Written by Catherine T. Manahan, 23 May 2008
In my earlier article, Junk EO 671, last March 3, I dwelt on the need to issue the Implementing Rules and Regulations (IRR) that would harmonize Executive Order (EO) No. 671 and the January 29, 2008 Memorandum of the Office of the President regulating the certification and accreditation of qualified donee-institutions.
The non-issuance of the IRR has stalled the processing of applications for accreditation by various donee-institutions consisting mostly of foundations and non-government organizations (NGOs) and the issuance of the BIR certificate of qualified donee-institution. Unfortunately, to date, no IRR or clarification has been issued on the matter.
To refresh our readers on this unresolved issue, under the 1997 Tax Code, as amended, foundations, NGOs and other nonprofit and nonstock domestic corporations are granted certain tax privileges. Specifically, these are full tax deductibility of the donations from the donor’s gross income and exemption of said benevolent donors from the donor’s tax.
These tax privileges were granted to encourage and entice the flow of funds to said donee institutions thereby equipping them with the much-needed financial resources for the implementation of their plans and projects.
Under Revenue Regulations (RR) No. 13-98, availment of the tax deduction and exemption privileges required prior accreditation of the donee institution with the Philippine Council for NGO Certification, Inc. (PCNC), a special agency created for this purpose and is composed of representatives from six of the major NGOs and the BIR. For a period of almost 10 years, the PCNC managed to ferret out bogus and fictitious applicant-donee institutions which had failed to meet the stringent accreditation requirements.
However, pursuant to Executive Order (EO) No. 671 dated October 22, 2007, effective November 15, 2007, the authority to accredit qualified donee-institutions was transferred from the PCNC to different government agencies, e.g., the Department of Science and Technology (DoST), the Department of Social Welfare and Development (DSWD), and the Commission on Higher Education (CHED), depending on the focus area of the donee-applicant.
The change in the accreditation procedure has sparked a controversy between the private sector and representatives from some of the designated government agencies on various issues, primarily on the latter agencies’ competency and familiarity with the accreditation process and requirements, which, if not properly addressed, might undermine the efficiency of the entire process.
To resolve this controversy, Malacaņang prepared an amendatory EO addressing and reconciling all the issues and concerns raised by the affected parties.
Among its salient features are the retention of the accreditation function with the PCNC and the expansion of the composition of the PCNC board to include not only representatives from the principal NGOs and the BIR but also representatives from the concerned government agencies, e.g., DoST, CHED, and DSWD.
Much can be said about the positive contributions of these donee institutions to Philippine society in the fields of education, health care, social welfare, culture and sports, among others. They epitomize the essence of private-public partnership for the greater good. Thus, the amendment introduced by the amendatory EO, i.e., reinstate the ante-EO 671 status quo but under a broadened PCNC Board in a genuine spirit of cooperation and compromise, appears to be a more practical approach.
According to my latest inquiry with the Department of Finance and the PCNC, the amendatory EO has been submitted to the Office of the President in March 2008 but no action has since been taken on draft EO. In the meantime, though, nothing has changed with respect to the status of applications for accreditation that were caught in mid-stream, i.e., applications that have already been approved by PCNC prior to November 15, 2007 but were belatedly sent to BIR after that date.
These applications have remained pending with the BIR in view of the latter’s policy to hold in abeyance the processing of the indorsed applications and issuance of the corresponding Certificates of Qualified Donee Institution until the IRR clarifying the implementation of EO 671 has been issued. This policy does not seem to have any basis considering the indorsed applications were evaluated by the PCNC and properly indorsed for approval to the BIR before the effectivity of EO 671 and as such, are still governed by the procedures set forth in RR No. 13-98.
Having said that, I believe that the delay in the issuance of the amendatory EO should not be an excuse for the BIR to hold in abeyance the processing and approval of the indorsed applications. The BIR’s apparent inaction on the indorsed applications not only undermines the implementation of the projects and programs of the affected institutions, in particular, but also stalls the economic development of the country, in general.
