Iris Perez | December 19, 2019
3 min read
Under the Corporation Code, a non-stock corporation may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civil service, or similar purposes, such as trade, industry, agriculture, and similar chambers, or any combination thereof (Corporation Code Section 88). By definition:
Just like any corporation does, Non-stock non-profit corporations are still required to file to SEC for incorporation and issuance of the Certificate of Incorporation. They must also be registered to BIR (Bureau of Internal Revenue) for the Certificate of Registration, then further apply for the tax-exemption, if qualified.
In addition, SEC-registered, non-stock corporations are required to submit to SEC their annual financial statements. If the non-stock corporation receives government funding or contributions from a donor of at least PHP 500,000 in one or aggregate transactions, it must also submit a sworn statement by the President and Treasurer on the organization’s (a) schedule of receipts or income other than contributions and donations; (b) schedule of contributions and donations; and (c) schedule of disbursements according to sources and activities (SRC Rule 68 Part I Section 4A, as amended by SEC Memorandum Circular No. 4, series of 2013, and SEC Memorandum Circular No. 15, series of 2016).
To qualify for accreditation, a non-stock, non-profit corporation must be organized for one or more of the following kinds of purposes:
Further, no part of the net income or assets of the accredited organization may belong to or inure to the benefit of any member, organizer, officer, or specific person (Tax Code Section 30(E); Revenue Regulation No. 13-98 Section 1(a)).
To qualify for accreditation as an NGO, an NPO must be organized and operated exclusively for one or more of the following kinds of purposes:
Further, any part of the net income of the NGO should not inure to the benefit of any private individual (Tax Code Section 34(H)(2)(c)(1)); Revenue Regulation No. 13-98 Section (1)(b)). Accredited NGOs are also subject to other requirements, including restrictions on the number of administrative expenses that can be incurred (up to 30 percent of total expenses) and limitations on the distribution of assets upon the organization’s dissolution (Revenue Regulation No. 13-98 Section 1(b)). 
A microfinance NGO obtains its mandate from the Microfinance NGOs Act and must undergo accreditation by the Microfinance NGO Regulatory Council in order to enjoy the legal and tax benefits set forth by the enabling law (Microfinance NGOs Act Section 10). 
No part of the income of an NPO may inure to the organization’s members, trustees, or officers. Any earnings of the organization must be used exclusively to promote its statutory objectives (Corporate Code Section 87).
Accredited NPOs are prohibited from undertaking a variety of transactions that would lead to direct or indirect private inurement. These include:
Further, the members of the Board of Trustees of accredited NPOs are prohibited from receiving compensation or remuneration. They may, however, receive reasonable per diem (Corporation Code, Section 30, as read in conjunction with Corporation Code, Section 87). There is no such prohibition against the remuneration of corporate officers. For accredited NGOs, administrative expenses, including compensation and remuneration, may not exceed, on an annual basis, 30 percent of total expenses for the taxable year (Revenue Regulation No. 13-98 Section 1(b)(ii)).
NPOs are prohibited from having stockholders. No part of the income of an NPO is distributable as dividends to its members, trustees, or officers; and all profits shall be used in furtherance of the organization’s objectives (Corporation Code Section 87). In addition, for accredited non-stock, non-profit corporations, the law specifically states that no part of the net income or assets may “belong” to any member, organizer, officer, or specific person (Revenue Regulation No. 13-98 Section 1(a); Tax Code Section 30(E) and (G)).