Yes. As a general rule, a non-stock, non-profit corporation may pay reasonable salaries to its officers and employees for actual services rendered. What Philippine law and regulators principally police is not the idea of compensation itself, but (1) compensation to trustees as trustees, (2) “inurement” or disguised distribution of corporate earnings/assets to insiders, and (3) conflicts of interest and poor governance around how compensation is approved and documented.

This article explains the full landscape: corporate law rules, practical governance requirements, tax and compliance implications, and common pitfalls.

1) Key concepts and distinctions that decide the answer

A. “Non-stock” and “non-profit” do not mean “no one can be paid”

A non-stock corporation does not issue shares and therefore does not distribute dividends. “Non-profit” means it is organized for purposes where profits are not distributed to members, trustees, or officers as such. But the corporation can still:

hire staff,
pay salaries and benefits,
contract consultants,
reimburse legitimate expenses,
pay allowances/per diems within legal limits,

…so long as payments are reasonable and for bona fide work.

B. Officers vs. trustees: different rules

Philippine corporate law draws an important line:

Trustees (board members): generally not entitled to compensation as trustees, except reasonable per diems, unless properly authorized and approved under the law/bylaws.
Officers (e.g., President, Treasurer, Corporate Secretary, Executive Director): may be paid salaries if they are actually performing officer/executive/management work and the compensation is properly approved and not a disguised distribution.

Many nonprofits blur this line by having trustees also serve as officers or paid executives. That is allowed only if handled correctly (see Section 4).

2) What corporate law allows—and what it restricts

A. General authority to compensate officers and employees

A corporation has the power to:

employ officers and employees, and
fix their compensation,

because paying for labor/services is a normal corporate act. For non-stock nonprofits, this is acceptable provided it is consistent with:

the corporation’s purposes,
the non-distribution constraint (no profit “sharing” to insiders),
fiduciary duties and conflict-of-interest rules.

B. The special rule on trustee compensation

Under Philippine corporate principles reflected in the Revised Corporation Code framework, trustees are generally not compensated, except for reasonable per diems. Compensation beyond per diems is typically permissible only if it is:

authorized in the bylaws (or properly authorized by the corporation’s governing rules), and
approved by the members under the statutory threshold (commonly described as requiring member approval, not merely board approval).

Practical takeaway: Paying trustees “honoraria,” “monthly allowances,” or “consulting fees” without clear authority and member approval is one of the fastest ways to trigger regulatory and tax problems.

C. Self-dealing and conflicts of interest still apply

If an officer or trustee participates in approving their own pay, that creates a classic conflict. Philippine corporate law generally treats contracts/transactions involving directors/trustees/officers with potential conflicts as voidable unless safeguards are met—commonly involving:

disclosure of the interest,
approval by disinterested decision-makers,
fairness/reasonableness of terms.

For nonprofits, the “fairness” lens is stricter because of the non-distribution principle and the presence of donor funds or public interest.

3) When salaries are clearly permissible

An officer’s salary is usually defensible when all of the following are true:

Actual services are rendered The officer performs real executive/administrative/operational work (e.g., program management, finance, compliance, HR, fundraising coordination).
Compensation is reasonable It is comparable to market rates for similar roles in similar organizations, considering size, budget, complexity, and geographic location.
Compensation is properly approved Approved through a documented process (board resolution; ideally by disinterested trustees; sometimes with member involvement depending on the person’s role and the bylaws).
It is not a disguised distribution of surplus Not tied to “profit shares,” “percentages of donations,” or automatic bonuses based solely on surplus without performance metrics and safeguards.
Proper documentation exists Employment contract, job description, performance evaluation framework, payroll records, withholding tax and mandatory contributions remitted, etc.

4) The hard case: when the paid officer is also a trustee

This is common in Philippine NGOs and foundations (e.g., founders serving as Chair/President while also acting as Executive Director).

A. Is it allowed?

It can be allowed, but it is high-risk and requires stricter governance. The core question becomes:

Are they being paid as a trustee (generally restricted), or as an employee/officer for actual services (generally allowed)?

B. Governance safeguards that should be present

To keep this arrangement defensible:

Separate roles in writing
- Board role: governance and oversight (unpaid except per diems, unless properly authorized).
- Officer role: management/execution (paid salary).
Disinterested approval
- The person should not vote on their own compensation.
- Compensation should be set by the disinterested trustees (or a compensation committee) and properly recorded.
Member approval where required
- If the compensation structure effectively becomes compensation to trustees beyond allowable per diems, or your bylaws require member approval, comply with that threshold.
Independent benchmarking
- Maintain a file showing how the figure was determined (salary surveys, comparable NGO pay, board deliberation minutes).
Performance and accountability
- Clear deliverables and evaluation, especially when donor funds are involved.

C. What regulators and auditors look for

Red flags include:

compensation that rises with donations without clear work justification,
multiple “allowances” that function like hidden salary,
“consultancy” contracts with trustees doing ordinary officer work,
missing board minutes or rushed approvals,
officers being paid even when inactive or abroad with no defined output.

5) Bylaws, articles, and internal policy: what should say what?

A. Check your articles and bylaws

Your governing documents often determine:

which officers are required,
how officers are elected/appointed,
who can be compensated and how compensation is approved,
whether member approval is needed for certain payments.

Best practice provisions (commonly used by well-governed nonprofits):

“Trustees shall serve without compensation except reasonable per diems.”
“The Board may appoint and fix compensation of officers and employees.”
“Any trustee who is appointed as an officer/employee may be compensated for services in that separate capacity, subject to disinterested approval and disclosure.”
“No part of net income shall inure to the benefit of any trustee, officer, or member except as reasonable compensation for services rendered.”

B. Adopt a written compensation and conflict-of-interest policy

A solid policy typically covers:

salary-setting process,
approval thresholds,
recusals,
documentation requirements,
benefits and allowances rules,
limits on per diems and reimbursables,
periodic review.

This is especially important for foundations and donor-funded organizations.

6) Securities and Exchange Commission compliance (non-stock nonprofits)

The Securities and Exchange Commission (SEC) supervises corporate registrations and reportorial compliance. For non-stock nonprofits, the practical SEC-sensitive issues are:

Consistency with corporate purpose Compensation must support, not contradict, the stated purpose.
No disguised profit distribution Payments that look like earnings distribution can become a governance issue (and can spill into tax issues).
Proper approvals in minutes and corporate records In disputes or regulatory reviews, what saves you is often the paper trail: board minutes, attendance, quorum, voting, disclosures.
Related-party transactions If officers are paid through entities they control (e.g., “consulting firm” owned by a trustee), treat this as a related-party transaction and apply stricter safeguards.

7) Tax realities: the “non-inurement” and “reasonable compensation” lens

A. Income tax exemption is not automatic for “non-profit”

In Philippine tax practice, “non-profit” status under corporate law does not automatically mean tax exemption. Tax exemption depends on the organization’s nature and compliance with the National Internal Revenue Code and Bureau of Internal Revenue (BIR) requirements.

B. Salaries are generally acceptable, but “inurement” is fatal

Even for organizations that qualify for tax exemption (e.g., certain charitable, educational, religious, or similar entities), a common condition is that:

no part of net income or assets benefits a private individual except as reasonable compensation for services.

So salaries are fine—excessive salaries or sham arrangements are not. The risk is:

loss of exemption,
deficiency assessments,
penalties,
donor deductibility problems (if applicable).

C. Payroll compliance still applies

If the corporation pays salaries, it typically must comply with:

withholding taxes on compensation,
issuance of BIR forms/certificates,
mandatory contributions if there is an employer-employee relationship (SSS/PhilHealth/Pag-IBIG),
labor standards (minimum wage, benefits, 13th month pay where applicable) depending on employee classification and coverage.

Misclassifying an “employee” as a “consultant” to avoid contributions is a frequent compliance trap.

D. Allowances and reimbursements: where nonprofits get burned

Legitimate categories:

properly substantiated expense reimbursements (official receipts, liquidation),
reasonable travel and representation expenses aligned with purpose.

High-risk categories:

flat “transport allowance” with no attendance requirement,
“representation” funds with no substantiation,
per diems that effectively replace salary,
“honoraria” paid monthly to trustees without legal basis.

8) Practical approval and documentation checklist (what “good” looks like)

A defensible nonprofit officer compensation file typically includes:

Board resolution approving:
- position,
- salary amount and benefits,
- effectivity date,
- signatory authority for the employment contract.
Minutes showing:
- quorum,
- disclosure of conflicts,
- recusal/non-participation of the interested person,
- rationale (benchmarking, budget capacity, job scope).
Job description and KPIs (even basic ones).
Employment contract (or officer appointment terms).
Payroll records:
- payslips,
- withholding tax remittances,
- statutory contributions,
- leave records if applicable.
Periodic review (annual or biannual) with recorded approval of adjustments.

9) Common scenarios and how to handle them

Scenario 1: Executive Director is not a trustee

Low risk. Treat like normal employment. Board approves compensation.

Scenario 2: President/Chair is also Executive Director and wants a salary

Medium to high risk. Allowed if:

role separation is explicit,
disinterested trustees approve salary,
interested person recuses,
compensation is reasonable and documented,
bylaws/member approvals are complied with if trustee compensation rules could be implicated.

Scenario 3: Trustees receive monthly “allowances” regardless of meetings

High risk. Often looks like prohibited trustee compensation or disguised distribution unless clearly authorized and justifiable as per diems/expense reimbursements with proper basis.

Scenario 4: Paying “consulting fees” to a trustee’s company

High risk. Treat as related-party transaction:

full disclosure,
disinterested approval,
proof of necessity and fair pricing,
deliverables and outputs,
clean procurement process if donor funds are involved.

10) Consequences of getting it wrong

Problems typically show up in four ways:

Corporate governance disputes Members challenge payments as ultra vires, conflicted, or against bylaws.
SEC reportorial and governance findings Especially when records are weak.
Tax exposure Reclassification as inurement/disguised distribution, loss of exemption, disallowances, deficiencies, penalties.
Labor and payroll liabilities Misclassification, unpaid contributions, unpaid statutory benefits.

11) Bottom line rules you can rely on

Officers may receive salaries in a Philippine non-stock non-profit corporation if the salary is for actual services and is reasonable.
Trustees are generally not compensated beyond reasonable per diems unless properly authorized and approved under the corporation’s governing rules and applicable law.
If a person is both trustee and paid officer/employee, it can be valid but must be handled with conflict-of-interest safeguards, disinterested approval, documentation, and reasonableness.
The safest mindset is: no distribution of surplus to insiders, only fair payment for real work with a clean paper trail.