Mr. Avelino T. Iglesias, Jr.

June 16, 1994 Mr. Avelino T. Iglesias, Jr. Philippine Deposit Insurance Corporation 2228 Pasong Tamo Street, Makati, Metro Manila S i r : This refers to your letter of May 31, 1994 requesting opinion whether Tulay sa Pag-Unlad, Inc.,a non-stock, non-profit corporation is authorized to set up a bank taking into consideration the following purposes in its Amended Articles of Incorporation: a) "to assist the Filipino people in their pursuit for education, culture, social, civic services and economic advancement, with the end in view that they will become responsible members and assets of the society";b) "invest or re-invest its funds at reasonable rates with small family size existing businesses or undertakings in order to help small time entrepreneurs, prosecute and manage their businesses successfully. prcd The pertinent provisions of the Corporation Code provide: "SECTION 87. Definition . For the purposes of this Code, a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of this Code on dissolution, Provided, That any profit which a non-stock corporation may obtain as an incident to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized ,subject to the provisions of this Title." (Emphasis supplied) "SECTION 14. Contents of articles of incorporation . xxx xxx xxx 2. The specific purpose or purposes for which the corporation is being incorporated. Where a corporation has more than one stated purpose, the articles of incorporation shall state which is the primary and which is/are the secondary purpose or purposes; Provided, That a non-stock corporation may not include a purpose which would change or contradict its nature as such : ....(Emphasis supplied) Therefore, as a general rule, a non-stock corporation organized as a non-profit concern is not empowered to venture on economic business activities. It may engage in a business for profit only if it is necessary to carry out the purpose(s) for which it was organized. Business activities merely convenient or useful cannot be undertaken by a non-stock, non-profit corporation if they are not essential having in view the nature and objectives of its incorporation. Accordingly, since the operation of a bank would run counter to the very nature of a non-stock, non-profit entity and considering further that said business activity in not necessary in carrying out the above-stated purposes for which the corporation was organized, it cannot be legally undertaken by subject corporation. cdlex Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman