Mr. Lawrence D. Feliciano

September 11, 1995 Mr. Lawrence D. Feliciano Unit 107 Celestial Marie Building 950 A.H. Lacson Street Sampaloc, Manila Sir : This refers to your letter of August 31, 1995, inquiring whether the proposed Magalang Pampanga Foundation, Inc. can be registered with the following purpose clause. prcd "To administer and manage Magalang Memorial Park Endowment Care Fund once all the interment space have been sold out and to ultimately take over ownership, operation and management of the Pampanga Magalang Memorial Park and Dev't. Corporation (PMMPDC)." The Corporation Code provides: "SECTION 14. Contents of the articles of incorporation . (2) . . .: Provided, That a non-stock corporation may not include a purpose which would change or contradict its nature as such : (Emphasis supplied) Further, the Corporation Code defines a non-stock corporation as follows: "SECTION 87. Definition . For the purpose 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 operation 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) From the foregoing provisions, it is clear that non-stock corporations, as a general rule, are not empowered to venture on profitable business. A corporation organized as a non-profit concern is not permitted to engage in business with the object of making income or profits directly or indirectly. It may be allowed to engage in business activities only if it is necessary to carry out the purpose(s) for which the corporation is organized, but unlike stock corporations, any profit that may be derived from such business activities are not distributable to the directors officers or members, but are used for the furtherance of corporate purposes. Thus the Corporation Code enumerates the following allowable purposes for which a non-stock corporation can be organized: "SECTION 88. Purposes . Non-stock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic services, or similar purposes, like trade, industry, agricultural and like chambers, or any combinations thereof, subject to the special provisions of this Title governing particular classes of non-stock corporations". The purpose of the corporation does not fall under any of the foregoing purposes for which a non-stock corporation can be organized. To allow the proposed corporation to be incorporated as a "foundation" on the basis of the purpose clause presented would run counter to the very nature of a non-stock non-profit corporation. However, you may modify it in such a way that it would fall under any of the above enumerations, clearly indicating therein that the corporation has no intention of making profit or income that would inure to the benefit of the corporate officers, directors, or members, accompanied by a modus operandi on how the proposed corporation shall be operated as supporting document. Please be advised accordingly. (SGD.) PERFECTO R. YASAY, JR. Acting Chairman