Ms Nelia Yulo Pasco

July 19, 1999 Ms Nelia Yulo Pasco Rm 311 Anita Bldg.,1300 Quezon Avenue cor. Timog Avenue, Quezon City M a d a m: This refers to your letter dated June 29, 1999 inquiring on the effects of the conversion of a stock corporation to a non-stock corporation to the stockholders who now become the members of the corporation, and how will the subscribed capital and all accumulated earnings during its operation as a stock corporation be treated thereafter. LibLex As aptly defined in Section 87 of the Corporation Code, a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees or officers, and 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 .Thus, the Commission, on several occasions, had opined that the members of a " non-stock corporation " are not entitled to any profit or interest in the corporate assets that may be obtained out of the operation or activities of the corporation. Until the corporation is dissolved and unless it is so provided in the articles of incorporation or by-laws, the members are not entitled to any vested interest over the assets of a non-stock corporation. In other words, a non-stock corporation only holds its funds in trust for the carrying out the objectives and purposes expressed in its articles of incorporation. Accordingly, after the conversion of a stock corporation into a non-stock corporation, the stockholders of the stock corporation, who now become the members of the non-stock corporation, will no longer have any pecuniary interest in the corporate assets. Neither are they entitled to any share in any profit that may be obtained out of the operation or activities of the non stock; corporation. Very truly yours, (SGD.) SONIA M. BALLO Director Corporate and Legal Department