Atty. Annie Gonzales-Tesoro

September 7, 1995 Atty. Annie Gonzales-Tesoro Officer-in-Charge Securities and Exchange Commission, Baguio Extension Office 76 Upper Gen. Luna Rd. 2600 Baguio City M a d a m : This refers to the letter query of Mr. Reynaldo U. Agranzamendez dated August 15, 1995, which you referred to the SEC Head Office inquiring whether it is legally possible to amend the articles of incorporation of BENJAMIN SALVOSA FOUNDATION, INC. to include the following additional purposes: LibLex a. To print and publish a community newspaper in the City of Baguio and in the Cordilleras as a means to inform the public of the results of its researches and investigations on scientific, educational and social issues; b. To operate a printing press as a means of supporting its activities relating to printing and publishing . Since there is no return address in the letter-query, the following reply is addressed to you. The Corporation Code provides; "SECTION 14. Contents of the articles of incorporation . ...2) ...:Provided, That a non-stock, non-profit corporation may not include a purpose which would change or contradict its nature as such " (Emphasis supplied) Further, Section 87 of the Corporation Code defines a non-stock corporation as follows: SECTION 87. Definition . For 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 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) Thus, while non-stock corporations are not empowered to venture on profitable business activities, they may, as incident to their purposes, engage in such business activities which are reasonably necessary or essential to carry out the purpose(s) for which they are 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 the corporate purposes . A perusal of the Articles of Incorporation of the Foundation reveals that among its purposes are "To engage in applied research or investigations aimed at a concrete result which will help meet a specific human need or which will lead to the production of certain substance, equipment or materials useful to humanity';"To engage in development work, or the promotion of the practical application of new knowledge discovered by research ";To see to it that all its researches are directed toward benefiting the public ." Accordingly, since the proposed activities shall be used as means to disseminate and inform the public of the results of the Foundation's researches and investigations, the same may be included in the present purpose clause of the Articles of Incorporation of the Foundation, provided, however, that the proposed proviso shall be modified, in such a way that the printing and publication services shall be limited only to matters pertaining to researches, studies or investigations undertaken by the Foundation; and provided further that the following proviso shall be included therein: " Provided, however, that any income, profit or gain that may be derived therefrom shall be purely used for the furtherance of the purposes for which the Foundation was organized; and in no case shall the profits be distributed to the benefit of any of the members, officers or directors of the Foundation ." Please be advised accordingly. (SGD.) PERFECTO R. YASAY, JR. Acting Chairman