Mr. Nestor A. Gonzales

September 19, 1995 Mr. Nestor A. Gonzales Office of the Provincial Secretary Pagadian City S i r : This refers to your 1st indorsement letter dated September 6, 1995, requesting comments on the report of the Committee on Rules, Ordinances and Resolutions of the Office of the Sangguniang Panlalawigan of Pagadian City, relative to the letter of Venancio C. Ferrer, Jr.,questioning the accreditation by the Provincial Livelihood Fund Management/Livelihood Assistance Action Center of associations registered with the SEC whose approved articles of incorporation and by-laws do not allow them to engage in lending business to participate in the re-lending program/on-going distribution of the Livelihood Restoration Program Fund being administered by said Agency. LibLex It is well-settled that a corporation only has the powers as are expressly granted in its charter or in the statutes under which it is created or such powers as are necessary for the purpose of carrying out its express powers. (SEC Opinion dated March 23, 1988 citing 13 Am Jur. Sec. 739). Only such powers as are reasonably necessary to enable corporations to carry out the express powers granted and the purposes of their creation are to be implied as are to be deemed incidental. (Ibid. citing Am. Jur. Sec. 740). Powers merely convenient or useful are not implied if they are not essential having in view the nature and object of incorporation. (Ibid., citing Planters Bank v. Sharp, 6 How (vs.) 301, 12L. ED. 447). Thus, in the determination of what businesses may be carried on by a corporation, reference must be made to its articles of incorporation, and unless the power to carry a particular business is either expressly or impliedly conferred thereby it does not exist. (Ibid., Chiwacla Lines v. Disnukes, 8 Ala 344, 650, 122, 5 LRA 100, Cited in Am. Jur. Supra. sec. 743). Moreover, under Sections 14 (2) and 87 of the Corporation Code, non-stock corporation, 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 test in determining whether an SEC registered corporation or association should be allowed to participate in the above-mentioned Relending Program, is whether or not it is expressly authorized under its articles of incorporation to engage in the line of business activity covered by the program or whether the activity is reasonably necessary to carry out the purposes for which it was organized. llcd Please be advised accordingly. (SGD.) FE ELOISA C. GLORIA Associate Commissioner