Ms. Fe B. Sapigao

January 31, 1995 Ms. Fe B. Sapigao Asingan, Pangasinan Madam: This refers to your letter of January 3, 1995 inquiring whether a registered non-stock organization can solicit investments and declare dividends to the members at the end of every year. cdll 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) It is clear from the above provisions that 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, but unlike stock corporations any profit that may be derived from such business activity is not distributable to the members, but is used for the furtherance of corporate purposes. Accordingly, your query is answered in the negative. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner