Atty. Diosdado G. Madrid

October 23, 1990 Atty. Diosdado G. Madrid Madrid Cacho Dominguez Pecson & Associates Suite 305, Delta Building Cor. West & Quezon Avenue Quezon City S i r : This refers to your letter dated October 5, 1990 requesting opinion on whether a "non-stock" corporation is the same as ''non-profit'' corporation. The Corporation Code defines non-stock corporation as follows: "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, 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) From the above provision, a corporation organized as a non-stock corporation, may in the pursuit of its purposes, obtain profits in the course of its operation, but unlike in stock corporations, such profits are not distributed among its members but are used for the furtherance of its purposes. Whether or not such type of corporation is considered a ''non-profit corporation" inspite of the fact that it may derive income or profit, the following authority is cited: "Where a corporation was organized to provide educational, civic and cultural radio program and by-laws prohibited use of profits or surplus as dividends ,corporation was a " non-profit organization" for income tax purposes ,notwithstanding broadcast of some commercial programs." (Words and Phrases, Vol. 28A, citing Debs Memorial Radio Fund v. C.I.R.,CCA 2, 148 F2d 948, 951) In the light of the foregoing, while a non-stock corporation may obtain profit as an incident to its operation, it is considered a "non-profit corporation" in the sense that its income is not distributable to its members. Accordingly, a non-stock corporation is also considered as non-profit corporation. LibLex (SGD.) RODOLFO L. SAMARISTA Associate Commissioner