Coffee Exporters Association

June 18, 1990 Coffee Exporters Association Philippines, Inc. (CEAP) Rm. 708 National Life Insurance Bldg. 6762 Ayala Ave.,Makati, MM Gentlemen : This refers to your letter dated March 28, 1990 inquiring whether the plan of the Board of Directors of the Coffee Exporters Association of the Philippines, Inc. to amend its articles of incorporation, to engage in business as one of its purposes, is legally feasible. cdlex As stated in the proposed amended articles of incorporation, the association intends to "...engage in the business of trading, importing, exporting, buying, selling, transporting, distributing and promoting or otherwise trade or deal in coffee or equipment machineries or other related materials ...". Section 87 of the Corporation Code defines a 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, 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." In line with the foregoing, non-stock corporations are not empowered to venture on economic business activities. However, as incident to its purpose(s), it may derive income or profit reasonably necessary to carry out the purpose(s) for which the corporation was organized. Any such powers as are reasonably necessary to enable corporations to carry out the express powers granted and the purposes of the creation are to be implied as they are to be deemed incidental .(Am. Jur.,Supra 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, 12 L. ed. 447) A reading of the purposes of the corporation, as enumerated in its articles of incorporation, disclosed that the proposed business venture of the association is neither incidental nor necessary to carry out the objectives for which the association was organized. Likewise, Section 14(2) of the Corporation Code provides: "SECTION 14. Contents of articles of incorporation .... 2. ....Provided, That a non-stock corporation may not include a purpose which would change or contradict its nature as such. ...(emphasis supplied) Thus, applying the above provisions in the instant case, while there is a manifestation in the proposed amended articles of incorporation that any profit which may be derived from the proposed business venture shall not redound to the benefit of any of the members, the said business would run counter to its very nature as a non-profit association. cdlex In the light of the foregoing, your query is answered in the negative. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner