Mr. Conrado B. Roxas

May 16, 1990 Mr. Conrado B. Roxas Manager, Field Service Department Land Bank of the Philippines 319 Sen. Gil J. Puyat Ave., Ext. Makati, Metro Manila S i r : This refers to your letter dated January 23, 1990 requesting opinion on the following queries: "1. Can non-stock/non-profit farmers' Associations registered with SEC amend their By-laws to include provision on allocation and distribution of income patterned after Regulation 44 of PD 175 and LOI 23? 2. In case item 1 is adopted, will there be no sanctions from the SEC or any other government entity?" As aptly defined in Section 87 of the Corporation Code, " a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, . . . ." Said law amplifies 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 , . . . . " Accordingly, your first query is answered in the negative. The distribution of income referred to in your query is applicable only to "cooperatives" organized pursuant to PD 175. Relative to your second query, any violation of the Corporation Code is subject to Section 144 thereof, quoted hereunder: "SECTION 144. Violation of the Code . Violations of any of the provisions of this Code or its amendment not otherwise specifically penalized therein shall be punished by a fine of not less than one thousand (P1,000.00) pesos or imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the Court. If the violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the Securities and Exchange Commission. Provided, that such dissolution shall not preclude the institution of appropriate action against the director, trustee or officer of the corporation responsible for said violation: Provided, further, That nothing in this section shall be construed to repeal the other causes for dissolution of a corporation provided in this Code. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner