Mr. Nicolas Clamor

October 22, 1992 Mr. Nicolas Clamor S i r : This refers to your letter of October 21, 1992 requesting opinion as to the distinction between a profit and a non-profit or non-stock corporation and whether a non-stock, non-profit corporation is covered by Commonwealth Act No. 108, otherwise known as the Anti-Dummy Law. prcd The Corporation Code classifies corporations into "stock corporations" and "non-stock corporations. This classification is based on the authority of the corporation to pay dividends. Under Section 3 thereof, "stock corporations" are defined as "corporations which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held". Accordingly, all corporations for profit should be organized as stock corporations. On the other hand, a "non-stock corporation" is defined under Section 87 of the same Code as "one where no part of its income is distributable as dividends to its members, trustees, or officers". Hence, a non-stock corporation is a non-profit corporation. Relative to your second query, the Anti-Dummy Law, applies only to entities engaged in wholly or partly nationalized economic business activities, that is, where there is a Constitutional or legal provision requiring Philippine citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege. Accordingly, since there is no existing law limiting foreign membership in non-stock corporations and considering further that non-stock corporations do not normally engage in economic business activities, the same, as a general rule, cannot be read within the context of the provisions of said Law. However, where there is an existing law limiting foreign membership in a particular kind or type of non-stock corporation, the provisions thereof shall apply. Please be advised accordingly. cdll Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman