HE

CORPORATION CODE

OF THE

PHILIPPINES

[Batas Pambansa Blg. 68]

 

TITLE XIII
SPECIAL CORPORATIONS
Chapter I - Educational Corporations
Sec. 106. Incorporation. - Educational corporations shall be
governed by special laws and by the general provisions of this Code.
(n)
Sec. 107. Pre-requisites to incorporation. - Except upon favorable
recommendation of the Ministry of Education and Culture, the
Securities and Exchange Commission shall not accept or approve
the articles of incorporation and by-laws of any educational
institution. (168a)
Sec. 108. Board of trustees. - Trustees of educational institutions
organized as non-stock corporations shall not be less than five (5)
nor more than fifteen (15): Provided, however, That the number of
trustees shall be in multiples of five (5).
Unless otherwise provided in the articles of incorporation on the by-
laws, the board of trustees of incorporated schools, colleges, or
other institutions of learning shall, as soon as organized, so classify
themselves that the term of office of one-fifth (1/5) of their number
shall expire every year. Trustees thereafter elected to fill vacancies,
occurring before the expiration of a particular term, shall hold office
only for the unexpired period. Trustees elected thereafter to fill
vacancies caused by expiration of term shall hold office for five (5)
years. A majority of the trustees shall constitute a quorum for the
transaction of business. The powers and authority of trustees shall
be defined in the by-laws.
For institutions organized as stock corporations, the number and
term of directors shall be governed by the provisions on stock
corporations. (169a)
 
 

Chapter II - RELIGIOUS CORPORATIONS

Sec. 109. Classes of religious corporations. - Religious corporations
may be incorporated by one or more persons. Such corporations
may be classified into corporations sole and religious societies.
Religious corporations shall be governed by this Chapter and by the
general provisions on non-stock corporations insofar as they may be
applicable. (n)
Sec. 110. Corporation sole. - For the purpose of administering and
managing, as trustee, the affairs, property and temporalities of any
religious denomination, sect or church, a corporation sole may be
formed by the chief archbishop, bishop, priest, minister, rabbi or
other presiding elder of such religious denomination, sect or church.
(154a)
Sec. 111. Articles of incorporation. - In order to become a
corporation sole, the chief archbishop, bishop, priest, minister, rabbi
or presiding elder of any religious denomination, sect or church
must file with the Securities and Exchange Commission articles of
incorporation setting forth the following:
1. That he is the chief archbishop, bishop, priest, minister, rabbi or
presiding elder of his religious denomination, sect or church and
that he desires to become a corporation sole;
2. That the rules, regulations and discipline of his religious denomination, sect or
church are not inconsistent with his becoming a corporation sole and do not forbid it;
3. That as such chief archbishop, bishop, priest, minister, rabbi or presiding elder, he
is charged with the administration of the temporalities and the management of the
affairs, estate and properties of his religious denomination, sect or church within his
territorial jurisdiction, describing such territorial jurisdiction;
4. The manner in which any vacancy occurring in the office of chief archbishop,
bishop, priest, minister, rabbi of presiding elder is required to be filled, according to
the rules, regulations or discipline of the religious denomination, sect or church to
which he belongs; and
5. The place where the principal office of the corporation sole is to be established and
located, which place must be within the Philippines.
The articles of incorporation may include any other provision not
contrary to law for the regulation of the affairs of the corporation.
(n)
Sec. 112. Submission of the articles of incorporation. - The articles
of incorporation must be verified, before filing, by affidavit or
affirmation of the chief archbishop, bishop, priest, minister, rabbi or
presiding elder, as the case may be, and accompanied by a copy of
the commission, certificate of election or letter of appointment of
such chief archbishop, bishop, priest, minister, rabbi or presiding
elder, duly certified to be correct by any notary public.
From and after the filing with the Securities and Exchange
Commission of the said articles of incorporation, verified by affidavit
or affirmation, and accompanied by the documents mentioned in
the preceding paragraph, such chief archbishop, bishop, priest,
minister, rabbi or presiding elder shall become a corporation sole
and all temporalities, estate and properties of the religious
denomination, sect or church theretofore administered or managed
by him as such chief archbishop, bishop, priest, minister, rabbi or
presiding elder shall be held in trust by him as a corporation sole,
for the use, purpose, behalf and sole benefit of his religious
denomination, sect or church, including hospitals, schools, colleges,
orphan asylums, parsonages and cemeteries thereof. (n)
Sec. 113. Acquisition and alienation of property. - Any corporation
sole may purchase and hold real estate and personal property for its
church, charitable, benevolent or educational purposes, and may
receive bequests or gifts for such purposes. Such corporation may
sell or mortgage real property held by it by obtaining an order for
that purpose from the Court of First Instance of the province where
the property is situated upon proof made to the satisfaction of the
court that notice of the application for leave to sell or mortgage has
been given by publication or otherwise in such manner and for such
time as said court may have directed, and that it is to the interest
of the corporation that leave to sell or mortgage should be granted.
The application for leave to sell or mortgage must be made by
petition, duly verified, by the chief archbishop, bishop, priest,
minister, rabbi or presiding elder acting as corporation sole, and
may be opposed by any member of the religious denomination, sect
or church represented by the corporation sole: Provided, That in
cases where the rules, regulations and discipline of the religious
denomination, sect or church, religious society or order concerned
represented by such corporation sole regulate the method of
acquiring, holding, selling and mortgaging real estate and personal
property, such rules, regulations and discipline shall control, and the
intervention of the courts shall not be necessary. (159a)
Sec. 114. Filling of vacancies. - The successors in office of any chief
archbishop, bishop, priest, minister, rabbi or presiding elder in a
corporation sole shall become the corporation sole on their
accession to office and shall be permitted to transact business as
such on the filing with the Securities and Exchange Commission of a
copy of their commission, certificate of election, or letters of
appointment, duly certified by any notary public.
During any vacancy in the office of chief archbishop, bishop, priest,
minister, rabbi or presiding elder of any religious denomination, sect
or church incorporated as a corporation sole, the person or persons
authorized and empowered by the rules, regulations or discipline of
the religious denomination, sect or church represented by the
corporation sole to administer the temporalities and manage the
affairs, estate and properties of the corporation sole during the
vacancy shall exercise all the powers and authority of the
corporation sole during such vacancy. (158a)
Sec. 115. Dissolution. - A corporation sole may be dissolved and its
affairs settled voluntarily by submitting to the Securities and
Exchange Commission a verified declaration of dissolution.
The declaration of dissolution shall set forth:
1. The name of the corporation;
2. The reason for dissolution and winding up;
3. The authorization for the dissolution of the corporation by the particular religious
denomination, sect or church;
4. The names and addresses of the persons who are to supervise the winding up of the
affairs of the corporation.
Upon approval of such declaration of dissolution by the Securities
and Exchange Commission, the corporation shall cease to carry on
its operations except for the purpose of winding up its affairs. (n)
Sec. 116. Religious societies. - Any religious society or religious
order, or any diocese, synod, or district organization of any religious
denomination, sect or church, unless forbidden by the constitution,
rules, regulations, or discipline of the religious denomination, sect
or church of which it is a part, or by competent authority, may,
upon written consent and/or by an affirmative vote at a meeting
called for the purpose of at least two-thirds (2/3) of its
membership, incorporate for the administration of its temporalities
or for the management of its affairs, properties and estate by filing
with the Securities and Exchange Commission, articles of
incorporation verified by the affidavit of the presiding elder,
secretary, or clerk or other member of such religious society or
religious order, or diocese, synod, or district organization of the
religious denomination, sect or church, setting forth the following:

1. That the religious society or religious order, or diocese,

synod, or district organization is a religious organization of a
religious denomination, sect or church;
2. That at least two-thirds (2/3) of its membership have given
their written consent or have voted to incorporate, at a duly
convened meeting of the body;
3. That the incorporation of the religious society or religious
order, or diocese, synod, or district organization desiring to
incorporate is not forbidden by competent authority or by the
constitution, rules, regulations or discipline of the religious
denomination, sect, or church of which it forms a part;
4. That the religious society or religious order, or diocese,
synod, or district organization desires to incorporate for the
administration of its affairs, properties and estate;
5. The place where the principal office of the corporation is to
be established and located, which place must be within the
 Philippines; and

6. The names, nationalities, and residences of the trustees

elected by the religious society or religious order, or the
diocese, synod, or district organization to serve for the first
year or such other period as may be prescribed by the laws of
the religious society or religious order, or of the diocese,
synod, or district organization, the board of trustees to be not
less than five (5) nor more than fifteen (15). (160a)
NONSTOCK CORPORATION
TITLE XI
NON-STOCK CORPORATIONS
Sec. 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.
The provisions governing stock corporation, when pertinent, shall be
applicable to non-stock corporations, except as may be covered by
specific provisions of this Title. (n)
 Sec. 88. Purposes. - Non-stock corporations may be formed or
organized for charitable, religious, educational, professional,
cultural, fraternal, literary, scientific, social, civic service, or similar
purposes, like trade, industry, agricultural and like chambers, or
any combination thereof, subject to the special provisions of this
Title governing particular classes of non-stock corporations. (n)
 
 
Chapter I - MEMBERS
Sec. 89. Right to vote. - The right of the members of any class or
classes to vote may be limited, broadened or denied to the extent
specified in the articles of incorporation or the by-laws. Unless so
limited, broadened or denied, each member, regardless of class,
shall be entitled to one vote.
Unless otherwise provided in the articles of incorporation or the by-
laws, a member may vote by proxy in accordance with the
provisions of this Code. (n)
Voting by mail or other similar means by members of non-stock
corporations may be authorized by the by-laws of non-stock
corporations with the approval of, and under such conditions which
may be prescribed by, the Securities and Exchange Commission.
Sec. 90. Non-transferability of membership. - Membership in a
non-stock corporation and all rights arising therefrom are personal
and non-transferable, unless the articles of incorporation or the by-
laws otherwise provide. (n)
Sec. 91. Termination of membership. - Membership shall be
terminated in the manner and for the causes provided in the articles
of incorporation or the by-laws. Termination of membership shall
have the effect of extinguishing all rights of a member in the
corporation or in its property, unless otherwise provided in the
articles of incorporation or the by-laws. (n)
 
 
Chapter II - TRUSTEES AND OFFICERS
Sec. 92. Election and term of trustees. - Unless otherwise provided
in the articles of incorporation or the by-laws, the board of trustees
of non-stock corporations, which may be more than fifteen (15) in
number as may be fixed in their articles of incorporation or by-laws,
shall, as soon as organized, so classify themselves that the term of
office of one-third (1/3) of their number shall expire every year;
and subsequent elections of trustees comprising one-third (1/3) of
the board of trustees shall be held annually and trustees so elected
shall have a term of three (3) years. Trustees thereafter elected to
fill vacancies occurring before the expiration of a particular term
shall hold office only for the unexpired period.
No person shall be elected as trustee unless he is a member of the
corporation.
Unless otherwise provided in the articles of incorporation or the by-
laws, officers of a non-stock corporation may be directly elected by
the members. (n)
Sec. 93. Place of meetings. - The by-laws may provide that the
members of a non-stock corporation may hold their regular or
special meetings at any place even outside the place where the
principal office of the corporation is located: Provided, That proper
notice is sent to all members indicating the date, time and place of
the meeting: and Provided, further, That the place of meeting shall
be within the Philippines. (n)
 
Chapter III - DISTRIBUTION OF ASSETS IN
NON-STOCK CORPORATIONS
Sec. 94. Rules of distribution. - In case dissolution of a non-stock
corporation in accordance with the provisions of this Code, its
assets shall be applied and distributed as follows:
1. All liabilities and obligations of the corporation shall be paid,
satisfied and discharged, or adequate provision shall be made
therefore;
2. Assets held by the corporation upon a condition requiring return, transfer or
conveyance, and which condition occurs by reason of the dissolution, shall be
returned, transferred or conveyed in accordance with such requirements;
3. Assets received and held by the corporation subject to limitations permitting their
use only for charitable, religious, benevolent, educational or similar purposes, but not
held upon a condition requiring return, transfer or conveyance by reason of the
dissolution, shall be transferred or conveyed to one or more corporations, societies or
organizations engaged in activities in the Philippines substantially similar to those of
the dissolving corporation according to a plan of distribution adopted pursuant to this
Chapter;
4. Assets other than those mentioned in the preceding paragraphs, if any, shall be
distributed in accordance with the provisions of the articles of incorporation or the by-
laws, to the extent that the articles of incorporation or the by-laws, determine the
distributive rights of members, or any class or classes of members, or provide for
distribution; and
5. In any other case, assets may be distributed to such persons, societies, organizations
or corporations, whether or not organized for profit, as may be specified in a plan of
distribution adopted pursuant to this Chapter. (n)
Sec. 95. Plan of distribution of assets. - A plan providing for the
distribution of assets, not inconsistent with the provisions of this
Title, may be adopted by a non-stock corporation in the process of
dissolution in the following manner:

The board of trustees shall, by majority vote, adopt a resolution

recommending a plan of distribution and directing the submission
thereof to a vote at a regular or special meeting of members having
voting rights. Written notice setting forth the proposed plan of
distribution or a summary thereof and the date, time and place of
such meeting shall be given to each member entitled to vote, within
the time and in the manner provided in this Code for the giving of
notice of meetings to members. Such plan of distribution shall be
adopted upon approval of at least two-thirds (2/3) of the members
having voting rights present or represented by proxy at such
meeting. (n)
PRE EMPTIVE RIGHT
TITLE IV POWER OF CORPORATION
Sec. 39. Power to deny pre-emptive right. - All stockholders of a stock corporation shall enjoy pre-
emptive right to subscribe to all issues or disposition of shares of any class, in proportion to their
respective shareholdings, unless such right is denied by the articles of incorporation or an
amendment thereto: Provided, That such pre-emptive right shall not extend to shares to be
issued in compliance with laws requiring stock offerings or minimum stock ownership by the
public; or to shares to be issued in good faith with the approval of the stockholders representing
two-thirds (2/3) of the outstanding capital stock, in exchange for property needed for corporate
purposes or in payment of a previously contracted debt.