Lecture On

Religious Corporations
 Jurisdiction of Securities and Exchange
Commission (SEC)
 Definition/distinction
 Registration of Articles of Incorporation (AI) &
By-laws (BL)
 Amendments of AI - BL
 Filling of vacancies
 Dissolution
 Licensing of religious foreign corporations
 Reportorial Requirements
 Membership/Nationalities
 Merger/Consolidation
Jurisdiction of SEC
Sec. 5 OF SRC: Powers and Functions of (SRC) Sec. 5.1(a.) Have jurisdiction and
the Commission. – 5.1. The supervision over all corporations,
Commission shall act with transparency partnerships or associations who are
and shall have the powers and the grantees of primary franchises
functions provided by this Code, and/or a license or permit issued by
Presidential Decree No. 902-A, the the government;
Corporation Code, the Investment
Houses Law, the Financing Company (PD 902-A) Sec. 3. The Commission shall
Act and other existing laws. Pursuant have absolute jurisdiction, supervision
thereto the Commission shall have, and control over all corporations,
among others, the following powers partnerships or associations, who are
and functions: the grantees of primary franchises
and/or a license or permit issued by
the government to operate in the
Philippines, and in the exercise of its
authority, it shall have the power to
enlist the aid and support of and to
deputize any and all enforcement
agencies of the government, civil or
military as well as any private
institution, corporation, firm,
association or person.
Jurisdiction….
(SRC) Sec. 5.1(m.) - Suspend, or 1. Fraud in procuring its certificate
revoke, after proper notice and of registration;
hearing the franchise or 2. Serious misrepresentation as to
certificate or registration of what the corporation can do or is
corporations, partnerships or doing to the great prejudice of or
associations, upon any of the damage to the general public;
grounds provided by law; and
3. Refusal to comply or defiance of
any lawful order of the
(PD 902-A) Sec. 6 (l) - To suspend, Commission restraining
or revoke, after proper notice and commission of acts which would
hearing, the franchise or amount to a grave violation of its
certificate of registration of franchise;
corporations, partnerships or 4. Continuous inoperation for a
associations, upon any of the period of at least five (5) years;
grounds provided by law,
including the following: 5. Failure to file by-laws within the
required period;
6. Failure to file required reports in
appropriate forms as determined
by the Commission within the
prescribed period;
Definition of Corporations Sole (CS)
and Religious Societies (RS)

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.
Corporations Sole
 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 or church.
Registration of Religious Societies (RS)

 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, regulation, 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:
(Cont.) On Registration of RS
1. That the religious society or religious order or
diocese, synod, or district organization is a
religious organization of some religious
denomination, sect or church;
2. That two-thirds of its membership have given
their written consent or have consented 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;
(Cont.) On Registration of RS
 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 residencies 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)
Registration of Corporations Sole (CS)
 Sec. 111. Articles of incorporation. – In order to
become a corporation sole, the chief archbishop,
bishop, priest, minister, rabbi or presiding 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;
(Cont.) On Registration of CS
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 or 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 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.
(Cont.) On Registration of CS
 Sec. 112. Submission of the articles of
incorporation. – The articles of
incorporation must be verified, before
filing, by affidavit of 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
(Cont.) Sec.112
 From and after 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, as the case
may be, shall become a corporation, 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.
 Problem Areas on Registration of RS
and CS
 Distinction of RS and CS from ordinary non-stock
corporation under Sec. 88 of the Code. (in a next
slide)
 Corporate Name (in a next slide)
 Purposes (allowed in section 88 may be
integrated; educational corporations should be
incorporated separate and distinct)
 Trustees (qualifications; Section 92 of CCP on
number of trustees of RS; ).
 Term of existence (in a succeeding slide)
 Principal office (in a succeeding slide)
 By-laws (in a succeeding slide)
 Term of office
 Distinction of Sec. 110 and 116 with
Sec. 88 of CCP

 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.
Illustration of Registrant under Section
88 of CCP

Christian Ministers Association, Inc.

 Enroll the participation of every Christian Pastors and

Church Leaders and workers in all its affairs.
 Established closer relationship among Christian Pastors
and Church Leaders and Workers for the betterment of the
Body of Christ, this association as well as the community.
 Secure the highest advantage of physical, social and most
of all the spiritual aspect of life of the members and the
community.
 Promote a healthy and safe environment as well as to
develop unity, cooperation brotherhood and nationalism.
Corporate Name
 Sec. 18. Corporate name. – No corporate name may be
allowed by the Securities and Exchange Commission if the
proposed name is identical or deceptively or confusingly
similar to that of any existing corporation or to any other
name already protected by law or is patently deceptive,
confusing or contrary to existing laws. When a change in the
corporate name is approved, the Commission shall issue an
amended certificate of incorporation under the amended
name.
 SEC Guidelines in the Approval of Corporate and Partnership
Names
 Trade name is also allowed for non-stock corporations.
 A subsidiary or affiliate of a foreign corporation that applies
for the registration of all or substantially all of the name of its
parent company shall use the word “Philippines” as part of its
name which shall be written as “(Philippines)” or “(Phil)” after
the name.
Purposes

SEC opinion –The integration of

church and school into one entity is
not feasible considering that they
have different purposes alien to
each other. A church however, may
operate an educational institution
by way of ownership or membership
in the latter.
Principal Office
 Memorandum Circular No. 3 Series of 2006

 In line with the “full disclosure” requirement of existing laws,

all corporations and partnerships applying for registration
with the securities and Exchange Commission should state in
their Articles of incorporation or Articles of partnership the (i)
specific address of their principal office, which shall include, if
feasible, the street number, street name, barangay, city or
municipality; and (ii) specific residence address of each
incorporator, stockholder, director, trustee, or partner.
 “Metro Manila” shall no longer be allowed as address of the
principal office.
 Additionally, all corporations are required to state in their
General information Sheet the Specific residence address of
each stockholder, officer, director or trustee.
 Filings that do not comply with the foregoing requirements
shall be considered as non-compliant with existing rules and
regulations.
Term of Existence
 Sec. 110 and 116 of the
Corporation Code did not provide
for a term of existence of religious
corporations, whether classified as
corporation sole or religious
societies. Hence, religious
corporations may be allowed to
exist perpetually.
Trustees
 Sec. 138. Designation of governing
boards. – The provisions of specific
provisions of this Code to the
contrary notwithstanding, non-stock
or special corporations may through
their articles of incorporation or
their by-laws, designate their
governing boards by any name
other than as board of trustees.
By-laws of RS
 Sec. 47. Contents of by-laws. – Subject to the provisions of the constitution, this Code,
or other special laws, and the articles of incorporation, a private corporation may
provide in its by-laws for:
1. The time, place and manner of calling and conducting regular or special meetings of the
directors or trustees;
2. The time and manner of calling and conducting regular or special meetings of the
stockholders or members.
3. The required quorum in meetings of stockholders or members and the manner of voting
therein:
4. The form for proxies of stockholders and members and the manner of voting therein;
5. The qualifications, duties and compensation of directors or trustees, officers and
employees;
6. The time for holding the annual election of directors or trustees and the mode or
manner of giving notice thereof;
7. The manner of election or appointment and the term of office of all officers other than
directors or trustees;
8. The penalties for violation of the by-laws
9. In the case of stock corporations, the manner of issuing stock certificates; and
10. Such other matters as may be necessary for the proper or convenient transaction of its
corporate business and affairs.
Amendments

 Amended Articles of Incorporation

Sec. 16 of CCP; established facts
 Amended By-laws (Sec. 48 of CCP)
 Trustees Certificate
Section 16 of CCP
 Sec. 16. Amendment of articles of incorporation. – Unless otherwise
prescribed by this Code or by special law, and for legitimate purposes,
any provision or matter stated in the articles of incorporation may be
amended by a majority vote of the board of directors or trustees and
the vote or written assent of the stockholders representing at least
two-thirds (2/3) of the outstanding capital stock, without prejudice to
the appraisal right of dissenting stockholders in accordance with the
provisions of this Code, or the vote or written assent of two-thirds
(2/3) of the members if it be a non-stock corporation.
 The original and amended articles together shall contain all provisions
required by law to be set out in the articles of incorporation. Such
articles, as amended, shall be indicated by underscoring the change or
changes made, and a copy thereof duly certified under oath by the
corporate secretary and a majority of the directors or trustees stating
the fact that said amendment or amendments have been duly
approved by the required vote of the stockholders or members, shall
be submitted to the securities and Exchange Commission
 The amendments shall take effect upon its approval by the securities
and Exchange Commission or from the date of filing with the said
Commission if not acted upon within six (6) months from the date of
filing for a cause not attributable to the corporation.
Section 48 of CCP
 Sec. 48. Amendments to by-laws. – the board of directors or trustees,
by a majority vote thereof, and the owners of at least a majority of
the outstanding capital stock, or at least a majority of the members of
a non-stock corporation, at a regular or special meeting duly called for
the purpose, may amend or repeal any by-laws or adopt new by-laws.

 The owners of two-thirds (2/3) of the outstanding capital stock or

two-thirds (2/3) of the members in a non-stock corporation may
delegate to the board of directors or trustees the power to amend or
repeal any by-laws or adopt new by-laws:

 Provided, That any power delegated to the board of directors or

trustees to amend or repeal any by-laws or adopt new by-laws shall
be considered as revoked whenever stockholders owning or
representing majority of the outstanding capital stock or a majority of
the members in non-stock corporations, shall so vote at a regular or
special meetings.
Trustees Certificate
 Directors’/Trustees’ Certificate – a
notarized document signed by a majority
of the directors/trustees and the
corporate secretary, certifying the
amendment of the Articles of
Incorporation/By-laws, indicating the
amended provisions, the vote of the
directors/trustees and
stockholders/members, the date and
place of the stockholders’ or members’
meeting; and the TIN of the signatories
therein.
Filling of vacancies in CS
 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.
 Note; This does not apply to RS.
Cont. of Sec. 114
 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.
Dissolution of CS
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.
Dissolution of RS

 Sections 117, 118, 119 and 120 of

the CCP
 Licensing of Religious Foreign
Corporations

 Branch office or Representative

Office
Reportorial Requirements
 General Information Sheet
 Financial Statements

 Queries : What will be the

consequence of non-submission of
reports?
CCP on Reportorial Requirements
Sec.26. Report of election of directors, trustees and officers. –
Within thirty (30) days after the election of the directors, trustees and
officers of the corporation, the Secretary, or any other officer of the
corporation, shall submit to the Securities and Exchange Commission,
the names, nationalities and residences of the directors, trustees, and
officers elected. Should a director, trustee or officer die, resign or in
any manner cease to hold office, his heirs in case of his death, the
secretary, or any other officer of the corporation, or the director,
trustee or officer himself, shall immediately report such fact to the
Securities and Exchange Commission
Sec. 141. Annual report of corporations. – Every corporation, domestic or
foreign, lawfully doing business in the Philippines shall submit to the
Securities and Exchange Commission an Annual report of its
operations, together with a financial statement of its assets and
liabilities, certified by any independent certified public accountant in
appropriate cases, covering the preceding fiscal year and such other
requirements as the Securities and Exchange Commission may
require. Such report shall be submitted within such period as may be
prescribed by the Securities and Exchange Commission.
SEC Opinion dated April 27, 2004 Sec. 116
of CCP-Corporation Sole

 The Commission en banc in its

meeting of 1 April 2004 ruled that
all corporation soles whose only
property is the church premises
which include, convents, rectories,
cemeteries for the religious and
bank deposits and shares of stock
need not file reportorial
requirements with the SEC.
Membership in RS and CS

 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
Membership in Religious Societies
 Section 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 by the articles of
incorporation or the by-laws, a member may
vote by proxy in accordance with the provisions
of this Code.
 Classification of members
 That the Association shall have two (2) classes of members:
(a) Founding members and (b) Regular members
 Founding members shall be entitled to all the rights and
privileges of a member as provided for in the Corporation
Code. In addition, Founding members shall have the
exclusive right to vote and be voted for in the election of the
Association’s trustees for a period of five (5) years from
incorporation, subject to any exceptions provided for in the
Association’s By-laws. The Founding Members of the
Association shall solely consist of all of the incorporators.
 Regular members shall be entitled to all the rights and
privileges of a member as provided for in the Corporation
Code, subject to the exclusive right of Founding members to
vote and be voted for in the election of the Association’s
trustees for a period of five (5) years from incorporation. The
association shall peridically furnish the Securities and
Exchange Commission with the names of Regular members
who shall subsequently be admitted into the association.
Nationalities of CS and RS

 Nationalities of CS and RS are

based on nationalities of members.
Merger/Consolidation

 Provisions of the Corporation Code

of the Philippines on Merger and
Consolidation
Question and Answer

Please feel free to ask questions.

 Thank you

Atty. Ferdinand Brian Sales

5849225
5842202