Corpo Case Digests Set14

CORPORATION
LAW CASE DIGESTS

3C & 3S – ATTY. CARLO BUSMENTE
IGLESIA EVANGELICA METODISTA ET. AL. vs.

BISHOP LAZARO ET. AL Petitioners Reverend Nestor Pineda, et al., which belonged to a faction
G.R. No. 184088 – July 6, 2010 that did not support the conversion, filed a civil case for "Enforcement
of Property Rights of Corporation Sole, Declaration of Nullity of
FACTS: Amended Articles of Incorporation from Corporation Sole to
Bishop Nicolas Zamora established the petitioner Iglesia Evangelica Corporation Aggregate with Application for Preliminary Injunction
Metodista En Las Islas Filipinas, Inc. (IEMELIF) as a corporation sole and/or Temporary Restraining Order" in IEMELIF's name against
with Bishop Zamora acting as its "General Superintendent." 39 years respondent members of its Consistory before the RTC. Petitioners
later, the IEMELIF enacted a by-‐laws that established a Supreme claim that a complete shift from IEMELIF's status as a corporation
Consistory of Elders (the Consistory), made up of church ministers, sole to a corporation aggregate required, not just an amendment
who were to serve for 4 years. The by-‐laws empowered the Consistory of the IEMELIF's articles of incorporation, but a complete
to elect a General Superintendent, a General Secretary, a General dissolution of the existing corporation sole followed by a re-‐
Evangelist, and a Treasurer General who would manage the affairs of incorporation.
the organization. The Consistory served as the IEMELIF's board of
directors. RTC dismissed. It held that, while the Corporation Code on Religious
Corporations has no provision governing the amendment of the
Although the IEMELIF remained a corporation sole on paper (with all articles of incorporation of a corporation sole, Sec. 109 provides that
corporate powers lodged in the hands of one member, the General religious corporations shall be governed additionally "by the
Superintendent), it had always acted like a corporation aggregate. provisions on non-‐stock corporations insofar as they may be
Subsequently, the general membership voted to change IEMELIF's applicable." The RTC thus held that Sec. 16 that governed amendments
organizational structure from a corporation sole to a corporation of the articles of incorporation of non-‐stock corporations applied to
aggregate. SEC approved the vote. However, the corporate papers corporations sole as well. What IEMELIF needed to authorize the
of the IEMELIF remained unaltered as a corporation sole. amendment was merely the vote or written assent of at least 2/3 of the
IEMELIF membership. CA Affirmed.
About 28 years later, the issue reemerge. In answer to a query from the
IEMELIF, the SEC replied that, although the SEC Commissioner did not ISSUE:
object to the conversion of the IEMELIF into a corporation aggregate, WON a corporation sole may be converted into a corporation
that conversion was not properly carried out and documented. The aggregate by mere amendment of its articles of incorporation.
SEC said that the IEMELIF needed to amend its articles of
incorporation for that purpose. HELD:
Acting on this advice, Respondent Bishop Nathanael Lazaro, its General Yes. Sec. 110 states that a corporation sole is "one formed by the chief
Superintendent, instructed all their congregations to take up the archbishop, bishop, priest, minister, rabbi or other presiding elder of a
matter with their respective members for resolution. Subsequently, religious denomination, sect, or church, for the purpose of
the general membership approved the conversion, prompting the administering or managing, as trustee, the affairs, properties and
IEMELIF to file amended articles of incorporation with the SEC. Bishop temporalities of such religious denomination, sect or church." A
Lazaro filed an affidavit-‐certification in support of the conversion.
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CORPORATION LAW CASE DIGESTS
corporation aggregate formed for the same purpose, on the other hand, under the Corporation Code, and that b) it is for a legitimate purpose.
consists of two or more persons. Sec. 17 provides that amendment shall be disapproved if, among
others, the prescribed form of the articles of incorporation or
The Corporation Code provides no specific mechanism for amending amendment to it is not observed, or if the purpose or purposes of the
the articles of incorporation of a corporation sole. But Sec. 109 allows corporation are patently unconstitutional, illegal, immoral, or contrary
the application to religious corporations of the general provisions to government rules and regulations, or if the required percentage of
governing non-‐stock corporations. ownership is not complied with. These impediments do not appear in
the case of IEMELIF.
For non-‐stock corporations, the power to amend its articles of
incorporation lies in its members. The code requires 2/3 of their votes Besides, the IEMELIF worked out the amendment of its articles of
for the approval of such an amendment. If such approval mechanism is incorporation upon the initiative and advice of the SEC. The latter's
made to operate in a corporation sole, its one member in whom all the interpretation and application of the Corporation Code is entitled to
powers of the corporation technically belongs, needs to get the respect and recognition, barring any divergence from applicable laws.
concurrence of two-‐thirds of its membership. The one member, here
the General Superintendent, is but a trustee, according to Sec. 110, of ROMAN CATHOLIC APOSTOLIC ADMINISTRATION OF DAVAO vs.
its membership. LAND REGISTRATION COMMISSION
G.R. NO. L-‐8451 – December 20, 1957
There is no point to dissolving the corporation sole of one member to
enable the corporation aggregate to emerge from it. Whether it is a FACTS:
non-‐stock corporation or a corporation sole, the corporate being This is a petition for mandamus filed by the Roman Catholic Apostolic
remains distinct from its members, whatever be their number. The Administrator of Davao seeking the reversal of a resolution by the
increase in the number of its corporate membership does not change Land Registration Commissioner in L.R.C. Consulta No. 14.
the complexion of its corporate responsibility to third parties. The one
member, with the concurrence of 2/3 of the membership of the On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of
organization for whom he acts as trustee, can self-‐will the amendment. the City of Davao, executed a deed of sale of a parcel of land located in
He can, with membership concurrence, increase the technical number the same city covered by a TCT in favor of the Roman Catholic
of the members of the corporation from "sole" or one to the greater Apostolic Administrator of Davao Inc., (RCAADI) a corporation sole
number authorized by its amended articles. organized and existing in accordance with Philippine Laws, with Msgr.
Clovis Thibault, a Canadian citizen, as actual incumbent.
In this case, the IEMELIF's General Superintendent Bishop Lazaro, who
embodied the corporation sole, had obtained, not only the approval of When the deed of sale was presented to Register of Deeds (RD) of
the Consistory that drew up corporate policies, but also that of the Davao for registration, the latter had in mind a previous resolution of
required two-‐thirds vote of its membership. the Fourth Branch of the CFI of Manila wherein the Carmelite Nuns of
Davao were made to prepare an affidavit to the effect that 60% of the
The amendment of the articles of incorporation requires merely that members of their corporation were Filipino citizens when they sought
a) the amendment is not contrary to any provision or requirement to register in favor of their congregation a deed of donation of a parcel

of land. The Register of Deeds then required said corporation sole

(RCAADI) to submit a similar affidavit declaring that 60% of the Section 5 of Article XIII of the Philippine Constitution reads as follows:
members thereof were Filipino citizens. SEC. 5. Save in cases of hereditary succession, no private agricultural
land shall be transferred or assigned except to individuals,
The vendee (RCAADI) in the letter dated June 28, 1954, expressed corporations, or associations qualified to acquire or hold lands of the
willingness to submit an affidavit, but not in the same tenor as that public domain in the Philippines.
made the Progress of the Carmelite Nuns because the two cases were
not similar, for whereas the congregation of the Carmelite Nuns had Section 1 of the same Article also provides the following:
five incorporators, the corporation sole has only one; that according to SECTION 1. All agricultural, timber, and mineral lands of the public
their articles of incorporation, the organization of the Carmelite Nuns domain, water, minerals, coal, petroleum, and other mineral oils, all
became the owner of properties donated to it, whereas the case at bar, forces of potential energy, and other natural resources of the
the totality of the Catholic population of Davao would become the Philippines belong to the State, and their disposition, exploitation,
owner of the property bought to be registered. development, or utilization shall be limited to cititzens of the
Philippines, or to corporations or associations at least sixty per centum
The RD entertained some doubts about the registrability of the of the capital of which is owned by such citizens, SUBJECT TO ANY
document and later referred the matter to the Land Registration EXISTING RIGHT, grant, lease, or concession AT THE TIME OF THE
Commissioner en consulta for resolution. The Commissioner rendered INAUGURATION OF THE GOVERNMENT ESTABLISHED UNDER
a resolution stating that in view of the provisions of Secs. 1 and 5 of CONSTITUTION. Natural resources, with the exception of public
Art.XIII of the Philippine Constitution, the vendee was not qualified to agricultural land, shall not be alienated, and no license, concession, or
acquire private lands in the Philippines in the absence of proof that at leases for the exploitation, development, or utilization of any of the
least 60 per centum of the capital, property, or assets of the Roman natural resources shall be granted for a period exceeding twenty-‐five
Catholic Apostolic Administrator of Davao, Inc., was actually owned or years, renewable for another twenty-‐five years, except as to water
controlled by Filipino citizens, there being no question that the present rights for irrigation, water supply, fisheries, or industrial uses other
incumbent of the corporation sole was a Canadian citizen. It then than the development of water power, in which cases other than the
ordered the RD of Davao to deny registration of the deed of sale in the development and limit of the grant.
absence of proof of compliance with such condition.
ISSUES:
Motion to reconsider was denied therefore an action for mandamus (1) What is the effect of these constitutional prohibition of the
was filed with the SC by said corporation sole, alleging that under the right of a religious corporation recognized by our Corporation
Corporation Law as well as the settled jurisprudence on the matter, the Law and registered as a corporation sole, to possess, acquire
deed of sale between Rodis and RCAADI is actually a deed of sale in and register real estates in its name when the Head, Manager,
favor of the Catholic Church which is qualified to acquire private Administrator or actual incumbent is an alien?
agricultural lands for the establishment and maintenance of places of
worship, and prayed that judgment be rendered reserving and setting (2) In whom the ownership of the properties constituting the
aside the resolution of the Land Registration Commissioner in endowment of the ecclesiastical or collative chaplaincies is
question. vested?

(3) MAIN ISSUE: WON the petitioner in this case can acquire The provisions of our Corporation law on religious corporations are
agricultural lands of the public domain in view of the illuminating and sustain the stand of petitioner. Section 154 thereof
provisions of Article XIII of the Constitution. provides:

HELD: SEC. 154. — For the administration of the temporalities of any religious
Petitioner consistently maintained that a corporation sole, irrespective denomination, society or church and the management of the estates and
of the citizenship of its incumbent, is not prohibited or disqualified to the properties thereof, it shall be lawful for the bishop, chief priest, or
acquire and hold real properties. The Corporation Law and the Canon presiding either of any such religious denomination, society or church to
Law are explicit in their provisions that a corporation sole or become a corporation sole, unless inconsistent wit the rules, regulations
"ordinary" is not the owner of the of the properties that he may acquire or discipline of his religious denomination, society or church or forbidden
but merely the administrator thereof. The Canon Law also specified by competent authority thereof.
that church temporalities are owned by the Catholic Church as a
"moral person" or by the diocess as minor "moral persons" with the See also the pertinent provisions of the succeeding sections of the same
ordinary or bishop as administrator. And elaborating on the Corporation Law copied hereunder:
composition of the Catholic Church in the Philippines, petitioner
explained that as a religious society or organization, it is made up SEC. 155. In order to become a corporation sole the bishop, chief priest,
of 2 elements or divisions — the clergy or religious members and or presiding elder of any religious denomination, society or church must
the faithful or lay members. file with the Securities and Exchange Commissioner articles of
incorporation setting forth the following facts:
Respondents, on the other hand, averred that although it might be true
that petitioner is not the owner of the land purchased, yet he has xxx xxx xxx.
control over the same, with full power to administer, take possession (3) That as such bishop, chief priest, or presiding elder he is charged with
of, alienate, transfer, encumber, sell or dispose of any or all lands and the administration of the temporalities and the management of the
their improvements registered in the name of the corporation sole and estates and properties of his religious denomination, society, or
can collect, receive, demand or sue for all money or values of any kind church within its territorial jurisdiction, describing it;
that may be kind that may become due or owing to said corporation,
and vested with authority to enter into agreements with any persons, SEC. 163. The right to administer all temporalities and all property
concerns or entities in connection with said real properties, or in other held or owned by a religious order or society, or by the diocese, synod,
words, actually exercising all rights of ownership over the properties. or district organization of any religious denomination or church shall,
on its incorporation, pass to the corporation and shall be held in trust
(1) A corporation sole is a special form of corporation usually for the use, purpose behalf, and benefit of the religious society, or
associated with the clergy. Conceived and introduced into the common order so incorporated or of the church of which the diocese, or district
law by sheer necessity, this legal creation which was referred to as organization is an organized and constituent part.
"that unhappy freak of English law" was designed to facilitate the
exercise of the functions of ownership carried on by the clerics for and That leaves no room for doubt that the bishops or archbishops, as the
on behalf of the church which was regarded as the property owner. case may be, as corporation's sole are merely administrators of the

church properties that come to their possession, in which they hold in (3) From the data secured from the Securities and Exchange
trust for the church. It can also be said that while it is true that church Commission, the SC found that the Roman Catholic Bishop of
properties could be administered by a natural persons, problems Zamboanga was incorporated (as a corporation sole) in
regarding succession to said properties can not be avoided to rise upon September, 1912, principally to administer its temporalities and
his death. Through this legal fiction, however, church properties manage its properties. Probably due to the ravages of the last war,
acquired by the incumbent of a corporation sole pass, by operation of its articles of incorporation were reconstructed in the Securities
law, upon his death not his personal heirs but to his successor in office. and Exchange Commission on April 8, 1948. At first, this
It could be seen, therefore, that a corporation sole is created not only corporation sole administered all the temporalities of the church
to administer the temporalities of the church or religious society existing or located in the island of Mindanao. Later on, however,
where he belongs but also to hold and transmit the same to his new dioceses were formed and new corporations sole were
successor in said office. created to correspond with the territorial jurisdiction of the new
dioceses, one of them being petitioner herein, the Roman Catholic
(2) Considering that nowhere can the SC find any provision conferring Apostolic Administrator of Davao, Inc., which was registered with
ownership of church properties on the Pope although he appears the Securities and Exchange Commission on September 12, 1950,
to be the supreme administrator or guardian of his flock, nor on and succeeded in the administrative for all the "temporalities" of
the corporation sole or heads of dioceses as they are admittedly the Roman Catholic Church existing in Davao.
mere administrators of said properties, ownership of these
temporalities logically fall and develop upon the church, diocese or According to our Corporation Law, Public Act No. 1549, approved April
congregation acquiring the same. Although this question of 1, 1906, a corporation sole is organized and composed of a single
ownership of ecclesiastical properties has off and on been individual, the head of any religious society or church, for the
mentioned in several decisions of the Court yet in no instance was ADMINISTRATION of the temporalities of such society or church. By
the subject of citizenship of this religious society been passed "temporalities" is meant estate and properties not used exclusively for
upon. religious worship. The successor in office of such religious head or
chief priest incorporated as a corporation sole shall become the
corporation sole on ascension to office, and shall be permitted to
The SC declared that although a branch of the Universal Roman transact business as such on filing with the Securities and Exchange
Catholic Apostolic Church, every Roman Catholic Church in different Commission a copy of his commission, certificate of election or letter of
countries, if it exercises its mission and is lawfully incorporated in appointment duly certified by any notary public or clerk of court of
accordance with the laws of the country where it is located, is record (Guevara's The Philippine Corporation Law, p. 223).
considered an entity or person with all the rights and privileges
granted to such artificial being under the laws of that country, separate The Corporation Law also contains the following provisions:
and distinct from the personality of the Roman Pontiff or the Holy See,
without prejudice to its religious relations with the latter which are SECTION 159. Any corporation sole may purchase and hold real estate
governed by the Canon Law or their rules and regulations. and personal; property for its church, charitable, benevolent, or
educational purposes, and may receive bequests or gifts of such
purposes. Such corporation may mortgage or sell real property held by

it upon obtaining an order for that purpose from the Court of First It can be also maintained without fear of being gainsaid that the Roman
Instance of the province in which the property is situated; but before Catholic Apostolic Church in the Philippines has no nationality and that
making the order proof must be made to the satisfaction of the Court the framers of the Constitution, as will be hereunder explained, did not
that notice of the application for leave to mortgage or sell has been have in mind the religious corporations sole when they provided that
given by publication or otherwise in such manner and for such time as 60 per centum of the capital thereof be owned by Filipino citizens.
said Court or the Judge thereof may have directed, and that it is to the
interest of the corporation that leave to mortgage or sell must be made It could be distilled from the foregoing that the framers of the
by petition, duly verified by the bishop, chief priest, or presiding elder Constitution intended said provisions as barrier for foreigners or
acting as corporation sole, and may be opposed by any member of the corporations financed by such foreigners to acquire, exploit and
religious denomination, society or church represented by the develop our natural resources, saving these undeveloped wealth for
corporation sole: Provided, however, That in cases where the rules, our people to clear and enrich when they are already prepared and
regulations, and discipline of the religious denomination, society or capable of doing so. But that is not the case of corporations sole in the
church concerned represented by such corporation sole regulate the Philippines, for, We repeat, they are mere administrators of the
methods of acquiring, holding, selling and mortgaging real estate and "temporalities" or properties titled in their name and for the benefit of
personal property, such rules, regulations, and discipline shall control the members of their respective religion composed of an
and the intervention of the Courts shall not be necessary. overwhelming majority of Filipinos. No mention nor allusion
whatsoever is made in the Constitution as to the prohibition against or
It can, therefore, be noticed that the power of a corporation sole to the liability of the Roman Catholic Church in the Philippines to acquire
purchase real property, like the power exercised in the case at bar, is and hold agricultural lands. Although there were some discussions on
not restricted although the power to sell or mortgage sometimes is, landholdings, they were mostly confined in the inclusion of the
depending upon the rules, regulations, and discipline of the church provision allowing the Government to break big landed estates to put
concerned represented by said corporation sole. If corporations sole an end to absentee landlordism.
can purchase and sell real estate for its church, charitable, benevolent,
or educational purposes, can they register said real properties? As It has been shown before that: (1) the corporation sole, unlike the
provided by law, lands held in trust for specific purposes may be ordinary corporations which are formed by no less than 5
subject of registration (section 69, Act 496), and the capacity of a incorporators, is composed of only one person, usually the head or
corporation sole, like petitioner herein, to register lands belonging to it bishop of the diocese, a unit which is not subject to expansion for the
is acknowledged, and title thereto may be issued in its name (Bishop of purpose of determining any percentage whatsoever; (2) the
Nueva Segovia vs. Insular Government, 26 Phil. 300-‐1913). Indeed it is corporation sole is only the administrator and not the owner of the
absurd that while the corporations sole that might be in need of temporalities located in the territory comprised by said corporation
acquiring lands for the erection of temples where the faithful can pray, sole; (3) such temporalities are administered for and on behalf of the
or schools and cemeteries which they are expressly authorized by law faithful residing in the diocese or territory of the corporation sole; and
to acquire in connection with the propagation of the Roman Catholic (4) the latter, as such, has no nationality and the citizenship of the
Apostolic faith or in furtherance of their freedom of religion they could incumbent Ordinary has nothing to do with the operation,
not register said properties in their name. management or administration of the corporation sole, nor effects the


citizenship of the faithful connected with their respective dioceses or Davao, Inc. is actually owned or controlled by Filipino citizens, and
corporation sole. denying the registration of the deed of sale in the absence of proof of
compliance with such requisite, is hereby reversed.
Consequently, the Constitutional Assembly must have known:
1. That a corporation sole is organized by and composed of a
single individual, the head of any religious society or church
operating within the zone, area or jurisdiction covered by said
corporation sole (Article 155, Public Act No. 1459);
2. That a corporation sole is a non-‐stock corporation;
3. That the Ordinary ( the corporation sole proper) does not own
the temporalities which he merely administers;
4. That under the law the nationality of said Ordinary or of any
administrator has absolutely no bearing on the nationality of
the person desiring to acquire real property in the Philippines
by purchase or other lawful means other than by hereditary
succession, who according to the Constitution must be a
Filipino (sections 1 and 5, Article XIII).
5. That section 159 of the Corporation Law expressly authorized
the corporation sole to purchase and holdreal estate for its
church, charitable, benevolent or educational purposes, and to
receive bequests or gifts for such purposes;
6. That in approving our Magna Carta the Delegates to the
Constitutional Convention, almost all of whom were Roman
Catholics, could not have intended to curtail the propagation
of the Roman Catholic faith or the expansion of the activities of
their church, knowing pretty well that with the growth of our
population more places of worship, more schools where our
youth could be taught and trained; more hallow grounds
where to bury our dead would be needed in the course of time.
Wherefore, the resolution of the respondent Land Registration

Commission of September 21, 1954, holding that in view of the
provisions of sections 1 and 5 of Article XIII of the Philippine
Constitution the vendee (petitioner) is not qualified to acquire lands in
the Philippines in the absence of proof that at least 60% of the capital,
properties or assets of the Roman Catholic Apostolic Administrator of

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CORPORATION

LAW CASE DIGESTS

IGLESIA EVANGELICA METODISTA ET. AL. vs.

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CORPO CASE DIGESTS 3C & 3S || 2

of land. The Register of Deeds then required said corporation sole

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