Subject: Request for Legal Opinion

Re: Sale of Land under the Corporate Name

Gentlemen,

You requested our firm to do a research on the procedures, requirements and processes in the sale
of the land under the corporate name of

We have researched on the rules on the sale of real property of a non-stock corporation. As a
general rule, it is the Board of Trustees which exercises almost all the corporate powers in a
corporation, as indicated clearly under Section 23 of the Corporation Code; and that Section 36
also confirms the power to purchase and sell property to wit:

“Sec. 36. Corporate powers and capacity. - Every corporation

incorporated under this Code has the power and capacity:

xxx

7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and
otherwise deal with such real and personal property, including securities and bonds
of other corporations, as the transaction of the lawful business of the corporation
may reasonably and necessarily require, subject to the limitations prescribed by law
and the Constitution;

xxx”

While a corporation may appoint agents to negotiate for the purchase of real property needed by
the corporation, the final say will have to be with the board, whose approval will finalize the
transaction.

However, in case of sale, disposal, lease or encumbrance of all or substantially all of the assets of
a non-stock corporation, Section 40 of the Corporation Code states a majority vote of its Board
of Trustees with the concurrence of at least two-thirds (2/3) of the members of the corporation,
in a stockholders’ or members’ meeting duly called for the purpose. Further, in non-stock
corporations where there are no members with voting rights, the vote of at least a majority of the
trustees in office will be sufficient authorization for the corporation to enter into any such
transaction. A sale or other disposition shall be deemed to cover “substantially all” of the corporate
property if thereby the corporation would rendered incapable of continuing the business or
accomplishing the purpose for which it was incorporated.

It is noted, however, that the concurrence of at least two-thirds (2/3) of the members of the
corporation would not be required and shall be deemed to be within the business judgment of the
Board of Trustees when it is necessary in the usual and regular course of business of the
corporation and if the proceeds of the sale or other disposition of such property and assets be
appropriated for the conduct of its remaining business.

In case of dissolution of a non-stock corporation, Section 94 of the same Code provides that its
assets shall be applied and distributes as follows which creates a restriction with regard to the
disposition of corporate real assets. The aforementioned provision states:

“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.”

Lastly, with regard to the proceeds of the sale of the corporate land, the income or gain thereon
shall not be distributable to the members, trustees and offices of the corporation and shall be only
be used to the purpose for which the corporation was instituted.

This legal opinion is rendered based solely on the facts / representations gathered from you, as
Respectfully yours,