Beruflich Dokumente
Kultur Dokumente
I.
Essence
of
Non-Stock
Corporations
Section
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
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
II.
Theory
on
Non-Stock
Corporation
(Sections
14(2),
43,
87,
88
and
94[5])
Section
14.
Contents
of
the
articles
of
incorporation.
All
corporations
organized
under
this
code
shall
file
with
the
Securities
and
Exchange
Commission
articles
of
incorporation
in
any
of
the
official
languages
duly
signed
and
acknowledged
by
all
of
the
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
incorporators,
containing
substantially
the
following
matters,
except
as
otherwise
prescribed
by
this
Code
or
by
special
law:
x
x
x
2.
The
specific
purpose
or
purposes
for
which
the
corporation
is
being
incorporated.
Where
a
corporation
has
more
than
one
stated
purpose,
contingencies.
(n)
CLARK, CORPORATE LAW (Little, Brown and Company, 1986 ed.), at pp. 699-700.
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
effectiveness
and
quality
of
the
services
rendered,
which
in
essence
is
covered
by
the
concept
of
"contractual
failure."1
o "Contractual
failure"
is
characterized
by
the
inability
of
a
buyer
of
services
to
assure
himself
that
he
is
getting
what
he
intends
to
be
contracting
for;
in
more
general
terms,
it
denotes
high
monitoring
and
enforcement
2
costs.
Stock Corporation
Non-Stock Corporation
IV.
Delinquency
of
Membership
Dues
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
Valley
Golf
&
Country
Club
v.
Vda.
De
Caram
Facts:
Valley
Golf
is
a
duly
constituted
non-stock,
non-profit
corporation
which
operates
a
golf
course.
The
members
and
their
guests
are
entitled
to
use
its
facilities
and
privileges,
provided
that
the
shareholders
regularly
pay
their
monthly
dues.
Congressman
Fermin
Caram,
Jr.
owned
a
golf
share
since
1961.
Due
to
his
delinquency
despite
collection
letters,
Valley
Golf
suspended
his
account
and
subsequently
sold
his
share
in
order
to
collect
his
outstanding
dues,
without
knowing
that
Caram
already
died
since
1986.
It
was
not
until
his
estate
was
settled
and
the
shares
given
to
Vda.
De
Caram
that
the
heirs
were
informed
of
the
sale.
She
was
told
that
she
can
only
claim
the
remaining
balance
out
of
the
sale
after
deducting
the
outstanding
membership
dues
that
Mr.
Caram
had
not
paid.
The
SEC
and
CA,
ruling
in
favor
of
Mrs.
Caram,
noted
that
under
Section
67,
paragraph
2
of
the
Corporation
Code,
a
share
stock
could
only
be
deemed
delinquent
and
sold
in
an
extrajudicial
sale
at
public
auction
only
upon
the
failure
of
the
stockholder
to
pay
the
unpaid
subscription
or
balance
for
the
share.
The
section
could
not
have
applied
in
Carams
case
since
he
had
fully
paid
for
the
Golf
Share
and
he
had
been
assessed
not
for
the
share
itself
but
for
his
delinquent
club
dues.
Also,
pursuant
to
Section
6
of
the
Corporation
Code,
"a
provision
creating
a
lien
upon
shares
of
stock
for
unpaid
debts,
liabilities,
or
assessments
of
stockholders
to
the
corporation,
should
be
embodied
in
the
Articles
of
Incorporation,
and
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
not
merely
in
the
by-laws.
In
the
same
vein,
it
was
opined
that
since
Section
98
of
the
Corporation
Code
provides
that
restrictions
on
transfer
of
shares
should
appear
in
the
articles
of
incorporation,
by-laws
and
the
certificate
of
stock
to
be
valid
and
binding
on
any
purchaser
in
good
faith,
there
was
more
reason
to
apply
the
said
rule
to
club
delinquencies
Held:
YES.
BUT
there
should
have
been
notice
and
hearing
concerning
his
expulsion
and
therefore
the
sale
was
void.
Under
Section
91,
membership
shall
be
terminated
in
the
manner
and
for
the
causes
provided
in
the
articles
of
incorporation
or
the
by-laws.
The
prevailing
rule
is
that
the
provisions
of
the
articles
of
incorporation
or
by-laws
of
termination
of
membership
must
be
strictly
complied
with
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
The
SEC
has
also
rendered
opinions
to
the
effect
that
juridical
persons
may
become
members
of
the
Board
of
Trustees
of
a
non-stock
corporation.
A
non-stock
corporation
whose
membership
is
composed
of
juridical
persons
was
allowed
to
be
registered,
provided
that
a
provision
for
the
classification
of
members
shall
include
duly
designated
or
authorized
representatives
of
juridical
persons
as
members
of
the
corporation,
for
purposes
of
qualifying
them
as
members
of
the
Board
of
Directors,
which
shall
be
provided
in
the
articles
of
incorporation
or
by-laws.1
VI.
Conversion
of
Non-Stock
Corporation
to
Stock
Corporation
SEC
Opinion,
12
May
1995,
XXIX
SEC
QUARTERLY
BULLETIN
16
(No.
4,
Dec.
1995).
2
SEC
Opinion,
16
April
191,
citing
2
FLETCHER
CYC.
OF
CORP.,
1982
Rev.
Vol.,
Sec.
300
at
93.
3
SEC
Opinion
No.
27,
series
of
2003,
addressed
to
Mr.
Arthur
Mar
O.
Alivio;
SEC
Opinion
No.
26,
series
of
2003,
addressed
to
Ms.
Jaycel
E.
Sato.
SEC held that a trustee may now be allowed to vote through the
SEC
Opinion
No.
26,
addressed
to
Ms.
Jaycel
E.
Sato;
SEC
Opinion
No.
27,
series
of
2003,
addressed
to
Mr.
Arthur
Mar
O.
Alivio.
5
SEC
Opinion,
16
April
191,
citing
2
FLETCHER
CYC.
OF
CORP.,
1982
Rev.
Vol.,
Sec.
300
at
93.
6
SEC
Opinion,
24
April
1995,
XXIX
SEC
QUARTERLY
BULLETIN
52
(No.
3,
Sept.
1995).
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
corporation
may
be
distributable
as
dividends
to
its
members,
trustees
or
officers.
Thus,
the
Commission
has
previously
ruled
that
a
non-stock
corporation
cannot
be
converted
into
a
stock
corporation
by
a
mere
amendment
of
the
Articles
of
Incorporation.
For
purposes
of
transformation,
it
is
fundamental
that
the
non-stock
corporation
be
dissolved
first
under
any
of
the
methods
specified
Title
XIV
of
the
Corporation
Code.
Thereafter,
the
members
may
organize
as
a
stock
corporation
directed
to
bring
profits
or
pecuniary
gains
to
themselves.
(SEC
Opinion
dated
24
February
2003;
SEC
Opinion
dated
10
December
1992).
VII.
What
Is
a
Foundation?
(Sections
30
and
34(H),
NIRC
of
1997;
Section
24,
Rev.
Reg.
No.
2;
BIR-NEDA
Regulations
No.
1-81,
as
amended)
1. Foundations
Not
a
Special
Category
under
Corporation
Code
SEC
Opinion,
24
February
1989,
SEC
QUARTERLY
BULLETIN
(No.
2,
June
1989);
SEC
Opinion,
13
May
1992,
XXVI
SEC
QUARTERLY
BULLETIN
12
(No.
3,
Sept.
1992).
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
(E)
Non-stock
corporation
or
association
organized
and
operated
exclusively
for
religious,
charitable,
scientific,
athletic,
or
cultural
purposes,
or
for
the
rehabilitation
of
veterans,
no
part
of
its
net
income
or
asset
shall
belong
to
or
inures
to
the
benefit
of
any
member,
organizer,
officer
or
any
specific
person;
(F)
Business
league
chamber
of
commerce,
or
board
of
trade,
not
organized
for
profit
and
no
part
of
the
net
income
of
which
inures
to
the
benefit
of
any
private
stock-holder,
or
individual;
(G)
Civic
league
or
organization
not
organized
for
profit
but
operated
exclusively
for
the
promotion
of
social
welfare;
Section
34.
Deductions
from
Gross
Income
x
x
x
(H)
Charitable
and
Other
Contributions.
(1)
In
General.
-
Contributions
or
gifts
actually
paid
or
made
within
the
taxable
year
to,
or
for
the
use
of
the
Government
of
the
Philippines
or
(H)
A
non-stock
and
nonprofit
educational
institution;
(I)
Government
educational
institution;
(J)
Farmers'
or
other
mutual
typhoon
or
fire
insurance
company,
mutual
ditch
or
irrigation
company,
mutual
or
cooperative
telephone
finished
by
them;
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
or
entities
shall
be
deductible
in
full;
(a)
Donations
to
the
Government.
-
Donations
to
the
Government
of
the
Philippines
or
to
any
of
its
agencies
or
political
subdivisions,
including
fully-owned
government
corporations,
exclusively
to
finance,
to
provide
for,
or
to
be
used
in
undertaking
priority
activities
in
education,
health,
youth
and
sports
development,
human
settlements,
science
and
culture,
and
in
economic
development
according
to
a
National
Priority
Plan
determined
by
the
National
Economic
and
Development
Authority
(NEDA),
In
consultation
with
appropriate
government
agencies,
including
its
regional
domestic
corporation:
(1)
Organized
and
operated
exclusively
for
scientific,
research,
educational,
character-building
and
youth
and
sports
development,
health,
social
welfare,
cultural
or
charitable
purposes,
or
a
combination
thereof,
no
part
of
the
net
income
of
which
inures
to
the
benefit
of
any
private
individual;
(2)
Which,
not
later
than
the
15th
day
of
the
third
month
after
the
close
of
the
accredited
nongovernment
organizations
taxable
year
in
which
(b)
Donations
to
Certain
Foreign
Institutions
or
International
Organizations.
-
donations
to
foreign
institutions
or
international
organizations
which
are
fully
deductible
in
pursuance
of
or
in
compliance
with
agreements,
treaties,
or
commitments
entered
into
by
the
Government
of
the
Philippines
and
the
foreign
institutions
or
international
organizations
or
in
pursuance
of
special
laws;
(3)
The
level
of
administrative
expense
of
which
shall,
on
an
annual
basis,
conform
with
the
rules
and
regulations
to
be
prescribed
by
the
Secretary
of
Finance,
upon
recommendation
of
the
Commissioner,
but
in
no
case
to
exceed
thirty
percent
(30%)
of
the
total
expenses;
and
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
corporation
organized
for
similar
purpose
or
purposes,
or
to
the
state
for
public
purpose,
or
would
be
distributed
by
a
court
to
another
organization
to
be
used
in
such
manner
as
in
the
judgment
of
said
court
shall
best
accomplish
the
general
purpose
for
which
property.
(4)
Proof
of
Deductions.
-
Contributions
or
gifts
shall
be
allowable
as
deductions
only
if
verified
under
the
rules
and
regulations
prescribed
by
the
Secretary
of
Finance,
upon
recommendation
of
the
Commissioner.
Subject
to
such
terms
and
conditions
as
may
be
prescribed
by
the
Secretary
of
Finance,
the
term
'utilization'
means:
(i)
Any
amount
in
cash
or
in
kind
(including
administrative
expenses)
paid
or
utilized
to
accomplish
one
or
more
purposes
for
which
the
accredited
nongovernment
organization
was
created
or
organized.
(Important
Points
from
the
Provision
Summary
from
CLV
Book)
(ii)
Any
amount
paid
to
acquire
an
asset
used
(or
held
for
use)
directly
in
carrying
out
one
or
more
purposes
for
which
the
accredited
nongovernment
organization
was
created
or
organized.
An
amount
set
aside
for
a
specific
project
which
comes
within
one
or
more
purposes
of
the
accredited
nongovernment
organization
may
be
treated
as
a
utilization,
but
only
if
at
the
time
such
amount
is
set
aside,
the
accredited
nongovernment
organization
has
established
to
the
satisfaction
of
the
Commissioner
that
the
amount
will
be
paid
for
the
specific
project
within
a
period
to
be
prescribed
in
rules
and
regulations
to
be
promulgated
by
the
Secretary
of
Finance,
upon
recommendation
of
the
Commissioner,
but
not
to
exceed
five
(5)
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
Therefore
both
a
regular
non-stock
corporation
and
a
foundation
are
tax-exempt
institution
under
Section
30
of
the
NIRC
when
they
are
organized
for
the
eleemosynary
purposes
specified
therein
and
no
profit
inures
to
the
benefit
of
their
members,
officers
and
trustees.
Nevertheless,
the
same
section
provides
that
the
income
of
whatever
kind
and
character
of
the
foregoing
organizations
from
any
of
their
properties,
real
or
personal,
or
from
any
of
their
activities
conducted
for
profit,
regardless
of
the
disposition
made
of
such
income,
shall
be
non-stock
corporations.
3. Tax
Deductibility
of
Charitable
Contributions3
The
extent
by
which
a
taxpayer
may
deduct
from
his
taxable
net
income
the
charitable
contributions
and
gifts
to
regular
non-
stock
corporations
organized
for
any
of
the
purposes
enumerated
in
Section
34(H)(1)
is
as
follows:
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
a. For
individual
taxpayer,
10%
of
his
taxable
net
income
derived
from
business;
and
b. For
corporate
taxpayers,
5%
of
taxable
net
income
derived
from
business.
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
REVENUE
REGULATION
NO.
2
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
requirements,
still
show
that
it
falls
under
the
provisions
of
Section
of
NIRC.
Collector
v.
V.G.
Sinco
Educational
Corp.,
100
Phil.
127
(1956).
4. Registration
as
Qualified
Donee-Institutions1
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
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
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)