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CIR vs. THE CLUB FILIPINO, INC. DE CEBU GR No. L-12719 | May 31, 1962 | Paredes, J.

laws. The actual purpose is not controlled by the corporate form or by the commercial aspect of the business prosecuted, but may be shown by extrinsic evidence, including the by-laws and the FACTS: The Club Filipino, is a civic corporation organized under method of operation. From the extrinsic evidence adduced, the the laws of the Philippines with an original authorized capital CTA concluded that the Club is not engaged in the business as a stock of P22,000, which was subsequently increased to P200,000 barkeeper and restaurateur. to operate and maintain a golf course, tennis, gymnasiums, bowling alleys, billiard tables and pools, and all sorts For a stock corporation to exist, two requisites must be complied of games not prohibited by general laws and general ordinances, with: and develop and nurture sports of any kind and any denomination for recreation and healthy training of its 1. a capital stock divided into shares and members and shareholders" (sec. 2, Escritura de Incorporacion 2. an authority to distribute to the holders of such shares, (Deed of Incorporation) del Club Filipino, Inc.). There is no dividends or allotments of the surplus profits on the basis of provision either in the articles or in the by-laws relative to the shares held (sec. 3, Act No. 1459). dividends and their distribution, although it is covenanted that upon its dissolution, the Club's remaining assets, after paying Nowhere in its articles of incorporation or by-laws could be debts, shall be donated to a charitable Phil. Institution in Cebu found an authority for the distribution of its dividends or surplus (Art. 27, Estatutos del (Statutes of the) Club). profits. Strictly speaking, it cannot, therefore, be considered a stock corporation, within the contemplation of the corpo law. The Club owns and operates a club house, a bowling alley, a golf course (on a lot leased from the government), and a barrestaurant where it sells wines and liquors, soft drinks, meals and short orders to its members and their guests. The barrestaurant was a necessary incident to the operation of the club and its golf-course. The club is operated mainly with funds derived from membership fees and dues. Whatever profits it had, were used to defray its overhead expenses and to improve its golf-course. In 1951, as a result of a capital surplus, arising from the re-valuation of its real properties, the value or price of which increased, the Club declared stock dividends; but no actual cash dividends were distributed to the stockholders. In 1952, a BIR agent discovered that the Club has never paid percentage tax on the gross receipts of its bar and restaurant, although it secured licenses. In a letter, the Collector assessed 1 against and demanded from the Club P12,068.84 as fixed and percentage taxes, surcharge and compromise penalty. Also, the Collector denied the Clubs request to cancel the assessment. On appeal, the CTA reversed the Collector and ruled that the Club is not liable for the assessed tax liabilities of P12,068.84 allegedly due from it as a keeper of bar and restaurant as it is a non-stock corporation. Hence, the Collector filed the instant petition for review. ISSUE: WON the Club is a stock corporation HELD: NO. It is a non-stock corporation. The facts that the capital stock of the Club is divided into shares, does not detract from the finding of the trial court that it is not engaged in the business of operator of bar and restaurant. What is determinative of whether or not the Club is engaged in such business is its object or purpose, as stated in its articles and by1 2

ISSUE: WON the Club is liable for the payment of P12,068.84, as fixed and percentage taxes and surcharges prescribed in sec. 2 3 4 182 , 183 and 191 of the Tax Code, in connection with the operation of its bar and restaurant; and for P500 as compromise penalty. HELD: NO. A tax is a burden, and, as such, it should not be deemed imposed upon fraternal, civic, non-profit, nonstock organizations, unless the intent to the contrary is manifest and patent" (Collector v. BPOE Elks Club, et al.), which is not the case here. Having found as a fact that the Club was organized to develop and cultivate sports of all class and denomination, for the healthful recreation and entertainment of its stockholders and members; that upon its dissolution, its remaining assets, after paying debts, shall be donated to a charitable Phil. Institution in Cebu; that it is operated mainly with funds derived from membership fees and dues; that the Club's bar and restaurant catered only to its members and their guests; that there was in fact no cash dividend distribution to its stockholders and that whatever was derived on retail from its bar and restaurant was used to defray its overall overhead expenses and to improve its golf-course (cost-plus-expenses-basis), it stands to reason that the Club is not engaged in the business of an operator of bar and restaurant.

P9, 599.07 as percentage tax on its gross receipts (tax years 1946-1951), P2,399.77 surcharge, P70 fixed tax (tax years 1946-1952, and P500 compromise penalty.

Sec. 182, of the Tax Code states, "Unless otherwise provided, every person engaging in a business on which the percentage tax is imposed shall pay in full a fixed annual tax of ten pesos for each calendar year or fraction thereof in which such person shall engage in said business." 3 Sec. 183 provides in general that "the percentage taxes on business shall be payable at the end of each calendar quarter in the amount lawfully due on the business transacted during each quarter; etc." 4 Sec. 191, same Tax Code, provides "Percentage tax . . . Keepers of restaurants, refreshment parlors and other eating places shall pay a tax three per centum, and keepers of bar and cafes where wines or liquors are served five per centum of their gross receipts . . .".

Ratio: The liability for fixed and percentage taxes, as provided by these sections, does not ipso facto attach by mere reason of the operation of a bar and restaurant. For the liability to attach, the operator thereof must be engaged in the business as a barkeeper and restaurateur. The plain and ordinary meaning of business is restricted to activities or affairs where profit is the purpose or livelihood is the motive, and the term business when used without qualification, should be construed in its plain and ordinary meaning, restricted to activities for profit or livelihood (CIR v. Manila Lodge & CTA, 1959; CIR v. Sweeney, et al., 1959,; Manila Polo Club v. B. L. Meer, 1960). The Club derived profit from the operation of its bar and restaurant, but such fact does not necessarily convert it into a profit-making enterprise. The bar and restaurant are necessary adjuncts of the Club to foster its purposes and the profits derived therefrom are necessarily incidental to the primary object of developing and cultivating sports for the healthful recreation and entertainment of the stockholders and members. That a Club makes some profit, does not make it a profit-making Club. As has been remarked a club should always strive, whenever possible, to have surplus (Jesus Sacred Heart College v. CIR, 1954; CIR v. Sinco Educational Corp., 1956). Affirmed. COLLECTOR OF INTERNAL REVENUE vs. UNIVERSITY OF THE VISAYAS G.R. No. L-13554 | Feb. 28, 1961 | Padilla, J. FACTS: In 1919, Vicente Gullas established a school in Cebu City known as the "Visayan Institute" and for a few years remained its sole owner. On Oct. 1, 1921 Vicente Gullas, Pantaleon del Rosario, Paulino Gullas, Manuel Briones and Eugenio del Rosario formed a non-stock corporation with an authorized capital of P20,000 for the purpose of establishing and maintaining a school to be named as the "Visayan Institute". The plan was to finance the school by selling to the public bonds with a par value of P100 each payable out of the funds of the corporation and the interest to be fixed by the by-laws. However, the financing plan was abandoned and instead, Gullas and his wife put in their own money. On Aug. 29, 1930 the Visayan Institute amended its articles of incorporation by converting it into a stock corporation with an authorized capital of P50,000 subscribed 5 and paid by the Gullas(es), del Rosarios, and Briones . It provided that upon dissolution, the properties of the institute (later of the University) will be distributed among the stockholders.
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According to the amended articles of incorporation, all shares of the corporation had been subscribed and paid for. In March 1949 the Visayan Institute became a university and renamed "University of the Visayas." However, the University did not file with the BIR returns of net income for the years, 1949 to 1950, inclusive. After investigation conducted by a BIR examiner, the examiner filed returns of the University's net income for the said years based upon the profit and loss statements shown and submitted to the examiner by the University's accountant. On Sept. 3 and 8, 1951, the Collector assessed the University for income received from 1946 to 1950, inclusive, and the tax due thereon, surcharges and penalties of P5,243.62 (1946), P11,474.53 (1947), P10,755.96 (1948), P16,373.41 (1949), and P14,412.00 (1950). Assessments were sent to the University. On Dec. 1 and 2, 1951, the University sent telegrams to the Collector requesting that it be allowed to pay the taxes, surcharges and penalties by installment at P1,000/month. The Collector replied that the University could settle its obligation to the Government by paying it in 12 monthly installments at P5,809.02/month, the first installment due and payable on or before Jan. 15, 1952, provided that the University would file a surety bond on or before Jan. 10, 1952 to insure payment thereof. On Dec. 17, 1951 the University paid P1,000 on account of the tax assessed against it. On Jan. 24, 1952 the University wrote to the Collector requesting that the 25% surcharge be eliminated because its failure to file income tax returns for the years 1946 to 1950 and to pay income tax thereon was due to the honest belief that private schools were exempt from taxation. The Collector granted the University's request and reduced to P4,603.77 the monthly installment to be paid by the University, provided that the first installment would be due and payable on or before Feb. 29, 1952 and that the surety bond to insure payment would be filed by the University on or before Feb. 29, 1952. The previous assessments were amended and the total obligation as of Jan. 31, 1953 was P55,245.24. On Feb. 29, April 3, and May 5, 1952, the University paid to the Cebu City Treasurer the monthly installment of P4,603.77, or the total sum of P13,811.31. On March 1, 1954 the University wrote to the Collector requesting that the P1,000 (paid on Dec. 17, 1951) and P13,811.31, or a total of P14,811.31, be refunded to it on the ground that being a corporation organized and operated exclusively for educational purpose, it was exempt from the payment of income tax. On the same day, the University brought an action against the Collector in the CFI of Cebu for recovery of P14,811.31. The Collector filed his answer with counterclaim. After the enactment into law of RA 1125 on June 16, 1954, upon motion of the Assistant Provincial Fiscal, the CFI of Cebu certified the case to the CTA pursuant to sec 22, and 7 of RA 1125. Vicente Gullas, University president, testified that the University is not engaged in a profit-making enterprise but in a purely educational pursuit; that the sources of income of the University

Name

No. of Stocks Amount Paid Subscribed P 7,000 7,000 7,000 7,000 22,000

Pantaleon E. del Rosario 70 Eugenio S. del Rosario Manuel C. Briones Paulino Gullas Vicente Gullas 70 70 70 220

are the various fees paid by the students like annual fee, book rental, etc.; that those receipts are spent for salaries of the teachers, repair of the buildings, purchase of library books and athletic equipment, scholarship funds and contributions to charity; that while the University realizes profit out of its operation, the profit goes to the improvement and repurchase of library books and equipment, establishment of scholarship funds, and musical instruments; that since its original incorporation, no dividends have been declared and distributed to the stockholders; and that as University president, he receives a salary of Pl,000 a month and P300 a month allowance for transportation, representation and entertainment. Teofilo Castillejo, University accountant, testified that the income of the University is derived only from admission, tuition, diploma, ROTC and laboratory fees paid by the students; that no dividends have been distributed to its stockholders since its incorporation; and that the net income of the University remains as surplus in its book of accounts. Juan Gandiongco, at present chief of the Collection Branch, BIR Regional District No. 7, and from 1934 to end of the war and from 1946 to 1951, was an income tax examiner, testified that sometime in 1941 he examined the books of account of the Visayan Institute and submitted a report of examination to the chief of the Income Tax Division; and that in the course of his examination of its books of account, he found that at no time from 1920 to 1941 did the Visayan Institute declare any stock or cash dividend. Zacarias Chua, Group Supervisor in the BRI and income tax examiner, and from 1946 to 1951 was stationed in Cebu City, testified that in 1951 he had occasion to examine the books of account of the Visayan Institute or the University of the Visayas; and he did not find any declaration and payment of case dividend to its stockholders. After hearing, the CTA ruled in favor of the University and that the latter is exempt from payment of income tax under Sec. 27(e) of the NIRC and the income tax assessments by the Collector for 1946 to 1950, inclusive, of P46,592.03, exclusive of surcharges, penalties and interests are null and void. CTA ordered the Collector to refund to the University P13,811.31 for income tax erroneously paid by the latter. Hence, this petition.

as provided for in the said provision must show that it is organized and operated exclusively for religious, charitable, scientific, athletic, cultural or educational purposes, or for the rehabilitation of veterans and that no part of its income inures to the benefit of any private stockholder or individual. CIR vs. V. G. Sinco Educational Corporation: The appellee is a non-profit institution and since its organization it has never distributed any dividend or profit to its stockholders. Of course, part of its income went to the payment of its teachers or professors and to the other expenses of the college incident to an educational institution but none of the income has ever been channeled to the benefit of any individual stockholder. Whatever payment is made to those who work for a school or college as a remuneration for their services is not considered as distribution of profit as would make the school one conducted for profit. In Mayor and Common Council of Borough of Princeton vs. State Board of Taxes & Assessments: wherein the principal officer of the school was formerly its owner and principal and as such principal he was given a salary for his services, the court held that school is not conducted for profit merely because moderate salaries were paid to the principal and to the teachers. SC made the comment that every responsible organization must be so run as to, at least, insure its existence, by operating within the limits of its own resources, especially its regular income. In other words, it should always strive, whenever possible, to have a surplus. . . "Again, the amount of fees charged by a school, college or university depends, ultimately, upon the policy and a given administration, at a particular time. It is not conclusive of the purposes of the institution. Otherwise, such purpose would vary with the particular persons in charge of the administration of the organization." (Jesus Sacred Heart College vs. Collector of Internal Revenue, 1954). ISSUE: WON the acquisition of additional facilities by the University inures to the benefit not only of the University but also of the stockholders HELD: NO. The University has satisfactorily established its claim that it is organized and operated exclusively for educational purposes and that no part of its income has inured to the benefit of any stockholder or individual.

ISSUE: WON the payments of salaries to Gullas et al. The Collectors argument that the University is not entitled to (stockholders) are considered distribution of profit as would the exemption of the law refers to the use made by it of part of make the school one conducted for profit its income in acquiring additional buildings and equipment which, it is claimed, would in the end to redound to the benefit of its stockholders. That "by capitalizing its earnings in the HELD: NO. aforementioned manner, the value of the properties of the 6 Under Sec. 27(e) of the NIRC, as amended, a corporation or corporation was enhanced and, therefore, such profits inured to association claiming exemption from the payment of income tax the benefit of the stockholders or members. The property of the
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The following organizations shall not be taxed under this Title in respect to income received by them as such (e) Corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, cultural or educational purposes, or for the

rehabilitation of veterans no Part of the net income of which inures to the benefit of any private stockholder or individual: Provided, however, That the income of whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit, regardless of the disposition made of such income, shall be liable to the tax imposed under this Code; .

corporation may be sold at any time and the profits thereof The fact that when on 29 August 1930 the corporation was divided among the stockholders or members." converted from a non-stock to a stock corporation, its assets had increased from P6,000 cash and P3,000 worth of books into This claim is too speculative. While the acquisition of additional assets worth P50,000, which were distributed in the form of facilities may redound to the benefit of the institution itself, (it) shares of stock to the members of the non-stock corporation, cannot be positively asserted that the same will redound to the predecessor of the stock corporation; and that at the meeting of benefit of its stockholders, for no one can predict the financial the Board of Trustees of the University held on 12 Feb. 1950, condition of the institution upon its dissolution. At any rate, the there was a move to double the stock dividend of the mere provision for the distribution of its assets to the corporation "in view of P200,000 gain in property real and stockholders upon dissolution does not remove the right of an personal besides the goodwill," which was not actually carried educational institution from tax exemption. Thus, in U.S. vs. out, is not enough for an inference that the University has been Pickwick Electric Membership Corp. (US case), it was held-"the turned into a corporation for business and profit. The fact is that mere fact that the members may receive some benefit on since its incorporation, the University has not declared any cash dissolution upon distribution of the assets is a contingency too dividend and no part of its profits has inured to the benefit of remote to have any material bearing upon the question where any stockholder or individual. The mere realization of profits out the association is admittedly not a scheme to avoid taxation and of its operation does not automatically result in the loss of its privilege of exemption from the payment of income tax as long its good faith and honesty of purpose is not challenged." as no part of its profits inures to the benefit of any stockholder ISSUE: WON the conversion of the University from non-stock to or individual. stock corporation made it a profit-making business, thus, not Others: exempt from income tax HELD: NO. The purposes of the University as stated in both the 7 original and amended articles of incorporation show that it is engaged in an educational endeavor and in no other. The profit and loss statements of the University for the years 1946 to 1950, inclusive, show that its income was solely derived from admission fees, tuition fees, diploma fees, graduation fees, ROTC fees and laboratory fees paid by the students. The fact that the original articles of incorporation was amended to convert the corporation from a non-stock to a stock corporation is not a conclusive proof that the University is engaged in a profit-making business, part of which inures to the benefit of a single stockholder or individual. As correctly held by the CTA, "Sec. 27(,e) of the NIRC does not make any distinction between stock and non-stock corporations, and it is not for this Court to make the distinction." The Collector's claim that the University has invested in other schools established in Toledo, Danao, Sogod, Colon, Sibonga and Cebu City is denied by Vicente Gullas, University president, who testified that the University is merely supervising these schools and does not receive any fee for such- that the only benefit the University derives in return is the encouragement of the graduates of the supervised schools to enroll in the University; that it is the witness himself who supervises them and receives remuneration for his services and not the University; and that although at the meeting of the board of trustees of the University held on 12 February 1950, there was a move to require the Toledo Colleges, Danao Colleges and Cebu Northern High School to give the University 5% of their admission fees and 10% of their graduation fees as remuneration for checking their financial account and for advertising their schools, yet the board of trustees had hot been able to compel them to do so because the supervised schools stood "on their own and not directed by the University of the Visayas" and that "they pay directly their fees to Manila or they cannot get graduation special order or when there is a contribution for girl scouts or boy scouts or for the anti-T.B., they later pay thru the University of the Visayas." Neither the fact that there was an offer to purchase the assets of the University of the Visayas for P4,000,000, which means that the stockholders' original investment of P1 is now worth P119, nor the fact that the University's profits are being kept for future distribution to stockholders would deprive the University of the privilege of exemption. As long as it continues to engage solely in the operation and maintenance of the school and no dividend inures to the benefit of any stockholder or individual, the University would enjoy the exemption from the payment of income tax provided for in section 27(e) of the NIRC. Affirmed.

The original articles of incorporation of the University states That the purpose for which such corporation is formed is for the upbuilding and development of the mind and body of the Filipino youth, and to promote that which is helpful and beneficial to the moulding of their character. To accomplish this end, the corporation shall establish and maintain, to begin with, a high school course, a school of law and of commerce, and may also establish sometime in the future some other institutions of learning such as colleges of education, medicine, engineering etc.

and its amended articles of incorporation state That the purpose for which such corporation is formed is to give to the Filipino youth such training and instruction which may make them wellprepared to honorably exercise the rights and to perform and discharge the duties and obligations of good, patriotic and useful citizen. The corporation will direct it efforts to the symmetrical development of their character, mind and body. To accomplish this end, the corporation will establish and maintain, to begin with, a high school or secondary course of instruction, a college of commerce and business administration and a college of law. In the future, when the conditions warrant it, the corporation may open, establish and maintain additional courses, schools, and colleges, such as: college of liberal arts, college of education, college of engineering, college of dentistry and pharmacy, college of medicine and surgery, etc.

IGLESIA EVANGELICA METODISTA EN LAS ISLAS FILIPINAS (IEMELIF) (Corporation Sole), INC., et al. vs. BISHOP NATHANAEL LAZARO, et al., G.R. No. 184088 | July 6, 2010 | Abad, J.

governing the amendment of the articles of incorporation of a corporation sole, its Sec 109 provides that religious corporations shall be governed additionally "by the provisions on non-stock corporations insofar as they may be applicable." Thus, Sec. 16 that governed amendments of the articles of non-stock FACTS: In 1909, Bishop Nicolas Zamora established the Iglesia corporations applied to corporations sole as well. The Iglesia Evangelica Metodista En Las Islas Filipinas, Inc. as a corporation needed the vote or written assent of at least 2/3 of the Iglesia sole with Bishop Zamora acting as its "General Superintendent." membership to authorize the amendment. Thirty-nine years later in 1948, the Iglesia enacted and registered a by-laws that established a Supreme Consistory of Elders (the On appeal by petitioner Pineda, et al, the CA affirmed the TC Consistory), made up of church ministers, who were to serve for decision. MR denied. Hence, the present petition for review. 4 years. The by-laws empowered the Consistory to elect a General Superintendent, a General Secretary, a General Petitioners Pineda, et al. insist that, since the Corpo Code does Evangelist, and a Treasurer General who would manage the not have any provision that allows a corporation sole to convert affairs of the organization. For all intents and purposes, the into a corporation aggregate by mere amendment of its articles Consistory served as the Iglesias board of directors. of incorporation, the conversion can take place only by first dissolving the Iglesia, the corporation sole, and afterwards by Although the Iglesia remained a corporation sole on paper (with creating a new corporation in its place. all corporate powers theoretically lodged in the hands of one member, the General Superintendent), it had always acted like a ISSUE: WON a corporation sole may be converted into a corporation aggregate. The Consistory exercised the Iglesias corporation aggregate by mere amendment of its articles of decision-making powers without ever being challenged. incorporation without first going through the process of Subsequently, during its 1973 General Conference, the general dissolution membership voted to put things right by changing the Iglesias organizational structure from a corporation sole to a corporation HELD: YES. aggregate, which the SEC approved. However, Iglesias corporate papers remained unaltered as a corporation sole. Religious corporations are governed by Secs 109 through 116 of the Code. In a 2009 case involving the Iglesia, SC distinguished a Only in 2001 (28 yrs later) did the issue reemerge. In answer to corporation sole from a corporation aggregate. Citing Sec 110, SC Iglesias query, the SEC replied that although the SEC said that a corporation sole is "one formed by the chief Commissioner did not in 1948 object to the conversion of the archbishop, bishop, priest, minister, rabbi or other presiding Iglesia into a corporation aggregate, that conversion was not elder of a religious denomination, sect, or church, for the properly carried out and documented and the Iglesia needed to purpose of administering or managing, as trustee, the affairs, amend its articles of incorporation for that purpose. properties and temporalities of such religious denomination, sect or church." A corporation aggregate formed for the same Acting on this advice, the Consistory resolved to convert the purpose, on the other hand, consists of two or more persons. Iglesia to a corporation aggregate. Respondent Bishop Nathanael Lazaro, its General Superintendent, instructed all their True, the Corpo Code provides no specific mechanism for congregations to take up the matter with their respective amending the articles of incorporation of a corporation sole. But, members for resolution. Subsequently, the general membership as the RTC correctly held, Sec 109 allows the application to approved the conversion, prompting the Iglesia to file amended religious corporations of the general provisions governing nonarticles of incorporation with the SEC. Bishop Lazaro filed an stock corporations. affidavit-certification in support of the conversion. Petitioners Reverend Nestor Pineda, et al., which belonged to a faction that did not support the conversion, filed a civil case for "Enforcement of Property Rights of Corporation Sole, Declaration of Nullity of Amended Articles of Incorporation from Corporation Sole to Corporation Aggregate with Application for Preliminary Injunction and/or TRO" in Iglesias name against respondent members of its Consistory before the RTC of Manila. Petitioners claim that a complete shift from the Iglesias status as a corporation sole to a corporation aggregate required, not just an amendment of Iglesias articles, but a complete dissolution of the existing corporation sole followed by a re-incorporation. In a non-stock corporation, the amendment needs the concurrence of at least 2/3 of its membership. If such approval mechanism is made to operate in a corporation sole, its one member in whom all the powers of the corporation technically belongs, needs to get the concurrence of 2/3 of its membership. The one member, here the General Superintendent, is but a trustee, according to Sec. 110 of the Corpo Code, of its membership.

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 non-stock corporation or a corporation sole, the corporate being remains distinct from its members, whatever be RTC dismissed the petition holding that, while the Corpo Code on their number. The increase in the number of its corporate Religious Corporations (Chapter II, Title XIII) has no provision

membership does not change the complexion of its corporate responsibility to third parties. The one member, with the concurrence of 2/3 of the membership of the organization for whom he acts as trustee, can self-will the amendment. He can, with membership concurrence, increase the technical number of the members of the corporation from "sole" or one to the greater number authorized by its amended articles. The Iglesias General Superintendent, respondent Bishop Lazaro, who embodied the corporation sole, had obtained, not only the approval of the Consistory that drew up corporate policies, but also that of the required 2/3 vote of its membership.

The amendment of the articles, as correctly put by the CA, requires merely that a) the amendment is not contrary to any provision or requirement under the Corpo Code, and that b) it is for a legitimate purpose. Sec 17 of the Code provides that amendment shall be disapproved if, among others, the prescribed form of the articles of incorporation or amendment to it is not observed, or if the purpose or purposes of the I vote to DENY the petition. corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations, or if the required percentage of ownership is not complied with. These impediments do not appear in the case of the Iglesia. As the CA noted, the Iglesia worked out the amendment of its articles upon the initiative and advice of the SEC. The latters interpretation and application of the Code is entitled to respect and recognition, barring any divergence from applicable laws. CA decision is AFFIRMED. SEPARATE CONCURRING OPINION CARPIO, J.: I concur in the result of the majority opinion that IEMELIF, a corporation sole, may be converted into a corporation aggregate by a mere amendment of its articles of incorporation without the necessity of first dissolving the corporation sole. However, the amendment can be effected by the corporation sole without the concurrence of 2/3 of the members of the religious denomination, sect or church that the corporation sole represents for the ff. reasons: 1. Pursuant to Sec 110 of the Code as a trustee, a corporation sole can exercise such corporate powers as maybe necessary to carry out its duties of administering and managing the affairs, properties and temporalities of the religious organization, provided that such powers are not inconsistent with the law and the Constitution. One of the powers authorized under Sec 36 of the Code is the power to amend the articles of incorporation. As pointed out in the majority opinion, Sec 109 allows the application to religious corporations of the general provisions governing non-stock corporations, insofar as they may be applicable. The lack of specific provision on amendments of articles of incorporation of a corporation sole calls for the suppletory application of relevant

provisions on non-stock corporations. Thus, Sec 16 of the Code applies. Section 16 requires the majority vote of the board of trustees and the vote or written assent of at least 2/3 of the members of a non-stock corporation. Applying this, a corporation sole, as the lone trustee and member of the corporation, can amend its articles of incorporation. Section 16 refers to the members of the corporation. Again, in the case of a corporation sole, there is only one memberthe chief archbishop, bishop, priest, minister, rabbi or presiding elderwho is also the trustee of the corporation. The religious denomination, sect or church represented by the corporation sole has members who are distinct and different from the member of the corporation sole. The members of the religious organization should not be considered for purposes of Sec 16. Thus, the votes of those members are not necessary in amending the articles of incorporation of the corporation sole, the vote of the latter is sufficient to effect the amendment.

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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 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 at least 2/3 of the members if it be a non-stock corporation.

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