IGLESIA EVANGELICA METODISTA EN LAS ISLAS FILIPINAS vs.
BISHOP NATHANAEL
LAZARO
Facts:
Bishop Nicolas Zamora established the petitioner Iglesia Evangelica Metodista En
Las Islas Filipinas, Inc. (IEMELIF) as a corporation sole with Bishop Zamora acting as
its "General Superintendent." 39 years later, the IEMELIF enacted a by-laws that
established a Supreme Consistory of Elders (the Consistory), made up of church
ministers, who were to serve for 4 years. The by-laws empowered the Consistory to
elect a General Superintendent, a General Secretary, a General Evangelist, and a
Treasurer General who would manage the affairs of the organization. The Consistory
served as the IEMELIF's board of directors.
Although the IEMELIF remained a corporation sole on paper (with all corporate
powers lodged in the hands of one member, the General Superintendent), it had
always acted like a corporation aggregate. Subsequently, the general
membership voted to change IEMELIF's organizational structure from a
corporation sole to a corporation aggregate.
SEC approved the vote.
However, the corporate papers of the IEMELIF remained unaltered as a corporation
sole.
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 object to the
conversion of the IEMELIF into a corporation aggregate, that conversion was not
properly carried out and documented. The SEC said that the IEMELIF needed to
amend its articles of incorporation for that purpose.
Acting on this advice, Respondent Bishop Nathanael Lazaro, its General
Superintendent, instructed all their congregations to take up the matter with their
respective members for resolution. Subsequently, the general membership
approved the conversion, prompting the IEMELIF to file amended articles of
incorporation with the SEC. Bishop Lazaro filed an 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 Temporary Restraining Order" in IEMELIF's name against
respondent members of its Consistory before the RTC. Petitioners claim that a
complete shift from IEMELIF's status as a corporation sole to a corporation
aggregate required, not just an amendment of the IEMELIF's articles of
incorporation, but a complete dissolution of the existing corporation sole
followed by a re-incorporation.
RTC dismissed. It held that, while the Corporation Code on Religious Corporations
has no provision governing the amendment of the articles of incorporation of a
corporation sole, Sec. 109 provides that religious corporations shall be governed
additionally "by the provisions on non-stock corporations insofar as they may be
applicable." The RTC thus held that Sec. 16 that governed amendments of the
articles of incorporation of non-stock corporations applied to corporations sole as
well. What IEMELIF needed to authorize the amendment was merely the vote or
written assent of at least 2/3 of the IEMELIF membership. CA Affirmed.
ISSUE:
WON a corporation sole may be converted into a corporation aggregate by mere
amendment of its articles of incorporation.
Held:
Yes.
Sec. 110 states that a corporation sole is "one formed by the chief archbishop,
bishop, priest, minister, rabbi or other presiding elder of a religious denomination,
sect, or church, for the purpose of administering or managing, as trustee, the
affairs, properties and temporalities of such religious denomination, sect or church."
A corporation aggregate formed for the same purpose, on the other hand, consists
of two or more persons.
The Corporation Code provides no specific mechanism for amending the articles of
incorporation of a corporation sole. But Sec. 109 allows the application to religious
corporations of the general provisions governing non-stock corporations.
For non-stock corporations, the power to amend its articles of incorporation lies in
its members. The code requires 2/3 of their votes for the approval of such an
amendment. 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 two-thirds of its membership. The one member,
here the General Superintendent, is but a trustee, according to Sec. 110, 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 their number. The increase in the number of its corporate 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.
In this case, the IEMELIF's General Superintendent 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 two-thirds vote of its
membership.
The amendment of the articles of incorporation requires merely that a) the
amendment is not contrary to any provision or requirement under the Corporation
Code, and that b) it is for a legitimate purpose. Sec. 17 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 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 IEMELIF.
Besides, the IEMELIF worked out the amendment of its articles of incorporation upon
the initiative and advice of the SEC. The latter's interpretation and application of the
Corporation Code is entitled to respect and recognition, barring any divergence from
applicable laws.
