G.R. No.

184088 July 6, 2010

IGLESIA EVANGELICA METODISTA EN LAS ISLAS FILIPINAS

Petitioners,vs.
BISHOP NATHANAEL LAZARO,
Respondents.D E C I S I O N
ABAD,
J.: facts

Th
e present dispute resolves t
h
e issue of w
h
et
h
er or not a corporation may c
h
ange its c
h
aracter as a corporation sole intoa corporation aggregate by mere
amendment of its articles of incorporation wit
h

out first going t

h
roug
h
t
h
e process of dissolution.Apparently, alt
h
oug
h
t
h
e IEMELIF remained a corporation sole on paper (wit
h
all corporate powers t
h
eoretically lodged in t
h
e
h
ands of one member, t
h
e General Superintendent), it

h
ad always acted like a corporation aggregate.
Th
eConsistory exercised IEMELIFs decision-making powers wit
h
out ever being c
h
allenged. Subsequently, during its 1973General Conference, t
h
e general members
h
ip voted to put t
h
ings rig
h
t by c
h
anging IEMELIFs organizational structurefrom a corporation sole
to a corporation aggregate. On May 7, 1973 t
h
e Securities and Exc
h
ange Commission (SEC)approved t

h
e vote. For some reasons,
h
owever, t
h
e corporate papers of t
h
e IEMELIF remained unaltered as a corporationsole.Only in 2001,
about 28 years later, did t
h
e issue reemerge. In answer to a query from t
h
e IEMELIF, t
h
e SEC replied onApril 3, 2001 t
h
at, alt
h
oug
h
t
h
e SEC Commissioner did not in 1948 object to t

h
e conversion of t
h
e IEMELIF into acorporation aggregate, t
h
at conversion was not properly carried out and documented.
Th
e SEC said t
h
at t
h
e IEMELIFneeded to amend its articles of incorporation for t
h
at purpose.
1
Acting on t
h
is advice, t
h
e Consistory resolved to convert t
h
e IEMELIF to a corporation aggregate. Respondent Bis
h

opNat
h
anael Lazaro, its General Superintendent, instructed all t
h
eir congregations to take up t
h
e matter wit
h
t
h
eirrespective members for resolution. Subsequently, t
h
e general members
h
ip approved t
h
e conversion, prompting t
h
eIEMELIF to file amended articles of incorporation wit
h
t
h
e SEC. Bis

h
op Lazaro filed an affidavit-certification in supportof t
h
e conversion.
2
Petitioners Reverend Nestor Pineda, et al., w
h
ic
h
belonged to a faction t
h
at did not support t
h
e conversion, filed a civilcase for "
En
forceme
n
t of Property Rights of Corporatio
n
Sole, Declaratio
n
of Nullity of Ame
nd

e
d
Articles of I
n
corporatio
n
from Corporatio
n
Sole to Corporatio
n
Aggregate with Applicatio
n
for Prelimi
n
ary I
nj
u
n
ctio
n
a
nd/
or Temporary Restrai

n
i
n
g Or
d
er
" in IEMELIFs nameagainst respondent members of its Consistory
before t
h
e Regional
T
rial Court (R
T
C) of Manila.
3
Petitioners claim t
h
at acomplete s
h
ift from IEMELIFs status as a corporation sole to a corporation
aggregate required, not just an amendment of t
h
e IEMELIFs articles of incorporation, but a complete dissolution of
t

h
e existing corporation sole followed by a re-incorporation.
The Issue Presented

Th
e only issue presented in t
h
is case is w
h
et
h
er or not t
h
e CA erred in affirming t
h
eR
T
C ruling t
h
at a corporation solemay be converted into a corporation
aggregate by mere amendment of its articles of incorporation.
The Courts Ruling
For non-stock corporations, t

h
e power to amend its articles of incorporation lies in its members.
Th
e code requires two-t
h
irds of t
h
eir votes for t
h
e approval of suc
h
an amendment. So
h
ow will t
h
is requirement apply to a corporation sole t
h
at
h
as tec
h
nically but one member (t
h

e
h
ead of t
h
e religious organization) w
h
o
h
olds in
h
is
h
ands its broad corporatepowers over t
h
e properties, rig
h
ts, and interests of
h
is religious organization?Alt
h
oug
h
a non-stock corporation

h
as a personality t
h
at is distinct from t
h
ose of its members w
h
o establis
h
ed it, itsarticles of incorporation cannot be amended solely t
h
roug
h
t
h
e action of its board of trustees.
Th
e amendment needs t
h
econcurrence of at least two-t
h
irds of its members
h

ip. If suc
h
approval mec
h
anism is made to operate in a corporationsole, its one member in
w
h
om all t
h
e powers of t
h
e corporation tec
h
nically belongs, needs to get t
h
e concurrence of two-t
h
irds of its members
h
ip.
Th
e one member,
h

ere t
h
e General Superintendent, is but a trustee, according to Section
110 of t
h
e Corporation Code, of its members
h
ip.
1
avvphi
1

Th
ere is no point to dissolving t
h
e corporation sole of one member to enable t
h
e corporation aggregate to emerge from it.W
h
et
h
er it is a non-stock corporation or a corporation sole, t
h

e corporate being remains distinct from its members,w

h
atever be t
h
eir number.
Th
e increase in t
h
e number of its corporate members
h
ip does not c
h
ange t
h
e complexion of itscorporate responsibility to t
h
ird parties.
Th
e one member, wit
h
t
h
e concurrence of two-t

h
irds of t
h
e members
h
ip of t
h
eorganization for w
h
om
h
e acts as trustee, can self-will t
h
e amendment. He can, wit
h
members
h
ip concurrence, increaset
h
e tec
h
nical number of t
h

e members of t
h
e corporation from "sole" or one to t
h
e greater number aut
h
orized by itsamended articles.
Th
e amendment of t
h
e articles of incorporation, as correctly put by t
h
e CA, requires merely t
h
at a) t
h
e amendment is notcontrary to any provision or requirement
under t
h
e Corporation Code, and t
h
at b) it is for a legitimate purpose. Section17 of t
h

e Corporation Code
10
provides t
h
at amendment s
h
all be disapproved if, among ot
h
ers, t
h
e prescribed form of t
h
earticles of incorporation or amendment to it is not observed, or if
t
h
e purpose or purposes of t
h
e corporation are patentlyunconstitutional, illegal, immoral, or
contrary to government rules and regulations, or if t
h
e required percentage of owners
h
ip is not complied wit

h
.
Th
ese impediments do not appear in t
h
e case of IEMELIF.Besides, as t
h
e CA noted, t
h
e IEMELIF worked out t
h
e amendment of its articles of incorporation upon t
h
e initiative and advice of t
h
e SEC.
Th
e latters interpretation and application of t
h
e Corporation Code is entitled to respect and recognition, barring
any divergence from applicable laws. Considering its experience
and specialized capabilities in t
h

earea of corporation law, t

h
e SECs prior action on t
h
e IEMELIF issue s
h
ould be accorded great weig
h
t.
W
HEREFORE,
t
h
e Court
DENIES
t
h
e petition and
AFFIRMS
t
h
e October 31, 2007 decision and August 1, 2008resolution of t
h

e Court of Appeals in CA-G.R. SP 92640.SO ORDERED