Non-Stock Corporation a. Section 87 and 88 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, sub ect to the provisions of this Code on dissolution! "rovided, #hat an$ profit which a non-stock corporation ma$ obtain as an incident to its operations shall, whenever necessar$ or proper, be used for the furtherance of the purpose or purposes for which the corporation was or%ani&ed, sub ect to the provisions of this #itle. #he provisions %overnin% stock corporation, when pertinent, shall be applicable to non-stock corporations, e'cept as ma$ be covered b$ specific provisions of this #itle. (n) Section 88. "urposes. - Non-stock corporations ma$ be formed or or%ani&ed for charitable, reli%ious, educational, professional, cultural, fraternal, literar$, scientific, social, civic service, or similar purposes, like trade, industr$, a%ricultural and like chambers, or an$ combination thereof, sub ect to the special provisions of this #itle %overnin% particular classes of non-stock corporations. (n) Definition of non-stock corporation o Section 87 refers to an ordinar$ non-stock corporation formed for an$ of the purposes mentioned in Section 88 o "olitical purposes is not specificall$ included* S+C ma$ re ect ,-. if the purpose of the corporation is to en%a%e in election campai%n or partisan political activit$ "ower to make profits and en%a%e in business o .ncidental profits obtained from operations /0! , non-stock corporation is not empowered to en%a%e in business with the ob ect of makin% income or profits directl$ or indirectl$* it runs counter to its ver$ nature as a non-profit entit$ .t is not prohibited, however to make income or profits as an incident to its operations ,n$ profit derived from it cannot be distributed as dividends to its members 1ust be used for furtherance of the purpose or purposes for which the corporation was or%ani&ed , non-stock corporation is considered a non-profit corporation o "rofits obtained from investment of accumulated funds .t ma$ invest its accumulated funds for profit purposes .t ma$ subscribe to the capital stock of a corporation .nvest in commercial papers such as mone$ instruments, but such power must be included in its ,-. for it to be not ultra vires o "owers necessar$ furtherance of purposes "owers merel$ convenient or useful are not implied if the$ are not essential, havin% in view the nature and ob ect of incorporation o Determination of actual purpose or ob ect Stated in its b$-laws and ,-. Section 82, 23, 24, 25, 26, 27,28 CHAPTER I MEMBERS Section 89. Right to vote. - #he ri%ht of the members of an$ class or classes to vote ma$ be limited, broadened or denied to the e'tent specified in the articles of incorporation or the b$-laws. 9nless so limited, broadened or denied, each member, re%ardless of class, shall be entitled to one vote. 9nless otherwise provided in the articles of incorporation or the b$-laws, a member ma$ vote b$ pro'$ in accordance with the provisions of this Code. (n) :otin% b$ mail or other similar means b$ members of non-stock corporations ma$ be authori&ed b$ the b$-laws of non-stock corporations with the approval of, and under such conditions which ma$ be prescribed b$, the Securities and +'chan%e Commission. Section 90. Non-transferabilit$ of membership. - 1embership in a non-stock corporation and all ri%hts arisin% therefrom are personal and nontransferable, unless the articles of incorporation or the b$-laws otherwise provide. (n) Section 91. #ermination of membership. - 1embership shall be terminated in the manner and for the causes provided in the articles of incorporation or the b$-laws. #ermination of membership shall have the effect of e'tin%uishin% all ri%hts of a member in the corporation or in its propert$, unless otherwise provided in the articles of incorporation or the b$-laws. (n) CHAPTER II TRUSTEES AND OFFICES Section 92. Election and term of trustees. - 9nless otherwise provided in the articles of incorporation or the b$-laws, the board of trustees of non-stock corporations, which ma$ be more than fifteen (48) in number as ma$ be fi'ed in their articles of incorporation or b$-laws, shall, as soon as or%ani&ed, so classif$ themselves that the term of office of one-third (4;6) of their number shall e'pire ever$ $ear* and subse<uent elections of trustees comprisin% one-third (4;6) of the board of trustees shall be held annuall$ and trustees so elected shall have a term of three (6) $ears. #rustees thereafter elected to fill vacancies occurrin% before the e'piration of a particular term shall hold office onl$ for the une'pired period. No person shall be elected as trustee unless he is a member of the corporation. 9nless otherwise provided in the articles of incorporation or the b$-laws, officers of a non-stock corporation ma$ be directl$ elected b$ the members. (n) Section 93. Place of meetings. - #he b$-laws ma$ provide that the members of a non-stock corporation ma$ hold their re%ular or special meetin%s at an$ place even outside the place where the principal office of the corporation is located! "rovided, #hat proper notice is sent to all members indicatin% the date, time and place of the meetin%! and "rovided, further, #hat the place of meetin% shall be within the "hilippines. (n) CHAPTER III DISTRIBUTION OF ASSETS IN NON STOC! CORPORATIONS Section 9". Rules of distribution. - .n case dissolution of a non-stock corporation in accordance with the provisions of this Code, its assets shall be applied and distributed as follows! 4. ,ll liabilities and obli%ations of the corporation shall be paid, satisfied and dischar%ed, or ade<uate provision shall be made therefore* 5. ,ssets held b$ the corporation upon a condition re<uirin% return, transfer or conve$ance, and which condition occurs b$ reason of the dissolution, shall be returned, transferred or conve$ed in accordance with such re<uirements* 6. ,ssets received and held b$ the corporation sub ect to limitations permittin% their use onl$ for charitable, reli%ious, benevolent, educational or similar purposes, but not held upon a condition re<uirin% return, transfer or conve$ance b$ reason of the dissolution, shall be transferred or conve$ed to one or more corporations, societies or or%ani&ations en%a%ed in activities in the "hilippines substantiall$ similar to those of the dissolvin% corporation accordin% to a plan of distribution adopted pursuant to this Chapter* 7. ,ssets other than those mentioned in the precedin% para%raphs, if an$, shall be distributed in accordance with the provisions of the articles of incorporation or the b$-laws, to the e'tent that the articles of incorporation or the b$-laws, determine the distributive ri%hts of members, or an$ class or classes of members, or provide for distribution* and 8. .n an$ other case, assets ma$ be distributed to such persons, societies, or%ani&ations or corporations, whether or not or%ani&ed for profit, as ma$ be specified in a plan of distribution adopted pursuant to this Chapter. (n) Section 9#. Plan of distribution of assets. - , plan providin% for the distribution of assets, not inconsistent with the provisions of this #itle, ma$ be adopted b$ a non-stock corporation in the process of dissolution in the followin% manner! #he board of trustees shall, b$ ma orit$ vote, adopt a resolution recommendin% a plan of distribution and directin% the submission thereof to a vote at a re%ular or special meetin% of members havin% votin% ri%hts. =ritten notice settin% forth the proposed plan of distribution or a summar$ thereof and the date, time and place of such meetin% shall be %iven to each member entitled to vote, within the time and in the manner provided in this Code for the %ivin% of notice of meetin%s to members. Such plan of distribution shall be adopted upon approval of at least two-thirds (5;6) of the members havin% votin% ri%hts present or represented b$ pro'$ at such meetin%. (n) 0ules applicable onl$ to non-stock corporations 4) "rohibitions a%ainst distribution of dividends -

b.

No pecuniar$ benefit shall inure in favor of the members althou%h the$ ma$ avail of, or derive other forms of, assistance from the corporation 5) Non-profit character .t cannot en%a%e in business with the ob ect of makin% profits #he fact that there is no distribution b$ an$ or%ani&ation of earnin%s or profits b$ wa$ of dividends or otherwise to its members is not conclusive as to its non-profit character 6) 0i%ht to :ote 1a$ be limited, broadened or even denied in the ,-. or b$-laws >$-laws ma$ declare who shall be entitled to vote and how the$ shall be entitled to vote or impose other restrictions such as limitin% the ri%ht to vote of each member to a ma'imum number of votes irrespective of the amount of his capital contribution or authori&in% the chairman to vote the remainin% balance after deductin% the total votes of the members;pro'ies or restrainin% pro'ies from participatin% directl$ in the election of trustees at the annual meetin% of members or limitin% the ri%ht to vote onl$ to members of %ood standin% 9nless provided b$ the ,-. or b$-laws, a member ma$ vote b$ pro'$ in accordance of the Corporation Code +ach member shall be entitled onl$ to one vote in the election of trustees unless cumulative votin% is authori&ed in the ,-. or b$-laws. ?e ma$ cast as man$ votes as there are trustees to be elected but ma$ not cast more than one vote for one candidate :otin% b$ mail or other similar means ma$ be authori&ed* necessar$ where a non-stock corporation has numerous members who are located in various parts of the countr$ 7) /overnin% >oards 1a$ desi%nate their %overnin% boards b$ an$ name other than as board of trustees, throu%h their ,-. or b$-laws #rustees of non-stock corporations have duties similar to those of stock corporations Number of trustees @ ma$be more than 48* .ncorporators @ shall not be more than 48 #erms of office for first elected are sta%%ered with 4 $ear interval* ma$ var$ as provided b$ ,-. or b$-laws* members of the board should alwa$s be elected in accordance with Section 57 and filin% up of vacancies b$ Section 52 #rustees subse<uentl$ elected shall have a term of 6 consecutive $ears* lifetime or unlimited term is not allowed as it absolutel$ deprives other members to the opportunit$ to participate in the mana%ement of the corporation or to become officers of the corporation -nl$ members of the corporation can be elected to sit in the board , corporation is not <ualified to occup$ the position of a director or trustee -fficers other than trustees ma$ be directl$ elected b$ the members unless otherwise provided in the ,-. and the b$-laws 8) 1eetin%s 1a$ be held an$where in or outside the "hilippines >ut if the b$-laws provides for a place, meetin%s ma$ not take place an$where else without first amendin% the said b$-laws. .f the b$-law does not indicate the place of meetin%, members cannot hold their meetin%s outside the place where the principal office of the corporation is located A) Dissolution .ts assets shall be applied and distributed in accordance with law or as ma$ be specified in a plan of distribution adopted b$ the corporation, provided it is not inconsistent with the rules 7) Conversion into stock corporation Cannot be converted b$ mere amendment of the ,-. 1ust be dissolved first and thereafter the members ma$ or%ani&e a stock corporation 1embers in a non-stock corporation 4) 1anner or mode of ac<uisition Cannot be ac<uired e'cept in the particular manner or mode of ac<uirin% the same, as provided for in its valid b$laws >$ virtue of inheritance is not provided and is not therefore considered as a valid mode of ac<uirin% membership in the corporation 5) ,pproval of admission of new members >$ the board of trustees* approval of the members of the corporation shall not be necessar$ 6) 1ode adopted in the b$-laws Not uniform in all corporations >$-laws ma$ either provide that new members ma$ be admitted b$ a ma orit$ of the members of the board of trustees or a committee on membership -nce adopted, such mode of admittin% new members must be observed until a new procedure is adopted b$ the corporation throu%h an amendment of the b$-laws 7) Bualifications for membership +<ual access to membership 8) ,dmission before adoption of corporate b$-laws #he power and capacit$ to admit members Do not re<uire the adoption of b$-laws before a corporation can commence its operation b$ acceptin% members A) ,mendment of b$-laws #he board of trustees ma$ not increase the membership fees b$ mere resolution, without first properl$ amendin% the b$-laws of the corporation 7) Nature of membership ri%hts "ersonal and non-transferable unless otherwise provided in its ,-. or the b$-laws 8) "ower of courts Courts are without power to strip a member of a non-stock, non-profit corporation of his membership therein without cause 2) #ermination of membership .nl$ in the manner and for the causes provided in the ,-. or the b$-laws +'pulsion or suspension of a member must be based on ust and reasonable %round after notice and hearin% of the char%e a%ainst him 43) "a$ment of dues and other assessments 1a$ provide in the ,-i or b$-laws to meet the e'penses for the %eneral operations and maintenance and improvement of the premises and facilities Dues @ obli%ations pa$able at recurrin% intervals for maintenance of an or%ani&ation ,ssessment @ implies a burden imposed in invictum and a sin%le act as distin%uished from a recurrin% act , non-stock corporation is authori&ed b$ law to accept members and ma$ collect reasonbale membership dues and other assessments for purposes of accomplishin% the purposes or ob ectives for which the corporation was or%ani&ed