Sec 15.

Amendments of Articles of Incoporation

FACTS: IEMELIF is a corporation sole. It was registered and by-laws were created which empowered the
election of officers to manage the affairs of the organization. Although, the petitioner remained a corporation
sole on paper, it had always acted like a corporation aggregate. The Consistory, IEMELIF’s board of directors,
together with the general membership change the organizational structure from corporation sole to corporation aggregate,
which was approved by SEC. However, the corporate papers remained unaltered as a corporation sole. About
28 years later, the issue re emerge. The SEC answered, this time, is that the conversion was not properly carried out and
documented and that it needed to amend its AOI for that purpose. Acting on the advice, the Consistory resolved to convert
but petitioner Rev. Nestor Pineda in IEMELIF’s name did not support the conversion. 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.

ISSUE: Whether or not a corporation sole may be converted into a corporation aggregate by mere amendment of its
articles of incorporation and not go through dissolution.

HELD: Yes. A corporation may change its character as a corporation sole into a corporation aggregate by mere
amendment of its articles of incorporation without first going through the process of dissolution. True, the
Corporation Code provides no specific mechanism for amending the articles of incorporation of a
corporation sole. However, Section 109 of the Corporation Code 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 two-thirds of their votes for the approval of such an
amendment. Although a non-stock corporation has a personality that is distinct from those of its members who
established it, its articles of incorporation cannot be amended solely through the action of its board of
trustees. The amendment needs the concurrence of at least two-thirds 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 two-thirds of its membership. The one member, here the General
Superintendent, is but a trustee, according to Section 110 of the Corporation 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 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 two-thirds 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.
Sec 16. Grounds When Articles of Incorporation or Amendment May be Disapproved

FACTS:

The Court prohibits corporations from releasing its stockholders from the payment of unpaid
subscriptions without going through the formalities provided under the corporation law. In any event,
the Corporation Code has provided a procedure for the demand of such payment and the holding of a
delinquency sale in case of continued non-payment.

San Juan, Mangune and Salido, and four other individuals (Salido faction), agreed to form two mining
corporations, namely Aramaywan and Narra Mining Corporation. They entered into an Agreement to
Incorporate wherein it was stipulated that San Juan would advance the paid-up subscription for
Aramaywan amounting to P2,500,000.00 and would assure the payment of the subscription of the
capital stock of Narra Mining. In exchange, San Juan would own 55% of the stocks of Aramaywan and
35% of the stocks of Narra Mining. In line with this, San Juan advanced the P2,500,000.00 paid-up
subscription of Aramaywan evidenced by a Standard Chartered Bank Certificate deposited in San
Juan's name as treasurer, held by him in trust for the corporation. The Board of Directors of
Aramaywan had its first Board Meeting wherein the Salido faction claimed that San Juan delivered
only P932,209.16 alleging that San Juan breached his obligation under the Agreement. Because of this,
Salido made a proposal to reduce San Juan's shares in Aramaywan from 55% to 15%.

ISSUE: Were San Juan’s shares validly reduced?

RULING:

No. Considering that San Juan's subscriptions have been fully paid, Aramaywan cannot reduce his
shares without a corresponding return of his investment. The Corporation Code has provided a
procedure for the demand of such payment and the holding of a delinquency sale in case of continued
non-payment. Thus, even assuming that San Juan had unpaid subscriptions, simply agreeing in a
meeting for their reduction, thereby releasing the stockholder from his obligation to pay the unpaid
subscriptions, cannot be the mode by which said unpaid subscriptions are settled. To allow
corporations to do such an act would violate the trust fund doctrine.