SEC Opinion dated 24 February 2003

The SEC Opinion pertains to the reply given by Director Benito Cataran, in behalf of the Commission, with regard to the following issues forwarded by one Benedicta Bello (President, Regis Benedictine Academy, Inc.):

1. WON it is legally feasible to convert a non-stock educational institution into a stock corporation – NO

A non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of this Code on dissolution (Sec. 87, Corporation Code.) Inline with this, the Commission has previously ruled that a non-stock corporation cannot be converted into a stock corporation by mere amendment of the articles of incorporation. For purposes of transformation, it is fundamental that the non-stock corporation be dissolved first under the methods specified in Title XIV of the Corporation Code. Thereafter, the members may organize a stock corporation directed to bring profits or pecuniary gains to themselves (SEC Opinion dated Dec. 10, 1992.)

2. WON members of a non-stock corporation (NSC) are entitled to any beneficial or vested interest over the assets of the NSC – NO (general rule)

Non-stock, non-profit corporations hold their funds in trust for the carrying out of the objectives and purposes expressed in its charter and unless it is so provided in the AOI or by-laws, the members are not entitled to any beneficial or vested interest over the assets of the NSC.

3. WON membership in a NSC is transferable – NO

Section 90 of the Corporation Code provides that membership in a NSC and all rights arising therefrom are personal and non-transferable, unless the articles of incorporation or the by-laws otherwise provide.

Unlike shares of stock in a stock corporation, which are bought at a fixed value, there is no such valuation in the case of membership in ordinary NSC. In the case of the latter, the money put in the corporation are merely contributions or donations, not investments which would entitle the members to dividends. Such funds are held mainly to carry out the purposes for which it is organized.

SEC OPINION DECEMBER 10 1992

Correct interpretation of the word "continuous" as provided for a Budget Circular No. 4 and 4-A dated June 20, 1991 and E.O. No. 292

SEC OPINION MAY 13 1992

58 Advice to who may be entitled to the rewards provided under Section 3513 of the Tariff and Customs Code of persons instrumental in the discovery and seizure of smuggled goods

13 May 1992

60 Whether services rendered by an employee of the Bureau of Plant Industry from May 1942 to December 1944 be considered in creditable service computation with the government for retirement purposes

13 May 1992