Europa Condominium Villas, Inc.

May 4, 1990 Europa Condominium Villas, Inc. c/o Atty. Conrado Abriol Padilla Suite 209 Comfoods Bldg. Gil Puyat Ave., Makati Metro Manila S i r : This refers to your letter dated June 13, 1989 requesting opinion on queries posed therein. Facts on record show that EUROPA CONDOMINIUM VILLAS, Inc. (EUROPA) was registered with the Commission under SEC. REG. NO. 51193 as a non-stock, non-profit association primarily organized for the purpose of owning or holding a Title to the common areas and managing of condominium projects known as "EUROPA CONDOMINIUM VILLA" pursuant to R.A. 4726 and Master Deed with Declaration of Restriction. It further appears that the original and amended by-laws of EUROPA have no provisions on the termination of membership in the association. Your queries read as follows: "a. Whether it is a non-stock corporation as defined under Section 87 of the New Corporation Code;" "b. Whether its corporate existence falls within any of the purposes of a non-stock corporation enumerated under Section 88 of the Code;" "c. Whether it can further amend its By-Laws by including among others, a provision on termination of membership which will lawfully authorized the association to extinguish all the rights of a member in the corporation or in its property, within the parameters of Section 91 in addition to Section 20 of the Condominium Act (RA No. 4726) which authorizes the foreclosure of a unit as a mode of losing ownership thereon and par. 7 of the attached amended articles which provides, among others, that any member who ceases to own a unit in a condominium project automatically ceases to be a member of the corporation." Relative to your first query, EUROPA CONDOMINIUM CORPORATION is a "non-stock, "non-profit" association as expressly manifested in its articles of incorporation, as amended. Due to this categorical classification in the said articles, it can thus be said that it squarely falls within the purview of Section 87 of the Corporation Code which provides and we quote: " Definition For Purpose 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 subject to the provisions of this Code on dissolution: Provided, That any profit which a non-stock corporation may obtain as an incident to its operation shall, whenever necessary or proper, be used for the furtherance of the purpose for which the corporation was organized, subject to the provisions of this Title." The aforesaid contention is further emphasized by Article II par. (g) of the secondary purposes of EUROPA Articles of Incorporation to the effect that the income derived from the operation of facilities within the common areas shall be used to defray the operating and other expenses of the corporation and shall not inure to the benefit of the members which is one of the common features of a non-stock corporation. The pertinent provision provides as follows: "(g) To operate by itself or thru others; restaurant and/or canteen facilities within the common areas of the project and, incidentally, outsiders willing to avail of such facilities, and to use any income therefrom to meet its operating and other expenses and expenditures." As to the second query, it is worthy to note that Section 88 allows the formation of non-stock corporations for purposes similar to those enumerate therein. The salient provision reads thus: "Purposes Non-stock corporations may be formed or organized for charitable and religious, educational, cultural, fraternal, literary, scientific, social , civic service, or similar purposes like trade, industry, agricultural and like chambers, or any combination thereof subject to the special provisions of this Title governing particular classes of non-stock corporations." (Emphasis ours) Accordingly, EUROPA purposes fall within the category of non-stock corporations organized for social or similar purposes. Anent your third query, the by-laws of the corporation may be amended to provide for termination of membership, subject to the following provision of RA 4726: "SECTION 10. . . . . The articles of incorporation or by-laws of the corporation shall not contain any provision contrary to or inconsistent with the provision of this Act, the enabling act or master deed, or the declaration of restrictions of the project. Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation shall not be transferable separately from the condominium unit of which it is an appurtenance . When a member or stockholder ceases to own a unit in the project in which the Condominium Corporation owns or holds the common areas, he shall automatically cease to be a member of stockholder of the Condominium Corporation." (Emphasis supplied) Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner