Mr. Leven S. Puno

March 4, 1992 Mr. Leven S. Puno 336 Roosevelt Avenue, 2nd Floor, San Francisco del Monte Quezon City S i r : This refers to your letter of February 3, 1992 requesting reconsideration of the SEC Opinion dated December 16, 1991 addressed to Ms. Celedonia M. Aquino which states that the " bishop " of Philippine Central Conference of the Methodist Church who is considered an " officer " under its by-laws, cannot serve beyond the term of the Board of Trustees or for life. You stated that subject Corporation was incorporated and registered with the Securities and Exchange Commission on July 1, 1953 for the administration of its temporalities or the management of its properties or estate. The affairs of the Corporation is covered by the Book of Discipline of the United Methodist Church with which it is connected, as its governing book of law and its instrument which sets forth its laws, plans, policies, and processes. Thus, Article V, par. 1 of its By-laws provides that the "officers" of the Corporation, which include the "Bishop" of the area, shall be elected in accordance with the law of the United Methodist Church and not according to its By-laws or the Corporation Code. Even if the Bishop is elected for a life term, the Book of Discipline of the United Methodist Church provides for redress and judicial process for his removal from office and he is retired automatically upon reaching the age of 67 years. Once elected as Bishop, he ceases to be a member of the Central Conference or Corporation and he becomes immediately a member of the Council of Bishops of the United Methodist Church. Not being a member anymore, he is no longer entitled to vote and does not participate in the consideration and formulation of the policies of the Corporation. You believe that the free exercise of the conduct of the business of the Corporation done in accordance with the Doctrines and Book of Discipline of the United Methodist Church is guaranteed by the Constitution of the Philippines. In the light of the foregoing, you claim that since the election of the "bishop" of subject Corporation is governed by the Book of Discipline of the United Methodist Church with which it is connected, it is not covered by the provisions of the Corporation Code, hence, your request for reconsideration of the abovementioned SEC Opinion. The pertinent provision of the Corporation Code provides: "SECTION 25. Corporate Officers, quorum . Immediately after their election ,the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws .Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time. ..." (Emphasis supplied) It is clear from the above provision that the term of the "officers" cannot extend beyond that of the Board of Directors/Trustees since they have to be elected after the election of the Board. Under Article III (1) of the By-laws of subject corporation, the Board of Trustees of the Corporation shall have a term of only four (4) years. Accordingly, the term of office of the Bishop of the Corporation, who is treated under Article V, par. 1 of its By-laws as one of the "officers" of the Corporation, cannot extend beyond that period. However, he can be re-elected. LexLib In this connection, your attention is invited to the provision of Section 148 of the Corporation Code which provides: "SECTION 148. Applicability to existing corporation . All corporations lawfully existing and doing business in the Philippines on the date of the effectivity of this Code and heretofore authorized, licensed or registered by the Securities and Exchange Commission, shall be deemed to have been authorized, licensed or registered under the provisions of this Code ,subject to the terms and conditions of its license, and shall be governed by the provisions hereof : Provided, That when any such corporation is affected by the new requirements of this Code, said corporation shall unless otherwise herein provided, be given a period of not more than two (2) years from the effectivity of this Code within which to comply with the same." (Emphasis supplied) Accordingly, subject Corporation, even if it was registered way back in 1953, is subject to the provisions of the Corporation Code. It is advised, however, that since the "bishop" of the Corporation is not actually acting as an "officer" as he ceases to be a member of the Corporation once elected, has no voting rights and does not participate in the consideration and formulation of the policies of the Corporation, it is suggested that an amendment be made in your By-laws removing him as one of the corporate officers and limit his power only as spiritual head or adviser of the Corporation. Take note that the term "officer" of a corporation implies some sort of managerial responsibility for the affairs of the corporation and imparts a close connection with the board of directors. Please be advised accordingly. LexLib Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman