Atty. Lilia B. De Lima

July 23, 1990 Atty. Lilia B. De Lima Executive Vice-President World Trade Center Metro Manila 5th Floor, Pacific Star Bldg. Makati Avenue, Makati Metro Manila M a d a m : This refers to your letter dated June 14, 1990 requesting opinion on the query posed therein. You stated that the World Trade Center Metro Manila (WTCMM),a franchise holder of the World Trade Centers Association (WTCA) in New York, U.S.A.,is duly registered with the Securities and Exchange Commission as World Trade Management, Inc. Through the WTCA, each world trade center becomes a branch office for all the others. The establishment of the WTCMM or World Trade Management, Inc. ushered in the formation of a Manila World Trade Center Club. The Club integrates all the Center's facilities and services which include the World Trade Center Network, information services, education services, office and business development services, fairs and exhibitions, etc. into a package of services which can be availed of by club members for free or at discounted rates. For this purpose, Manila World Trade Center Club will offer membership for individuals and companies involved in international trade and will charge an entrance fee and minimal annual dues. Membership in the club is non-proprietory. Members do not become owners or stockholders of WTCMM. Your query is, whether or not Manila World Trade Center Club is required to be registered with the Securities and Exchange Commission. Please be advised that an association or organization which is not engaged in economic business activity and not desirous of acquiring juridical personality need not be registered with the Commission. However, an unregistered association, unlike a registered one, is not a juridical person and, hence, denied the powers, rights and privileges granted under the Corporation Code and which are incident only through incorporation. "The principal distinction lies in the fact that a corporation is a legal entity deriving its existence from franchise, whereas, an association in the narrow sense of the term, is a creature of contract without legal personality separate and distinct from the individuals composing it." ( SEC Opinion, dated March 24, 1972 , citing 7 C.J.S. p. 21) Thus, an unregistered association cannot sue and be sued, it cannot enter into contracts in the name of the association and neither can it acquire properties under its common name. Contracts entered into in its behalf make the persons signing or executing them liable to the other contracting party. It has been held also that it is not competent to act or create agents or confer upon another authority to act on its behalf, and those who act or purport to act as its representative or agents do so at their own risk. ( SEC Opinion, Supra , citing Vda. De Salvatierra v. Garlitos et al., L-11442, May 23, 1958) It is only when the association is incorporated under the Corporation Code of the Philippines that it acquires juridical personality, distinct and separate from its members. Such incorporation enables the association to exercise the powers which its charter and the Corporation Code grants to said association. Likewise, should the Club offer for sale proprietary membership certificates to the public, said sale shall be covered by the provisions of the Revised Securities Act, in which case, the club has to comply with the "Rules or Registration and Sale of Proprietary Rights in Golf Courses and Clubs, Resort Facilities and Similar Projects" issued by the Commission. cdll Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman