Atty. Mamerto B. Alciso, Jr.

August 22, 1984 Atty. Mamerto B. Alciso, Jr. Mangagay, Bislig, Surigao del Sur Sir : This has reference to your letter dated July 31, 1984, requesting the opinion of this Commission on the queries posed therein. cdll It appears that the Andres Soriano Institute, Inc. is a non-stock educational corporation which was incorporated on April 19, 1961; that sometime in 1977, it sought the opinion of this Commission on whether its members can transfer their membership to other people of their choice; that the same was answered in the affirmative by this Office on January 3, 1978 (Exhibit K of your letter);and that the reason given is that the contributions of the members to the association may be considered as personal properties which they can transfer at will. You alleged in your letter that sometime in 1979, two (2) transfers/assignments of membership were made by two (2) members of the association (Exhibits I & J);and that these were recognized by the corporation apparently following the above-mentioned opinion. You also claim that after the effectivity of the new Corporation Code on May 1, 1980, there were various transfers/assignments made which are hereunder enumerated: Assignor Assignee Date of Exhibits Transfer 1. Felipe A. Orlando A. 12-31-80 "A" Briones Merida 2. Bonifacio G. Josefina A. 4-8-81 "B" Mercaida 3. Crisanto A. Paciencia M. 8-24-81 "C" Bojao Malasarte 4. Julian L. Melquiades B. 8-24-81 "D" Colar Malasarte 5. Fructuoso E. Joel J. Mundig 2-23-82 "E" Polina 6. Margarita A. Paterno A. 8-3-82 "F" Colar Guasa You further alleged that on June 3, 1984, Francis Castillo became a member of the association by virtue of a power-of-attorney executed by the heirs of the late Recaredo B. Castillo, former President of Andres Soriano Institute, Inc..He even became a board member filling up the vacancy left by the deceased R. Castillo (Exhibit AA). You claim that of the above transfers of memberships, only Annexes B and AA are recognized by the association. The other assignments/transfers, namely: Exhibits A, C, D, E & F are refused recognition on the grounds that the New Corporation Code, which took effect on May 1, 1980, prohibits the same. Your queries are restated as follows: 1. Does the board of directors have a legal basis in refusing to recognize the transfers/assignments of membership as evidenced by Exhibits "A","C","D","E" & "F"? 2. Would Section 90 of the Corporation Code similarly affect transfers/assignments of membership covered by Exhibits "B" and "AA"? 3. Must Section 90 be given a retroactive effect such as to cover transfers made prior to May 1, 1980, specifically those made in 1979 as evidenced by Exhibits "I" and "J"? 4. Does the prohibition in Section 90 include transfer by inheritance? Section 90 of the Corporation Code provides thus: "Non-transferability of membership. Membership in a non-stock corporation, and all rights arising therefrom, are personal and non-transferable ,unless the articles of incorporation or the by-laws provide otherwise." (Emphasis supplied) The general rule is that membership in non-stock corporation has personal elements accompanied by social and other ties, hence, it cannot be transferred to any other who wishes to be a member. However, this general rule admits of an exception, that is, where the articles or by-laws so provide that membership and all rights arising therefrom may be subject to transfer. In this connection, the articles of incorporation and by-laws of the association were silent on transferability of membership; the association which was affected by the new requirement of the Corporation Code did not comply with Section 148 thereof within two (2) years from May 1, 1980 by amending its articles or by-laws allowing transfer of membership. Thus, the provision of Section 90 of the Code to the effect that "membership in a non-stock corporation, and all rights arising therefrom are personal and non-transferable" shall be read into their articles or by-laws. In view thereof, the board of directors of that association should not recognize any transfer or assignments of membership made on May 1, 1980 or thereafter, specifically the transfers/assignments of membership as evidenced by your Exhibits "A", "C". "D", "E" & "F". Your second query is answered in the affirmative for the transfers/assignments of membership covered by your Exhibits "B" and "AA" were all executed after the effectivity of the New Corporation Code. Anent the transfers/assignments of membership executed in 1979, as evidenced by your Exhibits "I" and "J", please be informed that Act 1459, as amended, otherwise known as the Corporation Code, which was the law enforced at the time of such transfers, did not contain any express or implied prohibition against transfers of membership. Thus, transfers of membership made prior to May 1, 1980, as those covered by your Exhibits "I" and "J" were deemed valid. As regard your fourth query, please be advised that the word "transfer" includes all transactions whereby property of one person becomes that of another, whether by descent or purchase, and will is common assurance of a transfer which becomes effective at death of testator", (42 Words and Phrases, p. 410, 1952 ed., citing Elwood vs. State Soldiers' Compensation Board, 232 P. 1049, 117 Kan 753). Hence, the prohibition expressed in Section 90 of the New Corporation Code includes transfer by inheritance. Finally, should the association desire that membership therein and all rights arising therefrom be subject to transfer, the proper remedy is to have its articles of incorporation or by-laws amended setting forth the manner of acquiring membership in the association, otherwise, the provision of the Corporation Code will prevail. cdll Very truly yours, (SGD.) MANUEL G. ABELLO Chairman