Mrs. Veronica Y. Magallanes

April 5, 1995 Mrs. Veronica Y. Magallanes Philippine Navy Enlistedmen Wives Association EDSA Mandaluyong City, Metro Manila Madam: This refers to your letter of March 15, 1995 requesting information on the legality of the following issues. LibLex 1. Power of Camp Claudio Neighborhood Association, Inc. (CCNAI) to control Philippine Navy Enlistedmen Wives Association. Inc. (PNEMWAI) 2. Power of CCNAI to conduct raffle activities for the purpose of raising funds without election of new sets of officers 3. Right of the officers of CCNAI to hold office without any Board Resolution 4. Whether raffle tickets of CCNAI have been registered with the SEC'? Records on file with the Commission disclosed that the above-mentioned associations were registered separately and are not affiliated with each other. Hence, either of the two cannot control the other association It is well-settled that the moment an association is registered with the SEC, it is vested with a separate legal personality to act as a corporation enabling it to exercise such powers, rights and privileges of a corporation granted under the Corporation Code. It was discovered, however, that there are two (2) associations registered with the Commission bearing exactly the same name, PHILIPPINE NAVY ENLISTED MEN WIVES ASSOCIATION, INC. One was registered on May 28, 1992 and the other on August 2, 1993. This matter will be referred to the concerned Division of the Corporate and Legal Department for appropriate action. Relative to the issue on the power of CCNAI to offer raffle tickets to raise funds, it is well settled that a corporation has only such powers as are expressly granted in its charter or in the statutes under which it is created or such powers as are necessary for the purpose of carrying out its express powers .(13 Am. Jur. Sec. 739) Only such powers as are reasonably necessary to enable corporations to carry out the express powers granted and the purposes of the creation are to be implied as are to be deemed incidental. (Am. Jur. Sec. 740) Powers merely convenient or useful are not implied if they are not essential, having in view the nature and object of incorporation. (Ibid, citing Planters Bank v. Sharp. 6 How (vs) 301, 12L, ed. 447) The principle that only such necessary powers are to be deemed implied or incidental is emphasized under Section 36(11) of the Corporation Code which provides: "SECTION 36. Corporate powers and capacity . Every corporation incorporated under this Code has the power and capacity: xxx xxx xxx. (11) To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as stated in the articles of incorporation. (Emphasis supplied) Thus, the legality of the fund raising activity of CCNAI depends on whether it is included among the corporation's authorized purposes in the articles of incorporation or necessary in the furtherance of corporate objectives. Be advised further that raffle tickets are not required to be registered with the SEC. However, fund solicitation is subject to the provisions of Act No. 4075 , otherwise known as the Solicitation Permit Law, as amended by P.D. 1564, and the Rules and Regulations of the Department of Social Welfare and Development and Bureau of Internal Revenue. On the matter of "hold over term" of officers, the Commission, on several occasions, has ruled that such situation is allowable when no successors are elected due to justifiable reasons. Accordingly, for as long as the failure to hold an election for directors/officers is due to valid grounds, the incumbent members of the board/officers whose term has already expired, may continue their functions in a hold over capacity until their successors are duly elected and qualified and may decide what is best for the association. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner