Dr. Melecio Toledo

February 11, 1982 Dr. Melecio Toledo Isabela Colleges Foundation Cauayan, Isabela Sir : This has reference to your letter dated February 28, 1981, inquiring to what extent Republic Act No. 6055, an Act providing for the conversion of educational institutions from stock corporations to non-profit foundations, has been superseded/amended by the new Corporation Code of the Philippines, particularly with regards the following provisions; 1) The composition of the Board of Trustees "SECTION 4. The management of the foundation shall be vested in a Board of Trustees to be known as the "Board of Trustees of the Foundation".The Board of Trustees shall be composed of ten elected members, with a term of five years and the head of the highest student organization as ex-officio member. ..." 2) The disposition of the assets in case of dissolution. "SECTION 7. If the foundation is dissolved or for any reason its corporate existence ceases, all its assets, shall escheat to the State, subject to its liabilities to the third persons." Section 146 of the Corporation Code of the Philippines provides, thus: "Except as expressly provided by this Code, all laws or parts thereof inconsistent with any provision of this Code shall be deemed repealed." The phrase, " all laws or parts thereof " is a manifest indication of the legislative intent to cover all the laws whose provision are inconsistent with the provisions of the Code. However, provisions not affected by the Code shall continue to have full force and effect. The pertinent provisions of the Code similar to Section 4 of R.A. 6055 provides, thus: "SECTION 92. Election and term of trustees . Unless otherwise provided in the articles of incorporation or the by-laws, the Board of Trustees of non-stock corporations, which may be more than fifteen (15) in number as may be fixed in their articles of incorporation or by-laws, shall as soon as organized so classify themselves that the term of office of one-third (1/3) of their member shall expire every year; and subsequent election of trustees comprising one-third (1/3) of the board of trustees shall be held annually and trustees so elected shall have a term of three years. Trustees thereafter elected to fill vacancies occurring before the expiration of a particular term shall hold office only for the unexpired period. No person shall be elected as trustees unless he is a member of the corporation. Unless otherwise provided for in the articles of incorporation or the by-laws, officers of a non-stock corporation may be directly elected by the members". "SECTION 94. Rules for distribution . In case of dissolution of a non-stock corporation in accordance with the provisions of this Code, its assets shall be applied and distributed as follows: 1. All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made therefor; 2. Assets held by the corporation upon a condition requiring return, transfer or conveyance, and which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed in accordance with such requirements; 3. Assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to one or more corporations, societies or organizations engaged in activities in the Philippines substantially similar to those of the dissolving corporation pursuant to a plan of distribution adopted as provided in this Chapter. 4. Assets other than these mentioned in the preceding paragraphs, if any, shall be distributed in accordance with the provisions of the articles of incorporation or the by-laws, to the extent that the articles of incorporation or the by-laws determine the distributive rights of members, or any class or classes of members or provide for distribution; and 5. In any other case, assets may be distributed to such persons, societies, organizations or corporations whether or not organized for profit, as may be specified in a plan of distribution as provided in this Chapter. "SECTION 95. Plan of distribution of assets, not inconsistent with the provisions of this Title, may be adopted by a non-stock corporation in the process of dissolution in the following manner: The Board of Trustees shall, by majority vote, adopt a resolution recommending a plan of distribution and directing the submission thereof to a vote at a regular or special meeting of members having voting rights. Written notice setting forth the proposed plan of distribution or a summary thereof; and the date, time and place of such meeting, shall be given to each member entitled to vote, within the time and the manner provided in this Code for the giving of notice of meeting to members. Such plan of distribution shall be adopted upon approval of at least two-thirds (2/3) of the members having voting rights present or represented by proxy at such meeting". LexLib Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner