Mrs. Asuncion G. Celiz

September 25, 1995 Mrs. Asuncion G. Celiz 10 Investment St. SSS Homes, N.F. Quezon City M a d a m : This refers to your letter dated September 9, 1995, inquiring on the legalities of the issues raised therein relative to the existence of PHILIPPINE HEART CENTER HEART CLUB, INC. As stated, the Philippine Heart Center Heart Club, Inc. was previously registered with the SEC. However, it was dissolved due to non-submission of SEC requirements. Your queries are summarized as follows: Under the above circumstances, does the club still have the right to exist? Is it still subject to its present by-laws and the Corporation Code? If not, what will govern its operations? Is it legally possible for persons to manage the projects of the club making it appear that it belongs to them? Who will be responsible in case the Club commits malpractices. A verification from the corporate files of the above-named corporation on file with the Commission reveals that it was dissolved not for reason stated in your letter but by expiration of its term of existence. Records show that it was incorporated/registered on June 23, 1987, with a term of existence of only one (1) year from and after the date of incorporation. Therefore, its term of existence has expired on June 23, 1988. As a consequence thereof, the Club ceased to exist as a body corporate and is dissolved ipso facto .Hence, it lost its legal personality to continue acting as a corporation. However, while the club is prohibited from continuing its operation as a " corporation ",it may opt to continue to undertake the purposes for which it was organized, but its status is only that of an ordinary " association " which has no juridical personality. "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). It is worth mentioning that an association which is not engaged in profitable business and not desirous of acquiring juridical personality need not be registered with the Commission. However, an unregistered association, is not a juridical person, and hence, denied the rights and privileges which are incident only to incorporation. 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 representatives or agents do so at their own risk. (SEC Opinion, Supra citing Vda. de Salvatierra v. Garlitos et al., L-11442, May 23, 1958). In short, an unregistered association cannot exercise the powers, rights and privileges expressly granted under the Corporation Code to registered corporation, and is not subject to the provisions thereof, and hence, may be governed by its own rules and regulations. Furthermore, since it has no legal personality separate from its members, the members and officers thereof can be sued and be held responsible for their acts. Finally, should the members of the Club desire to re-incorporate, it may do so by complying with the registration requirements under the Corporation Code. prcd Please be advised accordingly. (SGD.) FE ELOISA C. GLORIA Associate Commissioner