7.2.11.
2 – Methods of Liquidation
Upon dissolution, a corporation continues for 3 years only for the purpose of winding up affairs,
suing and being sued, and disposing of property.
During liquidation, the corporation cannot engage in new business.
Distribution of Assets must follow this order:
1. Payment of debts
2. Distribution of remaining assets to stockholders
Exception: If no Certificate of Dissolution is filed, the corporation may still be deemed existing
and capable of liquidation.
Liquidation may be carried out by:
1. The corporation itself
2. Trustees to whom corporate assets have been conveyed
3. A committee or rehabilitation receiver appointed by the court
The 3-year period does not apply to trustees or receivers. As long as the conveyance occurred
within the 3-year period, the trustee may file suit even beyond the 3-year period until final
judgment.
No remedy in favor or against the corporation shall be removed or impaired due to subsequent
dissolution, including liability incurred by the corporation, its stockholders, members, directors,
or trustees.
7.2.12 – Other Corporations
[Link] – Non-Stock Corporations
Not organized for profit; no part of income distributable as dividends.
Income must be used to pursue the purposes stated in the Articles of Incorporation (AOI).
Membership rights are defined by the by-laws.
Purposes may include: charitable, religious, educational, professional, cultural, fraternal,
scientific, social, civic service, trade, agricultural, or similar purposes, or a combination of such.
Right to Vote:
Classes of members may be granted, broadened, or denied voting rights.
A member is entitled to one vote unless otherwise provided.
May vote in person, by proxy, or remotely (if allowed).
Other rights include transferring membership and voting via proxy.
Election and Term of Trustees:
Same as stock corporations.
Updated list of members and proxies must be submitted 20 days prior to any scheduled election.
Rules on Distribution of Assets:
1. Liabilities and obligations must be paid.
2. Assets held subject to return, transfer, or conveyance must be returned.
3. Assets with limitations requiring return for the primary purpose shall be transferred to another
similar organization.
4. Remaining assets shall be distributed according to the AOI or by-laws.
5. In other cases, assets may be distributed as specified and not for profit.
[Link] – Educational Corporations
May be stock or non-stock; conversion requires dissolution because it changes corporate nature.
Organized to provide facilities for teaching or instruction.
Requires favorable recommendation of the DepEd/CHED (cannot confirm exact agency due to
unclear text) for approval of AOI and by-laws.
Governed primarily by special laws and supplementarily by the Revised Corporation Code (RCC).
Board of Trustees (Non-Stock):
1. Must have at least 5 trustees, and the number must be in multiples of 5.
2. Term of office: ⅓ of trustees retire yearly.
3. Trustees serve 3-year terms unless otherwise provided.
4. Vacancies are filled only for the unexpired term.
5. Powers and authority defined by the by-laws.
[Link] – Religious Corporations
Governed by Chapter II, Title XIII of the RCC and supplementarily by non-stock corporation
provisions.
Composed of spiritual persons, organized for the furtherance of religion or for managing
religious property.
Types:
1. Corporation Sole – Formed by a chief archbishop, bishop, minister, priest, or presiding elder for
managing the affairs, properties, and temporalities of a religious denomination.
2. Religious Society – A non-stock corporation with religious purposes, incorporated by a group
(e.g., diocese, synod, sect).
Corporation Sole Requirements (to SEC):
AOI must state:
o Applicant is the presiding elder representing the religious group wishing to incorporate.
o A description of the elder’s authority over administration, property, and affairs.
o Rules for succession to fill vacancies.
o Principal office located within the Philippines.
o Provisions not contrary to law.