Corporate Books and Records (S74, S75) The following shall be kept and maintained by the corporation: 1.

. Every corporation registered under this provisions to keep a record of all business transactions (S74) 2. Minutes of meetings of both the SH and Directors 3. The Stock and Transfer Book or Membership Book if non-stock 4. Financial statements (S75) All this books and records shall be subject to inspection by members and SH during reasonable hours on any business day and either personally or through his authorize representative, with or without the presence of the particular SH concerned. W. Philpotts vs Phil. Mfgt co., inspection may be done with the SHs representatives F: petitioner, a SH in the PMC seeks to obtain a writ of mandamus to compel the respondents to permit him, in person or by some authorized agent or attorney, to inspect and examine the records transacted by said company. R: the right of inspection given to a SH can be exercised either by himself or by any proper representative or atty-in-fact, and either with or without the attendance of the SH. Pardo vs. Hercules Lumber F: petitioner a SH of Hercules seeks to obtain a writ of mandamus to compel respondent to permit him and his duly authorized agent and representative to examine the records and business transaction of Hercules. Hercules defense appears to be rested has reference to the time or times within which the right of inspection may be exercised. The Board also resolved to call the usual general meeting for March 30 with notice to the SH thath the books of the company are at their disposition from the th th 15 to 25 of the same month for examination in appropriate hours and contended that there is a lawful restriction on the right conferred by statute and it is insisted that the petitioner has not availed himself of the permission to inspect the books and transaction of the company within the 10 days thus defined, his right to inspection and examination is lost. R: The general right given by the statute may not be lawfully abridged to the extent attempted in this resolution. The officials in charge of a corporation may deny inspection when sought at an unusual hour or other improper condition but neither the executive officers nor the board have the power to deprive a SH of a right althogether. A by-law unduly restricting the right of inspection is invalid.

Vegaruth vs Isabela Sugar F: petitioner prays that mandamus be issued to each and all, of the respondents to notify immediately the petitioner within the reglementary period of all regular and special meetings of the BOD and to place at his disposal at reasonable hours the minutes, documents, and books of said corporation for his inspection as director and SH, and to issue immediately, upon payment of the fees certified copies of any documentation in connection with said minutes, documents and books. I: W/N the secretary was justified for his refusal to furnish the said books and documents R: Vegaruth telegraphing the secretary of the company secretary to forward in the shortest possible time a certified copy of the resolution concerning the payment of attys fees against Isabela Sugar co and others. To this, the secretary made decline d to comply since the minutes of the meeting had not been signed by the directors present, a certified copy could not be furnished and that as to other proceedings of the SH a request should be made to the president of the company. it further appears that the BOD adopted a resolution providing for inspection of the books and taking of copi es by authority of the president of the corporation, previously obntained in each case. Directors of a corporation have the unqualified right to inspect the books and records of the corporation at all reasonable hours. However, a director or SH does not have any absolute right to secure certified copies of the minutes of the corporation until these minutes have been written up and approved by the directors. It is not improper when a secretary declined to furnished certified true copies of minutes which had not been approved by the BOD and as provided in the resolution of the BOD which requires prior approval of the president.

Non-Stockholders, or assuming even the heirs of the deceased stockholder cannot inspect the books and records of the corporation of the SH. Puno vs Puno Ent. (599S685) the SHs right to inspection of the corporate books and records is based upon his ownership of shares and the necessity of self-protection. A SH has the right to be intelligently informed about the corporate affairs and such right rest upon the underlying ownership of the corporate assets and properties. Only the SH of record are entitled to receive dividends from the corporation as an inherit right. In this case, the SH died, the heirs wanted to exercise the ownership over the shares left by their deceased father. Upon the death of SH, the heirs do not automatically become SH of the corporation and acquire the rights and privileges of the deceased SH. The stocks must first be distributed to the heirs upon estate proceedings and the transfer of the stocks should be recorded in the books as required under S63. During the interim period, the heirs stand as the equitable owners of the stocks. The executor/administrator duly appointed by the court being vested with the legal title of the stocks until the settlement and division of the estate are effected, the estate of the decedent are held by the executor/administrator who are entitled to exercise the rights of the deceased SH.

 An estate proceeding must first be effected before the heirs can exercise ownership over the shares A SH of a holding/parent company cannot inspect the books and records of the subsidiary if he is not a SH of the subsidiary. The holding company must own wholly all the shares of the stocks of the subsidiary before a SH of the holding/parent company may inspect the books and records of the subsidiary. Case of Gokongwei vs. SEC Gokongwei vs SEC F: W/N the respondent SEC abused its discretion in denying petitioners right for an examination of the books and records of SMI, a fully-owned subsidiary of SMC. R: Pursuant to Sec 51 of the Corporation Code, the SHs right to inspection is based upon their ownership of the assets and property of the corporation. It is an incident of the ownership of the corporate property whether this interest or ownership be termed an equitable ownership, a beneficial or quasi-ownership. The right is predicated upon the necessity of self-protection. Where the right is granted by statute to the SH, it is given to him as such and must be exercised by him with respect to his interest as a SH and for some purpose germane thereto or in the interest of the corporation. The inspection has to be germane to the petitioners interest as a SH and has to be proper and lawful in character and not inimical to the interest of the corporation. In Grey vs Insular Lumber, the court held that the right to examine the books must be exercised in good faith for specific and honest purpose and not to gratify curiosity or for speculative or vexatious purposes. Thus, the right given by statute is not absolute and may be refused when the information is not sought in good faith or is used to the detriment of the corporation. The burden of proof showing impropriety of purposes in on the corporation and not the SH. Where a corporation owns approximately no property except the shares of stock of subsidiary which are merely agents or instrumentalities of the holding company, the legal fiction of distinct corporate entities may be disregarded and the books, papers and documents of all corporation may be required to be produced for examination and a mandamus may be granted as the records of the subsidiary were to all intents and purposes, the records of the parent even though subsidiary was not named as party. However, mandamus may be refused where the subsidiary is a separate and distinct corporation domiciled and with its books and records in another jurisdiction, and is not legally subject to the control of the parent company although it owned a vast majority of the stocks of the subsidiary. Inspection of an allied corporation by SH of the parent company which owns all the stock of the subsidiary has been refused on the ground that the SH was not within the class of persons having an interest. In this case, considering that the foreign subsidiary is wholly owned by SMC and under its control, it would be more in accord with equity, good faith and fair dealing to construe the statutory right of petitioner as SH to inspect the books and records of such wholly-owned subsidiary which are in respondent corporations posse ssion and control. If wholly owned, even if not a SH of the subsidiary, the SH of the parent may inspect the books of the subsidiary. If the two entities, parent and subsidiary, are legally being operated as separated and distinct copy, no right of inspection on the part of the parent to inspect the books of the subsidiary. (rogers vs. Sherman oil) If a SH/member is refused the right of inspection, the remedy is mandamus with claim for damages and/or attorneys fees; or criminal complaint for the violation of his right under Sec. 144 of Corporation Code where a fine of 1k-10k or imprisonment of 30 days 5 years (it is the penal provision of the Corporation Code) (S74(2))The defenses of the officers/directors may advance to avoid liability are: a. Improper use of information secured through previous examination b. Not acting in good faith or for a legitimate purpose PNB vs. Gonzales, Gonzales acquired 1 share of stock of PNB in order to pry into the activities of the bank even before he was a SH. The bank officers refused. The court ruled that there was improper use of information secured through previous examination and not acting in good faith. PNB was created by special law and primarily governed by law creating them and supplemented only by Corporation Code whenever applicable. A SH of PNB cannot examine the financial records of the bank. The charter of the bank only allows the monetary board of the Central Bank itself and the result can be divulged to the President of the Philippines, Secretary of Finance and the board themselves. c. The right is limited or restricted by special law or the law of its creation

Gonzales v. PNB F: Petitioner instituted a special civil action for mandamus against respondent praying that the latter be ordered to allow him to look into the books and records of the bank in order to satisfy himself as to the truth of the published report that the respondent has guaranteed the obligation of South Negros Devt Corporation in the purchase of a sugar mill to be financed by Japanese suppliers and financers. When the respondent denied his request, the petitioner sought mandamus from the CFI of Manila, adding that he acquired one (1) share of stock in PNB and was thus entitled to examine the respondent s records. Also, previous to this action, the petitioner instituted several cases in this court questioning different transactions entered into by the bank with other parties. The RTC dismissed the petitioner on the ground that the petitioner had improper motives and his purpose was not germane to his interest as a SH. and was appealed to CA. Issue: 1. Whether Gonzales' can ask for an examination of the books and records of PNB, in light of his ownership of one share in the bank. 2. Whether the inspection sought to be exercised by Gonzales would be violative of the provisions of PNB's charter. Held:

1. The unqualified provision on the right of inspection previously contained in Section 51, Act No. 1459, as amended, no longer holds true under the provisions of the present law. The argument of Gonzales that the right granted to him under Section 51 of the former Corporation Law should not be dependent on the propriety of his motive or purpose in asking for the inspection of the books of PNB loses whatever validity it might have had before the amendment of the law. If there is any doubt in the correctness of the ruling of the trial court that the right of inspection granted under Section 51 of the old Corporation Law must be dependent on a showing of proper motive on the part of the stockholder demanding the same, it is now dissipated by the clear language of the pertinent provision contained in Section 74 of Batas Pambansa Bilang 68. Although Gonzales has claimed that he has justifiable motives in seeking the inspection of the books of the PNB, he has not set forth the reasons and the purposes for which he desires such inspection, except to satisfy himself as to the truth of published reports regarding certain transactions entered into by the respondent bank and to inquire into their validity. The circumstances under which he acquired one share of stock in the PNB purposely to exercise the right of inspection do not argue in favor of his good faith and proper motivation. Admittedly he sought to be a stockholder in order to pry into transactions entered into by the PNB even before he became a stockholder. His obvious purpose was to arm himself with materials which he can use against the PNB for acts done by the latter when Gonzales was a total stranger to the same. He could have been impelled by a laudable sense of civic consciousness, but it could not be said that his purpose is germane to his interest as a stockholder. 2. Section 15 of the PNB's Charter (RA 1300, as amended) provides that "Inspection by Department of Supervision and Examination of the Central Bank. The National Bank shall be subject to inspection by the Department of Supervision and Examination of the Central Bank." Section 16 thereof providest that "Confidential information. The Superintendent of Banks and the Auditor General, or other officers designated by law to inspect or investigate the condition of the National Bank, shall not reveal to any person other than the President of the Philippines, the Secretary of Finance, and the Board of Directors the details of the inspection or investigation, nor shall they give any information relative to the funds in its custody, its current accounts or deposits belonging to private individuals, corporations, or any other entity, except by order of a Court of competent jurisdiction." On the other hand, Section 30 of the same provides that "Penalties for violation of the provisions of this Act. Any director, officer, employee, or agent of the Bank, who violates or permits the violation of any of the provisions of this Act, or any person aiding or abetting the violations of any of the provisions of this Act, shall be punished by a fine not to exceed ten thousand pesos or by imprisonment of not more than five years, or both such fine and imprisonment." The Philippine National Bank is not an ordinary corporation. Having a charter of its own, it is not governed, as a rule, by the Corporation Code of the Philippines. The provision of Section 74 of Batas Pambansa Blg. 68 of the new Corporation Code with respect to the right of a stockholder to demand an inspection or examination of the books of the corporation may not be reconciled with the above quoted provisions of the charter of the PNB. It is not correct to claim, therefore, that the right of inspection under Section 74 of the new Corporation Code may apply in a supplementary capacity to the charter of the PNB.

S76-80 MERGERS AND CONSOLIDATIONS 78 and 79 are procedures of mergers and consolidations The requirements and procedure necessary to accomplish a merger or consolidation are as follows: 1. The BOD/Trustees of each constituent corporation shall approve a plan of merger or consolidation setting forth the matters required in Section 76; 2. Approval of the plan by the SH representing 2/3 of the OCS or 2/3 of the member in Non-Stock of each of such corporations at separate corporate meetings called for that purpose 3. Prior notice of such meeting, with copy or summary of the plan of merger or consolidation shall be given to all SH or members at least 2 weeks prior to the scheduled meeting 4. Execution of articles of merger or consolidation by each constituent corporations to be signed by the president or VP and certified by the corporate secretary or asst. secretary setting forth the matters required in Sec. 78 5. Submission of articles of merger or consolidation in quadruplicate to the SEC subject to the requirement of Sec. 79 that if it involve corporations under the direct supervision of any other govt agency or governed by special laws, the favourable recommendation of the said govt agency shall be first be secured; and 6. Issuance of the certificate of merger or consolidation by the SEC at which it shall be effective. If the plan is contrary to law, the SEC shall set a hearing to give the corporations an opportunity to be heard upon proper notice and the SEC shall proceed as provided. S80: Effects of Mergers 1. The constituent corporation or the parties to the mergers and consolidation shall become a single corporation, in the case of merger would be the surviving or absorbing corporation; in consolidation, the consolidated corporation. 2. The separate existence of the corporation shall cease except that of the surviving or consolidated. 3. The surviving or consolidated corporation shall possess all the rights, immunities and powers and shall be subjected to all the duties and liabilities of the corporation organized under the code. 4. The surviving or consolidated shall thereupon and thereafter possess all the rights, privileges, immunities and franchises of each of the constituent corporations and any and all properties and all receivables due and whatever account including subscriptions to shares and other choses in action and all and any other interest of, or belonging to or due to each of the constituent corporations shall be transferred to surviving or consolidated corporation without any further act or deed. No need to indicate in the contract to the effect that all rights, properties, or remedies shall be vested to the surviving/consolidated corporation. The law provides for its effect and it is automatic. 5. The surviving and the consolidated corporations shall be responsible and liable to all the liabilities and obligations of the constituent in the same manner as if the surviving/consolidated corporation have itself incurred such liabilities and obligations; and any pending claim brought by or against any of the constituent corporation may be prosecuted against the surviving/consolidated corporation.

 Merger union effected by absorbing one or more existing corporations by another which survives and continues the combined business. Consolidation the uniting or amalgamation of two or more existing corporations to form a new corporation. Associated Bank vs CA F: Associated Bank Corporation and Citizens Bank and Trust Company merged to form just one banking corporation by virtue of the Amended AOI. The defendant Lorenzo Sarmiento executed in favor of AB a promissory note undertaking to pay the latter P2.5M on or before March 6, 1978. However, due to failure of Sarmiento to pay, AB filed this complaint. The defendant denied all the allegations and alleged as affirmative and special defenses that the complaint states no valid cause of action and AB is not the proper party in interest because the prom note was executed in favor of CBTC. The court ruled in favor of AB and ordered Sarmiento to pay AB his remaining balance + interest and attys fees. CA set aside the decision of the tc and dismissed the complaint. Hence, this appeal. I: W/N the AB may enforce the prom note made by provate respondent in favor of CBTC, the absorbed company after merger? R: Yes. In the merger of two or more existing corporations, one of the combining corporations survives and continues the combined business, while the rest are dissolved and all their rights, properties and liabilities are acquired by the surviving corporation. Although there is a dissolution of the absorbed corporations, there is no winding up of their affairs or liquidation of their assets because the surviving corporation automatically acquires all their rights, privileges and powers, as well as their liabilities. The merger, however, does not become effective upon the mere agreement of the constituent corporations. There should be approval by the SEC of the articles of merger which, in turn, must have been duly approved by a majority of the respective SH of the constituent corporations. In this case, an agreement of merger with AB and CBTC was entered on September 16, 1975 and provided that its effectivity shall be the date when the necessary papers to carry out this merger shall have been approved by the SEC. the agreement likewise provided for the transfer of the properties, rights, privileges, powers, franchises, assets, including goodwill and tradename, and all debts due to CBTC and all other actions belonging to CBTC shall be vested in AB as the surviving bank without need of further act or deed. The records do not show when the SEC approved the merger, however, assuming that the effectivity date of the merger was the date of execution, the Court cannot agree that petitioner no longer has any interest in the promissory note. The fact that the promissory note was executed after the effectivity date of merger does not militate against petitioner. The agreement itself clearly provides that all contracts irrespective of the date of execution entered in the name of CBTC shall be understood as pertaining to the surviving bank AB. Although the promissory note names CBTC as the payee, the reference to CBTC in the note shall be construed as a reference to petitioner bank. The Court holds that petitioner has a valid cause of action against Sarmiento. Consolidated/surviving corporation will not absorb the employees of constituent corporation absent specific provision in the merger agreement because the employees are not considered assets nor liabilities of th e corporation. Management of the surviving/consolidated corporation has the discretion to deny or absorb the employees, while the employees may likewise refuse to be absorbed otherwise there will be forced labor.

S81 APPRAISAL RIGHT vs Pre-emptive right Appraisal right granted to dissenting or objecting SH uncertain corporate or business decisions and demand the payment of the fair value of his share. Not available in any or all instances when a SH objects on a particular corporate act or transactions. Only available as provided for the corporation code. Instances of appraisal right any SH of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances: 1. In case of any amendment of AOI that has the effect of changing or restricting the rights of any SH; or class of shares or authorizing preferences in any respect superior to those outstanding shares of any class; or shortening or extending the corporate term or existence It is not available in all instances where there is an amendment of AOI under S16 subject to the appraisal right or provisions governing general amendment. Unless such appraisal right is subject to the preceding paragraph. 2. In case of the sale, lease, transfer, mortgage, exchange, pledge or other disposition of the corporate property and assets as provided in the Code; and 3. In cases of mergers and consolidation S82 - May be exercised by dissenting SH in cases falling under S42 However, a SH in closed corporation may for any reason under S105 compel the corporation to purchase his share at the fair value effectively granting the SH absolute right of appraisal, if not denied by AOI and provided only that the corporation has sufficient assets to cover debts and liabilities exclusive of capital. This rule does not apply in ordinary corporation.

Procedure and Requirements for the valid exercise of appraisal right 1. The SH must have voted against the proposed corporate action in any of the instances allowed by law for the exercise

The effect of appraisal right from the time the demand of payment until the abandonment of corporate action, all rights accruing to such shares including voting and dividend right shall be suspended provided the SH is not paid the value of the shares within 30 days from the date of the award, his voting and dividend right shall be restored The delinquent SH is entitled to receive dividends, but a SH exercising his appraisal right is not entitled to any of it. However, both of them have no voting rights. A SH exercising his appraisal right who is also a director does not lose his right as a director unless his shares are fully paid for by the corporation. The shares will still stand and remain in his name in the books of the corporation. A SH who does not paid his subscription in full may exercise his appraisal right under S72. Subscribers to shares of stocks not fully paid shall have all the rights of a SH. The annotation of the Stocks Certificate under S86 in order that appraisal right may be exercised is not mandatory; it is in the option of the corporation.

Title 11 S87 S88 Non-stock Corporation Sec. 3 with Sec. 87, one where no part of its income is distributable as dividends, members, trustees or officers. The provisions governing stock corporation when pertinent except may be covered by specific provisions of title 11 Section 88. Purposes. Non-stock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers, or any combination thereof, subject to the special provisions of this Title governing particular classes of non-stock corporations. Even if it may have a capital stock dividend into shares proprietary or otherwise, a corporation is considered non-stock so long as it does not distribute dividends to its members and officers. A NS corporation cannot engage in any business undertaking or activity for profit as it would run counter to its very nature as a non-profit entity. However, it may be allowed to engage in business if it is allowed and specified in its AOI or as incidental to the objects and purposes indicated therein or to defray the operating expenses of the entity. The determination of W/N a NS corporation can engage in profit-making depends largely on the purpose/s indicated in the AOI. If the business activity is authorized in the AOI, necessary, incidental or essential thereto, the same may be undertaken by the corporation, otherwise, not, as it would be an ultra-vires act under S45. The enumeration in S88 is not exclusive as the law itself recognizes similar or allied purpose or purposes for which NS corporations may be organized.

S89 VOTING RIGHTS Each member is entitled to one vote, thus cumulative is not generally allowed in NS. (Whereas cumulative voting is a matter of right granted to SH in a Stock Corporation) Except where the AOI or by-laws of non-stock may broaden, limit or deny voting rights of the members. i.e voting rights by proxy, honorary members, inactive or active members, etc. Doctrine of limited capacity in the corporate form of business Section 89. Right to vote. The right of the members of any class or classes to vote may be limited, broadened or denied to the extent specified in the articles of incorporation or the by-laws. Unless so limited, broadened or denied, each member, regardless of class, shall be entitled to one vote. Unless otherwise provided in the articles of incorporation or the by-laws, a member may vote by proxy in accordance with the provisions of this Code. (n) Voting by mail or other similar means by members of non-stock corporations may be authorized by the by-laws of non-stock corporations with the approval of, and under such conditions which may be prescribed by, the Securities and Exchange Commission. NS have the right to adopt rules prescribing the mode and manner which membership may be obtained or maintained. Membership Membership in a non-stock is personal in nature and non-transferable unless the by-laws provide otherwise. Membership acquired in a non-stock corporation Pursuant to the powers to issue stocks and admit under S36(6), A non-stock corporation can provide manner of admission of its members. Cebu Country Club vs. Elizagake can set criteria and standards to admit their member. The transferee of a membership certificate does not have the same right or privilege to compel the corporation to transfer in his name to become a member of the non-stock. However, in this case, it effectively upholds the non-profit, nonstock corporation to determine who its members shall be. It has the right to approve or disapprove an application for propriety membership. As long as the right should not be exercised arbitrarily. (In this case, Elizagake is a transferee of Cebu Country Club. He filed an application and used the application form of the club, however, it appears that that form does not impose or require a unanimous vote of the members to admit a member. He did not know that there was already an amendment of that provision in the application form which was amended more than 19 years ago. He only presumed that the requirement for the vote is only the majority. But he was denied membership because one of the members objected. One of the defenses was that

the amendment was not printed due to economic reason. The Court ruled that the said excuse was flimsy and unconvincing. The Court cannot fathom why such a prestigious country club whose members are all affluent did not have enough money to cause the printing of an updated application form. The court though admitted that a non-stock have the right to set standards and criterias, it should not be, however, be arbitrary as provided under Art. 19 of the Civil Code.) Section 90. 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 otherwise provide. (n) Section 91. Termination of membership. Membership shall be terminated in the manner and for the causes provided in the articles of incorporation or the by-laws. Termination of membership shall have the effect of extinguishing all rights of a member in the corporation or in its property, unless otherwise provided in the articles of incorporation or the by-laws Membership may be acquired by complying with the provision of its rules prescribed in the by-laws. This is consonance with the express power granted by law under S36(6) authorizing them to admit members and the authority carries with it the power to prescribe rules on membership. In the absence of charter or statutory restrictions, NS may determine who and how they shall be admitted. They can also exclude any person whom it deems unfit for membership The court has no power to interfere In the absence of any provisions in the AOI or by-laws relative to the manner and causes of termination or expulsion of member, the decided weight of authority is to the effect that the power is inherent and may be exercised in certain situations: 1. When an offense is committed which is so infamous as to render him unfit for society of honest men, and indictable at common law 2. When the offense is a violation of his duty as a member of the corporation 3. When the offense is of a mixed nature, both against his duty as a member of the corporation and also indictable at common law.

Chinese YMCA vs Ching F: On January 17, 1966, respondent Victor Ching filed with the Court of First Instance of Manila an action for mandamus with preliminary injunction against the herein petitioners, (Chinese YMCA for short), William Golangco, in his capacity as Director and President of the Chinese YMCA, and Juanito K. Tan, in his capacity as Recording Secretary of the Chinese YMCA. Respondent Ching anchored his action in the Court of First Instance of Manila upon the claim that the Membership Campaign of the Chinese YMCA for 1966 held from September 27, 1965, up to November 26, 1965, only 175 applications for membership were submitted, canvassed and accepted on the last day of the membership campaign. Not more than 240 membership applications, as reported in the issue of the Chinese Commercial News, were filed. The herein petitioners, on the other. hand, alleged that 249 membership applications, including the 106 submitted through respondent Ching, were filed during the campaign period. Further, the petitioners denied that there was any counting and/or approval of membership applications that took place on November 26, 1965, as under the Constitution and By-Laws of the Chinese YMCA membership applications had to be screened by its Membership Committee, endorsed favorably to its Board of Directors and approved by the latter body by two-thirds majority vote. It is claimed by the petitioners that of the 249 applications submitted, 174 were favorably endorsed by the Membership Committee to the Board of Directors and subsequently approved by the latter. 75 applications, which were among those submitted by respondent Ching were not approved for the reason that said respondent had given "stop-payment" orders on the checks submitted by him and some others to cover payment of the fees corresponding to these 75 applications. Accordingly, petitioners contend that the 1966 membership of the Chinese YMCA should be constituted as they are constituted, only by those 174 applicants whose applications were approved by the Chinese YMCA Board of Directors. It is to be noted that respondent Victor Ching is a member of the Board of Directors of the Chinese YMCA, while herein petitioners, William Golangco and Juanito K. Tan, are its president and recording secretary, respectively; that in the campaign for membership for the year 1966, a rivalry had developed between two groups in the association, one headed by respondent Ching and the other by petitioner Golangco; that on the last day of the membership campaign, November 26, 1965, respondent Ching and herein petitioner Golangco were in the office of the Chinese YMCA located at Room 336, Republic Supermarket Building, Florentino Torres, Manila; that respondent Ching, after it was agreed upon that there was going to be no extension of the membership campaign and that no application would be received after 5 o'clock that afternoon of November 26, 1965, caused to be counted the number of applications actually in the possession of the General Secretary of the association, at the close of office hours, 5:00 o'clock p.m. or thereabout, and the number of applications thus submitted was 175; and that two (2) days thereafter, it was reported in the November 28, 1965, issue of the Chinese Commercial News that some 240 applications for membership were received by the Chinese YMCA during the last day of its membership campaign, November 26,1965,5:00 o'clock p.m. After trial, the Court of First Instance of Manila rendered its decision annulling the 1996 annual membership campaign of YMCA and declaring as without legal effect the results of the same, including the approval of 174 applications to constitute the present active membership of the association; making permanent the preliminary injunction issued in this case enjoining the respondents from holding the annual election of the respondent association, until such time that a new list of members shall have been finalized; and dismissing the counterclaim of the respondents. CA affirmed.

Ruling: The documentary evidence itself as cited by the trial court, consisting of the applications and the receipts for payment of the membership fees show that they were filed and paid not later than the November 26, 1965 deadline, and this was further supported by the bank statement of the petitioner YMCA deposit account with the China Banking Corporation and the checks paid by certain members to the YMCA which show that the application fees corresponding to the questioned 74 applications (that raised the total to 249 from 175) were already paid to petitioner YMCA as the time of the said deadline. No evidence could be cited by the trial court to rebut this well nigh conclusive documentary evidence other than respondent's unsupported suspicion which the trial court adopted in a negative manner with its statement that it is "not improbable" that " some of those applications filed after said deadline". If there were indeed any applications filed after the deadline, they certainly should have been positively pinpointed and specifically annulled. What is worse, 175 membership applications were undisputedly filed within the deadline (including the 75 withdrawn by respondent) and yet the 100 remaining unquestioned memberships were nullified by the questioned decision without the individuals concerned ever having been impleaded or heard (except the individual petitioners president and secretary). The appealed decision thus contravened the established principle that the courts cannot strip a member of a non-stock non-profit corporation of his membership therein without cause. Otherwise, that would be an unwarranted and undue interference with the well established right of a corporation to determine its membership, as announced by Fletcher, as follows: Compliance with provisions of charter, constitution or by-laws. In order that membership may be acquired in a non-stock corporation and valid by-laws must be complied with, except in so far as they may be and are waived. *** But provisions in the by-laws as to formal steps to be taken to acquire membership may be waived by the corporation, or it may be estopped to assert that they have not been taken. [12A Fletcher Cyclopedia Corporations, Perm. ed., pp. 583-585; emphasis supplied.] Finally, the appealed decision did not give due importance to the undisputed fact therein stated that "at the board meeting of the association held on December 7, 1965, a list of 174 applications for membership, old and new, was submitted to the board and approved by the latter, over the objection of the petitioner [therein private respondent] who was present at said meeting." Such action of the petitioner association's board of directors approving the 174 membership applications of old and new members constituting its active membership as duly processed and screened by the authorized committee just be deemed a waiver on its part of any technicality or requirement of form, since otherwise the association would be practically paralyzed and deprived of the substantial revenues from the membership dues of P17,400.00 (at P100.00 per application). WHEREFORE the respondent court's decision is hereby set aside and in lieu thereof judgment is rendered dismissing private respondent's petition in the Court of First Instance of Manila and dissolving the preliminary injunction, with costs against private respondent.

TRUSTEES AND OFFICES 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 number shall expire every year; and subsequent elections 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 (3) 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 trustee unless he is a member of the corporation. Unless otherwise provided in the articles of incorporation or the by-laws, officers of a non-stock corporation may be directly elected by the members. Qualifications of Trustees 1. He is a member of the association 2. Majority must be residents of the Philippines 3. Other qualifications as may be provided for in the by-laws A term in excess of 5 years is not allowed as it would unduly deprived other members to take an active part in corporate management The courts will not generally interfere on matters involving the internal affairs of an unincorporated association such as election contest unless the acts complained of are arbitrary, oppressive, fraudulent, violative of civil rights and the like. An incorporated association or its members may avail the remedy of instituting an intra-corporate dispute case before the proper forum inclusive forum inclusive of election protest, pursuant to S5 of PD 902-A, as amended by RA 8799.

(S93) Place of Meetings In non-stock corporation, anywhere within the Philippines, otherwise provided in for the by-laws. If by-laws are silent as to when meeting will be held, Sec. 87 shall apply only within municipality or city where principal office is located Board of Directors GR: in a Stock corporation, BOD is composed of a 5-15 members except in close corporations, or banks EXCEPTION in non-stock, BOD can be more than 15 members Term of Office

In Stock, not more than 1 year; In Non-stock it can be 3 years Term of office is fixed by law

Tenure of Office May be shorter or be longer; In non-stock, the other corporate officers, i.e president, secretary or treasurer, may be directly elected by the members unless provided for in the AOI In Stock, the officers are voted by the BOD DIFFERENT TYPES OF CORPORATIONS ARE GOVERNED BY THE DIFFERENT PROVISIONS OF THE CODE

DISTRIBUTION OF ASSETS IN NON-STOCK CORPORATIONS Section 94. Rules of distribution. In case 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 therefore; 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 according to a plan of distribution adopted pursuant to this Chapter; 4. Assets other than those 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 adopted pursuant to this Chapter. (n) Assets may be distributed to the members if the AOI provide for distributive rights, otherwise par. 3 shall apply. Assets not subject to number 2, 3 and 4 may be distributed in accordance with a plan of distribution thereof in accordance with S95.

Section 95. Plan of distribution of assets. A plan providing for the 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 in the manner provided in this Code for the giving of notice of meetings 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. Lions Club vs. CA F: Vicente Josefa filed a complaint for Quo Warranto, Injunction, Damages with writ of preliminary injunction and prayer for temporary restraining order against petitioner and James So alleging that that Josefa and So filed their certificates of candidacy for the position of District Governor of District 301-Al for the fiscal year 1982-83; that before the elections an agreement was executed between Josefa and So for the purpose of avoiding an expensive, full-blown election contest, whereby the latter withdrew his certificate of candidacy in favor of Josefa; that said withdrawal of So was duly accepted by District 301-A through Governor Huang who affixed his signature to the aforesaid agreement; that however, news items were published conveying the Idea that So had not withdrawn from the gubernatorial race; that Gov. Huang informed Josefa that So had not filed a new certificate of candidacy and that the District did not recognize So as a candidate to any position; that a telex was sent to Lions Clubs International requesting information whether So was still a candidate after his withdrawal and Lions International admonished incumbent Governor Huang to enforce the Constitution and By-Laws of Multiple District 301 if the withdrawal was in fact made and accepted by the District. It was further alleged that on the day of the election the Chairman of the Nominations Committee reported at the Plenary Session that because of So's failure to file another certificate of candidacy, the District recognized only one candidate, Vicente Josefa, for Governor. The complaint likewise alleged that during all this time, armed men by force and intimidation prevented known leaders and followers of Josefa from entering the Plenary Session; that forced by the deteriorated peace and order in the convention hall and by virtue of the powers vested in him by the State Council of Governors. Plaintiff Josefa also alleged that So and some members of the Council of Past District Governors continued to hold and supervise an illegal election at the old site where voting and non-voting delegates and alternates were allowed to cast their votes without ballots, without ballot boxes and without the issuance of valid accreditation papers of the registered voting delegates. that in the meantime, at the election held at the Admiral Hotel Supervised by Gov. Huang, Josefa obtained 115 votes, a majority of the qualified voting delegates duly accredited, and was duly proclaimed as the Governor-elect of District 301-Al by the State Council of Governors; that, however, defendant Lions Clubs International unlawfully recognized So as the winner. The court ruled in favor of Josefa and issued a TRO. A motion to dismiss and lift the TRO was filed. The MD was dismissed but the TRO was lifted and set aside. CA issued a TRO restraining the RTCs order from lifting the TRO that the latter had issued.

I: W/N election dispute of a NS is subject to judicial review R: the courts will not interfere with the internal affairs of an unincorporated association so as to settle disputes between the members, or questions of policy, discipline, or internal government, so long as the government of the society is fairly and honestly administered in conformity with its laws and the law of the land, and no property or civil rights are invaded. Under such circumstances, the decision of the governing body or established private tribunal of the association is binding and conclusive and not subject to review or collateral attack in the courts. " The general rule of non-interference in the internal affairs of associations is, however, subject to exceptions, but the power of review is extremely limited. Accordingly, the courts have and will exercise power to interfere in the internal affairs of an association where law and justice so require, and the proceedings of the association are subject to judicial review where there is fraud, oppression, or bad faith, or where the action complained of is capricious, arbitrary, or unjustly discriminatory. Also, the courts will usually entertain jurisdiction to grant relief in case property or civil rights are invaded, although it has also been held that the involvement of property rights does not necessarily authorize judicial intervention, in the absence of arbitrariness, fraud or collusion. Moreover, the courts will intervene where the proceedings in question are violative of the laws of the society, or the law of the land, as by depriving a person of due process of law. Similarly, judicial intervention is warranted where there is a lack of jurisdiction on the part of the tribunal conducting the proceedings, where the organization exceeds its powers, or where the proceedings are otherwise illegal. The instant controversy between petitioner So and respondent Josefa falls squarely within the ambit of the rule of judicial nonintervention or non- interference. The elections in dispute, the manner by which it was conducted and the results thereof, is strictly the internal affair that concerns only the Lions association and/or its members, and We find from the records that the same was resolved within the organization of Lions Clubs International in accordance with the Constitution and By-Laws which are not immoral, unreasonable, contrary to public policy, or in contravention of the laws of the land. It is of judicial notice that a Lions club is a voluntary association of civic-minded men whose general purpose and aim is to serve the people and the community. It appears from the records that duly organized and chartered Lions clubs all over the world are under the supervision of the mother club known as The International Association of Lions Clubs for Lions Clubs International) which holds international offices in Illinois, U.S.A., and is governed by its constitution and by-laws. In essence, the courts, considering the nature of the action or suit at bar, are without jurisdiction and authority to review and reverse the decision of the International Board of Directors, Lions Clubs International, approving and recognizing the petitioner as duly elected District Governor of District 301-A1 for the fiscal year 1982-1983.