Saturday, April 9, 2016

"Corporation sole" may own lands as administrator of temporalities of the church, diocese, religious society


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The question now left for our determination is whether the Universal Roman Catholic Apostolic Church in the Philippines, or better still, the corporation sole named the Roman Catholic Apostolic Administrator of Davao, Inc., is qualified to acquire private agricultural lands in the Philippines pursuant to the provisions of Article XIII of the Constitution.

We see from sections 1 and 5 of said Article quoted before, that only persons or corporations qualified to acquire hold lands of the public domain in the Philippines may acquire or be assigned and hold private agricultural lands. Consequently, the decisive factor in the present controversy hinges on the proposition or whether or not the petitioner in this case can acquire agricultural lands of the public domain.

From the data secured from the Securities and Exchange Commission, We find that the Roman Catholic Bishop of Zamboanga was incorporated (as a corporation sole) in September, 1912, principally to administer its temporalities and manage its properties. Probably due to the ravages of the last war, its articles of incorporation were reconstructed in the Securities and Exchange Commission on April 8, 1948. At first, this corporation sole administered all the temporalities of the church existing or located in the island of Mindanao. Later on, however, new dioceses were formed and new corporations sole were created to correspond with the territorial jurisdiction of the new dioceses, one of them being petitioner herein, the Roman Catholic Apostolic Administrator of Davao, Inc., which was registered with the Securities and Exchange Commission on September 12, 1950, and succeeded in the administrative for all the "temporalities" of the Roman Catholic Church existing in Davao.

According to our Corporation Law, Public Act No. 1549, approved April 1, 1906, a corporation sole is organized and composed of a single individual, the head of any religious society or church, for the ADMINISTRATION of the temporalities of such society or church. By "temporalities" is meant estate and properties not used exclusively for religious worship. The successor in office of such religious head or chief priest incorporated as a corporation sole shall become the corporation sole on ascension to office, and shall be permitted to transact business as such on filing with the Securities and Exchange Commission a copy of his commission, certificate of election or letter of appointment duly certified by any notary public or clerk of court of record (Guevara's The Philippine Corporation Law, p. 223).

The Corporation Law also contains the following provisions:

SECTION 159. Any corporation sole may purchase and hold real estate and personal; property for its church, charitable, benevolent, or educational purposes, and may receive bequests or gifts of such purposes. Such corporation may mortgage or sell real property held by it upon obtaining an order for that purpose from the Court of First Instance of the province in which the property is situated; but before making the order proof must be made to the satisfaction of the Court that notice of the application for leave to mortgage or sell has been given by publication or otherwise in such manner and for such time as said Court or the Judge thereof may have directed, and that it is to the interest of the corporation that leave to mortgage or sell must be made by petition, duly verified by the bishop, chief priest, or presiding elder acting as corporation sole, and may be opposed by any member of the religious denomination, society or church represented by the corporation sole: Provided, however, That in cases where the rules, regulations, and discipline of the religious denomination, society or church concerned represented by such corporation sole regulate the methods of acquiring, holding, selling and mortgaging real estate and personal property, such rules, regulations, and discipline shall control and the intervention of the Courts shall not be necessary.

It can, therefore, be noticed that the power of a corporation sole to purchase real property, like the power exercised in the case at bar, it is not restricted although the power to sell or mortgage sometimes is, depending upon the rules, regulations, and discipline of the church concerned represented by said corporation sole. If corporations sole can purchase and sell real estate for its church, charitable, benevolent, or educational purposes, can they register said real properties? As provided by law, lands held in trust for specific purposes me be subject of registration (section 69, Act 496), and the capacity of a corporation sole, like petitioner herein, to register lands belonging to it is acknowledged, and title thereto may be issued in its name (Bishop of Nueva Segovia vs. Insular Government, 26 Phil. 300-1913). Indeed it is absurd that while the corporations sole that might be in need of acquiring lands for the erection of temples where the faithful can pray, or schools and cemeteries which they are expressly authorized by law to acquire in connection with the propagation of the Roman Catholic Apostolic faith or in furtherance of their freedom of religion they could not register said properties in their name. As professor Javier J. Nepomuceno very well says "Man in his search for the immortal and imponderable, has, even before the dawn of recorded history, erected temples to the Unknown God, and there is no doubt that he will continue to do so for all time to come, as long as he continues 'imploring the aid of Divine Providence'" (Nepomuceno's Corporation Sole, VI Ateneo Law Journal, No. 1, p. 41, September, 1956). Under the circumstances of this case, We might safely state that even before the establishment of the Philippine Commonwealth and of the Republic of the Philippines every corporation sole then organized and registered had by express provision of law the necessary power and qualification to purchase in its name private lands located in the territory in which it exercised its functions or ministry and for which it was created, independently of the nationality of its incumbent unique and single member and head, the bishop of the dioceses. It can be also maintained without fear of being gainsaid that the Roman Catholic Apostolic Church in the Philippines has no nationality and that the framers of the Constitution, as will be hereunder explained, did not have in mind the religious corporations sole when they provided that 60 per centum of the capital thereof be owned by Filipino citizens.

There could be no controversy as to the fact that a duly registered corporation sole is an artificial being having the right of succession and the power, attributes, and properties expressly authorized by law or incident to its existence (section 1, Corporation Law). In outlining the general powers of a corporation. Public Act. No. 1459 provides among others:

SEC. 13. Every corporation has the power:

(5) To purchase, hold, convey, sell, lease, lot, mortgage, encumber, and otherwise deal with such real and personal property as the purpose for which the corporation was formed may permit, and the transaction of the lawful business of the corporation may reasonably and necessarily require, unless otherwise prescribed in this Act: . . .

In implementation of the same and specially made applicable to a form of corporation recognized by the same law, Section 159 aforequoted expressly allowed the corporation sole to purchase and hold real as well as personal properties necessary for the promotion of the objects for which said corporation sole is created. Respondent Land Registration Commissioner, however, maintained that since the Philippine Constitution is a later enactment than public Act No. 1459, the provisions of Section 159 in amplification of Section 13 thereof, as regard real properties, should be considered repealed by the former.

There is a reason to believe that when the specific provision of the Constitution invoked by respondent Commissioner was under consideration, the framers of the same did not have in mind or overlooked this particular form of corporation. It is undeniable that the naturalization and conservation of our national resources was one of the dominating objectives of the Convention and in drafting the present Article XII of the Constitution, the delegates were goaded by the desire (1) to insure their conservation for Filipino posterity; (2) to serve as an instrument of national defense, helping prevent the extension into the country of foreign control through peaceful economic penetration; and (3) to prevent making the Philippines a source of international conflicts with the consequent danger to its internal security and independence (See The Framing of the Philippine Constitution by Professor Jose M. Aruego, a Delegate to the Constitutional Convention, Vol. II. P. 592-604). In the same book Delegate Aruego, explaining the reason behind the first consideration, wrote:

At the time of the framing of Philippine Constitution, Filipino capital had been to be rather shy. Filipinos hesitated s a general rule to invest a considerable sum of their capital for the development, exploitation and utilization of the natural resources of the country. They had not as yet been so used to corporate as the peoples of the west. This general apathy, the delegates knew, would mean the retardation of the development of the natural resources, unless foreign capital would be encouraged to come and help in that development. They knew that the naturalization of the natural resources would certainly not encourage theINVESTMENT OF FOREIGN CAPITAL into them. But there was a general feeling in the Convention that it was better to have such a development retarded or even postpone together until such time when the Filipinos would be ready and willing to undertake it rather than permit the natural resources to be placed under the ownership or control of foreigners in order that they might be immediately be developed, with the Filipinos of the future serving not as owners but utmost as tenants or workers under foreign masters. By all means, the delegates believed, the natural resources should be conserved for Filipino posterity.

It could be distilled from the foregoing that the farmers of the Constitution intended said provisions as barrier for foreigners or corporations financed by such foreigners to acquire, exploit and develop our natural resources, saving these undeveloped wealth for our people to clear and enrich when they are already prepared and capable of doing so. But that is not the case of corporations sole in the Philippines, for, We repeat, they are mere administrators of the "temporalities" or properties titled in their name and for the benefit of the members of their respective religion composed of an overwhelming majority of Filipinos. No mention nor allusion whatsoever is made in the Constitution as to the prohibition against or the liability of the Roman Catholic Church in the Philippines to acquire and hold agricultural lands. Although there were some discussions on landholdings, they were mostly confined in the inclusion of the provision allowing the Government to break big landed estates to put an end to absentee landlordism.

But let us suppose, for the sake of argument, that the above referred to inhibitory clause of Section 1 of Article XIII of the constitution does have bearing on the petitioner's case; even so the clause requiring that at least 60 per centum of the capital of the corporation be owned by Filipinos is subordinated to the petitioner's aforesaid right already existing at the time of the inauguration of the Commonwealth and the Republic of the Philippines. In the language of Mr. Justice Jose P. Laurel (a delegate to the Constitutional Convention), in his concurring opinion of the case of Gold Creek mining Corporation, petitioner vs. Eulogio Rodriguez, Secretary of Agriculture and Commerce, and Quirico Abadilla, Director of the Bureau of Mines, respondent, 66 Phil. 259:

The saving clause in the section involved of the Constitution was originally embodied in the report submitted by the Committee on Naturalization and Preservation of Land and Other Natural Resources to the Constitutional Convention on September 17, 1954. It was later inserted in the first draft of the Constitution as section 13 of Article XIII thereof, and finally incorporated as we find it now. Slight have been the changes undergone by the proviso from the time when it comes out of the committee until it was finally adopted. When first submitted and as inserted to the first draft of the Constitution it reads: 'subject to any right, grant, lease, or concession existing in respect thereto on the date of the adoption of the Constitution'. As finally adopted, the proviso reads: 'subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution'. This recognition is not mere graciousness but springs form the just character of the government established. The framers of the Constitution were not obscured by the rhetoric of democracy or swayed to hostility by an intense spirit of nationalism. They well knew that conservation of our natural resources did not mean destruction or annihilation of acquired property rights. Withal, they erected a government neither episodic nor stationary but well-nigh conservative in the protection of property rights. This notwithstanding nationalistic and socialistic traits discoverable upon even a sudden dip into a variety of the provisions embodied in the instrument.

The writer of this decision wishes to state at this juncture that during the deliberation of this case he submitted to the consideration of the Court the question that may be termed the "vested right saving clause" contained in Section 1, Article XII of the Constitution, but some of the members of this Court either did not agree with the theory of the writer, or were not ready to take a definite stand on the particular point I am now to discuss deferring our ruling on such debatable question for a better occasion, inasmuch as the determination thereof is not absolutely necessary for the solution of the problem involved in this case. In his desire to face the issues squarely, the writer will endeavor, at least as a disgression, to explain and develop his theory, not as a lucubration of the Court, but of his own, for he deems it better and convenient to go over the cycle of reasons that are linked to one another and that step by step lead Us to conclude as We do in the dispositive part of this decision.

It will be noticed that Section 1 of Article XIII of the Constitution provides, among other things, that "all agricultural lands of the public domain and their disposition shall be limited to citizens of the Philippines or to corporations at least 60 per centum of the capital of which is owned by such citizens, SUBJECT TO ANY EXISTING RIGHT AT THE TIME OF THE INAUGURATION OF THE GOVERNMENT ESTABLISHED UNDER THIS CONSTITUTION."

As recounted by Mr. Justice Laurel in the aforementioned case of Gold Creek Mining Corporation vs. Rodriguez et al., 66 Phil. 259, "this recognition (in the clause already quoted), is not mere graciousness but springs from the just character of the government established. The farmers of the Constitution were not obscured by the rhetoric of democracy or swayed to hostility by an intense spirit of nationalism. They well knew that conservation of our natural resources did not mean destruction or annihilation of ACQUIRED PROPERTY RIGHTS".

But respondents' counsel may argue that the preexisting right of acquisition of public or private lands by a corporation which does not fulfill this 60 per cent requisite, refers to purchases of the Constitution and not to later transactions. This argument would imply that even assuming that petitioner had at the time of the enactment of the Constitution the right to purchase real property or right could not be exercised after the effectivity of our Constitution, because said power or right of corporations sole, like the herein petitioner, conferred in virtue of the aforequoted provisions of the Corporation Law, could no longer be exercised in view of the requisite therein prescribed that at least 60 per centum of the capital of the corporation had to be Filipino. It has been shown before that: (1) the corporation sole, unlike the ordinary corporations which are formed by no less than 5 incorporators, is composed of only one persons, usually the head or bishop of the diocese, a unit which is not subject to expansion for the purpose of determining any percentage whatsoever; (2) the corporation sole is only the administrator and not the owner of the temporalities located in the territory comprised by said corporation sole; (3) such temporalities are administered for and on behalf of the faithful residing in the diocese or territory of the corporation sole; and (4) the latter, as such, has no nationality and the citizenship of the incumbent Ordinary has nothing to do with the operation, management or administration of the corporation sole, nor effects the citizenship of the faithful connected with their respective dioceses or corporation sole.

In view of these peculiarities of the corporation sole, it would seem obvious that when the specific provision of the Constitution invoked by respondent Commissioner (section 1, Art. XIII), was under consideration, the framers of the same did not have in mind or overlooked this particular form of corporation. If this were so, as the facts and circumstances already indicated tend to prove it to be so, then the inescapable conclusion would be that this requirement of at least 60 per cent of Filipino capital was never intended to apply to corporations sole, and the existence or not a vested right becomes unquestionably immaterial.

But let us assumed that the questioned proviso is material. yet We might say that a reading of said Section 1 will show that it does not refer to any actual acquisition of land up to the right, qualification or power to acquire and hold private real property. The population of the Philippines, Catholic to a high percentage, is ever increasing. In the practice of religion of their faithful the corporation sole may be in need of more temples where to pray, more schools where the children of the congregation could be taught in the principles of their religion, more hospitals where their sick could be treated, more hallow or consecrated grounds or cemeteries where Catholics could be buried, many more than those actually existing at the time of the enactment of our Constitution. This being the case, could it be logically maintained that because the corporation sole which, by express provision of law, has the power to hold and acquire real estate and personal property of its churches, charitable benevolent, or educational purposes (section 159, Corporation Law) it has to stop its growth and restrain its necessities just because the corporation sole is a non-stock corporation composed of only one person who in his unity does not admit of any percentage, especially when that person is not the owner but merely an administrator of the temporalities of the corporation sole? The writer leaves the answer to whoever may read and consider this portion of the decision.

Anyway, as stated before, this question is not a decisive factor in disposing the case, for even if We were to disregard such saving clause of the Constitution, which reads: subject to any existing right, grant, etc., at the same time of the inauguration of the Government established under this Constitution, yet We would have, under the evidence on record, sufficient grounds to uphold petitioner's contention on this matter.

In this case of the Register of Deeds of Rizal vs. Ung Sui Si Temple, 2 G.R. No. L-6776, promulgated May 21, 1955, wherein this question was considered from a different angle, this Court through Mr. Justice J.B.L. Reyes, said:

The fact that the appellant religious organization has no capital stock does not suffice to escape the Constitutional inhibition, since it is admitted that its members are of foreign nationality. The purpose of the sixty per centum requirement is obviously to ensure that corporation or associations allowed to acquire agricultural land or to exploit natural resources shall be controlled by Filipinos; and the spirit of the Constitution demands that in the absence of capital stock, the controlling membership should be composed of Filipino citizens.

In that case respondent-appellant Ung Siu Si Temple was not a corporation sole but a corporation aggregate, i.e., an unregistered organization operating through 3 trustees, all of Chinese nationality, and that is why this Court laid down the doctrine just quoted. With regard to petitioner, which likewise is a non-stock corporation, the case is different, because it is a registered corporation sole, evidently of no nationality and registered mainly to administer the temporalities and manage the properties belonging to the faithful of said church residing in Davao. But even if we were to go over the record to inquire into the composing membership to determine whether the citizenship requirement is satisfied or not, we would find undeniable proof that the members of the Roman Catholic Apostolic faith within the territory of Davao are predominantly Filipino citizens. As indicated before, petitioner has presented evidence to establish that the clergy and lay members of this religion fully covers the percentage of Filipino citizens required by the Constitution. These facts are not controverted by respondents and our conclusion in this point is sensibly obvious.

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