Saturday, November 05, 2005

SEC registration of churches

Related discussions (external links):

Registering a local Baptist church with the SEC either as corporation sole or as religious society / aggregate (US Supreme Court decision on the two entities of the incorporated church; Does the concept of the corporation sole conflict with the Baptist distinctive of congregational church government? )

Sample Constitution and Bylaws for local churches

Of Church Organization, Part Three: Constitutions by Dr. Kevin T. Bauder, Central Baptist Theological Seminary
If a church is not registered with the Securities and Exchange Commission, is it an illegal church?

A veteran pastor I talked to several months ago had problems with some members who eventually left and formed their own church. When these members found out that their original church was not registered with the SEC, they claimed that it was an illegal church.

Registration with the SEC gives the church a legal personality, but a church can exist and function even without registration. We will discuss more about the freedom of religion and non-establishment clauses of the 1987 Constitution later on. One good reason for registering a church with the SEC is so that the church property can be titled in the name of the church itself, not in the name of the pastor or of a church member.

The essential provisions of the Corporation Code relevant to churches are Section 2 (definition of corporation), Section 36 (corporate powers and capacity), Section 91 (termination of membership), and Sections 109 up to 116 (religious corporations). 

Steps in registering a church with the SEC

1. Name verification and reservation - you have to find out either through the SEC’s website or through its Public Research Unit/Name Verification office at EDSA whether the proposed name for your church is still available, that is, it is not already being used by another registered church. For example, there are already a lot of churches carrying the name “Faith Baptist Church.” What you can do if you still want to use that name is to add something else to the name, for example, “Faith Baptist Church of bgy. Diliman, Quezon City.”

If the church name you applied for is available, you can have the name reserved from 30 to 90 days; the longer the reservation period, the higher the fee. During that period, when you are working on the documents required for the registration, no one else can apply for registration with that proposed name.

2. The SEC has ready made forms for a Constitution and By-Laws (the last time I asked, these forms cost about four hundred pesos). After submitting all the requirements and paying all the fees, the certificate of registration will subsequently be issued by the Corporate and Legal Department of the SEC.

3. The SEC also asks certain reportorial requirements to be submitted to it on a periodic basis.

As you can see from the provisions of the Corporation Code cited above, you can register your church either as a corporation sole or as a religious society/religious aggregate. But the important thing is, the ready made Constitution and By-Laws provided by the SEC are not really suitable for local Baptist churches. (About two years ago, I urged the Asia Baptist Bible College Alumni Association during its meeting at San Mateo Bible Baptist Church to draft a Constitution and By-Laws appropriate for local Baptist churches.)

If you use the Constitution and By-Laws provided by the SEC, one good practice is to attach to the documents your church’s Articles of Faith. 

Submit updated list of members to the SEC regularly

The church should submit an updated list of members to the SEC at least twice a year through a General Information Sheet (GIS). The updated list is invaluable in case of a church conflict or split.

There are only a few churches which keep an updated list of their members. One church in Marikina I attended in the 1980’s besides keeping its membership list updated, also issues to its members identification cards renewable every six months.

Church property should be titled in the church’s name

The property of the church should not be titled in the name of the pastor or of any church member, but in the name of the church itself. That’s what SEC registration does, that is, give the church a legal personality. What’s even worse is titling the church property in the name of pastor and his wife. In this case, the property will be considered as conjugal property.

(Under the Family Code, any property acquired during the marriage is presumed conjugal, unless there is clear proof that the property was acquired through the separate means of either the husband or wife.)

This practice of titling the church property in the name of the pastor or of some church members will create a lot of problems later on. For example, one church in the Albay area had its property titled in the name of the pastor. When the pastor died, his children claimed that they own the land by right of succession (or “inheritance” in layman’s terms), and they demanded that the church vacate the premises.

Another church in the Bicol area had its property titled in the name of three pastors recommended by the mother church. The mother church thought (commendably, I might add) that if only one name appeared in the title, that person could possibly claim the land for himself later on. But the problem was, two of the pastors are already dead, and the only way the property can be transferred to the church is by way of donation or sale. But the heirs of the two deceased pastors can now claim that they are part owners of the property by right of succession (inheritance).

One church in the Metro Manila area had its property titled in the name of its two pastoral staff. But one of the pastors is already in the province, and the other pastor had to leave the church under unfavorable circumstances. There is now a brewing legal controversy among several parties over the ownership of the land and the church building.

Incorporate as soon as possible

Depending upon the policies, practices and beliefs of the sending/mother church, the mission work should be incorporated as soon as possible, either as corporation sole or religious society.

If the mission work has not yet been incorporated, its properties should be titled in the name of the sending/mother church. Later on, the mother church can transfer the title either by way of donation or sale.

Suggestion: sending/mother church should impose conditions on property donated to the mission work

If the money used to buy the property came from the sending/mother church, it is a good idea to impose certain conditions if the property will be donated to the mission work upon its incorporation. For example, the sending/mother church can impose the condition that if the daughter- or granddaughter-church strays from its doctrinal position as contained in the Articles of Faith attached to the SEC documents, the mother church can rescind the donation.

(Speaking of donation, the Civil Code requires that for donations worth more than five thousand pesos, the donation and the acceptance of the donation must be in writing.)

Also, the sending/mother church can impose the condition that in case of a split in the daughter- or granddaughter-church, the opposing parties must agree not to sue each other in court, and agree to a mediation or conciliation of the matter by the mother church or by a group of selected pastors. In case the opposing parties do not comply with this condition, the mother church can then rescind the donation.

Admittedly, this suggestion is difficult to implement or even to accept, since most Baptist churches in the Philippines subscribe to the doctrine of the autonomy of the local church. But until and unless we formulate a way to mediate or conciliate church splits, we will have the tragic spectacle of Christians suing each other in court, in total contravention of 1 Corinthians 6: 1-7, which state,
1. Dare any of you, having a matter against another, go to law before the unjust, and not before the saints?
2. Do ye not know that the saints shall judge the world? and if the world shall be judged by you, are ye unworthy to judge the smallest matters?
3. Know ye not that we shall judge angels? how much more things that pertain to this life?
4. If then ye have judgments of things pertaining to this life, set them to judge who are least esteemed in the church.
5. I speak to your shame. Is it so, that there is not a wise man among you? no, not one that shall be able to judge between his brethren?
6. But brother goeth to law with brother, and that before the unbelievers.
7. Now therefore there is utterly a fault among you, because ye go to law one with another. Why do ye not rather take wrong? why do ye not rather suffer yourselves to be defrauded?
8. Nay, ye do wrong, and defraud, and that your brethren.
I welcome your ideas as to how we can mediate and conciliate church splits. Incidentally, under the Securities Regulation Code, church splits would fall under “intra-corporate controversies” and are under the jurisdiction of the Regional Trial Court.

I was told of one church split in the southern part of our country, where criminal cases have been filed by the former pastor against the incumbent pastor and some members. I do not know all the facts, and I do not wish to exacerbate the situation by needless speculation. But the problems could possibly have been avoided if the Constitution and By-Laws of that church had provided for a procedure or mechanism in the succession to the office of the pastor in case of death, disability, or resignation.

Also, the problem could have been avoided if the mother church had retained some form of control by imposing certain conditions in its donation (if any) of the property to the daughter- or granddaughter church.

Church leaders must educate members on the Constitution and By-Laws

This necessity will become more apparent to you as we discuss the 2001 Supreme Court decision in the case of “The Church in Quezon City.”

I have handled some cases involving homeowners associations, and it is amazing that the only time the members take time to read and study their Constitution and By-Laws is when there is already a brewing controversy or when cases have already filed by one party against another.

We cannot claim that the Constitution and By-Laws submitted to the SEC are merely pro forma, and that our only rule for faith and practice is the Bible. By registering with the SEC, churches in a way are giving up some of their autonomy by agreeing to be bound by the laws of our country. In case of disputes or disagreements that eventually reach our judicial system, the courts will refer to the Constitution and By-Laws for the resolution of the case. (In cases of disputes regarding doctrine however, there is a US Supreme Court ruling which states that such are beyond the jurisdiction of secular courts.) Romans chapter 13 is very instructive:
1. Let every soul be subject unto the higher powers. For there is no power but of God: the powers that be are ordained of God.
2. Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation.
3. For rulers are not a terror to good works, but to the evil. Wilt thou then not be afraid of the power? do that which is good, and thou shalt have praise of the same:
4. For he is the minister of God to thee for good. But if thou do that which is evil, be afraid; for he beareth not the sword in vain: for he is the minister of God, a revenger to execute wrath upon him that doeth evil.
5. Wherefore ye must needs be subject, not only for wrath, but also for conscience sake.

Note: Jerald Finney, a Baptist and a lawyer, in his book “Separation of Church and State” and in his blog of the same title argues strongly and passionately against the incorporation of churches. He states in Chapter 3 of his book:

“A New Testament church cannot be organized according to the principles of both the Bible and civil law. Should a church organize, even partially, according to the principles of civil law, that church cannot also be in conformity to the principles of church organization laid down in the Word of God. For example, a church which incorporates is not a New Testament church.”

Finney’s blog contains a lot more articles of interest for pastors considering whether or not to incorporate their churches or ministries. Biblical Law Center, a ministry of the Indianapolis Baptist Temple under Dr. Greg Dixon, also provides a lot of articles on the issue of non-registration of churches.


Anonymous said...

Hi! I have a question. I bought a farm land with a total of 18.5 hectares. Since I was not in our country when I purchase this land It was through my parents and family members assisting me to acquire the land. Now, I found out that the name of the original title is different name in the deed of sale. I am so confused because the previous owner of the land had sold it. The person that bought it he never transfer in to his name nor tax declared into his name. Then, I acquire the land from him through the help of my family members but they did not double check the land papers. Now it appear that the owner of the land is still the name stated in the old land title. Please help me how to solve this problem. WHat will I do to correct this documents since the person that named in the old land title is nowhere to be found and unkown. The land title is real it was been surveyed but I got this problem. please help what to do.

Atty. Gerry T. Galacio said...

You have to ask the person from whom your family bought the land to produce the Deed of Sale between him and the original owner. The Register of Deeds which has jurisdiction over the land will require you to produce this particular Deed of Sale. The RD will also impose charges and penalties since the first transfer of ownership was a taxable transaction.

Anonymous said...

hi! we tried to look for the person named in the land title we found out the he already pass away long time ago. I don't know what procedure to straighten the documents.The person that bought this farmland before he only had the Land title that he didn't know what the guidelines and procedure of buying land before. I wanted to make all this straighten but I need your legal advise please...

Atty. Gerry T. Galacio said...

1. You can try contacting the surviving heirs of the original owner of the land, and ask them to execute a Deed of Sale between them and you. There are problems here however, since these heirs must execute among themselves a Deed of Extrajudicial Settlement (to settle the estate of the deceased original owner) and pay the estate taxes, before the Register of Deeds can transfer the title to them. These heirs will then transfer the property to you by way of a Deed of Sale. It is a very complicated procedure.

2. You can also inquire at the Register of Deeds which has jurisdiction over the property in question and ask the officials there as to other possible ways of solving your problem.

Anonymous said...

hi, ask ko lang po kung naka registered na po kami sa SEC tapos di na po kami nakapagrenew for 8yrs. Nahihirapan po ulit kami mag apply kc gusto po namin na yung name pa din ng church namin. ano po pwede naming gawin? Pumunta na po kami sa SEC kaso we advice na palitan na lang namin name namin.

Atty. Gerry T. Galacio said...

If a corporation has not complied with the reportorial requirements, then the SEC can revoke the Articles of Incorporation. Also, under the so-called doctrine of non-use, any corporation which has not exercised its corporate powers and privileges for five years loses its legal personality.

Try writing to and asking for help from Hon. Fe B. Barin, SEC chairperson.

Anonymous said...

thank you Atty...i have found your website very helpful with my research...

Anonymous said...

Hi!can we register our church group even though we haven't any property. I saw lots of registerd churches renting building to be used as their worship places. what can you say about that?

Atty. Gerry T. Galacio said...

1. Ownership of real property is NOT a requirement for SEC registration of churches.

2. Your church might be interested in my post "Guidelines and precautions in buying church property" in