In Philippine law, religious corporations are distinct entities specifically established for religious purposes, falling under the broader classification of "corporations sole" or "religious societies." These entities operate under the auspices of the Corporation Code of the Philippines (Batas Pambansa Blg. 68) and are designed to address the unique organizational and functional needs of religious groups. Below is an exhaustive exploration of religious corporations under Philippine law.

1. Definition and Nature of Religious Corporations

A religious corporation is primarily established for the administration and governance of church or religious affairs. Unlike commercial or stock corporations focused on profit generation, religious corporations serve to manage the property, assets, and legal matters for religious purposes without aiming for profit.

Religious corporations can take two primary forms under Philippine law:

Corporation Sole: This is an entity composed of a single person, typically an ecclesiastical officer like a bishop, priest, or minister, who serves as the trustee of the temporalities of the church. Corporation sole structures are used mainly by hierarchical churches to handle the administration and legal matters of the church property and assets.
Religious Societies: These are organizations established by groups of individuals who come together to form an association or society with religious purposes. These corporations are managed by a board of trustees, similar to other non-stock corporations but are tailored for religious worship, advancement of faith, and the community’s spiritual growth.

2. Legal Basis and Governing Law

Religious corporations are governed by Sections 109 to 116 of the Corporation Code of the Philippines. These provisions outline the creation, governance, powers, dissolution, and succession of religious corporations, particularly focusing on corporations sole. Key sections include:

Section 109: Recognizes and defines a "corporation sole" as a special form of corporation organized to manage the property of religious denominations.
Section 110: Establishes the procedural requirements for forming a corporation sole, including the filing of Articles of Incorporation with the Securities and Exchange Commission (SEC).
Section 113: Details the authority of a corporation sole to acquire and hold property, essential for managing church-owned assets.
Section 115: Specifies the process for succession within a corporation sole, ensuring continuity when a current officeholder (e.g., bishop or priest) vacates their position.

3. Formation of Religious Corporations

Corporation Sole

To establish a corporation sole, an individual occupying a clerical office (bishop, minister, etc.) must file Articles of Incorporation with the SEC. These articles must include the following information:

The name of the corporation sole and the ecclesiastical office it represents.
The principal office location.
The full name of the individual constituting the corporation sole.
A declaration that the entity will be used solely for managing church property and facilitating its religious mission.

The filing must be accompanied by certified proof of the ecclesiastical office and a notarized affidavit of consent. Once approved, the corporation sole gains legal capacity to act in secular matters regarding property and contractual relationships.

Religious Societies

Religious societies, or religious non-stock corporations, are formed when a group of individuals (at least five) establishes a non-profit religious organization. This formation follows the general rules for non-stock corporations under the Corporation Code but must adhere to religious, not-for-profit goals in its activities and management.

4. Powers and Limitations

Powers

Religious corporations are endowed with specific powers to ensure they can fulfill their religious and administrative functions. These powers include:

Holding and Managing Property: They can acquire, hold, and dispose of property for religious purposes, as long as it is consistent with the religious mission.
Contractual Authority: They can enter into contracts, sue, and be sued in court.
Governance Autonomy: The religious leadership (e.g., bishops or trustees) can make decisions concerning the corporation’s operations, in line with the religious doctrine and mission.

Limitations

Religious corporations are limited in the following respects:

Non-Profit Nature: They cannot engage in profit-making activities. Any income or assets must directly serve the religious mission.
Ownership Restrictions: The property is held in trust for the religious mission and not for individual gain.
Succession Rules: A corporation sole is limited by its requirement for a specific succession process, ensuring that the officeholder’s replacement (e.g., the new bishop) inherits both responsibilities and property.

5. Succession in Corporation Sole

In cases where the position in a corporation sole becomes vacant (e.g., due to death, resignation, or removal of the religious leader), the succession process under Section 115 of the Corporation Code ensures continuity. The successor, upon meeting the qualifications and taking office, assumes the corporation sole’s responsibilities without requiring a new SEC filing, preserving the corporation's legal identity and authority.

6. Dissolution of Religious Corporations

Religious corporations, like other non-stock entities, can be dissolved voluntarily or involuntarily. Voluntary dissolution may occur through the filing of a verified request for dissolution with the SEC, often approved by the relevant religious authority. Involuntary dissolution might arise if the corporation fails to meet legal compliance or faces judicial dissolution for serious misconduct.

7. Taxation of Religious Corporations

Tax-Exempt Status

Religious corporations generally qualify for tax exemptions on income and property under Section 28(3), Article VI of the 1987 Philippine Constitution and the National Internal Revenue Code (NIRC). Key points regarding taxation include:

Income Tax Exemption: Income generated by religious corporations that are directly tied to religious activities (e.g., donations, offerings) is exempt from income tax. However, income derived from unrelated business activities may be subject to taxation.
Property Tax Exemption: Properties used exclusively for religious worship or charitable activities are exempt from property taxes. However, properties not used for religious purposes, such as commercial lease arrangements, may be subject to property tax.
Other Exemptions: Religious corporations are exempt from documentary stamp taxes on donations and other activities directly related to religious purposes.

Reporting Requirements

Religious corporations must still comply with some reporting requirements to maintain their tax-exempt status. This includes filing certain forms with the Bureau of Internal Revenue (BIR) if they have unrelated income or property not used exclusively for religious purposes.

8. Jurisprudence on Religious Corporations

Philippine case law highlights key principles in managing and interpreting the rights of religious corporations:

Separate Legal Identity: Religious corporations are separate legal entities, meaning the property of a corporation sole does not belong to the officeholder individually but to the corporation for the benefit of the religious organization.
Autonomy in Religious Affairs: Courts generally uphold the autonomy of religious corporations in matters of doctrine and religious practice, respecting the constitutional separation of church and state.
Property Disputes: The Supreme Court has often ruled in favor of the religious corporation’s right to manage its properties as long as they align with the religious mission, recognizing the unique role of these entities in supporting faith-based activities.

Conclusion

Religious corporations in the Philippines provide an essential legal structure for religious organizations to manage their properties and carry out their missions. By recognizing both the corporation sole and religious society models, the Corporation Code accommodates the diversity in religious organizational needs. These corporations enjoy unique privileges, such as tax exemptions and specific succession rules, that support their non-profit, faith-centered objectives. Nonetheless, they must adhere to Philippine corporate and tax laws, especially regarding property use, unrelated income, and compliance requirements, to maintain their special status under Philippine law.