Business of religion
THE 9.0-magnitude earthquake and the resulting tsunami that hit Japan last week sent jitters down the spine of most Filipinos.
Coming on the heels of the shakeup that recently hit Christchurch, New Zealand, where several of our countrymen are believed to have perished, the tragic events in Japan show that man is helpless against the forces of nature.
Disaster preparedness can only mitigate the adverse effects of natural calamities. When nature unleashes its fury, we can only pray it will be quick and that damage to life and property will be minimal.
In times of catastrophe, religiosity (or belief in the existence of a God, regardless of how He is called) among the populace tends to go up. The places of worship in our country enjoy high attendance when force majeure hits with devastating results.
With dire forecasts of environment-related calamities in the future, expect the religious organizations in our midst to drumbeat the repent-the-world-is-doomed line with fervor to attract more members into their fold.
Thanks to its constitutionally protected tax free status, religion has become big business in our country.
In a show of financial strength, religious groups have moved from town-hall style preaching to radio and TV to spread their message. The late morning and early afternoon slots of local TV stations on Sundays have become their stumping ground.
Retail activities
The extent to which religious organizations can engage in business to support their evangelical mission was the subject of a recent query with the Securities and Exchange Commission.
A religious group registered as a non-stock, non-profit corporation wrote that its primary purpose was “to propagate the message of new life in Christ Jesus by reaching out to people in the Philippines, in East Asia and other parts of the world.”
To accomplish this objective, the corporation plans to, among others, import, export and distribute the Bible, books, tapes, video materials and other religious materials that promote or extol Christian values.
Like other similarly organized groups, it wants to fund its activities through donations, grants, contributions and financial assistance by its faithful and third parties.
It asked whether, under its Articles of Incorporation and existing laws, it has the authority to sell copies of the Bible and religious materials to the public.
Corollary to that activity, it also sought clearance on its plan to amend its Articles of Incorporation to include retail and franchising among its incidental powers.
Necessary
The SEC said that, as a general rule, non-stock, non-profit corporations cannot engage in profitable business activities.
The prohibition, however, does not apply if the business activities are incidental to and reasonably necessary or essential to carry out the purpose for which the corporation was organized.
Taking into consideration the corporation’s nature and objective, business activities that are merely convenient or useful, but are not essential to the accomplishment of its objective, are not permitted.
In addition to meeting the criteria mentioned, the SEC said any profit that may result from the business activity cannot be distributed to the members but should be used to promote the corporate objective.
After a careful review of the religious group’s Articles of Incorporation, the SEC ruled that it could sell “copies of the Bible and other religious literature as the said activity can be said to be reasonably necessary and incidental to its purpose of propagating the word of Jesus Christ.”
Although it gave the group the green light to distribute religious materials, the SEC emphasized that “the selling must be reasonable so as not to amount to a contradiction or negation of (its) nature as a religious organization.”
Prohibition
The SEC, however, turned down the corporation’s request to include retail and franchising activities among its allowable business activities.
In franchising, the franchiser grants the franchisee the right to use its trademark or trade name, including certain business systems and processes, to produce and market a product or service.
In consideration for such use, the franchisee pays a fee plus a percentage of the sales revenue as royalty.
Thus, the SEC said, franchising is “a tool for business expansion and/or advancement … in essence, it is primarily a business function.”
Retail, on the other hand, connotes a “business activity for profit governed by the Retail Trade Nationalization Act.”
On the basis of these definitions, the SEC ruled that while the activities sought to be included in its corporate powers might be convenient or useful to the religious group, they are “not reasonably necessary or essential to the propagation of Christian values and teachings, having in view the nature and object of the religious corporation.”
What’s more, the SEC stressed that the inclusion of retail and franchising activities in its Articles of Incorporation would run counter to the Corporation Code, which prohibits non-stock corporations from including a purpose in their corporate papers that would change or contradict its nature as non-stock and non-profit.
With this ruling, it can be safely said that religion does not live by teachings alone, it needs bread too.
(For feedback, write to [email protected].)
