April 28, 1997

Mr. Patrick T. Lugue

Calatagan Golf Club, Inc.
5/F Enzo Building, 399 Sen. Gil Puyat Ave.,
1200 Makati, Metro Manila

Sir:

This refers to your letter dated March 13, 1997 requesting opinion on the
following queries: Cdpr

1. Can the Calatagan Golf Club, Inc., a non-profit stock corporation,

within the context of Article 16 of the Corporation Code, obtain approval of
amendment to articles of incorporation on the qualification of ownership of
shares by sending all of its members through registered mail a notice of the
proposed amendment together with a form which should be sent back by those
who object to the proposed amendment, with the statement that unless the Club
receives within a specified period the requisite number of the written objection
form, the proposed amendment shall be considered approved by the members?
In effect, the proposal will be considered carried unless a sufficient number of
members manifest their objection.

2. Is the appraisal right available to the stockholders of this non-profit

organization?

Relative to query no. 1 the Corporation Code provides:

"SECTION 16. Amendment of articles of incorporation. — Unless

otherwise prescribed by this Code or by special law, and for legitimate
purposes, any provision or matter stated in the articles of incorporation may be
amended by a majority vote of the board of directors or trustees and the vote or
written assent of the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock, without prejudice to the appraisal right or dissenting
stockholders in accordance with the provisions of this Code, or the vote written
assent of two-thirds (2/3) of the members if it be a non-stock corporation.

xxx xxx xxx."

While the above provision allows voting by "written assent", silence or failure
to object on the proposal should not be treated as approval thereof, as the law
explicitly requires the stockholder's "assent" to be in writing.
Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2019 First Release 1
 Anent the second query, the above cited provision expressly authorizes the
exercise of appraisal right in accordance with Section 81 of the same Code, quoted in
part hereunder:

"SECTION 81. Instances of appraisal right. — Any stockholder 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, any amendment to the articles of incorporation has the

effect of changing or restricting the rights of any stockholders or class of
shares, or of authorizing preferences in any respect superior to those of
outstanding shares of any class, or of extending or shortening the term of
corporate existence;

. . . ." (Emphasis supplied)

While the Club is a "non-profit" corporation, it has the character of a "stock

corporation". Unlike an ordinary non-profit, non-stock corporation, the member
stockholders thereof have individual pecuniary interest in the Club represented in
terms of " proprietary shares", ownership of which is EVIDENCED BY certificates
of proprietary share or membership, and the corresponding market value of which
can easily be determined or fixed. This kind of corporation is called "proprietary
membership corporation". While it has the color of a "non-stock corporation" being
non-profit, it has the character more of a "stock corporation". In the light of the
foregoing, your second query may be answered in the affirmative.

Very truly yours,

(SGD.) FE ELOISA C. GLORIA

Associate Commissioner

Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2019 First Release 2