Atty. Victoria G. De Los Reyes

July 13, 1993 Atty. Victoria G. De Los Reyes National Steel Corporation 377 Sen. Gil Puyat Ave., Makati, Metro Manila M a d a m : This refers to your letter dated June 30, 1993 requesting opinion on the queries posed therein relative to the meaning of "assignee" of proprietary corporate member; the legality of the requirement of Manila Golf and Country Club, Inc. imposing an entrance fee of P100,000.00 on each and every "new assignee"; and whether or not the rules and regulations of the Club are subject to the approval of the Commission. Please be advised that the Commission does not, as a matter of settled policy, render opinion on queries based on allegations or issues which may eventually be litigated in the future. The opinion which may be rendered thereon would not be binding upon private parties who would in all probability, if the opinion happens to be adverse to their interest, take issue therewith, and contest it before the Court. For this reason, the Commission refrains from commenting on the issues raised in your letter so that it will not be estopped to decide the same if brought before it in a proper proceeding. However, for purposes of information only, the following may be imparted. It is well-settled that by-laws are the private laws of the corporation. They are in effect written into the charter and in this sense, they become part of the fundamental law of the corporation, and the corporation, its directors, officers and stockholders or members are bound by and must comply with them . (SEC Opinion dated April 8, 1992 addressed to Noe S. Andaya, citing 8 Fletcher, Sec. 4197) In addition to the by-laws, a corporation may adopt other rules and regulations for its government which may be in the form of board resolutions. However, the Board cannot adopt rules and regulations or procedure different or inconsistent from that specifically provided for in the by-laws . Thus, if the Rules and Regulations/Board Resolutions are in consonance with, and not repugnant to or contradictory with the By-laws, the two must be read together to supplement each other, and in case of conflict, the By-laws shall prevail. While corporate By-laws are subject to the approval by the Commission, other rules and regulations of the corporation do not need SEC approval, unless they involve matters where the law requires SEC approval. Unless a complaint questioning a corporate interpretation of a by-law provision is formally filed with the Securities Investigation and Clearing Department of this Commission in accordance with P.D. 902-A, as amended and the SEC Rules and Procedure , the Commission will not interfere on the matter. cdll Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman