Mr. Crisiviel F. Verano

June 3, 1998 Mr. Crisiviel F. Verano Valley Golf & Country Club, Inc. Antipolo, Rizal S i r : This refers to your letter dated April 22, 1998 inquiring on the following: cdll (a) Whether or not the Board of Directors can enter into a contract with a developer-financier for the re-development of Valley Golf & Country Club, such as, re-building the Clubhouse, re-planting the existing fairways of the golf-course, without getting the consent of 2/3 of the outstanding capital stock as required under the by-laws in certain corporate transaction. It is well-settled that the Board of Directors is the governing body of the corporation with whom the management of the corporate affairs is vested. (Sec. 23 Corporation Code). Therefore, it is the duty of the Board to exercise such management function in conformity with the Articles of Incorporation, By-laws and Corporation Code . Thus, if the Board believes that the proposal does not fall within the transactions mentioned in the Corporation Code and corporate by-laws which require the approval of the stockholders, it may enter into the above-mentioned contract without obtaining 2/3 vote of the outstanding capital stock of the corporation. The determination as to whether the proposed project would entail a substantial change/amount as contemplated in the By-laws of the corporation, is for the Board, by virtue of its management power, to find out. In the exercise of such prerogative, the Board should exercise good judgment solely in the interest of the corporation. Acts and dealings of the Board of Directors done in good faith and in the exercise of an honest judgment are presumed to be regular and valid. It has to be emphasized however that dealings of the Board is subject to the provisions of Section 31 of the Corporation Code and may be reviewed, scrutinized and questioned if the corporation's and members' interests are prejudiced. (b) Whether or not the Board of Directors can issue the remaining unissued authorized capital stock of the Club in favor of the developer-financier of the project without the consent of 2/3 vote of the outstanding capital stock. There is no specific provision in the Corporation Code requiring stockholders approval in the issuance of shares out of the unissued authorized capital stock. Board approval is sufficient to carry out such corporate transaction, unless explicitly required under the By-laws . However , while stockholders approval is not necessary, the transaction is subject to the provisions of Section 39 of the Corporation Code which grants the existing stockholders the preemptive right to subscribe to all issuances of shares, unless denied in the articles of incorporation or the issuance falls under any of the exceptions enumerated therein. Further, the Club's shares being registered under the Revised Securities Act, the proposed transaction is subject to the requirements under said Act. cdll Please be advised accordingly. Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman