Atty. Manuel O. Chan. Jr.

July 27, 1990 Atty. Manuel O. Chan. Jr. 1325 Macario Adriatico St. Ermita, Maynila P.O. Box 735 S i r : This refers to your request for legal opinion on the following questions: 1. Whether a member of the Manila Golf and Country Club, Inc. can sell or assign his shares without the approval of the Board of Directors; and 2. Whether a membership certificate can be issued by the Club to a buyer without first being approved and accepted as member of the Club. The general rule is that "membership in non-stock corporation has personal elements accompanied by social and other ties, hence, it cannot be transferred to any other who wishes to be a member. However, this general rule admits of an exception , that is, where the articles or by-laws so provide that membership and rights arising therefrom may be subject to transfer." (SEC Opinion dated August 22, 1984 addressed to Atty. Mamerto B. Alciso, Jr.) The Corporation Code provides, thus: "SECTION 90. Non-transferability of membership . Membership in a non-stock corporation, and all rights arising therefrom, are personal and non-transferable, unless the articles of incorporation or the by-laws otherwise provide." Corollary thereto, the By-Laws of the Club which was amended on February 19, 1986 and approved by the Commission on May 14, 1986 provide: "SECTION 9. Membership in the club is not transferable or assignable. The transfer or assignment of a membership certificate does not automatically entitle the transferee to become a member ;he should nevertheless file the requisite application as provided in Sec . 4 ,..." (Emphasis supplied) "SECTION 32. No assignment of a Membership Certificate or any portion thereof shall be valid and binding with respect to the Club until such assignment is registered over the signature of the member (or his executor or administrator in case of his death) in whose name the same was issued in the books of the club ." (Emphasis supplied) It can be deduced from the foregoing provisions that the shares of the Club may be transferred and may be done even without the approval of the Board of Directors. However, while the assignment or transfer may be valid as between the parties, the same is not binding with respect to the Club until recorded in the corporate books. Likewise, pursuant to Section 32 of the by-laws, while the share is transferable, the assignment does not carry with it the privileges of membership in the Club. "SECTION 32. ....Provided that no assignment of a Membership Certificate or any portion thereof shall carry the privileges of membership in the Club unless the assignee has been elected to membership pursuant to Section 4 ,...." (Emphasis supplied) Thus, to become a member, the transferee has to apply for membership pursuant to Sec. 4 of the by-laws, quoted hereunder: "SECTION 4. Any person desiring to become a member shall file an application in the form prescribed by the Board of Directors which shall be posted and published in such place or places as the Board of Directors may prescribe for a period of at least one (1) month prior to his election. The Board of Directors shall pass upon all application and at least five (5) affirmative votes are required for approval and two (2) negative votes shall automatically bar admission." (Emphasis supplied) Accordingly, your second query is answered in the negative. Incidentally, it may be mentioned 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 members are bound by and must comply with them. (8 Fletcher, 750-751) Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner