Mr. Julius Z. Neri

January 12, 1988 Mr. Julius Z. Neri Cebu Country Club P.O. Box 698 Banilad, Cebu City Sir : This has reference to your letter dated December 2, 1987, requesting the opinion of this Commission on the query stated therein. prcd It appears therein that Cebu Country Club, Inc. is a nonprofit, non stock corporation duly registered under and by virtue of Philippines laws. The purpose of the club is to maintain, operate, manage and carry on a social and recreative club, carry on a golf course and other lawful games, sports and recreations. You alleged that in accordance with Sec. 7 of its articles of incorporation, it is a non-stock corporation and membership therein as well as the right of participation in its assets shall be limited to qualified persons who are duly accredited owners of Proprietary Ownership Certificates (POC) issued by the corporation in accordance with its by-laws. It is authorized by its articles of incorporation to issue 800 POCs. To be a member one has to be accepted by the club's board of directors in accordance with the procedures, qualifications and requirements of its by-laws and must be a registered owner of at least one POC. The members who are POC holders are classified into voting members (limited to 100 in number) and nonvoting members. It is undisputed that voting members are the only members who take part in the election of its officers and in the amendment of its by-laws. It likewise appears therein that the club wants to amend its articles of incorporation for the purpose of increasing the members of POC From 800 to 1,000 or whatever number the members may decide. You now require the opinion of this Commission on the following: "May we kindly have your opinion on who shall be allowed to vote in the amendment of the club's articles of Incorporation? Shall it be limited to 100 voting members only? Shall it be all the members who are POC holders? Or shall it be all POC registered owners whether members or not?" The pertinent provision of Sec. 89 of the Corporation Code is quoted hereunder: "SECTION 89. Right to Vote . The right of the members of any class or classes to vote may be limited, broadened or denied to the extent specified in the articles of incorporation or the by-laws. Unless so limited, broadened or denied, each member, regardless of class, shall be entitled to one vote." From the foregoing provision therefore it is clear that the articles of incorporation or the by-laws may limit, broaden or even deny a member's right to vote. Sections 1 and 2 of Article III of your approved Amended By-laws provides, and we quote: "SECTION 1. Persons Exercising Voting Rights . All present full resident members of the Cebu Country Club, Inc. each of whom has elected to purchase a Proprietary Ownership Certificate and to pay for the same within the period allowed therefor, shall be entitled to one vote in all affairs of the corporation and shall be designated as a "Voting Proprietary Member." "SECTION 2. How Voting Rights are Acquired . By a unanimous approval of the Board, any proprietary member may be elected as and given the status of a voting proprietary member provided that at no time shall the number of voting proprietary members exceed one hundred (100) and provided further, that in no case shall the number of voting members who are not citizens of the Philippines exceed FORTY (40) percent of the total voting proprietary membership." From the above, there is no doubt that the right to vote in your corporation is limited to the Voting Proprietary members in accordance with the aforequoted provisions of your by-laws. Consequently, only such voting proprietary members shall be allowed to vote in the amendment of the club's articles of incorporation. "As a general rule the courts uphold restrictions on the right to vote contained in a corporation's articles of incorporation or By-laws implementing authority contained in the By-laws. "A majority of the stockholders or members of a corporation may adopt reasonable by-laws, not inconsistent with the charter or any statute regulating the method of voting at corporate election." (Fletchers',Vol. 5, pp. 131-132) Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman