Re : Assessment of monthly dues pursuant to theArticles of Incorporation and By-Lawsof Sherwood Hills Golf Club

April 15, 2004 SEC O PINI ON NO. 23-04 Re : Assessment of monthly dues pursuant to the Articles of Incorporation and By-Laws of Sherwood Hills Golf Club Atty. Oscar T. Zaldivar Zaldivar & Zaldivar 812 Guadalupe BLISS Makati City S i r : This refers to your request for opinion on the issue whether or not inactive members of Sherwood Hills Golf Club Inc. (Club) may be compelled to pay monthly maintenance dues. It appears that your client (Karangalan Industrial Commercial Corporation) is a corporate shareholder of Sherwood. However, your client is not a club member as it has not yet paid the activation fee and therefore not entitled to use the club facilities. The assessment of monthly maintenance dues is based on Paragraph 6, Article VII and Section 13.1 of the By-Laws of the Club: "Article VII. (Articles of Incorporation) xxx xxx xxx 6. The registered owner of any class of share shall be subject to the payment of monthly dues in such amount as may be prescribed by resolution of the Board of Directors to meet the expenses for the general operations of the Club, and the maintenance and improvement of its premises and facilities. . . . Article XII. (By-Laws) Section 13.1. Monthly Dues . In order to meet the expenses for the general operations of the Club and the maintenance and improvement of its premises and facilities, all Regular members shall pay monthly dues to the Club in such amount as may be fixed by resolution of the Board of Directors, provided, however, that a juridical entity which owns a Class "C" share shall be assessed double the amount of monthly dues whether or not two nominees or representatives have been named. The payment of the monthly dues shall be the principal responsibility of the registered owner of the share, regardless of whether or not the rights thereto have been assigned in accordance with these By-laws. Such membership dues shall be assessable upon resolution of the Board of Directors which shall not be earlier than the formal turn over of the project by the Developer to the Club." As you correctly stated, the Commission, in its Opinion dated 4 October 2001 , affirmed the power of the Club to assess monthly dues upon its shareholders to meet expenses for general operations of the Club, and for maintenance of its premises and facilities. This is based on the proposition that registered owners of any class of share, whether plain shareholders or members, will benefit from the proper maintenance and improvement of the Club's facilities and premises. This issue was also the subject of a case between Mr. Federico Galang, Spouses Domingo C. Go & Debbie C. Go, and the Club, filed with the Commission and docketed as OGC-AA-CFD Case No. 11-02-15. In its Order dated 1 April 2003, the Commission En Banc dismissed the said case for lack of interest of the parties. We understand that Mr. Federico Galang filed with the Court of Appeals a petition for review docketed as CA-G.R. SP No. 76702 . In that petition, petitioner Galang is asking the appellate court: (1) to set aside the aforesaid Order of Commission En Banc; (2) to declare Paragraph 6, Article VII of the Articles of Incorporation and Section 13.1, Article XIII of the By-Laws of the Club as null and void ; (3) to set aside SEC Opinion dated 4 October 2001 insofar as it interprets Paragraph 6, Article VII of the Articles of Incorporation as including both member and non-member shareholders. Based on the foregoing, the Commission regrets that it cannot render the opinion requested as the issue raised has been elevated to the court and is now pending therein. Also, the subject involves the substantive and contractual rights of private parties who would, in all probability, contest the same in court if the Commission's opinion turns out to be adverse to their interest. [ Sections 5.1 and 5.2, SEC Memorandum Circular No. 15 (2003) or Guidelines for Requests of Opinion ] For your guidance, we are providing you copy of the Guidelines on Request for Legal Opinion or SEC Memorandum Circular No. 15 dated 16 December 2003. cEHSIC Very truly yours, (SGD.) VERNETTE G. UMALI PACO General Counsel