Ms. Corazon M. Buenconsejo

April 17, 1996 Ms. Corazon M. Buenconsejo Far East Bank and Trust Company Far East Bank Center Senator Gil J. Puyat Ave., 1200 Makati City Madam: This refers to your letter dated March 28, 1996 requesting opinion on the effect of Section 6 of the Corporation Code, quoted hereunder, on the existing common non-voting shares issued by Far East Bank and Trust Company which was registered in 1960 and whose Articles of Incorporation provides for non-voting common shares. "SECTION 6. Classification of shares . The shares of stock of stock corporations may be divided into classes or series of shares, or both, any of which classes or series of shares may have such rights, privileges or restrictions as may be stated in the articles of incorporation; provided, That no share may be deprive of voting rights except those classified and issued as "preferred" or "redeemable shares , unless otherwise provided in this Code: Provided, further, That there shall always be a class or series of shares which have complete voting rights. Any or all of the shares or series of shares may have a par value or have no par value as may be provided for in the articles of incorporation: Provided, however, That banks, trust companies, insurance companies, public utilities, and building and loan associations shall not be permitted to issue no-par value shares of stocks. ..." (Emphasis supplied) From the underscored phrases in the foregoing provision, it can be construed that common shares cannot be deprived of voting rights. In relation thereto, Section 148 of the Corporation Code provides: "SECTION 148. Applicability to existing corporations . All corporations lawfully existing and doing business in the Philippines on the date of the effectivity of this Code and heretofore authorized, licensed or registered by the Securities and Exchange Commission, shall be deemed to have been authorized, licensed or registered under the provisions of this Code, subject to the terms and conditions of its license, and shall be governed by the provisions hereof; Provided, That where any such corporation is affected by the new requirements of this Code ,said corporation shall, unless otherwise herein provided, be given a period of not more than two (2) years from the effectivity of this Code within which to comply with the same ." (Emphasis supplied) Under the aforecited provision, affected existing corporations are given two (2) years from the effectivity of the Corporation Code within which to comply with the provisions thereof, and the Commission, in several occasions has ruled that, failure on their part to amend their articles of incorporation to comply with the applicable provisions of the Code on or before May 1, 1982, the expiry date of the two (2) year period, the Commission will consider the provisions therein as written into their Articles of Incorporation as of May 1, 1980, the date of effectivity of the Corporation Code. (SEC Opinion dated Sept. 25, 1990, citing SEC Opinions dated April 26 and June 29, 1982) Thus, applying the above ruling in the instant case, the requirement under Section 6 is deemed inserted in the Articles of Incorporation of subject corporation as of May 1, 1980 since it failed to amend its Articles of Incorporation to comply with the requirement. After said date holders of common shares shall enjoy equal rights and voting power . Take note, however, that subject corporation is a special type of corporation whose operation is primarily governed by a special law, the General Banking Act .As such, the Corporation Code , which is a general law, would have only a supplementary effect insofar as the provisions thereof are applicable and are not inconsistent with the special law governing it. It is a well-settled jurisprudence that in case of conflict, the special law shall prevail. Accordingly, in the absence of a provision under the General Banking Act on the matter, the aforecited provisions of the Corporation Code shall be applied. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner