Cagayan Electric Power & Light Co., Inc.

September 4, 1992 Cagayan Electric Power & Light Co.,Inc. Eight Floor, Strata 100 Bldg., Emerald Avenue, Ortigas Complex Pasig, Metro Manila Attention : Ms Imelda P . Marquez Corporate Secretary M a d a m : This refers to your letter of July 23, 1992 requesting opinion whether your company can declare stock dividends for Filipino shareholders from the unissued but authorized Common A shares only and limit the Common B shares to foreign stockholders. cdll The articles of incorporation of the corporation attached in your letter-query provides: "(1) No issuance or transfer of shares of stock of the corporation which would reduce the stock ownership of the Philippine citizens or nationals to less than the minimum percentage of the outstanding or voting capital stock as the case may be, required by any applicable provision of law or regulation to be owned by Philippine citizens, or nationals, shall be made or effected by or shall be recorded in the books of the Corporation and this restriction shall appear in all stock certificates. In order to insure compliance with such requirements, shares of Class A stock shall be issued subject to the following limitations :Except as otherwise provided herein, only individuals or partnerships, corporation, associations or more firms, who are deemed to be Philippine citizens or nationals within the purview of the applicable provisions of law or regulation of the Republic of the Philippine citizens, shall be qualified to acquire, own or hold shares of Class A Stock of the Corporation, and no such shares may be issued, sold or transferred, except to such qualified persons or firm ...." (Emphasis supplied) Considering that the above procedure in question is consistent with the aforecited provision of the company's articles of incorporation, the same may be allowed, provided that there are sufficient class of shares to cover the stock dividend declaration and the requirements under Section 43 of the Corporation Code relative to declaration of dividends are complied with, and provided further, that since the company's articles of incorporation provide for other classes of shares, the stock dividends should be declared in such a manner that the rights of other classes of shares pursuant to law and the articles of incorporation are not ignored or disregarded. llcd Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman