Lt. Col. Pedro R. Sanchez, Jr.

October 19, 1994 Lt. Col. Pedro R. Sanchez, Jr. Basa Air Base Savings and Loan Association, Inc. Basa Air Base Pampanga S i r : This refers to your letter of July 11, 1994 requesting opinion on the query posed therein relative to denial of proxy. As stated, sometime in 1985, the Board of Directors of Basa Air Base Savings and Loan Association, Inc. had passed a Resolution in order to amend the By-laws of said association for the purpose of disallowing proxy voting. Said resolution was affirmed and/or approved by a vote of at least a majority of the members of the association during the annual General Election of the Board of Directors last Jan. 8, 1985. It was filed with the then Central Bank of the Philippines for favorable action. Since said resolution was passed and approved by the members of the association, proxy voting was no longer allowed up to the current election last January 1994. Since January 1992 continuously up to January 1994, you failed to have an election of the Board of Directors because of lack of quorum. There is an on going clamor from certain minority group to call a Special General Assembly Meeting for the purpose of electing the Board of Directors. You feel that it will be futile to call for a Special General Assembly meeting if proxy voting will not be applied. Hence, the following query: "May proxy voting be allowed in the General Assembly Meeting for the purpose of electing the Board of Directors, considering that the same has already been disallowed by a Resolution passed and approved by the required number of members and implemented by the association for the last nine (9) years?" The Bangko Sentral ng Pilipinas, in its letter to the SEC dated September 26, 1994 manifested a position stating that no amendment to the By-laws of the corporation shall be effective until it is formally approved by that Office and the SEC. This position conforms with the following provisions of the Corporation Code: LibLex "SECTION 46. Adoption of by-laws . ... The Securities and Exchange Commission shall not accept the by-laws or any amendment thereto of any bank, banking institution, building and loan associations, trust company, public utility, educational institution or other special corporations governed by special laws, unless accompanied by a certificate of the appropriate government agency to the effect that such by-laws or amendments are in accordance with law ." (Emphasis supplied) "SECTION 48. Amendment to the by-laws . ... xxx xxx xxx The amended or new by-laws shall only be effective upon the issuance by the Securities and Exchange Commission of a certification that the same are not inconsistent with this Code ." (Emphasis supplied) On the basis of the above provisions, subject corporation cannot implement any amendment in its By-laws even if approved by the Board and the members without prior approval of the Bangko Sentral and the SEC. We, therefore, conform with the previous opinion of the Bangko Sentral on the matter embodied in its letter of August 10, 1994 addressed to subject corporation quoted hereunder: "Proxy voting may, therefore, be allowed in the general assembly meeting of your association since the approved and registered by-laws of your association allows this. The proposed amendments have no force and effect until and unless they have been approved by the BSP and registered with the SEC." Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner