Mr. Geminiano R. Pineda

January 26, 1989 Mr. Geminiano R. Pineda 3rd Floor 3B Montepino Building Corner Amorsolo & Gamboa Streets Legaspi Village, Makati, Metro Manila Sir : This refers to your letter dated January 12, 1989, requesting clarification on the query posed therein. llcd It appears that the articles of incorporation of San Miguel Corporation Employees Savings and Loan Association, Inc. provide for seven (7) directors. You alleged that with the resignation of one of the directors sometime last year, there are at present only six (6) directors. In the last regular meeting of the board of directors held on December 12, 1988, wherein five (5) of the six (6) directors were present, the directors unanimously approved a resolution limiting the number of directors to be elected to six (6) at the coming annual meeting of members of the corporation on January 30, 1989. In the subsequent meeting of the board for January 1989, the absent director questioned the legality of electing only six (6) directors instead of seven (7) as provided in the articles of incorporation. Clarification is now being sought on whether the board of directors can opt for the election of a lesser number of directors than what the articles of incorporation provide. In connection therewith, please the advised that to effect a change in any provision or matter stated in the articles of incorporation which in your case is the decrease of the number of the members of the board, compliance with Section 16 of the Corporation Code is necessary. The law provides thus: "SECTION 16. Amendment of articles of incorporation Unless otherwise prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a "majority" vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least "two-thirds (2/3)" of the outstanding capital stock; without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the vote or written assent of two-thirds (2/3) of the members if it be a non-stock corporation . The original and amended Articles together shall contain all provisions required by law to be set out in the articles of incorporation. Such articles, as amended shall be indicated by underscoring the change or changes made and a copy thereof duly certified under oath by the corporate secretary and a majority of the directors or trustees stating the fact that said amendment or amendments have been duly approved by the required vote of the stockholders or members, shall be submitted to the Securities and Exchange Commission. The amendments shall take effect upon its approval by the Securities and Exchange Commission or from the date of filing with the said Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to the corporation ".(Emphasis supplied). Thus, in order to legally effect the change in the number of the Board of Directors of the Corporation from 7 to 6, an amended articles of incorporation reflecting such change executed in accordance with the aforecited provision of law is necessary. cdlex Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman