The University Physicians' Services, Inc.

July 11, 1983 The University Physicians' Services, Inc. 1122 General Luna St.,Ermita Manila Attention : Mr . Cesar Bazarga House Counsel Gentlemen: This refers to your letter dated March 30, 1983, requesting information on the proper procedure to follow due to the effect of Section 7 of the New Corporation Code on Article VII of the Articles of Incorporation of the University Physicians' Services, Inc. which was registered with this Commission on January 17, 1976. Article VII of the said Articles of Incorporation provides, to wit: "The rights preferences, qualifications and restrictions of the FOUNDER'S AND COMMON STOCK are as follows: xxx xxx xxx Both holders of the FOUNDER'S and COMMON shares may be elected director. Only the FOUNDER's stock shall have the right to vote .(Emphasis supplied) Under Section 7 of the New Corporation Code, however, the exclusive voting right granted to Founder's shares is limited to 5 years. The law provides, thus: "Founder's shares classified as such in the Articles of Incorporation may be given certain rights and privileges not enjoyed by the owners of other stocks provided that where the exclusive right to vote ....is granted it must be for a limited period not to exceed five (5) years subject to the approval of the Securities and Exchange Commission. The five(5)-year period shall commence from the date of the aforesaid approval by the SEC." (Emphasis supplied) In relation thereto, Section 148 of the Corporation Code of the Philippines provides that existing corporations affected by the new requirements of the Code are given a period of two (2) years from its effectivity (May 1, 1980) within which to comply with the same. The corporate records of the corporation, however, show that its articles of incorporation has not been amended to comply with the above-mentioned requirement. In this connection, the Commission in several opinions, has ruled that "if a corporation does not file an amendment to its articles of incorporation on or before May 1, 1982, the Commission will consider the limitation laid down by Section 7 of the Corporation Code as written into said Articles on May 1, 1980." (SEC opinion dated April 26 and June 29, 1982). Hence, the Commission has to consider the limitation period in your articles of incorporation, granting the founder's shares thereof certain rights and privileges not enjoyed by the owners of other stocks, to be effective only up to April 30, 1985; after said date, the holders of common and founder's shares shall enjoy equal rights and voting powers. Please be guided accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner