Romulo Mabanta Buenaventura Sayoc & De los Angeles

July 7, 1997 Romulo Mabanta Buenaventura Sayoc & De los Angeles 30/F Citibank Tower Paseo de Roxas, Makati City Attention : Attys . Cynthia Roxas-Del Castillo and Jose Luis De Dios S i r : This refers to your letter dated May 16, 1997, contesting the ruling of our Money Market Operations Department dated April 29, 1997, which states that there is no conflict between paragraph 4 of RSA Rule 34 (a)-1 and Section 58 of the Corporation Code and requesting this Commission to amend said SEC Rule to conform with the Corporation Code. While we agree with your argument that the rules and regulations issued by Administrative Agencies cannot go beyond the terms and provisions of the basic law, we don't agree that it is not being observed in the case of the above-cited questioned SEC Rule. What is being intended to be implemented by said RSA Rule is not Section 58 of the Corporation Code but Section 34 of the Revised Securities Act . (RSA) which provides in part: "SECTION 34. Proxies . (a) It shall be unlawful for any person, in contravention of such rules and regulations as the Commission may prescribe .... (b) It shall be unlawful for any member of a securities exchange, or any broker or dealer, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors .... (c) ...and in accordance with rules and regulations prescribed by the Commission file with the Commission and pursuant to all holders of record or such security information substantially equivalent to the information which would be required to be transmitted if a solicitation was made .... It is quite clear from the above provisions that the Commission has the authority to promulgate Rules and Regulations on proxies which are applicable to " listed companies ".In this connection, it is well-settled that a special law is to be taken as an exception to the general law. Accordingly, RSA Rule 34 (a)-1 which was adopted to effectively implement Section 34 of the Revised Securities Act (a special law) should prevail over Section 58 of the Corporation Code (a general law). The rationale behind the questioned SEC Rule providing that no proxy shall confer authority to vote with respect to more than one meeting is to prevent situations where the proxy holders would still be voting the shares which are no longer owned by the persons who executed the proxies. There is a great possibility that this situations would occur in the case of publicly held/listed shares because of the series of subsequent transfers. Please be advised accordingly. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner