Mr. Jan Nicolas V. Cabrera

April 21, 1997 Mr. Jan Nicolas V. Cabrera 14 Arayat Street, Mandaluyong City S i r : This refers to your letter dated April 19, 1997 requesting information on the following: 1. The procedures in electing the members of the board of directors of a stock corporation. prcd 2. Meaning of the term cumulative voting. 3. The effect of the election if the procedure prescribed by law is not followed. In the election of the members of the Board of Directors, the following procedure laid down under the Corporation Code should be followed: "SECTION 24. Election of directors or trustees . At all elections of directors or trustees, there must be present, either in person or by representative authorized to act by written proxy, the owners of the majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. The election must be by ballot if requested by any voting stockholder or member. In stock corporations, every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing ,at the time fixed in the by-laws, in his own name on the stock books of the corporation, or where the by-laws are silent, at the time of the election; and said stockholder may vote such number of shares for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes as the number of directors to be elected and multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit: Provided, That the total number of votes cast by him shall not exceed the number of shares owned by him as shown in the books of the corporation multiplied by the whole number of directors to be elected :Provided, however, That no delinquent stock shall be voted. Unless otherwise provided in the articles of incorporation or in the by-laws, members of corporations which have no capital stock may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate. Candidates receiving the highest number of votes shall be declared elected .Any meeting of the stockholders or members called for an election may adjourn from day to day or from time to time but not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by proxy, at the meeting, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote." The right of " cumulative voting " is a method of concentrating votes devised to give sufficient minority stockholders the opportunity to secure representation in the board of directors. To illustrate: Suppose that stockholder A has 20 shares registered in his name on the books of the corporation, and there are 5 directors to be elected. In such case, he has 100 votes, this being the product of 20 shares multiplied by 5 directors (20 x 5).Under the method of cumulative voting, he may cast the total 100 votes for only one candidate or he may distribute the 100 votes among as many candidates as he shall see fit; such as: 20 votes for each of the 5 candidates: or 50 for one candidate and 50 for another or in any combination desired by him, provided that the total number of votes cast by him does not exceed 100. llcd In the absence of a formal protest from any of the stockholders, the elected Directors are presumed to have been elected in accordance with law. The Commission always adheres to the hands-off policy not to interfere on election matters, unless the election is contested and a formal complaint is filed before it. Very truly yours, (SGD.) SONIA M. BALLO Director Corporate and Legal Department