Mr. Ciriaco M. Dator

November 17, 2003 SEC OPINION NO. 61-03 Mr. Ciriaco M. Dator Officer-In-Charge Supervision and Examination Sector Supervision and Examination Department Bangko Sentral ng Pilipinas Manila 1004 Dear Mr. Dator : This refers to your letters dated 17 October and 25 July 2003 requesting our comments on whether International Exchange Bank (iBank) should amend its Articles of Incorporation by virtue of the conversion of its preferred shares, details of which follow: FROM TO Redeemable Non-Redeemable Floating Rate Fixed rate of Five (5) Years Non-Convertible Convertible Before anything else, please be informed that based on our records, your first letter was never officially transmitted to our office while your second letter was only received last 29 October 2003. Anent your concern, the Commission is of the opinion that there is no need to amend iBank's Articles of Incorporation. Pertinent portion of Section 6 of the Corporation Code of the Philippines ("the Code") provides: CcSEIH "The Board of Directors, where authorized in its articles of incorporation, may fix the terms and conditions of preferred shares of stock or any series thereof: Provided, That such terms and conditions shall be effective upon filing of a certificate thereof with the Securities and Exchange Commission." The intent thereof is to allow the corporation "to meet changes in market conditions which cannot be foreseen at the time of incorporation or later amendment of articles of incorporation". (SEC Opinion dated 09 August 1982, Philippine Telegraph and Telephone Corp.) Such is clearly contemplated in the subject case of iBank, as its Amended Articles of Incorporation explicitly states that its preferred shares " may be redeemable or non-redeemable, convertible or non-convertible to common stock, as may be determined by the Board of Directors by a resolution duly approved ". The terms or features of the preferred shares apply to the entire authorized preferred shares, whether issued or unissued. When the Amended Articles of Incorporation of iBank containing the aforequoted features of its preferred shares was approved by the Commission on 22 February 2001, said features were attached to the entire preferred shares, and not only on the unissued preferred shares, otherwise, the abovecited purpose for which the aforequoted provision was incorporated in Section 6 of the Code would be defeated. ( Ibid ) Thus, there is no need to amend the Articles of Incorporation of iBank. However, the Corporate Secretary should file with this Commission a Certificate, under oath, containing the approval by Board of Directors of the resolution fixing the terms and conditions of the preferred shares. (SEC Opinion dated 11 January 1982, Mr. Jose C. Vitug) Very truly yours, (SGD.) VERNETTE UMALI-PACO General Counsel