February 28, 2000

Ponce Enrile Reyes & Manalastas

3rd Floor, Vernida IV Bldg., Leviste St.
Salcedo Village, Makati City
Attention : Attys. Rossano P. Nisce & Bob L. Guinto
Gentlemen:
This refers to your letter dated February 8, 2000 requesting the Commission, on behalf of your
client, The Insular Life Assurance Company, to confirm the following views relative to the
intended "demutualization" of the corporation (conversion of the corporation from a "non-stock"
corporation to a "stock" corporation by way of amendment to its articles of incorporation and bylaws).
1.
That the vote of the members required to approve the amendments to the articles of
incorporation and by-laws of the corporation is at least two thirds (2/3) of the members actually
in attendance in person or by proxy at a meeting duly called for the purpose, provided that such
members present or represented constitute a quorum of at least five (5%) percent of all the
voting members of the corporation; and
2.
That the corporation may convert from a non-stock to stock insurance company pursuant
to its "demutualization" in accordance with the Insurance Code and the guidelines of the
Insurance Commission, and that the same may be effected through, among others, the
amendment of its articles of incorporation and by-laws without the necessity of first dissolving
the company.
Relative to the first view, please be advised that inasmuch as the office of the Insurance
Commissioner (IC) which has the primary jurisdiction of insurance companies, has already
confirmed your position in its letter dated November 12, 1999 addressed to your Law Office, the
Securities and Exchange Commission. (SEC) in its meeting of February 24, 2000, resolved not to
interpose any objection thereto, subject, however, to the condition that all the policy holders who
are the members of the insurance firm are properly notified of the meeting to be called for the
purpose of approving the intended demutualization.
Anent the second issue, the general rule is that a non-stock, non-profit corporation cannot be
converted into a stock corporation by mere amendment of its articles of incorporation without
first dissolving the same. However, this principle is not applicable in the present case. While a
"mutual life insurance corporation" is basically a "non-stock" corporation it cannot per se fall
under such category, taking into consideration its nature and purpose. Somehow it has the
character of a "stock" corporation. Unlike in ordinary non-stock, non-profit corporation, the
members thereof who are the policy holders have individual pecuniary interest in the firm
because of their premium contributions evidenced by their insurance policies, the corresponding
value of which can be determined and fixed, and for which corresponding shares of stocks may
be issued in exchange therefor. Thus, the Commission, in its meeting of February 24, 2000,
likewise confirmed the second position, subject, however, to the conditions, that the corporation
meets with all the technical requirements for the issuance of fully paid shares and that under the
demutualization scheme to be adopted, the existing members of the insurance firm shall remain
to be policy holders.

Very truly yours,

(SGD.) PERFECTO R. YASAY, JR.
Chairman