Peftok Integrated Services, Inc.

February 12, 1985 Peftok Integrated Services, Inc. Rms. 404-405 Sunrise Condominium Bldg. Ortigas Avenue, Greenhills, San Juan Metro Manila Gentlemen: This refers to your letter dated February 5, 1985 requesting for information whether the transfer of shares of stock contained in the resolution of Peftok Investment and Development Corporation granting one (1) share of stock in Peftok Integrated Services, Inc.,in trust, each in favor of Messrs. Benjamino Vallejo, Tomas Batilo, Egmidio Jose, Antidio Obaldo and Teodolfo Santos in order to qualify them as directors therein, is not inconsistent with the provisions covering the preemptive right of stockholders to purchase the issued shares of the company is any sale thereof, as contained in Article 10 of the Articles of Incorporation of Peftok Integrated Services, Inc. prcd On the matter as to who may be elected as directors, Section 23 of the Corporation Code provides, in part to wit: "Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his name on the books of the corporation " (emphasis supplied). The above-quoted provision requires stock ownership in order to be eligible as director. As to the requirement of stock ownership, the general rule is that "beneficial ownership is not necessary and that a person who holds the legal title to stock on the books of the corporation is qualified, although the beneficial ownership may be in another. In other words, it is sufficient that the title to the stock, as it appears on the books of the corporation, is in the director, since the legal title is what counts and it is the person whose name appears as owner on the books of the company who is stockholder and eligible as director .For instance, a director may hold his stock as trustee and yet be legally qualified. So a person to whom one share of stock has been transferred for the express purpose of qualifying him as director is eligible "....(2 Fletcher Cyc. Corp. Sec. 300 pp. 91-92 emphasis supplied). It is therefore, opined that the proposed transfer of naked ownership of stock is not violative of Article 10 of the Articles of Incorporation of Peftok Integrated Services, Inc.,if the purpose thereof is merely to qualify the nominees/trustees as directors. To rule otherwise would create an injustice to corporate stockholders who under the law, have the right to be represented in the Board. However, the procedure laid down in our letter dated January 25, 1985, particularly the last paragraph thereof, must be complied with. Please be advised accordingly. Very truly yours, (SGD).MANUEL G. ABELLO Chairman