PEFTOK Integrated Services, Inc.

May 9, 1989 PEFTOK Integrated Services, Inc. Rms. 404-405 Sunrise Condominium I Bldg., Ortigas Avenue, Greenhills, San Juan, Metro Manila Gentlemen: This refers to your letter dated March 8, 1989, seeking for clarification on whether the President elect for the year 1989 of your corporation can continue to serve his term of office for one year pursuant to the provisions of the by-laws inspite of having reached compulsory retirement age last March as prescribed under the Company Operating Procedure No. 23 (Re: Amended Retirement & Plan of PEFTOK Integrated Services, Inc.). prcd While a person may be an officer or employee of a corporation or both he is not as a matter of law an employee by virtue of the fact that he is an officer (2 Fletcher Ch II Sec. 266).An office is created by the charter of the Corporation, and the o fficer is elected by the directors or stockholders .(Ibid).An employee usually occupies no office and generally employed not by the action of directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid. (2 Fletcher, citing Alldritt v. Kansas Centennial Global Exposition, Inc. 189 Kas 649, 371 P2d 818).Thus, when the president of a corporation acts only as such, performing the regular executive duties pertaining to his office, he is not considered an employee. However, a corporation may hire its president to perform services under circumstances which will make him an employee. (2 Fletcher, Ch II Sec. 266.1). A reading of the Amended Retirement & Separation Plan of PEFTOK disclosed that only employees are covered by the compulsory retirement age. Your attention is invited on the provisions of Section 25 of the Corporation Code which clearly provides that the president is considered a corporate officer. The law provides thus: "SECTION 25. Corporate Officers, quorum . Immediately after the election, the directors of a corporation must formally organized by the election of a president, who shall be a director, ..." (emphasis supplied). Likewise, it is worth mentioning that insofar as the power to remove corporate officers is concerned the same must ordinarily be vested in the body or officer authorized to elect or appoint (SEC Opinion dated September 29, 1987). Under Section 25 of the Corporation Code, the power to elect the officers is vested in the Directors. Consequently, the general right of removal of officers in a Corporation is vested only on the members of the Board. In the light of the foregoing, the term of office of the president does not fall within the scope of the Standard Operating Procedure of the Company. Hence, he can continue to serve until the expiration of his term of Office. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman