Mr. Ramon A. Fabella

December 16, 1986 Mr. Ramon A. Fabella Peoples Trans-East Asia Insurance Corporation 2nd Floor, Mercantile Insurance Bldg. cor. Gen. Luna & Deaterio Sts. Intramuros, Manila Sir : This refers to your letter dated November 4, 1986 requesting information relative to the dividend right to preferred shares based on the following facts: 1. Your company invested in the preferred shares of Philippine Savings Bank on the assumption that it would receive the corresponding dividend assured by the Bank. 2. You have in the past inquired and requested for copies of financial statement and minutes of the annual stockholders' meeting to no avail, except for newspaper clippings of the bank's statement of condition. 3. Due to your insistence, it has come to a point that your business relationship with the bank was even threatened. 4. Then came the takeover by the present management of the bank who subsequently approved the conversion of the preferred shares to common shares. Though you appreciated the conversion of the preferred shares to common with the rights and benefits provided for by law, nevertheless, you contend loss of money in your investment due to the conversion. You claimed that from the period of January 1, 1979 to April 10, 1984 you failed to receive from the bank an estimated amount of P23,310.00 in the form of unpaid dividends. Hence, your present request. Relative to the rights of holders of preferred shares to receive dividends, please find attached herewith a xeroxed copy of our opinion on the matter addressed to Federal Insurance Company, Inc.,dated November 3, 1986. Regarding the conversion of preferred shares to common shares, the same is allowed under Section 16 of the Corporation Code. The law provides, thus: "SECTION 16. Amendment of articles of incorporation . Unless otherwise prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code." . . . (emphasis supplied) Any dissenting stockholder may avail of Section 81 of the Corporation Code which provides: "SECTION 81. Instances of appraisal right . Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances. 1. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares in any class. ..." Regarding the bank's refusal to furnish you copies of its financial statements and minutes of annual stockholders' meeting inspite of your request, quoted in part hereunder is Section 74 of the Corporation Code which recognizes the stockholders' right to inspect corporate books and records. "The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, trustees, stockholder or member of the corporation at reasonable hours on business days and they may demand, in writing, for a copy of excerpts from said records or minutes, at his expense." Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman