Mr. Victor Africa

May 23, 1993 Mr. Victor Africa Telecoms Plaza 316 Gil J. Puyat Ave., Salcedo Village, Makati Metro Manila S i r : This refers to your letter of April 19, 1993 requesting opinion on the following queries: 1. Whether Corporate Officers can rightfully deny the request for inspection by a stockholder of record, because another person claims ownership of the shares; 2. Whether Corporate Officers have the authority to motu proprio go beyond the Stock and Transfer Book in determining who is the person with the right of inspection; 3. Whether a person who has not filed any claim for the shares has a right to protest/object/oppose such inspection by stockholder of record; and 4. Whether a person who has a pending claim for the shares has ipso facto, a right to protest/object/oppose such inspection by a stockholder of record, and which right must be respected by Corporate Officers. Section 7 of the Corporation Code, quoted hereunder provides as to who are entitled to exercise inspection right of corporate books. SECTION 74. Books to be kept; stock transfer agent . . . . Stock corporations must also keep a book to be known as the " stock and transfer book ", in which must be kept a record of all stocks in the names of the stockholders alphabetically arranged; the installments paid and unpaid on all stock for which subscription has been made, and the date of payment of any installment; a statement of every alienation, sale or transfer of stock made, the date thereof, and by and to whom made; and such other entries as the by-laws may prescribe. The stock and transfer book shall be kept in the principal office of the corporation or in the office of its stock transfer agent and shall be open for inspection of any director or stockholder of the corporation at reasonable hours on business days." xxx xxx xxx (Emphasis supplied) To determine who are the stockholders of a corporation who are entitled to the right of inspection of corporate books, much therefore would depend on the identities of the stockholders as appearing in the stock and transfer book of the corporation which is the best evidence to show the present stock-ownership. However, it is not an exclusive evidence on matters and things written therein. Extrinsic evidence may be admitted. However, proper foundation proof explaining why the stock and transfer book should not be relied on must first be laid for the introduction of other evidences. The rights of a stockholder accrues only upon entry of his name in the books of the corporation. A person who desires to be recognized as a stockholder for purposes of exercising stockholder's rights must secure a standing by having his ownership of shares recorded on the corporate books. As a general rule, only those whose ownership of shares are duly registered in the corporate books are considered stockholders of record and are entitled to all rights of a stockholder. Thus, unless it is clearly established by evidence that the claimant of stock is a stockholder, he is not entitled to exercise the right to inspect corporate books and a person who is not a registered stockholder has no right to object to the inspection right of any stockholder registered in the stock and transfer book. Regarding any violation or refusal of the right of inspection, Section 74 of the Corporation Code provides: "SECTION 74. Books to be kept; stock transfer agent . . . . xxx xxx xxx Any officer or agent of the corporation who shall refuse to allow any director, trustee, stockholder or member of the corporation to examine and copy excerpts from its records or minutes in accordance with the provisions of this Code, shall be liable to such director, trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall be punishable under Section 144 of this Code: Provided, That if such refusal is pursuant to a resolution or order of the board of directors or trustees, the liability under this section for such action shall be imposed upon the directors or trustees who voted for such refusal: and Provided, further, That it shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the corporation's records and minutes has improperly used any information secured through any prior examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his demand. xxx xxx xxx." Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman