PEFTOK Integrated Services, Incorporated

June 13, 1985 PEFTOK Integrated Services, Incorporated c/o Mr. Marcelino A. Bueno Rms. 404-405, Sunrise Cond. Bldg. Ortigas Avenue, Greenhills San Juan, Metro Manila Gentlemen: This relates to your letter dated April 19, 1985 requesting for opinion on the query posed therein. It appears that eight (8) members of the present Board of Directors of PEFTOK Integrated Services, Incorporated (PISI) were elected to their position therein upon transfer to them of one share each of said corporation's stock in trust for PEFTOK Investment & Development Corporation (PIDC) in order to qualify them a members of the Board . Some issued shares of stock of the former corporation are up for sale. Under Article 10 of the articles of incorporation of PEFTOK Integrated Services, Inc., it is provided that no stockholders or the executor or administrator or any deceased stockholder of the corporation shall transfer, alienate, or any way dispose of any share of the corporation without first offering the same in writing to the existing stockholders who shall have 30 days option within which to buy the same and thereafter, to the corporation which is also given 30 days from and after the date of the expiration of the 30-day period given to the stockholders. Your query is whether these eight (8) Directors are qualified to buy the share which are offered for sale. It has to be recalled that the eight (8) directors of PISI are holders of stock therein only in trust for the real owner which is the PIDC. The latter granted them one share each of its stock in PIDC merely to qualify them as its nominees to the board of directors of PISI. Consequently, a trust relation is created between the eight (8) directors and PIDC. They would have the legal title to the stock of PISI in trust for the equitable owner, the PIDC. According to the great weight of authority, the fact that one stock stand on the corporate book in the name of a person as trustee, or that, the holder thereof is described as trustee in the certificate is notice to both of the corporation and to the person who may purchase said shares from the trustee, that he does not hold shares in his own right. The fact that the cestui que trust is not named is immaterial. Until the stock is transferred on the corporate books in the name of the real owner, the eight directors remain the nominal owners of the share and are regarded as trustees of the stock for the benefit of the cestui que trust. (SEC opinion, dated August 17, 1982). In view of the foregoing, the eight (8) directors cannot exercise the option granted the stockholders under Article 10 of the Articles of Incorporation of PISI. However, should the bonafide stockholders and the corporation itself fail to exercise their respective options to purchase the offered stock within the period prescribed in their charter, then, the eight (8) directors may so purchase the offered stock in their own right. Furthermore, please be advised that the entry in the stock and transfer book of PISI regarding the previous eight (8) shares of stock assigned by PIDC in favor of the eight (8) directors should contain a description that each of said eight (8) nominees of PIDC holds the stock of PISI merely as trustee thereof. Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman