RE : Incumbent Trustee not qualified as Independent Trustee

October 19, 2004 SEC OPINION NO. 44-04 RE : Incumbent Trustee not qualified as Independent Trustee Mr. Israel A. Gozo Trustee Guagua National Colleges Inc. E. Lagman Street, Sta. Filomena 2003 Guagua, Pampanga S i r : This refers to your request for opinion on the issue whether or not a present member of the Board of Trustees of Guagua National Colleges Inc. can be nominated and elected to the position of Independent Trustee? We answer your query in the negative. As you pointed out, SEC Memorandum Circular No. 16 (2002) or the Guidelines on the Nomination and Election of Independent Directors defines independent director as a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director in any corporation that meets the requirements of Section 17.2 of the Securities Regulation Code and includes , among others, any person who : i. Is not a director or officer or substantial stockholder of the corporation or of its related companies or any of its substantial shareholders (other than as an independent director of any of the foregoing); . . ." The afore-quoted provision is clear and unambiguous that for one to qualify as independent director of a corporation he must not be a director of such corporation. This means that an incumbent director cannot be nominated and elected to the position of independent director. However, an incumbent independent director may still be re-elected as independent director of that corporation. It shall be understood that the opinion rendered is based solely on the facts disclosed in the query and relevant solely to the particular issue raised therein and shall not be used in the nature of a standing rule binding upon the Commission in other cases of similar or dissimilar circumstances. [ SEC Memorandum Circular No. 15 (2003) ] ECISAD For your information and guidance. Very truly yours, (SGD.) VERNETTE G. UMALI-PACO General Counsel