Ms. Aleli R. Sangalang

January 20, 1994 Ms. Aleli R. Sangalang Provident Fund Association, Inc. Quezon Memorial Circle, Elliptical Road, Quezon City M a d a m : This refers to your letter of January 5, 1994 requesting opinion on the legality of the alleged unreasonable adjustment of the honorarium and per diems of the members of the Board of Trustees and Management Staff of NHA-Provident Fund Association, Inc. cdll Please be advised that the Commission does not, as a matter of settled policy, render opinions on queries or transactions involving justiciable issues which may eventually be litigated in the future or which could only be clarified and determined in a proper proceeding, such as those presented in your letter. The opinion which may be rendered thereon would not be binding upon private parties who would in all probability, if the opinion happens to be adverse to their interest, take issue therewith and contest it before the Court. For this reason, the Commission refrains from giving opinion on the validity of the above transaction so that it will not be estopped to resolve any controversy pertaining thereto if brought before it in a proper proceeding. However, for purposes of information only the following may be imparted. While "per diems" may be granted to the members of the board, there is a limitation that the same must be reasonable. Section 30 of the Corporation Code provides: "SECTION 30. Compensation of directors . In the absence of any provision in the by-laws fixing their compensation, the directors shall not receive any compensation, as such directors, except for reasonable per diems :Provided, however, That any such compensation (other than per diems) may be granted to directors by the vote of the stockholders representing at least majority of the outstanding capital stock at regular or special stockholders' meeting. In no case shall the total yearly compensation of directors, exceed ten (10%) percent of the net income before income tax of the corporation during the preceding year." (Emphasis supplied) Thus, stockholders or members may review a board resolution fixing or increasing per diems of the Board and may inquire into its reasonableness and if found excessive, to afford adequate relief therefrom. Any " per diem" to directors or trustees made without proper authorization or is unreasonably excessive may ordinarily be recoverable in a stockholders/members suit. Where action by the corporation is prevented by the control of the majority stockholders/members, relief may be at the instance of the minority stockholders/members themselves. Any one who feels he has a cause of action against the Corporation, its Directors or Officers, may file a verified complaint with the Securities Investigation and Clearing Department of this Commission pursuant to P.D. 902-A, as amended and Revised Rules of Procedure in the Securities and Exchange Commission. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman