Mr. S. G. Cajot

September 28, 1981 Mr. S. G. Cajot Manager Philippine Loans and Credit Corporation City of Naga Sir : In connection with your letter of July 22, 1981, please be informed that Section 5, Article II of your by-laws authorizes the payment of compensation for services rendered by the members of the board of directors, and that Section 8, Article III, of the same by-laws also allows compensation and salaries for officers of your corporation. However, please be informed that Section 30 of the Corporation Code provides, that in no case shall the total yearly compensation of directors, as such directors, exceed ten (10%) percent of the net income before income tax of the corporation during the preceding year. In view of the foregoing, your queries must be answered in the affirmative. As to whether or not said corporate expenses, such as the payment of compensation, salaries or representation expenses, are disallowed by the BIR for purposes of taxation, is a question to be ascertained in that office, and certainly not in this jurisdiction. Please be guided accordingly. prcd Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner