Dr. Nacianceno S. Albaran, Sr.

October 16, 1990 Dr. Nacianceno S. Albaran, Sr. 24 Javellana Extension Jaro, Iloilo City S i r : This refers to your letter dated September 10, 1990 requesting opinion on the following queries: llcd 1. As a new member, do you have the right to request for an independent, external audit of the financial status of the Polytechnic School of Iloilo since the Accountant-Cashier submitted to you a deficit financial statement? 2. Do incorporators have the legal right to receive some amount in the form of honorarium from the income of a non-stock, non-profit corporation? 3. Does a member have the legal right to review a financial statement submitted to the SEC? 4. Does the SEC have the legal right to require the submission and verification of the Membership Book, Minute Book, Cash Book, Ledger Book, Journal Book, Vouchers, and all other pertinent papers to justify a Financial Statement submitted? Anent your first, third and fourth queries, please be advised that members are entitled to full information as to the management of the corporation and expenditure of its funds. The members' right to inspect corporate books and records is expressly recognized under the Corporation Code. Section 74 thereof provides that records of all business transactions of the corporation shall be open to inspection of any director, member, or stockholder of the corporation at reasonable hours on business days. Another right of a member expressly provided under Section 75 of the Code is the right to be furnished of the most recent financial statement, which shall include a balance sheet as of the end of the last taxable year and a profit or loss statement for said taxable year, showing in reasonable detail its assets and liabilities and the result of its operations and a financial report of the operations of the corporation for the preceding year, which shall include financial statements, duly signed and certified by an independent certified public accountant . While the Corporation Code is silent that a member or stockholder can demand a detailed auditing of the business operation of the corporation, nevertheless, he can file a complaint or petition with the SEC pursuant to PD 902-A, as amended, upon discovery of probable anomalies or irregularities in the management and operation of the corporation, in which case, the Commission may order an audit and examination of the corporate books if there is a clear showing that the same is necessary. Anent your second query, incorporators or members of a non-stock. non-profit corporation are not entitled to receive any amount from the income of the corporation, unless they actually render services to the corporation, as when they are acting as directors, officers or employees of the corporation. However, any grant of compensation must be provided for in the by-laws, otherwise, they are not entitled to any compensation, except those allowed under Section 30 of the Corporation Code, quoted hereunder: "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 a regular or special stockholders' meeting. In no case shall the total yearly compensation of directors, as such directors, exceed ten (10%) per cent of the net income before income tax of the corporation during the preceding year. cdlex (SGD.) RODOLFO L. SAMARISTA Associate Commissioner