M. S. Torralba

June 4, 1981 M. S. Torralba 214 Katipunan Avenue Blue Ridge, Quezon City Sir : This has reference to your letter dated 25 March 1981 requesting the opinion of this Commission on the queries posed therein which are hereby answered in the order they are presented. cdlex In the first two queries, you want to know if members of the Board of Directors, whether officers or not of the corporation, are entitled to receive monthly salary in addition to their transportation allowances or per diems every board meeting. Relative thereto, quoted hereunder is the pertinent provision of the Corporation Code of the Philippines, for your ready reference: 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 a 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%) percent of the net income before income tax of the corporation during the preceding year." (Emphasis supplied) This means that a by-laws may provide for a fixed compensation of the members of the board of directors. If it does not so provide, the board of directors shall not receive any compensation; nevertheless, they shall be entitled to reasonable per diems. However, even if the by-laws does not allow the members any compensation (other than per diems) the same may be granted to them by the vote of the stockholders representing at least a majority of the outstanding capital stock at a regular or special stockholders' meeting. The third query asks what action you can take to stop the directors from receiving compensation in the event they are not entitled thereto. To protect corporate rights and properties against illegal acts of the directors, stockholders may file a derivative suit in behalf of the corporation against the director. As to the last query, please note that this issue is an intra-corporate matter falling under the original and exclusive jurisdiction of the Securities and Exchange Commission. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department