Board Resolutions On Compensation of Trustees

From the get-go, this Board did not waste time to help themselves to Association Funds.  Here are excerpts of minutes in a special board meeting, held on April 26, 2022:

Mr. Subia: I moved for the approval for the increase of Board per diem from P 1,000 to P 2,000 monthly. (All approved)

Mr. Ayop: I proposed that all members of Execom members be provided with a gas allowance amounting to P 1,000 per attendance, and all Committee heads will have a meal allowance every meeting. (All approved.)

Mr. Servando: For the approved committee allowance, I suggest to continue giving the monthly allowance (All approved.)

Since REHOA was organized more than a dozen years ago, trustees received a per diem of P 1,000 for every meeting. My understanding is that some trustees were still residing outside Riviera early on, and it was a token given for attendance. Committee meetings were mostly held in the REHOA office where coffee was served. No committee heads received any extra monetary compensation or allowance. 

No gasoline allowance was given, but out of pocket costs, such as gasoline expense and meals for official meetings outside Riviera were duly shouldered by the Association.

The proponent of this gasoline allowance is recorded as having recommended it be named as an "allowance" instead of "per diem." It looks ridiculously expensive for the ExeCom members and other trustees to get P 1000 for gasoline consumption going from their residences her to  Rehoa office and back, so calling it a monthly allowance makes it more credible. This resolution in effect assures ExeCom members will get P3000 each per month.

(Sidebar: To paraphrase the Bard, that which you call a monthly allowance would cost as much by any other name.)

SEC. 29 of REPUBLIC ACT NO. 11232  deals with Compensation of Directors or Trustees, and the prohibition is emphatic:

Directors or trustees shall not participate in the determination of their own per diems or compensation.

No one believes residents stand for election to increase their disposable income by a few thousand pesos. That our trustees appear to have ignored this legal provision - with impunity (?) - boggles the mind.

Do not these resolutions indicate an exaggerated sense of entitlement that trumps the law?

Remarkably, it is a lawyer, and designated legal counsel at that- one we can assume in knowledgeable in such matters- who made this proposal to double the per diems of our trustees.

 Perhaps he can pull out a magical rabbit out of his hat or conjure a legal leg to stand on or locate some case law or some exception in the RA No.  11232 and RA No. 9904 that can square these resolutions with the law?

If the lawyer who is also a trustee, has anything to say about this seemingly irresponsible, if not downright, illegal resolution, there's a space for him in this blog.

Perhaps he can enlighten us non-lawyers how this resolution is compliant with a fiduciary's obligation to put the interests of the Association first and last.

To be clear:

The issue here  is not affordability. Neither is it whether our fiduciaries  deserve  an extra thousand or two.

The issue is whether trustees can, motu proprio, decide how much per diems they can get.If there is no legal barrier can they not increase their per diems to P10,000 per attendance?

And suppose, just suppose they find a legal leg to stand on.

Would such a resolution comply with their fiduciary obligations of loyalty (to Rehoa), and duty of care? Whatever happened to duty and personal honor?

Will we be witnessing the demise of pro bono service in our community?

To be legal, it bears remembering, is not necessarily to be ethical.

(sidebar: At one time, this board resolved to withhold the payment of per diems to those absent and to distribute the budgeted amount for the meeting among those present in a board meeting. (Believe me, I am not making this up).

It’s common sense and standing practice not to give per diems to those absent; it is as rare as a unicorn to distribute the withheld per diems to those attending. What in heavens' name is the intention  here? To punish the absentees and reward the attendees already sure to get an envelope containing two 1,000 peso bills?

In any company, any employee or officer who proposes a batty idea like this  deserves to be fired on the spot and immediately escorted by the security outside the building.

To be sure, this odor of this unhinged resolution was insufferable even to the approving trustees and this resolution was revoked.

But what does approving a resolution like this say about the trustees’ attitude toward fiscal responsibility?  Note, it’s not the petty cash involved, it’s the principle.

SEC. 30. Liability of Directors, Trustees or Officers. 

Directors or trustees who willfully  and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of  gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or  pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.  (underscoring mine)