Republic of the Philippines

RECEIVED

TATIVES

HOUSE OF REPRESENTAT!
Quezon City, Metro Manila pave: 93 AUG 2016
Tume:_3foom

SEVENTEETH CONGRESS
First Regular Session

2435

BY:

presmparon
BLS GN crx

House Bill No.

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Introduced by AKBAYAN Representative Tomasito S. Villarin

EXPLANATORY NOTE,

The social justice clause of the 1987 Philippine Constitution rightfully
affords full protection to labor. ‘The rights provided in Article XIII,
Section 3 of the Philippine Constitution, particularly the rights to
security of tenure, to self-organize, to collectively bargain and
negotiate, inchuding the right to participate in the decision-making
process of employers, are rights guaranteed to all workers in the
private and public sector.

On 6 June 2011, Republic Act No. 10149 otherwise known as the
“GOCC Governance Act of 2011” was signed into law. RA 10149 was
enacted to curb the grant of unreasonably high allowances, bonuses
and per diems given to members of the Board and officers of
government-owned or -controlled corporations. RA 10149 created the
Governance Commission for Government-Owned or -Controlled
Corporation, or GCG, which has the power to recommend the
reorganization, merger, streamlining, abolition and privatization of
any government-owned or -controlled corporation.

Earlier on 08 September 2010, Executive Order No. 7 was issued
seeking to rationalize compensation in GOCCs. In its Section 9, EO 7
imposed a moratorium on increases in salaries, allowances, benefits,
and other incentives in GOCCs unless approved by the President.

While the safeguards imposed by RA 10149 and EO 7 were meant to
prevent the grant of unconscionable compensation to members of the
Board and officers, the two enactments placed employees and
personnel of GOCCs, particularly those occupying supervisory and
rank-and-file positions, in an unfair situation.

Moreover, every recommendation of reorganization, merger,
streamlining, abolition and privatization affects the right of employees


and personnel to security of tenure. The blanket moratorium in EO 7
has frustrated the implementation of the provisions of collective
bargaining and negotiating agreements. These effects were not the
intention behind the law.

In connection to this, the intention of RA 10149 should be clearly set
by an amendment of the law. The negative effects of the
implementation on the rights of supervisory and rank-and-file
employees and members of personnel run counter to the guarantees
given by the Philippine Constitution.

This bill was filed by Akbayan’s representatives during the 16
Congress after consulting several GOCC unions.

In view of the foregoing, the passage of this bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

2485

House Bill No.

Introduced by AKBAYAN Representative Tomasito S. Villarin

AN ACT
AMENDING REPUBLIC ACT NO. 10149
OTHERWISE KNOWN AS
THE “GOCC GOVERNANCE ACT OF 2011”

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Ttle. - This Act shall be known as the “GOCC
Governance Amendments Act of 2016.”

SECTION 2. Amendatory Provisions. —

{a) Section 3 of Republic Act No. 10149 is hereby amended to read as
follows:

“Section 3. Definition of Terms.—For purposes
of this Act, the following terms shall used
and understood as follows

(a) “Affiliate” refers to a corporation fifty
percent (50%) or less of the outstanding
capital stock of which is owned or controlled,
directly or indirectly, by the GOCC.

(b)  “Appointive Director” refers to: (1) In
the case of chartered GOCCs, all members of
its Board of Directors/Trustees who are not
ex officio members thereof; (2) In the case of
nonchartered GOCCs, members of its Board
of Directors/Trustees whom the State is
entitled to nominate, to the extent of its


percentage shareholdings in such GOCC;
and (3) In the case of subsidiaries and
affiliates, members of its Board of
Directors/Trustees whom the GOCC is
entitled to nominate to the extent of its
percentage shareholdings in such subsidiary
or affiliate.

(c) “Board of _Directors/Trustees” or
“Board” refers to the governing body that
exercises the corporate powers of a GOCC.

(d) “Breakthrough Results’ refer to the
achievement of corporate goals or other
performance indicators as determined by the
GOCC or its supervising department.

(c) “Chartered Statement? refers to a
statement of the GOCC’s vision, mission and
core values.

() “Chartered GOCC’ refers to a GOCC,
including Government Financial Institutions,
created and vested with functions by special
law.

(g) “Chief Executive Officer (CEOP’ refers to
the highest-ranking corporate executive, who
could be the President or the General
Manager, Chairman or the Administrator of
a GOCC.

(h) “Department” refers to an_ executive
department created by law. This shall
include any instrumentality having or
assigned the rank of a department,
regardless of its name or designation.

(i) “Employee” refers to_any individual
employed by _a_nonchartered GOCC who
occupies @ managerial, supervisory or rank-
and-file position and who is not a member of
the Board of Directors/Trustees _or_an
Officer, as these terms are defined herein.

(i) “Ex Officio Board Member’ refers to any
individual who sits or acts as a member of
the Board of Directors/Trustees by virtue of

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one’s title to another office, and without
further warrant or appointment.

(k) “Fit and Proper Rule” refers to the
standard for determining whether a member
of the Board of Directors/Trustees or CEO is
fit and proper to hold a position in a GOCC
which shall include, but not be limited to,
standards on __ integrity, experience,
education, training and competence.

() “Government Agency’ refers to any of
the various units of the Government of the
Republic of the Philippines, including a
department, bureau, office, instrumentality
or GOCC, or a local government or district
unit therein.

(m) “Government Corporate Governance
Standards” refer to a set of principles derived
from law and practices, rules and standards
prescribed by the Governance Commission
for Government-Owned or -Controlled
Corporation (GCG) that generate long-tem
and desirable economic value for the State.
It shall also refer to a system whereby
shareholders, creditors, _ employees,
personnel, and other stakeholders of a
corporation ensure that management
enhances the value of the corporation as it
competes in an increasingly global market
place.

(0) “Government Financial _ Institutions
(GFisf refer to financial institutions or
corporations in which the government
directly or indirectly owns majority of the
capital stock and, which are either: (1)
registered with or directly supervised by the
Bangko Sentral ng Pilipinas; or (2) collecting
or transacting funds or contributions from
the public and places them in financial
instruments or assets such as deposits,
loans, bonds and equity including, but not
limited to, the Government Service
Insurance System and the Social Security
System.

(0) “Government Instrumentalities with
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Corporate Powers —_ (GCIP)/Government
Corporate Entities (GCEP refer to
instrumentalities within the departmental
framework but vested by law with special
functions or jurisdiction, endowed with some
if not all corporate powers, administering
special funds, and enjoying operational
autonomy usually through a charter
including, but not limited to, the following:
the Manila International Airport Authority
(MIAA), the Philippine Ports Authority (PPA),
the Philippine Deposit —_ Insurance
Corporation (PDIC), the —_ Metropolitan
Waterworks and Sewerage System (MWSS),
the Laguna Lake Development Authority
(LLDA), the Philippine Fisheries Development
Authority (PFDA), the Bases Conversion and
Development Authority (BCDA), the Cebu
Port Authority (CPA), the Cagayan de Oro
Port Authority, the San Fernando Port
Authority, the Local Water Utilities
Administration (LWUA) and the Asian
Productivity Organization (APO).

(Pp) *Government-Owned or ~Controlled
Corporation (GOCCP refers to any-agency a
chartered or nonchartered GOCC, as defined
herein, organized either as a stock or
nonstock corporation, vested with functions
relating to public needs —_ whether
governmental or proprietary in nature, and
owned by the Government of the Republic of
the Philippines directly or through its
instrumentalities, either wholly or, where
applicable, as in the case of stock
corporation, to the extent of at least a
majority of its outstanding capital stock:
Provided, however, That for purposes of this
Act, the term “GOCC’ shall include
“GICP/GCE and GFP as defined herein:
Provided, further, That for purposes _of
Chapter IIl_of this Act, the distinction
between a chartered or nonchartered GOCC
shall be retained.

(a) “Member of the personne?’ refers to an
individual employed _by a chartered GOCC
who occupies a career or noncareer position

4


and who is not a member of the Board of
Directors/Trustees or an Officer, as_these
are defined herein.

()  “Nonchartered GOCC’ refers to a
GOCC organized and operating under Batas
Pambansa Bilang 68, or the Corporation
Code of the Philippines.

(s) “Officers” refer to corporate officers of
the GOCC as provided in its charter or
bylaws, such as the CEO, Chief Financial
Officer, Chief Investment Officer, President,
Vice President, General Manager, Treasurer
and Corporate Secretary.

() “Ownership Manuals’ refer to
guidelines and rules pertaining to the
ownership by the State or corporations and
enterprises or the exercise of such
ownership governing the GOCCs or any
classification thereof.

(u) “Per Diems” refer to the compensation
granted to members of the Board of
Directors or Trustees of a GOCC for actual
attendance in meetings.

(v) “Performance Evaluation System? refers
to the process of appraising _ the
accomplishments of GOCCs in a given fiscal
year based on set performance criteria,
targets and weights.

(w) “Performance Scorecard” refers to a
governance and management tool forming
part of the performance evaluation system
which consists of a set of measures, targets
and initiatives that facilitate the achievement
of breakthrough results and performance
through the effective and efficient monitoring
and coordination of the strategic objectives
of the GOCC.

(x) “President” refers to the President of
the Republic of the Philippines.

(y) “Related Corporation” refers to a

3


subsidiary or affiliate of a GOCC.

(2 “Secretary” refers to the person vested
with the authority and responsibility for the
exercise of the mandate of the Department,
for the discharge of its powers and functions,
and who shall have supervision and control
of the Department.

(aa) “Strategy Map” refers to an integrated
set of strategic choices or objectives drawn
by the governing body, the successful
execution of which results in the
achievement of the GOCC’s vision in relation
to its mission or purpose for having been
created.

(bb) “Subsidiary” refers to a corporation
where at least a majority of the outstanding
capital stock is owned or controlled, directly
or indirectly, through one or more
intermediaries, by the GOCC.”

(b) A new provision after Section 4, denominated as “Section 4-1” is
hereby added:

“Section 4-1. Interpretation—No provision of
this Act shall be interpreted _to_deny_a
member of the personnel of a chartered
GOCC or an employee of _a_nonchartered
GOCC, or such member of the personnel_or
employee occupying supervisory and_rank-
and-file positions in the entities covered in
Section 4 hereof, the right to security of
tenure, right to_self-organize and right to

collective bargaining and negotiations.”

(c) Section 8 is hereby amended to read as follows:

“Section 8. Coverage of the Compensation and
Position Classification System—The GCG,
after conducting a compensation study, shall
develop a Compensation and Position
Classification System which shall apply to all
officers and employees of the chartered
GOCCs _ whether—under—the—Salary
Standardization—Law—or—exempt—therefrom
and shall consist of classes of positions

grouped into such categories as the GCG may
6


determine, subject to the approval of the
President: Provided, That the compensation of
employees of nonchartered GOCCs shall be
set in accordance with the Articles 244, 252
253, 253-A and 250 of the Presidential
Decree No. 442 otherwise known as the

‘Labor Code of the Philippines’

SECTION 3. Separability Clause—If for any reason, any provision of
this Act is declared invalid or unconstitutional, the remaining
provisions not affected thereby shall continue to be in force and effect.

SECTION 4. Repealing Clause—All laws, decrees, executive orders,
proclamations, rules and regulations, and other issuances, or part or
parts thereof, particularly of Republic Act No. 10149 otherwise known
as the “GOCC Governance Act of 2011,” which are inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.

SECTION 5. Effectivity Clause.—This Act shall take effect fifteen (15)
days after the completion of its publication in the Official Gazette or at
least two (2) newspapers of general circulation.

Approved.