SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B. No. 52£ 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
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This bill seeks to institutionalize the systematic review and evaluation of 
government-owned and controlled corporations (GOCCs) to oversee their 
financial condition and ensure that they contribute to the progress of the country. 
GOCC, as defined under Presidential Decree No. 2029, is "a stock or a 
non-stock corporation, whether performing governmental or proprietary 
functions, which is directly chartered by special law or, if organized under the 
general corporation law, is owned or controlled by the government directly or 
indirectly throug!:t a parent corporation or subsidiary corporation, the ex\tent of at 
least a majority of its outstanding capital stock or of its outstandirig voting 
capital stock" E.O. No. 64 of 1993 expanded the definition to inblude "a 
corporation created by special law or incorporated and organized under the 
Corporation Code and in which government, directly or indirectly, has 
ownership of the majority of the capital stock." 
In a paper done by the Senate Economic Planning Office (SEPO) on the 
profile of selected Philippine GOCCs released in 2006, there were 133 GOCCs as 
of June 2004. Its consolidated total assets amounted to P4.5 trillion, which grew 
by 0.24 percent from the previous year while its total liabilities declined by 4.97 
percent to P3.7 trillion during the same year from the P3.9 trillion balance in 
2003. According to SEPO, studies have shown that public corporations generally 
perform poorly compared to private corporations. A World Bank (1995) study 
identified three reasons why GOCCs or state- owned enterprises (SOEs) perform 
poorly: 
1.) 
No one has a clear stake in generating positive returns because 
there is no single identifiable owner since government can be the ministries, or 
parliament or the general public; 
2.) Many SOEs have multiple or conflicting objectives. Government 
creates a corporation to address social objectives such as lowering the price of a 
sOcially-sensitive.good, yet the corporation is expected to maximize returns; and 
3.) Access to subsidies, transfers and guaranteed loans create a moral 
hazard such that there is no incentive to be efficient since there is no threat of 
bankruptcy. 
The same paper reveals that the poor financial condition of GOCCs 
studied arises from operational factors and inconsistent policy objectives of 


government. Most of the 14 GOCCs are mandated to provide services with social 
objectives, which result in losses. In these cases, government is obliged to 
subsidize their operations. Likewise, some of the GOCCs' operations require 
huge capital investments which government cannot afford given its bbdgetary 
constraints. The consequence is that there is heavy reliance on debt, paJ1ticularly 
on foreign loans. The high foreign debt exposure, in turn, makes these GOCCs 
vulnerable to foreign exchange and interest rate risks. Another factor is the moral 
hazard problem in the operations of GOCCs and their conduits. Many of the 
GOCCs have less incentive to perform efficiently because government 
guarantees their debt. In some instances, there is little restraint in spending. 
Finally, there is no single entity that exercises the ownership function of the State 
over the GOCCs. The rights and functions of the State as an owner are largely 
exercised through the department to which they are attached. The monitoring of 
the overall performance of GOCCs is also dispersed among the various 
departments to which they are attached. 
This bill mandates all GOCCs to submit regularly to a sunset review by 
both the Committees of the Senate and the House of Representatives having 
legislative jurisdiction over the said corporations, the interval between each 
review to be not more than a period of five (5) years. Under this proposed 
measure, sunset review shall refer to the systematic evaluation by Committees of 
the Senate and the House of Representatives having legislative jurisdiction over 
government-owned or controlled corporations to determine if the said 
corporations merit continued government participation and/ or subsidy. 
In view of the benefits that will be gained by the efficient operations of 
GOCCs, immediate passage of this bill is earnestly requested. 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SEN ATE 
S.B. No. 526 
Introduced by Senator LOREN LEGARDA. 
AN ACT 
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JUL -8 AB :24 
PROVIDING FOR A SYSTEMATIC AND PERIODIC REVIEW OF THE 
ECONOMY, EFFICIENCY AND VIABILITY OF GOVERNMENT-OWNED OR 
CONTROLLED CORPORATIONS AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 1. Title. - This Act shall be known as the "Philippine Sunset Act of 
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2013." 
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SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to 
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promote economy and efficiency of government-owned or controlled corporations 
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shall be subjected to the interest of the common good and the test of economic 
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viability. 
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Toward this end, the State, in order to promote private sector initiative, shall 
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only engage in business areas where private sector is not in participation, or when 
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the public good so requires. 
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SEC, 3. Definition of Tenns. - For purposes of this Act: 
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a. "Sunset Review" shall refer to the systematic evaluation by Committees of the 
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Senate and the House of Representatives having legisla:tive jurisdiction over 
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government-owned or controlled corporations to determine H the said 
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corporations merit continued government participation and/ or subsidy; 
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b. "Government-owned or Controlled Corporation" or subsequently referred to 
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as "GOCCs", shall refer to a stock or non-stock corporation, performing 
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governmental or proprietary functions directly chartered by special law or if 
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otherwise formed, is owned or controlled by the government; directly or 
indirectly, through a parent corporation or subsidiary corporation to the 
extend of at least majority of its outstanding capital stock in the case of a stock 
corporation, or by being represented by at least the majority of its voting 
members, in the case of a non-stock corporation: Provided, That an acquired 
asset corporation as defined hereunder shall not be considered a government-
owned or controlled corporation. 
For purposes of this Act, a corporation created by special law and explicate 
intended for ultimate transfer to private ownership under certain specified 
conditions shall be considered a 
government-owned or controlled 
corporation until it is transferred to private ownership. 
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For purposes of this Act, a corporation created by special law and explicate 
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intended for ultimate transfer to private ownership under certain specified 
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conditions shall be considered a 
government-owned or controlled 
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corporation until it is transferred to private ownership. 
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c." Acquire Asset Corporation" shall refer to a corporation which is: 
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1. Under private ownership, with at least the majority, of its outstanding 
capital stock: 
(a) Conveyed to 
the 
government, 
or any 
of 
its 
instrumentalities 
including 
government-owned 
or 
agencies 
or 
controlled 
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corporations, in satisfaction of debts whether by fdreclosure or 
. otherwise; or 
(b) Duly acquired by the government through final judgment in 
sequestration proceeding; or 
2. 
Subsidiary of a government-owned or controlled corporation formed 
exclusively to own and manage, or lease, or operate specific physical 
assets acquired by a government financial institution in satisfaction of 
debts incurred therewith. 
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SEC. 4. Conduct of Review. - GOCCs shall be regularly subjected to a sunset 
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review by both the Committees of the Senate and the House of Representatives 
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having legislative jurisdiction over the said corporations, the interval between each 
review to be not more than a period of five (5) years. 
SEC. 5. Scope of Review. - The concerned committees of the Senate and of the 
House of Representatives shall review the economy, efficiency and the need to 
maintain the GOCCs using the following: 
a. Their efficient allocation and use of investment resources made available to 
them by the government; 
b. Instances where there is needless duplication or overlap of functions with 
other GOCCs; 
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c. Accomplishment of set goals for the GOCCs in case their charter 'provides for 
such; 
d. Financial and social investment returns and productivity; 
e. Existence of private sector participation in the field of operation or industry; 
and 
f. 
The interest of the common good. 
SEC. 6. Consolidated Recommendation, - The concerned committees of the 
Senate and the House of Representatives, at the termination of their respective 
sunset reviews, shall submit a consolidated recommendation to the Senate Finance 
Committee and the House of Committee on Appropriations for appropriate action. 
SEC. 7. Possible Actions or Recommendation. - the concerned committees of 
the Senate and the House of Representatives may recommend: 
a. The continued existence of and the corresponding budgetary allocation for 
the subject GOCC; 
b. The termination of the existence of, or budget allocations for, the GOCC by 
either privatizing the said subject GOCC or dissolving the said GOCC; and 
c. Such other recommendation or course of action they may deem as necessary. 
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SEC. 8. Duty of Disclose. - GOCCs under sunset review shall be duty-bound 
to disclose all pertinent information and make available all relevant documents to 
the reviewing committees of Congress. 
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The officers and directors of the GOCC shall be primarily tasked to perform 
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all the necessary acts under this Section. Failure on their part to disclose all the 
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pertinent information required by the reviewing congressional committees, or any 
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intentional attempt to delay the proceedings, for what ever purpose, shall subject 
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such officers and directors to administrative, civil and criminal sanctions under 
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existing laws. 
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SEC. 9. Separability Clause. - If any provision of this Act is declared invalid, 
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the remainder of this Act or any provision not affected thereby shall remain in force 
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and effect. 
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SEC. 10. Repealing Clause. - All laws, presidential decrees, executive orders 
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and their implementing rules, inconsistent with the provisions of this act are hereby 
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repealed, amended or modified accordingly. 
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For purposes of this Act, the Government Corporate Monitoring and 
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Coordinating Committee created under Executive Order No. 936 dated 26 February 
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1984, reconstituted under Memorandum Circular No. 10 dated 19 May 1986, and 
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strengthened under Executive Order No. 236 dated 22 July 1987, shall continue to 
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exercise its powers and functions, and shall complement the congressional review 
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mechanism created under this Act. 
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SEC. 11. Effectivity. - This Act shall take effect fifteen (15) 
publication in at least two (2) newspapers of general circulation. 
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Approved, 
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1a ys after its