THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
JUN 30 P”d8 
First Regular Session 
) 
3 :  
S E N A T E  
Introduced by Senator S. R. Osmefia Ill 
EXPLANATORY NOTE 
The government recognizes the primary role being played by government- 
owned and controlled corporations (GOCCs) in undertaking desirable economic 
activities, especially in the production and distribution of goods and services. 
These corporations have assumed an increasingly important role in the national 
endeavor for accelerated economic and social development. Their continued 
expansion and growth through the years manifest the magnitude of their impact 
on the economic recovery of our country. GOCCs have generated income to our 
cash-strapped government and have provided employment to several of our 
citizens. 
However, most GOCCs have become financial burdens. The government 
has been providing financial assistance to them to enable to continue and sustain 
their operations. 
“SEC. 16 of Article XI1 of the Constitution provides that 
GOCCs should be established only by special charters in the 
interest of the common good and subject to the test of economic 
viability. ’: 
Further, Section 20 of Article I1 states, to wit: 
“The State recognizes the indispensable role of the private 
sector, encourages private enterprises, and provides incentives to 
needed investments.” 
Given these guidelines, the State should continuously evaluate and review 
existing GOCCs to determiQe whether they satisfy the tests as enshrined in our 
Constitution. There is a need to improve the operations of government-owned 
and controlled corporations in order to promote economy, efficiency and 
effectiveness in the delivery of public service. They must answer to the common 
good of the people, be financially viable, provide social benefits and not unduly 
compete with private sector. 
This bill institutionalizes such mechanism of systematic review and 
evaluation of GOCCs. The need to allocate our already scarce resources dictates 
that such measure is done soonest to hasten the attainment of economic 
recovery. 


Early passage of the bjll is, therefore, earnestly sought 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
RE 
,.. 
..~ 
S E N A T E  
_.. 
S.No. 487 
Introduced by Senator S. R. Osmefia 111 
AN ACT 
PROVIDING FOR A PERIODIC REVIEW OF THE ECONOMY, EFFICIENCY 
CORPORATIONS BY CONGRESS, AND FOR OTHER PURPOSES 
AND VIABILITY 
OF 
GOVERNMENT-OWNED 
AND 
CONTROLLED 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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2004". 
SECTION 1. Short Title. - This Act shall be known as the "Sunset Act of 
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SEC. 2. Declarafion of Policy. - It is hereby declared the policy of the 
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State to promote economy and efficiency of government-owned and controlled 
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corporations. Pursuant to Article XII, Section 16 of the Constitution, such 
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government-owned and controlled corporations shall be subjected to the interest 
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of the common good and the test of economic and financial viability. 
In order to promote private sector initiative, the State shall engage in 
business only in activities where there is lack of private sector participation, or 
when the public good so requires. 
SEC. 3. Definition of Terms. - For purpose of this Act, the term: 
a) Sunset Review- shall refer to the systematic evaluation by committees 
of the Senate and the House of Representatives which have legislative 
jurisdiction over government-owned or controlled corporations to determine if the 
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said corporations merit continued government participation and/or subsidy; 


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b) Government-owned or Controlled Corporation or subsequently referred 
as "G0CC"- shall refer to a stock or non-stock corporation, performing 
governmental or propriety functions directly chartered by special law of if 
otherwise formed, is owned or controlled by the government directly or indirectly 
,through a parent corporation or subsidiary corporation to the extent of at least a 
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, until it is transferred to public ownership. 
c) Acquired Asset Corporation- shall refer to a corporation which is: 
1. Under private ownership, with at least the majority of its outstanding 
capital stock: 
(a) Conveyed to the government, or any of its agent or instrumentalities, 
including government-owned or controlled corporations, in satisfaction of debts 
whether by foreclosure or otherwise; or 
(b) Duly acquired by the government through final judgement in a 
sequestration proceeding; or 
2. A 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. 
SEC. 4. Coverage. - All GOCCs, as defined in Section 3 (b) shall be 
governed by the provisions of this Act. 
SEC. 5 Conduct of Review. - GOCCs shall be regularly subjected to a 
sunset review by both the Committees of the Senate and of the House of 
Representatives having legislative jurisdiction over the said corporations, the 
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interval between each review to be not more than a period of two (2) years. 


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SEC. 6. Scope and Review. - The concerned committees of the Senate 
and the House of Representatives shall review the GOCCs under their 
jurisdiction based on, but not limited to, 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 function 
with other GOCCs; 
c) accomplishment of set goals for the GOCCs, in case their charter 
provides for such; 
d) financial and social investment rate of returns and productivity; 
existence of private sector participation in the field of operation or industry, and, 
e) the interest of the common good. 
SEC. 7. Consolidated Recommendation. - The concerned committee 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 Committee on Appropriations for 
appropriate action. 
SEC. 8. Possible Acfion 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 allocation for, the GOCC 
by either privatizing the said subject GOCC or dissolving the GOCC; 
c. merging or consolidating two or more GOCCs when they perform 
similar or overlapping functions; and 
d. such other recommendation or course of action they may deem .as 
necessary. 
SEC. 9. Duty to disclose. - GOCCs under sunset review shall be duty 
bound to disclose all pertinent information and make available all relevant 


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documents to the necessary acts under this section. Failure on their part to 
disclose all pertinent information required by the reviewing congressional 
committees, or any intentional attempt to delay the proceeding, for whatever 
purpose, shall subject such officers and directors to administrative, civil and 
criminal sanctions under existing laws. 
SEC. 10. 
Separabilify Clause. - If for any reason, any section or 
provision of this Act, or any portion thereof, is declared unconstitutional, the 
remainder of this Act shall be affected by such declaration. 
SEC.ll. Repealing Clause. - Any provision rule or regulation contrary 
to or in conflict with this Act shall be considered, and is, repealed or modified 
accordingly. 
For purposes of this Act, the Government Corporate Monitoring and 
Coordinating Committee, created under Executive Order No. 936 dated February 
1984, reconstituted under Memorandum Circular No. 10 dated 19 May 1986, 
strengthened under Executive Order No. 236 dated 22 July 1987, shall continue 
to exercise its powers and functions, and shall complement the congressional 
review mechanism created under this Act. 
SEC. 12. €ffecfivity. This Act shall take effect fifteen (15) days after its 
publication 
in 
at 
least two 
(2) 
newspapers 
of 
general 
circulation. 
Approved,