" 
FIFTEENTH CONGRESS 
. OF THE REPUBLIC OF THE PHILIPPINES 
Fm'f Regular SeJuon 
SENATE 
S,B. No2580 
Introduced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
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The 
Government-Owned 
and 
Controlled 
Corporations 
(GOCCs) 
and 
Government Financial Institntions (GFIs) play key roles in economic and social 
development. The government enterprises participate in the production and delivery of 
goods and services particularly in areas where the private sector will not invest due to 
uncertain economic viability despite laudable social benefits. 
Hence, the government corporations arc accorded flexibility 111 its operation 
which is in line with the acceptable corporate standards and practices as differentiated 
from regular government agencies. 
However, some GOCCs and GFIs have become a financial burden to the 
government, which has been incurring huge budget deficits in large part because of the 
subsidies provided to the GOCCs. Moreover, the financlal viability of the GOCCs has 
become doubtful as can be gleaned from the meager income remitted to the natronal 
treasury despite the considerable investments of the government. 
"SEC. 16 of Article XII of the Constitution provides that government owned 
and controlled corporations (GOCCs) should be established only by special charters in 
the interest of the common good and subject to the test of economic viability. 
Tpe Department of Finance (DOF) has reported the existence of at least 736 
GOCCsincluding water districts and of which fourteen (14) are closely monitored for 
being heavily dependent on subsidy or advances from the national government. 
The dividends remitted by the GOCCs to the national government coffers have 
been shrinking over the years while their combined liabilities and subsidies are steadily 
increasing. Subsidies for 2010 are seen to grow to P36.71 billion from the 1'17.439 
billion provided in 2009. For the period January to June of 2010, a total of 1'7.466 
billion in subsidies have already been extended to GOCCs and GFls. 
At least fifty-two (52) GOCCs registered losses 111 2008, according to DOF 
data, with the National Food Authority posting the highest net loss followed by Light 
Rail Transit Authority, NA1'OCOR, Bases Conversion Development Authority, and 
Metropolitan Waterworks and Sewerage System. 
Accordingly, the Department of Budget and Management has been releasing 
subsidies to GOCCs and GFls for years despite the fiscal deficit position. These 
subsidies are released to corporations including those with depleted capitalization to 
enable them to continue and sustain their operations. 
In lieu of imposing new revenue measures, the government may adopt an 


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expenditure reform policy, including the trimming down of the budget by not 
providing subsidies to losing GOCCs in order to manage the deficit. Due to its impact 
on the consolidated public sector financial position, the government should closely 
monitor the GOCCs that continuously incur substantial losses. 
The State should continuously evaluate and review existing GOCCs to determine 
whether they satisfy the tests as enshrined in our Constitution. There is a need to 
improve their operations in order to promote economy and efficiency in the delivery of 
public services. GOCCs must answer to the common good of the people, be financially 
viable, provide social benefits and not unduly compete with the private sector. 
This bill institutionalizes such mechanism of systematic review and evaluation of 
GOCCs. It directs all government corporations to prepare their respective assets and 
liability management guidelines that will define the parameters and limits of their 
financial and operational capabilities for central control and monitoring by the DOF. 
These guidelines shall serve as tools to anticipate, prevent and minimize certain 
eventualities that may adversely affect the financial condition of the corporation. The 
financial guidelines seek to limit borrowing, lending and guaranteeing any form of 
financial transaction while the operational guidelines seek to inhibit the corporation 
from engaging in activities outside of its defined capabilities. 
In order to rationalize the government corporations, minimize impact of 
subsidies on the budget deficit, and promote accountability, the immediate passage of 
this bill is earnestly requested. 


FIFTEENTH CONGRESS 
OF THE REPUBLIC OF THE PHILIPPINES 
Fil:rt Regular S es.riotl 
SENATE 
S.B. No2580 
Introduced by Senator Ralph G. Recto 
AN ACT 
TO ENSURE THE ACCOUNTABILITY OF GOVERNMENT-OWNED OR 
CONTROLLED 
CORPORATIONS, 
GOVERNMENT 
FINANCIAL 
INSTITUTIONS, AND OTHER SIMILAR AGENCIES IN THE PUBLIC 
SECTOR BY REQUIRING THESE ENTITIES TO BE EVALUATED AND 
SUBJECTED 
TO 
THE TEST 
OF 
ECONOMIC 
AND 
FINANCIAL 
VIABILITY, CREATING A CONGRESSIONAL OVERSIGHT COMMITTEE, 
AND FOR OTHER PURPOSES 
Be it enatted by the Senate and House of Representatives of the PhilippineJ t1t CotlgrcJJ aJsemhled: 
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SECTION 1. Short Title. - This Act shall be known as the "Government-Owned or 
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Controllcd Corporations (GOCCs) Accountability Act". 
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SEC. 2. Poliry. - It is the policy of the State to create or establish Government-
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Owned or Controlled Corporations only in the interest of the common good and subject to 
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the test of economic and financial viability. 
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Evety GOCC must be free from fraud, abuse and wastage, and must be made 
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accountable through the effective monitoring oversight by Congress for the benefit of the 
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people., 
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It is hereby declared a national policy to require all government corporations to clearly 
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define the parameters and/or limits of their financial and operational capabilities consistent 
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with their established mandates and charters. 
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SEC. 3. Government-Owned or Controlled Corporation Defined. - For purpose of 
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this Act, "Government-owned or Controlled Corporation" or "GOCC" refers to a stock or 
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non-stock corporation, performing governmental or proprietaty functions directly chartered 
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by special law or, if otl,erwise formed, is owned or. controlled by the Government directly or 
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indirectly through a parent or subsidiary corporation. It includes Government Financial 
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Institutions and other siruilar agencies in the public sector. 
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SEC. 4. Asset and Liability Management Guidelines. - The definition of the limits 
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of the financial and operational capabilities of each GOCC shall be embodied in tl,eir 
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respective asset and liability management guidelines which are universally accepted 
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management tools whereby financial and operational activities are automatically confined 
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within clearly defined limits. 
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Foremost among the financial guidelines are the limits on borrowing, lending and 
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guaranteeing any form of fruanciaJ transaction, risk andlor commitment. 
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Foremost among the operational guidelines are the recognition and acceptance of the 
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Jiruits of in-house talents and capabilities thereby inhibiting said corporation from engaging 
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in activities outside its defined capabilities or in cases where it is nccessary to engage in such 
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transactions or activities, the mandator), requirement to tap outside talents preferably from 


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other government agencies or institutions. 
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SEC. 5. Use of Asset and Liabiliry Management Guidelines. - The Asset and 
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Liability Management Guidelines shall be used primarily as a tool to anticipate, obviate 
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prevent and/or minimize certain eventualities that may adversely affect the fInancial 
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condition of individual corporations. As a standard requirement, however, it is seen as a vital 
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instrument to stabilize and solidify the country's overall fInancial condition. 
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In cases where a GOee is under the control or supervision of a department of the 
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National Government, adherence to these asset and liability gllidelmes shall be the 
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responsibility of the department under which this c01poration belongs. The department 
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covered shall prescribe their respective policies and procedures including penalties for their 
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violations, in orcler to ensure that such guidelines are stricdy complied with. 
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SEC. 6. Central Monitoring and Control fry the Department of Finance. - The 
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central monitoring and control of the overall fInancial condition of GOCCs shall be made by 
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the Department of Finance (DOF) which shall consolidate all related figures into an annual 
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report. Within thirty (30) days from the end of each calendar year, the DOl' shall submit this 
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annual report to the OffIce of the President, copy furnished the Senate and the House of 
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Representatives. 
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SEC. 7. Submission oj GOCC Reports. - Every GOCC is reqUlred to submit 
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quarterly ancl consolidated annual reports to Congress. 
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Each quarterly report, to be submittecl within thirty (30) days from the end of each 
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calendar quarter, shall be in the form of an executive summary concerning tile [mances and 
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operations of the GOCC and shall indicate any achievement and major projects. It shall 
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include all fInancial reports ancl minutes of clirectors' ancl shareholders' meetings for the 
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subject quarter. 
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Each annual report, to be submitted within sixty (GO) clays from d1e end of each 
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calendar or fIscal year as may be applicable, shall include the following: 
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(1) A consolidatecl executive summary; 
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(2) A list of dlrectors and offIcers; 
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(3) A summary of the remuneration paid to clirectors and offIcers over the last year; 
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(4) The COl1unission on Audit report for the last year; and 
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(5) The audited fInancial statement for the last year. 
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SEC 8. Mandatory Publication. - Every GOCC is requirecl to disclose ancl publish in 
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at least one (1) newspaper of general circulation wrthin thirty (30) clays from dle end of each 
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calendar or fIscal year as may be applicable the following information: 
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(1) Travel ancl hospitality expenses for clirectors ancl offIcers; and 
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(2) Contracts for goods and services over one million pesos (PHp 1,000,000) 
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SEC. 9. Creation of a Congressional Oversight Committee for GOCCs. - There is 
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hereby createcl a Congressional Oversight Committee for GOCCs to be composed of six (G) 
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members, with three (3) Representatives each from the Senate and the House of 
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Representatives, and co-chaired by the Chairpersons of the Senate Committee on 
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Government Corporations and Public Enterprises ancl the House Committee on 
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Governm,nt Enterprises ancl Privatization. 
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The Congressional Oversight Committee for GOCCs shall receive and evaluate the 
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reports· submitted by the GOCCs to Congress. It shall be dle principallegisL~tive monitoring 
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arm and policy recommending body for all GOCCs. 
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SEC. 10. Powers and Functions of the Congressional Oversight Committee for 
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GOCCs. - The Congressional Oversight Committee for GOCCs shall have the following 
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powers ancl functions: 


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(1) Prescribe and adopt guidelines that will govern its work; 
(2) Hold hearings, receive testimonies and reports pertinent to its specific concerns; 
(3) Secure from any department, bureau, office, agency or instrumentality 9f the 
Government such assistance as may be needed, including technical information 
preparation and production of reports and submission of recommendations or plans 
as it may require; 
(4) Smnrnon by subpoena ad testiftcandttm any public or private citizen to testify before 
it, or requite by subpoena duces tecum to produce before it such records, reports or other 
docnments as may be necessary in the performance of its functions; 
(5) Use resource persons from the public and private sectors as may be needed; 
(6) Approve the budget for the Congtessional Oversight Committee for GOCCs and 
all disbursements therefrom, including compensation of all personnel; 
(7) Organize its staff and hire and appoint employees and personnel, whether 
temporary or contraclual, subject to applicable laws; and 
(8) Exercise all other powers necessary to attain its purposes. 
SEC. 11. Conduct of Review. - The Congressional Oversight Committee for GOCCs 
shall review the quarterly and annual reports submitted by the GOCCs to Congress. 
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The 'Congressional Oversight Committee for GOCCs may require the submission of 
additional pertinent corporate and commercial documents and/or the revelation of all 
relevant data as may be deemed necessary for the conduct of such review, Failure to submit 
any of the required documents or to reveal any required data shall subject the directors and 
officers of the concerned GOCC to appropriate administrative, civil, and criminal liability, 
The Congressional Oversight Committee for GOCCs shall review the reports, 
documents, and data submitted by each GOCC and shall be authorized to conduct 
investigations in furtherance of such review. The scope of review shall include the following: 
(1) Accomplishment of the set goals as may be set forth in their respective 
charters or otherwise; 
(2) Allocation of resources of each GOCC; 
3) Instances of duplication of functions; 
(4) Financial and social investment rate of returns and productivity; and 
(5) Interest of the cotrUnon good. 
SEC. 12. Submission of Recommendations -
The Congressional Oversight 
Committee on GOCCs shall submit its recommendations to the Senate and the House of 
Representatives, copy furnished to the Office of the President, for appropriate action. The 
recommendations may include the following: 
(1) Continued existence of and corresponding budgetary allocation for each GOCC; 
(2) Termination of the existence of or budget allocation for the GOCC by elther 
privatization or dissolution; 


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(3) Merger or consolidation of GOCCs performing similar or overlapping functions; 
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(4) Restructure of the GOCCs in the Executive branch; 
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(5) Adjustment of compensation packages for directors, officers, and employees; 
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(6) Filing of appropriate civil, criminal, or administrative charges; 
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(7) Contract review or renegotiation as may be appropriate; and 
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(8) Other recommendations as may be deemed appropriate. 
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SEC. 13. Repealing Clause. - All laws, decrees, orders, rules and regulations or other 
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issuances or parts thereof inconsistent with the provisions of this Act are hereby repealed or 
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modified accordingly. 
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SEC. 14. S eparabiliry Clause. - If any portion or provision of this Act is declared 
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unconstitutional, the remainder of this Act or any provisions not affected thereby shall 
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remain in force and effect. 
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SECTION 15. Effectivity Clause. - This Act shall take effect after fifteen (15) days 
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following the completion of its publication either in the Official Gazette or in a newspaper 
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of general circulation in the Philippines. 
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Approved,