\ 
FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
,SENATE 
iLl 
[JCT 12 r'5:1:i 
S. B. No. 2566 
Introduced by Senator FRANKLIN M. DRILON 
EXPLANATORY NOTE 
The State, recognizing the role of Government-Owned or Controlled 
Corporations (GOCCs) as mechanisms in delivering essential services to the 
public at the least cost to the State and promoting economic development, has 
established a significant number of GOCCs over the years. 
However, contrary to their mandate to be economically and financially 
viable, the existing GOCCs currently account for a very substantial portion of the 
annual expenditures of the State in the form of subsidy, without providing 
substantial additional income and revenues for the Government. 
The management, coordination and monitoring of the performance of 
GOCCs currently undertaken by the various Departments and Government 
Agencies to which they are attached do not sufficiently ensure that GOCCs, in 
the performance of the purposes for which they were established, likewise 
achieve fiscal viability and responsibility. It is anticipated that the lack of 
centralized monitoring and supervision of the management and operations of the 
GOCCs will further result in the substantial and continued depletion of the 
State's funds without maximizing the potential of these GOCCs to achieve their 
mandates under their charters. 
It is thus in the interest of the State that GOCCs operate profitably, 
effectively deliver the much-needed services to the public, and significantly 
contribute to national development. 
Towards this end, this bill seeks to address the seeming lack of sustained 
and concerted effort on the part of the State to closely monitor and evaluate the 
performance of GOCCs by rationalizing their existence and role, and by ensuring 
the faithful performance of their mandate using the standards of good 
governance, transparency, accountability and responsibility in fulfilling their 
duties to the State. 
With the passage of this bill, it is anticipated that the Government-Owned 
or Controlled Corporations will operate profitably and significantly contribute to 


the income of the State thereby improving the quality of public services rendered 
and substantially contribute to national development. 
In view of the foregoing, the urgent passage of the proposed measure is 
requested. 


1 
2 
3 
FIFTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
S. B. No.25GB 
. 
Ol'? ICE (1'-
; 
,i 
ilJ 
oeT 12 P'5 :15 
RECEIVED!lV (b 
. 
-t--
Introduced by Senator FRANKLIN M. DRILON 
AN ACT TO PROMOTE FINANCIAL VIABILITY AND FISCAL DISCIPLINE 
IN GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS AND 
TO STRENGTHEN THE ROLE OF THE STATE IN ITS GOVERNANCE AND 
MANAGEMENT TO MAKE THEM MORE RESPONSIVE TO THE NEEDS 
OF PUBLIC INTEREST AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
CHAPTER I 
General Provisions 
4 
SECTION 1. Short Title. - This Act shall be known as the "GOCC 
5 
Governance Act of2010." 
6 
7 
SECTION 2. Declaration of Policy. - The State recognizes the potential of 
8 
Government-Owned or Controlled Corporations as significant tools for economic 
9 
development. It is thus the policy of the State to promote the growth of the 
10 
Government-Owned or Controlled Corporations by ensuring that their 
11 
operations are consistent with national development policies and programs. 
12 
13 
Towards this end, the State shall ensure that: 
14 
15 
(a) The governance of Government-Owned or Controlled Corporations is 
16 
carried out in a transparent, responsible and accountable manner and 
17 
with the utmost degree of professionalism and effectiveness; 
18 
1 


1 
(b) A reporting system, which will require the periodic disclosure and 
2 
examination of the operations and management of the Government-
3 
Owned or Controlled Corporations, their assets and finances, revenues 
4 
and expenditures is enforced; 
5 
6 
(c) The governing board of 
every Government-Owned or Controlled 
7 
8 
9 
10 
Corporation shall be competent to carry out its functions, fully 
accountable to the State as its fiduciary, and act in the best interest of the 
State; 
11 
(d) Reasonable, justifiable and appropriate remuneration schemes are 
12 
adopted for the officers and employees of Government-Owned or 
13 
Controlled Corporations to prevent or deter the granting of 
14 
unconscionable and excessive remuneration packages; 
15 
16 
(e) There is a clear separation between the regulatory and proprietary 
17 
activities of Government-Owned or Controlled Corporations, in order to 
18 
achieve a level playing field with corporations in the private sector 
19 
performing similar commercial activities for the public. 
20 
21 
SECTION 3. Definition of Terms. -
22 
23 
(a)" Affiliate" refers to a corporation fifty percent (50%) or less of the voting 
24 
25 
26 
stock of which is owned or controlled, directly or indirectly, by the 
Government-Owned or Controlled Corporation. 
27 
(b)" Appointive Director" - refers to: 
28 
29 
30 
31 
32 
33 
34 
35 
a. In the case of Chartered Government-Owned or Controlled 
Corporations, all members of its Board of Directors/Trustees who 
are not ex officio members thereof; and 
b. In the case of Non-chartered Government-Owned or Controlled 
Corporation, members of its Board of Directors/Trustees whom the 
State is entitled ~o nominate, to the extent 'of its percentage 
shareholdings 
in 
such 
Government-Owned 
or 
Controlled 
Corporation. 
2 


1 
(c) 
"Board of Directors/Trustees" or "Board" refers to the governing body 
2 
3 
4 
that exercises the corporate powers of a Government-Owned or 
Controlled Corporation. 
5 
(d) "Charter Statement" refers to a statement of the Government-Owned or 
6 
Controlled Corporation's vision, mission and core values. 
7 
8 
(e) 
"Chartered GOCC" refers to a Government-Owned or Controlled 
9 
10 
11 
Corporation, including Government Financial Institutions, created and 
, 
vested with functions by a special law. 
12 
(f) 
"Chief Executive Officer" refers to the President or the General Manager 
13 
or the Administrator of a Government-Owned or Controlled 
14 
15 
Corporation. 
16 
(g) 
"Corporate Governance" refers to a set of principles and standards 
17 
derived from law, regulation and proper corporate practices that enables 
18 
the corporation to attract financial and human capital, perform 
19 
efficiently, thereby generating long-term and desirable economic value 
20 
for the State. 
21 
22 
(h) 
"Department" refers to an executive department created by law for the 
23 
functional distribution of the work of the President. 
24 
25 
(i) 
"Fit and Proper Rule" refers to the standard for determining whether a 
26 
member of the Board of Directors/Trustees or Chief Executive Officer 
27 
28 
29 
30 
is fit and proper to hold a position in a Government-Owned or Controlled 
Corporation, which shall include but not be limited to, standards on 
integrity, experience, education, training, and competence. 
31 
G) 
"Government Agency" refers to any of the various units of the 
32 
Government of the Republic of the Philippines, including a department, 
33 
34 
35 
bureau, office, instrumentality, or Government-Owned or Controlled 
Corporation, or a local government or a distinct unit therein. 
3 


1 
(k) 
"Government-Owned or Controlled Corporation (GOCC)" refers to any 
2 
agency organized as a stock or non-stock corporqtion, vested with 
3 
functions relating to public needs whether governmental or proprietary 
4 
in nature, and owned by the Government of the Republic of the 
5 
Philippines directly or through its instrumentalities either wholly, or, 
6 
where applicable as in the case of stock corporations, to the extent of at 
7 
least fifty-one percent (51 %) of its capital stock. 
8 
9 
(I) 
"Non-chartered GOCC" refers to a GOCC organized and operating 
10 
11 
12 
under Batas Pambansa Bilang 68, or The Corporation Code of the 
Philippines. 
13 
(m) "Officer" refers to the corporate officer entrusted to manage the day to 
14 
15 
16 
17 
day operations of the GOCC as provided in its charter or by-laws, such 
as the 
Chief Executive Officer, 
President, Vice President, General 
Manager, Treasurer, and Corporate Secretary; 
18 
(n) 
"Performance Scorecards" refers to a governance and management tool 
19 
20 
21 
22 
23 
consisting 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. 
24 
(0) 
"President" refers to the President of the Republic of the Philippines. 
25 
26 
(p) "Related Corporation" refers to a subsidiary or affiliate of a GOCC; 
27 
28 
(q) 
"Secretary" refers to the person vested with the authority and 
29 
responsibility for the exercise of the mandate of the Department, for the 
30 
discharge of its powers' and functions, and who shall have supervision 
31 
and control of the Depar~ent. 
32 
33 
(r) 
"Strategy Map" refers to an integrated set of strategic choices or 
34 
35 
objectives drawn by the governing body, the successful execution of 
which results in the achievement of the GOCC's vision in relation to its 
4 


1 
2 
mission or purpose for having been created. 
3 
(s) 
'Subsidiary' refers to a corporation more than fifty percent (50%) of the 
4 
voting stock of which is owned or controlled, directly or indirectly 
5 
through one or more intermediaries, by the GOCc. 
6 
7 
SECTION 4. Coverage. - This Act shall be applicable to all GOCCs 
8 
regardless of classification but shall exclude the Bangko Sentral ng Pilipinas 
9 
being a constitutionally-mandated agency. 
10 
II 
CHAPTER II 
12 
The Governance Council for Government-Owned or Controlled 
13 
Corporations ("GCG") 
14 
15 
SECTION. 5. Creation of the Governance Council for Government-Owned or 
16 
Controlled Corporations. 
-
The~e is hereby created an advisory, monitoring, 
17 
recommendatory, and policy-enforcing body to be known as the Governance 
18 
Council for Government-Owned or Controlled Corporations, hereinafter referred 
19 
to as the GCG, which shall be attached to the Office of the President. The GCG 
20 
shall have the following powers and functions: 
21 
22 
a) Adopt within ninety (90) days from its constitution, an ownership and 
23 
operations manual governing GOCCs. Said manual shall be consistent 
24 
with the Medium Term Philippine Development Plan and shall include: 
25 
a. Objectives of State ownership; 
26 
b. Role of national government in the governance of GOCCs; 
27 
c. Modes of implementation of the ownership policy; 
28 
d. Guidelines on the monitoring of the operations of all GOCCs 
29 
including their Related Corporations. These shall include Strategy 
30 
Maps, Charter Statements, Performance Commitments and such 
31 
other mechanisms. 
32 
e .. The roles, relationships and responsibilities of the State, the 
33 
Government Agencies to which the GOCC is attached, and the 
34 
GOCC; 
35 
f. 
Disclosure and transparency requirements; 
5 


2 
3 
4 
5 
6 
7 
g. Code of Ethics of Directors and Officers ; 
h. Creation of board committees and similar oversight bodies; 
• 
i. Integrated corporate reporting system; 
j. 
Statement of the social responsibilities of the GOCC; and 
k. Such other matters as the GCG may deem proper to include in the 
ownership policy. 
8 
b) Identify the necessary skills and qualifications required for Appointive 
9 
Directors and recommend to the President a shortlist of suitable and 
10 
qualified candidates for Appointive Directors; 
11 
12 
c) Conduct periodic study, evaluation and assessment of the performance of 
13 
the GOCCs, receive, and in appropriate cases, require reports on the 
14 
operations and management of the GOCCs, including but not limited to 
15 
the management of the assets and finances of the GOCCs; 
16 
17 
d) Evaluate the performance and determine the relevance of the GOCc, and 
18 
recommend to the President the reorganization, merging, streamlining, 
19 
abolition or privatization of a GOCc. For this purpose, the GCG shall be 
20 
guided by the following: 
21 
22 
1. The functions or purpose for which the GOCC was created are no 
23 
longer relevant to the State or no longer consistent with the national 
24 
development policy of the State; 
25 
2. The GOCC's functions or purpose duplicate or unnecessarily overlap 
26 
with functions, progr'lms, activities or projects already provided by a 
27 
Government Agency; or 
28 
3. The GOCC is not producing the desired outcomes, or no longer 
29 
achieving the objectives and purposes for which. it was originally 
30 
designed and implemented, and/ or not cost efficient and does not 
31 
generate the level of social, physical and economic returns vis-ii-vis the 
32 
resource inputs. 
33 
34 
Upon determination by the GCG that it is to the best interest of the State 
35 
that a GOCC should be reorganized, merged, streamlined, abolished, or 
6 


1 
privatized, it shall make its recommendation to the President. 
The 
2 
President may, upon confirmation of the findings of the GCG, order the 
3 
reorganization, merging, streamlining, abolition or privatization of such 
4 
GOCc. 
5 
6 
Any such reorganization, merger, streamlining, abolition or privatization 
7 
must be completed on or before June 30, 2015. 
8 
9 
e) Conduct compensation studies, develop and recommend to the President 
10 
a competitive compensation and remuneration system which shall attract 
11 
and retain talent, at the same time allowing the GOCC to be financially 
12 
sound and sustainable; 
13 
14 
f) Provide technical advice and assistance to the Government Agencies to 
15 
which the GOCCs are attached in setting performance objectives and 
16 
targets for the GOCCs and in monitoring GOCCs performance vis-a-vis 
17 
set objectives and targets; 
18 
19 
g) Coordinate and monitor the operations of GOCCs, ensuring alignment 
20 
and consistency with the national development policies and programs. It 
21 
shall meet at least quarterly to: 
22 
23 
1) Review Strategy Maps and Performance Scorecards of all GOCCs; 
24 
2) Review and assess existing performance-related policies including the 
25 
compensation/remuneration of Board of Directors/Trustees and 
26 
Officers and recommend appropriate revisions and actions; 
27 
3) Prepare performance reports of the GOCCs for submission to the 
28 
President. 
29 
30 
h) Prepare a semi-annual progress report to be submitted to the President 
31 
and the Congress. In its report, the GCG will provide its performance 
32 
assessment of the GOCCs and recommend clear and specific actions. 
33 
Within one hundred twenty (120) days from the close of the year, the GCG 
34 
shall prepare an annual report on the performance of the GOCCs and 
35 
submit it to the President and the Congress. 
7 


· 1 
i) Review proposals by Government Agencies for the creation of a GOCC or 
2 
Related Corporation under the The Corporation Code'of the Philippines 
3 
(Batas Pambansa Bilang 68) and recommend to the President the approval 
4 
or disapproval of the same. 
5 
6 
j) Review the functions of each of the GOCC and, upon determination that 
7 
there is a conflict between the regulatory and commercial functions of a 
8 
GOCC, recommend to the President and to the Government Agency to 
9 
which such GOCC is attached, a plan of action to ensure that the 
10 
commercial functions of the GOCC do not conflict with such regulatory 
11 
functions. 
12 
13 
SECTION 6. Composition of the GCG. - The GCG shall be composed of five 
14 
(5) members with the Secretary of the Department of Budget and Management 
15 
(DBM) as ex officio Chairman, and the Secretary of the Department of Finance 
16 
(DOF) and the Director-General of the National Economic Development 
17 
Authority (NEDA) as ex officio members, and two (2) representatives from the 
18 
private sector as appointive members of the GCG. 
19 
20 
The two (2) representatives from the private sector shall be appointed by 
21 
the President, upon the joint recommendation of the DBM, DOF and the NEDA 
22 
from a list of at least four (4) nominees. They must be citizens of the Philippines 
23 
with recognized competence ih the areas of corporate governance, policy 
24 
administration, business management, human resources management, financial 
25 
management and other related fields. They shall serve as GCG members for a 
26 
term of three (3) years, without reappointment; Provided, That of the 
27 
representatives from the private sector first appointed, one (1) shall serve for two 
28 
years, and one (1) shall serve for three (3) years, and thereafter every 
29 
representative so appointed shall serve for three (3) years. 
30 
31 
SECTION 7. Remuneration of Members of the GCG. - The members of the 
32 
GCG shall not receive any compensation or remuneration for their services as 
33 
such, but may receive reasonable per diems for actual attendance in meetings of 
34 
the GCG and reimbursement for actual and reasonable expenses in relation to the 
35 
discharge of their functions or in carrying out the objectives of the GCG; Provided, 
8 


1 
That per diems payable to the members of the GCG shall be approved by the 
2 
President. 
3 
4 
SECTION 8. The GCG Secretariat. - The GCG shall maintain a full-time 
5 
technical secretariat in the Office of the President. Within ninety days (90) days 
6 
from the effectivity of this Act, the GCG shall present to the President the staffing 
7 
requirement, organizational structure and budget requirements of the GCG 
8 
Secretariat. 
9 
10 
SECTION 9. Managing Director. - The management of ~e GCG Secretariat 
11 
shall be vested in the Managing Director who shall be a citizen of the Philippines 
12 
with known integrity, independence and recognized competence in the areas of 
13 
corporate governance, policy administration, business management, human 
14 
resources management and/or financial management and who has not been 
15 
convicted of any act involving violation of the The Corporation Code of the 
16 
Philippines, The Securities Regulation Code (Republic Act No. 8799) or any 
17 
other offense involving moral turpitude. 
18 
19 
The Managing Director shall be appointed by the President from a list of 
20 
at least five (5) nominees, upon the recommendation of the GCG. 
21 
22 
The Managing Director shall have the rank of a Cabinet Secretary; 
23 
Provided, That the Managing Dir~ctor may receive such allowances and bonuses 
24 
as determined by the GCG and approved by the President, giving due 
25 
consideration to his overall performance and the performance of the GCG. 
26 
27 
SECTION 10. Powers and Duties of the Managing Director. - The Managing 
28 
Director shall have the following powers and duties: 
29 
30 
31 
32 
33 
34 
35 
(a) 
(b) 
(c) 
Direct and manage the day-to-day affairs and business of the GCG 
Secretariat, subject to the control and supervision of the GCG; 
Attend all meetings of the GCG and participate in its deliberations; 
With the approval of ~he GCG, determine the staffing pattern and the 
number of personnel of the GCG Secretariat, fix their salaries and other 
emoluments, and define their powers and duties. 
9 


I 
2 
3 
(d) 
(e) 
With the approval of the GCG, to appoint, remove, suspend, or 
otherwise discipline, for cause, any employee of the GCG Secretariat. 
Perform such other duties as may be delegated or assigned to him by 
4 
the CGGG from time to time. 
5 
6 
SECTION 11. Compensation and Position Classification System. - The GCG, 
7 
after conducting a compensation study, shall develop a Compensation and 
8 
Position Classification System which shall consist of classes of positions grouped 
9 
into such categories as the GCG may determine, subject to the approval of the 
10 
President. 
11 
12 
All positions in the Position Classification System, as determined by the 
13 
GCG and as approved by the President, shall be allocated to their proper 
14 
position titles and salary grades in accordance with an Index of Occupational 
15 
Services, Position Titles and Salary Grades of the Compensation and Position 
16 
Classification System, which shall be prepared by the GCG and approved by the 
17 
President. 
18 
19 
The GCG may recommend, subject to the approval of the President, 
20 
additional allowances or bonuses for certain position titles, giving due 
21 
consideration to the necessity fo~ such allowances and the good performance of 
22 
theGOCC. 
23 
24 
The following principles shall govern the Compensation and Position 
25 
Classification System: 
26 
27 
(a) All GOCC personnel shall be paid just and equitable wages. Pay 
28 
distinctions shall take into consideration work distinctions; Provided, 
29 
That the ratio of compensation between those occupying higher ranks 
30 
and those at lower ranks should be maintained at equitable levels, 
31 
giving due consideration to higher percentage of increases to lower 
32 
level positions and lower percentage increases to higher level positions. 
33 
(b) Basic compensation for all personnel in the GOCC shall generally be 
34 
comparable with those in the private sector doing comparable work, 
35 
and must be in accordance with prevailing laws on minimum wages; 
10 


I 
The total compensation provided for GOCC personnel shall be 
2 
maintained at a reasonable level with due regard to the national 
3 
budget; 
4 
(c) A review of the GOCC compensation rates, taking into account the 
5 
performance of the GOCC, its overall contribution to the national 
6 
economy and the possible erosion in purchasing power due to 
7 
inflation and other factors, shall be conducted periodically. 
8 
9 
The Compensation and Position Classification System to be developed 
10 
and recommended by the GCG and as approved by the President shall apply to 
II 
all positions, on full or part-time basis, now existing or hereafter created in the 
12 
GOCC; Provided, That in no case shall there be any diminution in the salaries of 
13 
incumbent employees of GOCCs who are covered by Republic Act No. 6758, as 
14 
amended, upon the implementation of the Compensation and Position 
15 
Classification System for GOCCs. 
16 
17 
No GOCC shall be exempt from the coverage of the Compensation and 
18 
Position Classification System developed by the GCG under this Act. 
19 
20 
21 
22 
23 
CHAPTER III 
Reorganization of GOCCs 
24 
SECTION 12. Number of Directors/Trustees. - The present number of 
25 
Directors/Trustees provided in the charter of the GOCCs shall be maintained, 
26 
but in no case shall the total number of Directors/Trustees exceed nine (9) 
27 
members. 
28 
29 
SECTION 13. Appointment of the Board of Direc tors /Trustees of GOCCs. - An 
30 
Appointive Director shall be appointed by the President of the Philippines from 
31 
a shortlist prepared by the GCG. 
32 
33 
The GCG shall formulate its rules and criteria in the selection and 
34 
nomination of prospective appointees; Provided, however, That all nominees 
35 
included in the list submitted by the GCG to the President shall meet the Fit and 
11 


1 
Proper test as defined under this Act and such other qualifications which the 
2 
GCG may determine taking into consideration the unique requirements of each 
3 
GOCc. 
No person who is not included in the shortlist prepared by the GCG 
4 
may become an Appointive Director; Provided, That the GCG shall ensure that 
5 
the shortlist shaH exceed by at least fifty percent (50%) of the number of 
6 
directors/ trustees to be appointed; Provided, further, That in the event that the 
7 
President does not see fit to appoint any of the nominees included in the 
8 
shortlist, he shall ask the GCG to submit additional nominees. 
9 
10 
SECTION 14. Term of Office. - The charters of each GOCCs to the contrary 
11 
notwithstanding, the term of office of each Appointive Director shall be one (1) 
12 
year. An Appointive Director may be nominated by the GCG for re-appointment 
13 
by the President only if he/ she obtains a performance score of above average or 
14 
its equivalent or higher in the immediately preceding year of his/her tenure as 
15 
Appointive Director based on the performance criteria for Appointive Directors 
16 
for the GOCc. Of the Appointive Directors first appointed under this Act, at 
17 
least one third (1/3) shaH serve for three (3) years; at least one third (1/3) for two 
18 
(2) years and the remaining Appointive Directors shaH serve for one (1) year. 
19 
Thereafter, every Appointive Director so appointed shall serve for one (1) year. 
20 
21 
Appointment to any vacancy shaH be only for the unexpired term of the 
22 
predecessor. The appointment of a director to fill such vacancy shaH be in 
23 
accordance with the manner provided in Section 13 of this Act. 
24 
25 
Any provision of law to the contrary notwithstanding, all incumbent 
26 
CEOs and members of the Board of GOCCs shaH, upon approval of this Act, 
27 
have a term of office until July 1, 2011 or until their successors shaH have been 
28 
appointed, or unless sooner replaced by the President. 
29 
30 
SECTION 15. 
The Chief Executive Officer of the GOCc. - The Chief 
31 
Executive Officer (CEO) or the highest-ranking officer provided in the charters of 
32 
the GOCCs, shall be elected annually by the members of the Board from among 
33 
its ranks. The CEO shaH be subject to the disciplinary powers of the Board and 
34 
may be removed by the Board for cause. 
35 
12 


1 
SECTION 16. 
Requisites for the Creation of a new GOCC or Related 
2 
Corporation Under The Corporation Code. 
- A Government Agency seeking to 
3 
establish a GOCC or Related Corporation under The Corporation Code of the 
4 
Philippines shall, before registedng the same with the Securities and Exchange 
5 
Commission (SEC), first obtain the approval of the President for the creation of 
6 
such GOCC or Related Corporation. The Securities and Exchange Commission 
7 
(SEC) shall not register the articles of incorporation and by-laws of a proposed 
8 
GOCC or Related Corporation, unless the application for registration is 
9 
accompanied by an endorsement from the GCG stating that the President has 
10 
approved the same. 
11 
CHAPTER IV 
Board of Directors/TrusteesjOfficers 
12 
13 
14 
15 
16 
Of Government-Owned or Controlled Corporations 
SECTION 17. 
Coverage. - The duties, obligations, responsibilities and 
17 
standards of care provided under this Chapter shall be applicable to all members 
18 
of the Board of Directors/Trustees and Officers of GOCCs now existing or 
19 
hereafter created. These duties, obligations, responsibilities shall be in addition 
20 
to the powers and functions provided in the individual charters or articles of 
21 
incorporation and by-laws of their respective GOCCs. 
22 
23 
SECTION 18. Fiduciary Duties of the Board and Officers. - As fiduciaries of 
24 
the State, members of the Board of Directors/Trustees and the Officers of GOCCs 
25 
have the legal obligation and duty to always act in the best int~rest of the GOCC, 
26 
with utmost good faith in all its dealings with the property and monies of the 
27 
GOCc. 
28 
29 
The members of the Board and Officers of GOCCs shall: 
30 
31 
1. Act with utmost and undivided loyalty to the GOCC; 
32 
2. Act with due care, extraordinary diligence, skill and good faith in the 
33 
conduct of the business of the GOCC; 
34 
3. Avoid conflicts of interest and declare any interest they may have in any 
35 
particular matter before the Board; 
13 


1 
4. Apply sound business principles to ensure the financial soundness of the 
2 
GOCC; 
3 
5. Elect and/ or employ only Officers who are fit and proper to hold such 
4 
office with due regard to their qualifications, competence, experience, and 
5 
integrity. 
6 
7 
Where a member of the' Board or an Officer, by virtue of his office, 
8 
acquires or receives for himself a benefit or profit, of whatever kind or nature 
9 
including but not limited to the acquisition of shares in corporations where the 
10 
GOCC has an interest, using the properties of the GOCC for their own benefit, 
11 
receiving commission on contracts from the GOCC's assets, or taking advantage 
12 
of corporate opportunities of the GOCC, all such profits or benefits shall be 
13 
subject to restitution under Section 24 of this Act, without prejudice to any 
14 
administrative, civil or criminal action against members of the Board of 
15 
Directors/Trustees 
or 
Officers. 
This 
proVISIOn 
shall 
be 
applicable 
16 
notwithstanding the fact that such member of the Board or Officer risked his 
17 
own funds in the venture. 
18 
19 
SECTION 19. Trustee Relation to the Properties, Interests and Monies of the 
20 
GOCc. - Except for the per diem received for actual attendance in board meetings 
21 
and the reimbursement for actual and reasonable transportation expenses and 
22 
bonuses within the limits authorized by the GCG, any and all realized profits 
23 
and/ or benefits, including, but not limited to the share in the profits, bonuses of 
24 
members of the Board or Officers in excess of that authorized .by the GCG, stock 
25 
options, dividends and other similar offers or grants from corporations where 
26 
the GOCC is a stockholder or investor, and any benefit from the performance of 
, 
27 
members of the Board or Officers of the Corporation acting for and in behalf of 
28 
the GOCC in dealing with its properties, investments in other corporations, 
29 
management of subsidiaries and other interest, are to be held in trust by such 
30 
member of the Board or Officer for the GOCC they represent. 
31 
32 
SECTION 20. Care, Diligence and Skill in the Conduct of the Business of the 
33 
GOCc. - The members of the Board and the Officers must exercise extraordinary 
34 
diligence in the conduct of the business and in dealing with tile properties of the 
14 


• 
1 
GOCc. Such degree of diligence requires using the utmost diligence of very 
2 
cautious person with due regard for all the circumstances. 
3 
4 
SECTION 21. Fit and Proper. - All members of the Board and the Chief 
5 
Executive Officer shall be qualified by the "fit and proper" test to be determined 
6 
by the GCG in consultation and coordination with the relevant government 
7 
agencies to which the GOCC is attached and approved by the President. 
S 
9 
To maintain the quality of management of the GOCCs, the GCG, in 
10 
coordination with the relevant Government Agencies, shall, subject to the 
11 
approval of the President, prescribe, pass upon and review the qualifications and 
12 
disqualifications of individuals appointed as directors or elected as officers of the 
13 
GOCC and shall disqualify those-found unfit. 
14 
15 
In determining whether an individual is fit and proper to hold the 
16 
position of a director or officer of the GOCC, due regard shall be given to his 
17 
integrity, experience, education, training and competence. 
18 
19 
SECTION 22. 
Power of Board of DirectorsfTrustees to Discipline, Remove 
20 
Officers ofGOCC. - Subject to existing civil service laws, rules and regulations, the 
21 
Board shall have the authority to discipline the Chief Executive Officer, or order 
22 
his removal from office, upon a majority vote of the members of the Board who 
23 
actually took part in the investigation and deliberation. 
24 
25 
SECTION 23. Limits to Per Diems, Allowances and Bonuses. - The charters 
26 
of each of the GOCCs to the contrary notwithstanding, the members of the Board 
27 
of Directors/Trustees of the GOCCs shall not receive any compensation nor be 
28 
entitled to retirement benefits as such directors. They shall, however, be entitled 
29 
to reasonable per diems; Provided, That the same is authorized under the charter of 
30 
the GOCC; Provided, further, That such Directors/Trustees may be entitled to 
31 
bonuses equivalent to not more than two (2) months salary of the CEO of the 
32 
GOCC, based on their individual and the GOCC's performance; ProvidedJinally, 
33 
That any bonus in excess of this limit shall be subject to the approval of the 
34 
President. 
35 
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1 
In case of GOCCs organized solely for the promotion of social welfare and 
2 
the common good without regard to profit, the total yearly per diems, allowances 
3 
and bonuses in the aggregate which the members of the Board of such GOCCs 
4 
may receive shall be determined by the President based on the achievement by 
5 
such GOCC of its performance targets. 
6 
7 
SECTION 24. Restitution. -
Upon the determination and report of the 
8 
Commission on Audit (COA) that properties or monies belonging to the GOCC 
9 
are in the possession of a member of the Board or Officer without authority, or 
• 
10 
that profits are earned by the member of the Board or Officer in violation of 
11 
his/her fiduciary duty, or the . aggregate per diems, allowances and bonuses 
12 
received in a particular year are in excess of the limits provided under this Act, 
13 
the member of the Board or Officer receiving such properti~s or monies shall 
14 
return the same to the cocco 
15 
16 
CHAPTER V 
17 
Miscellaneous Provisions 
18 
19 
SECTION 25. Appropriations. - The amount of TEN MILLION PESOS 
20 
(P10,OOO,OOO.OO) is hereby initially appropriated for the creation and operations 
21 
of the GCG, to be sourced from the Contingent Fund of the President. 
22 
Subsequent appropriations shall be similarly sourced. 
23 
24 
SECTION 26. Suppletory Application of The Corporation Code and Charters of 
25 
the GOCCs. - The provisions of The Corporation Code of the Philippines and the 
26 
provisions of the charters of the relevant GOCC, insofar as they are not 
27 
inconsistent with the provisions of this Act, shall apply suppletorily to GOCCs. 
28 
29 
SECTION 27. 
Repealing Clause. 
All 
laws, 
executive orders, 
30 
administrative orders, rules, regulations, decrees, and other issuances or parts 
31 
thereof, which are inconsistent with the provisions of this Act, are hereby 
32 
revoked, repealed or modified accordingly. 
33 
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1 
SECTION 28. Separability Clause. - Should any provision of this Act be 
2 
declared unconstitutional, the same shall not affect the validity of the other 
3 
provisions of this Act. 
4 
5 
SECTION 29. Effectivity. - This Act shall take effect after fifteen (15) days 
6 
following its publication in the Official Gazette or in two (2) newspapers of 
7 
general circulation. 
8 
9 
Approved, 
17