Republic of che Philippines
HOUSE OF REPRESENTATIVES
Quezon City. Metro Manila

nouse Bit. No_ 4067

Introduced by HON. FELICIANO BELMONTE, JR. and HON, JOSEPH EMILIO A. ABAYA

EXPLANATORY NOTE

In market economies like the Philippines, the creation of Government Owned
and Controlled Corporations (GOCCs) aid the State in its primordial obligation to
achieve sustained economic development and ensure the effective delivery of basic
services while incurring the least cost.

Concomitant to the success of the economic performance of GOCCs is sound
State intervention in order to promote fiscal discipline. Such intervention requires the
State to establish a sustained and concerted mechanism for close monitoring and
evaluation of the economic and administrative performance of these GOCCs while
ensuring that their administration is in line with the twin pillars of good governance -

transparency and accountability. This description befits the idea of a centralized
management style of these institutions.

Unfortunately, however, the State currently employs a highly decentralized
strategy of managing its GOCCs. Contrary to the vital economic function that these
GOCCS are expected to perform, they accounted for a very substantial portion of annual
government expenditures in the form of subsidies which have effectively depleted the
scarce financial resources of the State at a rapid pace without providing substantial
economic returns. This dismal performance is largely attributed to the current
decentralized management policy of the State towards these economic institutions.

This bill, therefore seeks to address this problem of decentralization and address
the growing concern for the apparent lack of effort of the State to examine and evaluate
the performance of GOCCs by centralizing government management of these

institutions with the view of ensuring fiscal discipline and sound overall economic
performance


With the passage of this bill, it is anticipated that GOCCs will operate more
profitably, effectively and efficiently to ensure the State of financial resources it needs to
provide for public services.

The immediate approval of this bill is earnestly requested.

Sy aoe
FELICIANO BELMONTE, JR.



Republic of the Philippines
OF REPRESENTATIVES,
Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

BILL NO. 4067

HOU!

Introduced by HON. FELICIANO BELMONTE, JR. and HON. JOSEPH EMILIO A. ABAYA

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 Senate and the House of Representatives of the Republic of the Philippines in
Congress assembled:

CHAPTER I
General Provisions
SECTION 1. Short Title. - This Act shall be known as the “GOCC Governance

Act of 2011."

SEC, 2. Declaration of Poli

. ~ The State recognizes the potential of

ernment-Owned or Controlled Corporations (GOCCS) as significant tools for
economic development. It is thus the policy of the State to promote the growth of the

GOCCs by ensuring that their operations a

consistent with national development

policies and programs


Towards this end, the State shall ensure that:

(a) The governance of GOCCS is carried out in a transparent, responsible and
accountable manner and with the utmost degree of professionalism and
effectiveness;

(b) A reporting system, which will require the periodic disclosure and
examination of the operations and management of the GOCCs, their assets
and finances, revenues and expenditures, is enforced;

(c) The governing board of every GOCC is competent to carry out its functions,
fully accountable to the State as its fiduciary, and acts in the best interest of
the State;

(d) Reasonable, justifiable and appropriate remuneration schemes are adopted
for the officers and employees of GOCCs to prevent or deter the granting of
unconscionable and excessive remuneration packages; and

(e) There is a clear separation between the regulatory and proprietary activities

of GOCCs, in order to achieve a level playing field with corporations in the

private sector performing similar commercial activities for the public.
SEC. 3. Definition of Terms. -
(a) “Affiliate” refers to a corporation fifty percent (50%) or less of the

outstanding capital stock of which is owned or controlled, directly or

(vb) “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; and

i


@

(s)

(h)

2. In the case of Non-chartered 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.

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.

“Board of Directors/Trustees” or “Board” refers to the governing body that
exercises the corporate powers of a GOCC.

“Charter 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 a special law.

“Chief Executive Officer” refers to the President or the General Manager or
the Administrator of a GOCC.

“Corporate Governance” refers to a set of principles and standards derived
from law, regulation and proper corporate practices that enables the
corporation to attract financial and human capital, perform efficiently, and
generate long-term and desirable economic value for the State.
“Department” refers to an executive department created by law for the
functional distribution of the work of the President.

“Fit and Proper Rule” refers to the standard for determining whether a
member of the Board of Directors/Trustees or Chief Executive Officer is fit

and proper to hold a position in a GOCC, which shall include but not be


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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 a distinct unit therein.
“Government Instrumentalities with Corporate Powers (GICP)/
Government Corporate Entities (GCE) refers to any instrumentality or
agency of the government, which is neither a corporation nor an agency
integrated 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: Manila
International Airport Authority (MIAA), the Philippine Ports Authority
(PPA), Philippine Deposit Insurance Corporation (PDIC), Metropolitan

Water and Sewerage Services (MWSS), Phi

pine Rice Research Institute
(PRRI), Laguna Lake Development Authority (LLDA), Fisheries
Development Authority (FDA), Bases Conversion Development Authority
(BCDA), Cebu Port Authority (CPA), Cagayan de Oro Port Authority, San
Fernando Port Authority, Local Water Utilities Administration (LWUA),
the Manila Economic and Cultural Office (MECO) and the Asian
Productivity Organization (APO) .

“Government-Owned or Controlled Corporation (GOCC)” refers to any

agency organized as a stock or non-stock corporation, vested with functions


(m)

(n)

(0)

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 corporations, 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 as defined herein.
“Non-chartered GOCC” refers to a GOCC organized and operating under
Batas Pambansa Bilang 68, or The Corporation Code of the Philippines.
“Officer” refers to the corporate officer entrusted to manage the day to 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.

“Performance Scorecards” refers to a governance and management tool
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
Goce.

“President” refers to the President of the Republic of the Philippines.

“Related Corporation” refers to a subsidiary or affiliate of aGOCC.

“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

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(3) “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.

() “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.

SEC. 4, Coverage. - This Act shall be applicable to all GOCCs, including, all
GICPs/GCEs as defined herein, excluding the Bangko Sentral ng Pilipinas, which is
a constitutionally-mandated independent agency, and the local water districts.

CHAPTER I
The Governance Commission for Government-Owned or Controlled
Corporations (“GCG”)
SEC. 5. Creation of the Governance Commission for Government-Owned or

Controlled Corporations. - There is hereby created an advisory, monitoring,

recommendatory, and policy-implementing body to be known as the Governance
Commission for Government-Owned or Controlled Corporations, hereinafter
referred to as the GCG, which shall be attached to the Office of the President. The
GCG shall have the following powers and functions:

a) Adopt within one hundred and eighty (180) days from its constitution, an

ownership and operations manual governing GOCCs. Said manual shall be

consistent with the Medium Term Philippine Development Plan and shall

include:


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9,

10.

uu.

Objectives of State ownership;

Role of national government in the governance of GOCCs;

Modes of implementation of the ownership policy;

Guidelines on the monitoring of the operations of all GOCCs including
their Related Corporations. These shall include Strategy Maps,
Charter Statements, Performance Commitments and such other
mechanisms;

The roles, relationships and responsibilities of the State, the
Government Agencies to which the GOCC is attached, and the GOCC;
Disclosure and transparency requirements;

Code of Ethics of Directors and Officers;

Creation of board committees and similar oversight bodies;

Integrated corporate reporting system;

Statement of the social responsibilities of the GOCC; and

Such other matters as the GCG may deem proper to include in the

ownership policy.

b) In addition to the qualifications required under the individual charter of the

GOCCs, the GCG shall identify other necessary skills and qualifications

required for Appointive Directors and recommend to the President a

shortlist of suitable and qualified candidates for Appointive Directors;

¢) Conduct periodic study, evaluation and assessment of the performance of the

GOCCs, receive, and in appropriate cases, require reports on the operations

a


a)

and management of the GOCCs, including but not limited to the

management of the assets and finances of the GOCCs;

Evaluate the performance and determine the relevance of the GOCC, and

recommend to the President the reorganization, merging, streamlining,

abolition or privatization of a GOCC. For this purpose, the GCG shall be

guided by the following

1, The functions or purpose for which the GOCC was created are no longer
relevant to the State or no longer consistent with the national

development policy of the State;

‘The GOCC’s functions or purpose duplicate or unnecessarily overlap with
functions, programs, activities or projects already provided by a
Government Agency;

3. The GOCC is not producing the desired outcomes, or no longer achieving
the objectives and purposes for which it was originally designed and
implemented, and/or not cost efficient and does not generate the level of
social, physical and economic returns vis-a-vis the resource inputs; and

4. The GOCC is in fact dormant or non-operational for at least one (1) year.

Upon determination by the GCG that it is to the best interest of the State that

a GOCC should be reorganized, merged, streamlined, abolished, or

privatized, it shall make its recommendation to the President. The President

may, upon confirmation of the findings of the GCG, order the reorganization,

merging, streamlining, abolition or privatization of such GOCC.


8)

The order for any such reorganization, merger, streamlining, abolition or
privatization, as recommended by the GCG, must be issued by the President
on or before June 30, 2015. Any such reorganization, merger, streamlining,
abolition or privatization must be completed within ninety (90) days from the
issuance by the President of the order to reorganize, merge, streamline,
abolish or privatize.

Conduct compensation studies, develop and recommend to the President a
competitive compensation and remuneration system which shall attract and

retain talent, at the same time allowing the GOCC to be financially sound and

sustainable;

Provide technical advi

and assistance to the Government Agencies to which
the GOCCS are attached in setting performance objectives and targets for the

GOCCs and in monitoring GOCCs performance vi

vis set objectives and

targets;

Coordinate and monitor the operations of GOCCs, ensuring alignment and

consistency with the national development policies and programs. It shall

meet at least quarterly to:

1) Review Strategy Maps and Performance Scorecards of all GOCCs;

2) Review and assess existing performance-related policies including the
compensation/ remuneration of Board of Directors /Trustees and Officers
and recommend appropriate revisions and actions; and

3) Prepare performance reports of the GOCCs for submission to the

President.


h) Prepare a semi-annual progress report to be submitted to the President and
the Congress, In its report, the GCG will provide its performance assessment
of the GOCCs and recommend clear and specific actions. Within one
hundred twenty (120) days from the close of the year, the GCG shall prepare
an annual report on the performance of the GOCCs and submit it to the
President and the Congress; and

i) Review the functions of each of the GOCC and, upon determination that
there is a conflict between the regulatory and commercial functions of a
GOCC, recommend to the President and to the Government Agency to which
such GOCC is attached, a plan of action to ensure that the commercial
functions of the GOCC do not conflict with such regulatory functions,

SEC. 6. Composition of the GCG. - The GCG shall be composed of five (5)
members with the Secretary of the Department of Budget and Management (DBM)
as ex officio Chairman, and the Secretary of the Department of Finance (DOF) and the
Director-General of the National Economic Development Authority (NEDA) as ex
officio members, and two (2) representatives from the private sector as appointive
members of the GCG.

The two (2) representatives from the private sector shall be appointed by the
President, upon the joint recommendation of the DBM, DOF and the NEDA from a

list of at feast four (4) nominees. They must be

ens of the Philippines with
recognized competence in the areas of corporate governance, policy administration,
business management, human resources management, financial management and

other related fields. They shall serve as GCG members for a term of three (3) years,

10


without reappointment: Provided, That of the representatives from the private sector
first appointed, one (1) shall serve for two (2) years, and one (1) shall serve for three
(3) years, and thereafter every representative so appointed shall serve for three (3)
years.

SEC. 7. Remuneration of Members of the GCG. - The members of the GCG
shall not receive any compensation or remuneration for their services as such, except
for members representing the private sector who may receive reasonable per diems
for actual attendance in meetings of the GCG: Provided, That per diems payable to the
members of the GCG shall be approved by the President.

SEC. 8. The GCG Secretariat. - The GCG shall maintain a full-time technical

secretariat, Within ninety days (90) from the effec y of this Act, the GCG shall

present to the President the staffing requirement, organizational structure and
budget requirements of the GCG Secretariat.

SEC. 9, Managing Director. - The management of the GCG Secretariat shall
be vested in the Managing Director who shall be a citizen of the Philippines with
known integrity, independence and recognized competence in the areas of corporate
governance, policy administration, business management, human resources
management and/or financial management and who has not been convicted of any
act involving violation of The Corporation Code of the Philippines, The Securities
Regulation Code (Republic Act No. 8799) or any other offense involving moral
turpitude.

The Managing Director shall be appointed by the President from a list of at

least five (5) nominees, upon the recommendation of the GCG.

n


The Managing Director shall have the rank of a Cabinet Undersecretary:
Provided, That the Managing Director may receive such allowances and bonuses as
determined by the GCG and approved by the President, giving due consideration to
his overall performance and the performance of the GCG.

SEC. 10. Powers and Duties of the Managing Director. — The Managing
Director shall have the following powers and duties:

(a) Direct and manage the day-to-day affairs and business of the GCG
Secretariat, subject to the control and supervision of the GCG;

(b) Attend all meetings of the GCG and participate in its deliberations;

(©) With the approval of the GCG, determine the staffing pattern and the
number of personnel of the GCG Secretariat and define their powers and
duties;

(d) With the approval of the GCG, to appoint, remove, suspend, or otherwise
discipline, for cause, any employee of the GCG Secretariat; and

(e) Perform such other duties as may be delegated or assigned to him by the
Chairman of the GCG from time to time.

CHAPTER II
Compensation and Position Classification System for GOCCs

SEC. 11. 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 GOCCs whether under the Salary Standardization Law or exempt therefrom and

12


shall consist of classes of positions grouped into such categories as the GCG may
determine, subject to the approval of the President.

SEC. 12. Position Titles and Salary Grades. - All positions in the Position
Classification System, as determined by the GCG and as approved by the President,
shall be allocated to their proper position titles and salary grades in accordance with
an Index of Occupational Services, Position Titles and Salary Grades of the
Compensation and Position Classification System, which shall be prepared by the
GCG and approved by the President.

The following principles shall govern the Compensation and Position
Classification System:

(a) All GOCC personne! shall be paid just and equitable wages in accordance

with the principle of equal pay for work of equal value. Differences in pay
shall be based on verifiable Compensation and Position Classification

factors in due regard to the financial capabil

y of the government.

(b) Basic compensation for all personnel in the GOCC shall generally be
comparable with those in the private sector doing comparable work, and
must be in accordance with prevailing laws on minimum wages. The total
compensation provided for GOCC personnel shall be maintained at a
reasonable level with due regard to the national budget.

(c) A review of the GOCC compensation rates, taking into account the
performance of the GOCC, its overall contribution to the national
economy and the possible erosion in purchasing power due to inflation

and other factors, shall be conducted periodically.

1B


No GOCC shall be exempt from the coverage of the Compensation and
Position Classification System developed by the GCG under this Act,

SEC. 13. Additional allowances and bonuses. - The GCG may recommend,
subject to the approval of the President, additional allowances or bonuses for certain
position titles, giving due consideration to the necessity for such allowances and the
good performance of the GOCC: Provided, That no bonuses or additional allowances
shall be granted unless the GOCC has fully paid all taxes for which it is liable, and
the GOCC has declared and paid all the dividends required to be paid under its
charter or any other laws

SEC. 14. Non-diminution of salaries. - The Compensation and Position
Classification System to be developed and recommended by the GCG and as
approved by the President shall apply to all positions, on full or part-time basis, now
existing or hereafter created in the GOCC: Provided, That in no case shall there be
any diminution in the salaries of incumbent employees of GOCCs, including those
exempt under Republic Act No. 6758, as amended, upon the implementation of the

Compensation and Position Classi

ation System for GOCCs.
CHAPTER IV
Board of Directors/Trustees/Officers
Of Government-Owned or Controlled Corporations
SEC. 15. Coverage. - The duties, obligations, responsibilities and standards of
care provided under this Chapter shall be applicable to all members of the Board of
Directors /Trustees and Officers of GOCCs now existing or hereafter created. These

duties, obligations, responsibilities shall be in addition to the powers and functions

uM


provided in the individual charters or articles of incorporation and by-laws of their
respective GOCCs.

SEC. 16. Number of Directors/Trustees. - The present number of
Directors/Trustees provided in the charter of the GOCCs shall be maintained.

SEC. 17. Ex officio alternates - The ex officio members of the GOCC may
designate their respective alternates who shall be the officials next in rank to them,
and whose acts shall be considered the acts of their principals.

SEC. 18. Appointment of the Board of Directors/Trustees of GOCCs, - An
Appointive Director shall be appointed by the President of the Philippines from a
shortlist prepared by the GCG.

‘The GCG shall formulate its rules and criteria in the selection and nomination

of prospective appointees: Provided, However, That all nominees included in the list
submitted by the GCG to the President shall meet the Fit and Proper test as defined
under this Act and such other qualifications which the GCG may determine taking
into consideration the unique requirements of each GOCC. No person who is not
included in the shortlist prepared by the GCG may become an Appointive Director:
Provided, That the GCG shail ensure that the shortlist shall exceed by at least fifty
percent (30%) of the number of directors/trustees to be appointed: Provided, Further,
That in the event that the President does not see fit to appoint any of the nominees
included in the shortlist, he shall ask the GCG to submit additional nominees.

SEC. 19. Fit and Proper. - All members of the Board and the Chief Executive

Officer shall be qualified by the “fit and proper” test to be determined by the GCG in


consultation and coordination with the relevant government agencies to which the
GOCC is attached and approved by the President.

To maintain the quality of management of the GOCCs, the GCG, in
coordination with the relevant Government Agencies, shall, subject to the approval
of the President, prescribe, pass upon and review the qualifications and
disqualifications of individuals appointed as directors or elected Chief Executive
Officer of the GOCC and shall disqualify those found unfit,

In determining whether an individual is fit and proper to hold the position of
a director or Chief Executive Officer of the GOCC, due regard shall be given to his
integrity, experience, education, training and competence.

SEC. 20. Term of Office. - The charters of each GOCC to the contrary
notwithstanding, the term of office of each Appointive Director shall be one (1) year.
An Appointive Director may be nominated by the GCG for re-appointment by the
President only if he/she obtains a performance score of above average or its
equivalent or higher in the immediately preceding year of his/her tenure as
Appointive Director based on the performance criteria for Appointive Directors for
the GOCC.

Appointment to any vacancy shall be only for the unexpired term of the

predecessor. The app

tment of a director to fill such vacancy shall be in

accordance with the manner pro

led in Section 18 of this Act.
Any provision of law to the contrary notwithstanding, all incumbent CEOs

and members of the Board of GOCCs shall, upon approval of this Act, have a term

16


of office until July 1, 2011 or until their successors shall have been appointed, or
unless sooner replaced by the President.

SEC. 21. The Chief Executive Officer of the GOCC. - The Chief Executive
Officer (CEO) or the highest-ranking officer provided in the charters of the GOCCs,
shall be elected annually by the members of the Board from among its ranks, or from
a shortlist of qualified candidates submitted by the GCG. ‘The CEO shall be subject
to the disciplinary powers of the Board and may be removed by the Board for cause.

SEC. 22, Fiduciary Duties of the Board and Officers. ~ As fiduciaries of the
State, members of the Board of Directors/Trustees and the Officers of GOCCs have
the legal obligation and duty to always act in the best interest of the GOCC, with
utmost good faith in all its dealings with the property and monies of the GOCC.

The members of the Board and Officers of GOCCs shall:

1. Act with utmost and un

ided loyalty to the GOCC;

2. Act with due care, extraordinary diligence, skill and good faith in the conduct
of the business of the GOCC;

3. Avoid conflicts of interest and declare any interest they may have in any
particular matter before the Board;

Apply sound business principles to ensure the financial soundness of the

GOCG; and

o

Elect and/or employ only Officers who are fit and proper to hold such office
with due regard to their qualifications, competence, experience, and integrity.
Where a member of the Board or an Officer, by virtue of his office, acquires or

receives for himself a benefit or profit, of whatever kind or nature including but not


limited to the acquisition of shares in corporations where the GOCC has an interest,
using the properties of the GOCC for their own benefit, receiving commission on
contracts from the GOCC’s assets, or taking advantage of corporate opportunities of
the GOCC, all such profits or benefits shall be subject to restitution under Section 27
of this Act, without prejudice to any administrative, civil or criminal action against
members of the Board of Directors/Trustees or Officers. This provision shall be
applicable notwithstanding the fact that such member of the Board or Officer risked
his own funds in the venture.

SEC, 23. Trustee Relation to the Properties, Interests and Monies of the
GOCC. - Except for the per dient received for actual attendance in board meetings
and the reimbursement for actual and reasonable transportation expenses and
bonuses within the limits authorized by the GCG, any and all realized profits
and/or benefits, including, but not limited to the share in the profits, bonuses of
members of the Board or Officers in excess of that authorized by the GCG, stock
options, dividends and other similar offers or grants from corporations where the
GOCC is a stockholder or investor, and any benefit from the performance of
members of the Board or Officers of the Corporation acting for and in behalf of the
GOCC in dealing with its properties, investments in other corporations,
management of subsidiaries and other interest, are to be held in trust by such

member of the Board or Officer for the GOCC they represent.

SEC, 24. Care, Di

nce and Skill in the Conduct of the Business of the
GOCC. - The members of the Board and the Officers must exercise extraordinary

diligence in the conduct of the business and in dealing with the properties of the

18


GOCC. Such degree of diligence requires using the utmost diligence of very cautious
person with due regard for all the circumstances.
SEC. 25. Power of Board of Directors/Trustees to Discipline, Remove Officers

of GOCC. -

Subject to existing civil service laws, rules and regulations, the Board
shall have the authority to discipline the Chief Executive Officer, or order his
removal from office, upon a majority vote of the members of the Board who actually
took part in the investigation and deliberation.

SEC. 26. Limits to Per Diems, Allowances and Bonuses. - The charters of each
of the GOCCs to the contrary notwithstanding, the members of the Board of
Directors/Trustees of the GOCCs shall not receive any compensation nor be entitled
to retirement benefits as such directors, Except for those who sit in the Board in their
ex officio capacities, members of the Board shall, however, be entitled to reasonable
per diems: Provided, That the same is authorized under the charter or the by-laws of
the GOCC: Provided, Further, That such Directors/Trustees may be entitled to
bonuses equivalent to not more than two (2) months salary of the CEO of the GOCC,
based on their individual and the GOCC’s performance: Provided, Finally, That any
bonus in excess of this limit shall be subject to the approval of the President.

In case of GOCCs organized solely for the promotion of social welfare and the
common good without regard to profit, the total yearly per diems and bonuses in the
aggregate which the members of the Board of such GOCCs may receive shall be
determined by the President based on the achievement by such GOCC of its

performance targets,

19


SEC. 27. Restitution.— Upon the determination and report of the
‘Commission on Audit (COA) that properties or monies belonging to the GOCC are
in the possession of a member of the Board or Officer without authority, or that
profits are earned by the member of the Board or Officer in violation of his/her
fiduciary duty, or the aggregate per diems, allowances and bonuses received in a
particular year are in excess of the limits provided under this Act, the member of the
Board or Officer receiving such properties or monies shall return the same to the
Goce

Failure to make the restitution, after a written demand has been served, shall
be punished with an imprisonment of one (1) year and a fine equivalent to twice the

amount to be restituted, and in the

iscretion of the court of competent jurisdiction,

disqualification to hold public office.

APTER V

Creation of a new GOCC or Related Corporation

SEC. 28. Requisites for the Creation of a new GOCC or Related Corporation
under The Corporation Code. - A Government Agency seeking to establish a GOCC
or Related Corporation under The Corporation Code of the Philippines shall submit
its proposal to the GCG for review and recommendation to the President for his
approval before registering the same with the Securities and Exchange Commission
(SEC). The SEC shall not register the articles of incorporation and by-laws of a
proposed GOCC or Related Corporation, unless the application for registration is

accompanied by an endorsement from the GCG stating that the President has

approved the same.


CHAPTER VI
Miscellaneous Provisions

SEC. 29. Appropriations. - The amount of Ten Million Pesos (P10,000,000.00)
for the initial operation of the GCG shall be sourced from the Contingent Fund of
the President. Subsequent funding requirements shall be included in the annual
General Appropriations Act.

SEC. 30. Suppletory Application of The Corporation Code and Charters of the
GOCCS. - The provisions of The Corporation Code of the Philippines and the
provisions of the charters of the relevant GOCC, insofar as they are not inconsistent
with the provisions of this Act, shall apply suppletorily to GOCCs,

SEC. 31. Repealing Clause. ~ The charters of the GOCCs under existing laws
and all other laws, executive orders, administrative orders, rules, regulations,
decrees, and other issuances or parts thereof, which are inconsistent with the
provisions of this Act, are hereby revoked, repealed or modified accordingly.

SEC. 32. Separability Clause. - Should any provision of this Act be declared
unconstitutional, the same shall not affect the validity of the other provisions of this
Act.

SEC. 33. Effectivity. - This Act shall take effect after fifteen (15) days

following its publication in the Official Gazette or in two (2) newspapers of general

circulation.

Approved,