<<<PRESS RELEASES

QUESTIONS & ANSWERS on the ABOLITION OF PHILIPPINE NATIONAL OIL CORP. (PNOC) AND PHILIPPINE NATIONAL CONSTRUCTION CORP. (PNCC) SUBSIDIARIES

POSTED LAST 22 Oct 2014 - 10:44 am

Q: What are the reasons for abolishing a GOCC?

A: Under Section 5(a) of R.A. No. 10149, the GCG shall be guided by any of the following standards for the abolition to evaluate the performance and to determine the relevance of a GOCC:

  • The functions or purposes 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 purposes duplicate or unnecessarily overlap with the functions, programs, activities, or projects already provided by a Government Agency;
  • 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-à-vis the resource inputs;
  • The GOCC is in fact dormant or nonoperational;
  • The GOCC is involved in an activity best carried out by the private sector; and
  • The function, purpose, or nature of operations of any group of GOCCs requires consolidation under a holding company.

Q: Which of these criteria did the 7 abolished GOCCs meet/ why were these GOCCs abolished?

A:  The 7 GOCCs were evaluated and found to meet the following criteria:

GOCC

MANDATE/PURPOSE

REASONS FOR ABOLITION

PNOC-Alternative Fuels Corporation

(PNOC-AFC)

  • To study, develop, and fast-track the utilization and commercialization of existing and emerging alternative sources of energy and technologies and carry on the business of alternative fuels and other related activities thereto to enhance the energy security and promote sustainable energy.
  • 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-à-vis the resource inputs
  • Functions or purposes duplicate or unnecessarily overlap with the functions, programs, activities, or projects already provided by a Government Agency

PNOC- Development and Management Corporation

(PNOC-DMC)

  • To acquire lands, interest in lands and real estate properties; and to own, develop, and manage, real estate.
  • Functions or purposes duplicate or unnecessarily overlap with the functions, programs, activities, or projects already provided by a Government Agency
  • Involved in an activity best carried out by the private sector

Alabang-Sto. Tomas Development Incorporated (ASDI)

  • To develop, and manage investments in infrastructure projects such as those involving toll roads, highways, bridges, buildings, and structures of all kinds, construction, and excavation.                   
  • Dormant or Nonoperational
  • Previously Identified for Privatization
  • Board Resolution Shortening ASDI’s Corporate Life

DISC Contractors Builders and General Services Incorporated (DCBGSI)

  • To manufacture, process, import, buy, sell, export structural steel, sheet metals, and other forms of steel or metal structures.
  • To manufacture, assemble, and sell trucks, heavy equipment and industrial machineries and its components.
  • No Longer Performing Primary Purpose
  • Operated at a Loss in 2011

Traffic Control Products Corporation (TCPC)

  • To manufacture paint pavement markings and other traffic safety devices such as various traffic signs, traffic lines and parking meters.
  • Has Been Operating at a Loss
  • Dormant or Nonoperational

CDCP Farms Corporation (CDCP-FC)

  • To engage in agriculture, cattle, livestock, dairy, meat, fruits and vegetables industries including fish culturing, development and production.
  • Operated at a Loss Since 2005
  • Dormant or Nonoperational

Tierra Factors Corporation (TFC)

  • To carry on the commercial and industrial business of factoring, manufacturing, importing, exporting machinery, equipment, materials and commodities of every kind and nature.
  • Dormant or Nonoperational
  • Previously Identified and Recommended for Liquidation by COA

 

Q: How will the abolition proceed?

A: The GCG shall convene a Technical Working Group (TWG) per GOCC consisting of officials of the GOCC’s Supervising Agency and/or Parent GOCC and the Securities and Exchange Commission (SEC) to implement the abolition. The responsibilities of the TWG are as follows:

  • Work on winding down the operations of the GOCC.
  • The Supervising Agency or Parent GOCC shall coordinate and/or supervise the transfer of programs and functions of the GOCC.
  • The parent GOCC shall take over the assets, program, and functions of the GOCC. It shall also be responsible for the payment of liabilities out of the proceeds from the sale of assets and assumption of remaining liabilities. Furthermore, it shall implement the separation package for affected employees, in accordance with the pertinent provisions of the Labor Code and the GOCC’s personnel policy.
  • The SEC shall provide technical support and ensure that the winding down of operations be in accordance with the provisions of the Corporation Code of the Philippines.

Q: What will happen to the affected employees?

A: For PNOC subsidiaries, PNOC shall determine the necessity to absorb, including option to reorganize if necessary, their affected employees. PNOC-AFC and PNOC-DMC have allocated benefits totaling to P12.61 million and P9.87 million respectively for its affected employees.

      As for PNCC subsidiaries, only 3 GOCCs have at most 6 employees as these GOCCs are already in the process of winding down or are already nonoperational. Affected employees were already being granted their separation benefits. These remaining employees work on the monitoring of remaining assets and will receive separation benefits.

Q: How much will be gained or saved from these abolitions?

A: The abolition of PNOC subsidiaries will result to approximately P 210 million[1] in annual cost savings. PNCC on the other hand will gain a minimum of P 445.85 million[2] upon closure of its 5 subsidiaries.

 

Contact:
Bea Nadine V. Barte 
(02) 328 – 2030 to 34 
bnvbarte@gcg.gov.ph 
www.gcg.gov.ph

 

[1] Derived from five-year average (2009-2013) total cost of operations of PNOC-AFC (P 153 million) and PNOC-DMC (P 57 million).

[2] Lowest estimated benefit to the PNCC (net of Related Party Liabilities)