The Supreme Court (SC), in G.R. Nos. 197422 and 197950, unanimously affirmed the constitutionality of Republic Act No. 10149, otherwise known as the GOCC Governance Act of 2011, that promotes financial viability, fiscal discipline, and responsiveness of Government-Owned or-Controlled Corporations (GOCCs).

In the decision penned by Justice Marvic M.V.F. Leonen, the Court En Banc dismissed the petitions filed by Albay Representative Edcel Lagman and Surigao del Sur 1st District Representative Prospero Pichay, Jr.

The high tribunal found that the law mandates the improvement of the State’s ownership rights in GOCCs, promotes growth by ensuring that operations are aligned with national development policies and programs, and addresses the poor handling of the operations and abuses committed by officials of these corporations.

The SC held that Republic Act No. 10149 introduced valid changes to the terms and conditions for service in GOCCs in that “Congress acted within its discretion when it modified, in good faith and in accordance with the objectives and policies contained in valid laws, the aspects of public offices which exist by virtue of the same exercise of legislative power.

Congress enacted Republic Act No. 10149 to address the reported abuses, poor performance, and inefficiencies in the operations of GOCCs. The law, among others, reduced the terms of incumbent GOCC officers and created a central policy-making and regulatory body for GOCCs, tasked with reforming and developing a standardized compensation and position classification system for GOCCs.”1

These actions that the Congress enacted through R.A. No. 10149 were geared toward achieving what they perceived as a great public need.

Of equal note, the SC did not see the need to address questions of legislative policy or wisdom with due respect to the Congress as a co-equal branch of government. Absent any clear showing of unconstitutionality, the provisions of RA No. 10149, duly deliberated upon and approved by the legislature, should be upheld.

The Governance Commission welcomes this decision as it continues to pursue its mandate which the Congress has enacted through the law. Further, GCG remains steadfast in its commitment in ensuring a strategic and performance-driven GOCC Sector that upholds transparency and institutionalizes good corporate governance in the service of the Filipino people.

1-Page 71, Decision in G.R. Nos. 197422 and 197950, promulgated on 03 November 2020

For media contact:

Kristine Joyce B. Reaño
(02) 5328 – 2030 to 34 local 442
kjbreano@gcg.gov.ph
www.gcg.gov.ph

The Governance Commission for GOCCs (GCG) has received the highest rating for the Calendar Year 2020 in the annual audit report of the Commission on Audit (COA) released on 21 June 2021. The report, which is now available on the COA’s website, was signed on 10 May 2021 by supervising auditor Melinda R. Barcial.

2020 marks the 8th year that the Governance Commission has received an Unqualified Opinion for the presentation of financial statements. Meriting such rating entails consistently following the Generally Accepted Accounting Principles and Philippine Public-Sector Accounting Standards.

Despite the COVID-19 pandemic, the GCG was able to sustain transparent, efficient, and streamlined processes. The GCG Management was able to present financial statements that complied with applicable laws, rules, and regulations.

The recommendations of the COA and other stakeholders presented future improvement opportunities to aid the GCG in enhancing its processes and operations.

By addressing findings and implementing recommendations, the GCG becomes more effective in its role as the central advisory, monitoring, and oversight body of the GOCC Sector.

-o0o-

For media contact:

Kristine Joyce B. Reaño
(02) 5328 – 2030 to 34 local 442
kjbreano@gcg.gov.ph
www.gcg.gov.ph

President Rodrigo Duterte noted the milestones of the Governance Commission for GOCCs (GCG) since the enactment of the GOCC Governance Act of 2011.

“GCG has been instrumental in enabling GOCCs to become catalysts for our nation’s economy and growth development. I hope this milestone will further inspire the men and women of the Commission to work even harder, ensuring that transparency and accountability will become the norm,” President Duterte said through a recorded message.

The GCG, the central monitoring and oversight body of government-owned or-controlled corporations (GOCCs), celebrated the 10th Anniversary of Republic Act No. 10149, otherwise known as the GOCC Governance Act of 2011 on 11 June 2021.

The virtual celebration officially marked the Commission’s 10th year of policy-making, performance evaluation, and promotion of corporate governance that enable GOCCs to become significant tools for economic growth and development.

Senator Franklin M. Drilon, the principal author of the GOCC Governance Act, in a written message to the GCG commended the contribution of GOCCs in raising funds for the government’s COVID-19 response. He also noted that the potentials of the law may be further maximized.

During the celebration, GCG Chairperson Samuel G. Dagpin, Jr. said “We have done a lot. And there is much more to do regarding rationalizing the GOCC Sector and enhancing competitive neutrality, implementing the CPCS (Compensation and Position Classification System), promoting participatory governance in the Sector, and raising corporate governance to international standards, among others.”

Department of Finance Secretary Carlos G. Dominguez in a live message lauded the great strides that have been made in improving the performance of GOCCs and the valuable governance reforms implemented by the GCG in the government corporate sector. He in turn challenged GCG to correct the seeming incongruence between its evaluation against those made by other regulatory agencies.

Senator Richard J. Gordon, Department of Budget and Management Secretary Wendel E. Avisado, and the former GCG Chairperson and Commissioners also sent their messages in view of the occasion.

During the virtual celebration, the Governance Commission also recognized its partners, such as the Securities and Exchange Commission, Presidential Commission on Good Government, the Office of the Ombudsman, among others, for their contribution to promoting good governance in GOCCs.

In photo during the virtual celebration of the 10th Anniversary of the GOCC Governance Act (from left to right): Undersecretary Bayani H. Agabin, Department of Finance (DOF); Secretary Carlos G. Dominguez III, DOF; Commissioner Dennis B. Funa, Insurance Commission (IC); Ms. Beatrice G. Karamihan, GCG; CEO Leonardo Jose M. Berba, Institute for Solidarity in Asia (ISA) and Institute of Corporate Directors (ICD); Chairperson Samuel G. Dagpin, Jr., GCG; Executive Clerk of Court Maria Teresa S. Pabulayan, Sandiganbayan; Director Jacqueline D. Ponseca, GCG; Ms. Kristine B. Reaño, GCG; Commissioner Marites Cruz-Doral, GCG; Director Jonathan B. Beltran, Commission on Audit (COA); Former GCG Director William B. Ruyeras, Professor Simeon A. Ilago, University of the Philippines- National College of Public Administration and Governance (UP-NCPAG); Director Irving V. Occeña, GCG; Chairperson Emilio B. Aquino, Securities and Exchange Commission (SEC); Director Michael D. Pabalinas, GCG; Undersecretary Ricardo P. Bernabe III, Office of the Executive Secretary; Director Karen Tangco-Pascasio, GCG; Director Robert Alvin T. Arceo, Department of Trade and Industry (DTI); Chairperson Reynold S. Munsayac, Presidential Commission on Good Government (PCGG); Deputy Executive Secretary Alberto A. Bernardo, Internal Audit - Office of the President; Director Johann S. Barcena, GCG; Atty. Juliet M. Guevara, GCG; Mr. Melecio Zuñiga, Jr., GCG; Officer-in-Charge Eric B. Distor, National Bureau of Investigation  (NBI).

-o0o-

For media contact:

Kristine Joyce B. Reaño
(02) 5328 – 2030 to 34 local 442
kjbreano@gcg.gov.ph
www.gcg.gov.ph

Established on 08 October 2015, the Corporate Government Scorecard (CGS) is a quantitatively-driven evaluation tool based on existing and globally accepted standards and practices. It is an instrument that assesses the corporate governance initiatives of a Government-Owned or -Controlled Corporation (GOCC) through a methodology benchmarked against the Organisation for Economic Co-operation and Development Principles (OECD Principles) and the ASEAN Corporate Governance Scorecard (ACGS). 

The OECD Principles provide the benchmark for building an environment of trust, transparency, and accountability in corporations. Corporate Governance principles, such as the OECD Principles and the ACGS, guide corporations on how to operate in a way that would lead to financial stability, business integrity, long-term sustainability and resilience, and attracting investments. In particular, the OECD Principles include: Ensuring the Basis for an Effective Corporate Governance Framework, the Role of Stakeholders, Disclosure and Transparency, and the Responsibilities of the Board. 

The GCG used these international standards as a point of reference and introduced the CGS for the GOCC Sector. Through this, the Governance Commission aims to reinforce improvement of corporate governance standards that will lead to long-term sustainability and resilience in the Sector.

The CGS checks GOCCs’ policies and practices in terms of stakeholder relationships, disclosure and transparency, and responsibilities of the Board. GOCCs which adhere to the principles yield a good corporate governance score. This means that these institutions have rules and practices that allow them to have a satisfactory relationship with the Board, internal and external stakeholders, shareholders, and creditors. 

The output of the CGS is called the CGS score. This is an indicator of the GOCCs' level of adherence to international best practices.

CGS and PES

Despite its clear characteristics, the CGS is often mistaken for the Performance Evaluation System (PES), a performance evaluation framework of the GCG. While both are significant for a thorough assessment of a GOCC, both are unique in terms of their objectives and purpose.

The CGS aims to enhance the corporate governance standards in GOCCs towards sustainability and resilience. It helps the Governance Commission and GOCCs identify and assess the latter’s strengths and weaknesses by checking the level of adherence to existing corporate governance provisions, best practices, and international standards of corporate governance.

The CGS asks questions such as “Does the GOCC stipulate the existence and scope of its effort to address customer’s welfare?” to assess the policies and practices in terms of relationship with stakeholders. It also checks the content quality of a GOCC’s Annual Report to assess the disclosure and transparency of GOCCs. 

In terms of the responsibilities of the Board, the CGS evaluates the practices of the GOCC, asking questions such as, “Does the GOCC disclose how it implements and monitors compliance with the code of ethics or conduct?”

In contrast, the purpose of the PES is to set organizational targets and appraise the accomplishments of a GOCC. It indicates the organizational performance of a GOCC based on their mandates and long-term vision as a contribution to national development.

It measures the GOCC’s performance of its strategic objectives that are anchored on the five perspectives: a) Social Impact, b) Financial, c) Stakeholder/Customer, d) Internal Processes, and e) Learning and Growth.

Each perspective tackles a certain scope of the organization. The Social Impact Perspective refers to the national and community-wide or socio-economic impact of the services delivered by the GOCC. The Financial Perspective evaluates the financial performance and utilization of the corporation. The Stakeholder/Customer Perspective measures organizational performance based on the level of satisfaction of customers with the GOCC services delivered. The Internal Process Perspective refers to the efficient manner and quality of the corporation’s operations and functions. The Learning and Growth Perspective measures the competencies of the employees and other capacities that are vital to performance.

It is important to note that the PES also consists of different measures given the various mandates, operations, and objectives of the GOCCs. The CGS, on the other hand, consists of the same set of standards being checked across all the GOCCs.

The PES is the basis for the Performance-Based Bonus of the employees. It also forms part of the computation of the Performance Evaluation for Directors (PED) score of the Board Members. It also helps the GCG to ascertain whether a GOCC should be reorganized, merged, streamlined, abolished, or privatized.

The PES promotes accountability in government corporations, while the CGS encourages transparency; both implement the State policy in the governance of GOCCs. In tandem with the PES, the CGS helps ensure that state-owned enterprises are running at their best, full capacity and are espousing a culture of good governance.

For media contact:

Kristine Joyce B. Reaño
(02) 5328 – 2030 to 34 local 442
kjbreano@gcg.gov.ph
www.gcg.gov.ph
 

The Governance Commission for GOCCs (GCG) obtained a high audit rating for the Calendar Year 2019 in the recently released annual audit report of the Commission on Audit (COA). The report, which is now available on the COA’s website, was signed on 31 July 2020 by supervising auditor Melinda R. Barcial. The GCG is among the 15 attached agencies under the Office of the President that received an unqualified audit opinion.

This is an achievement for the GCG as an organization, made possible by the hard work of its personnel who ensure that processes remain clean, efficient, and streamlined.

Each year since 2013, the COA has been issuing an Unqualified Opinion to the GCG for consistently presenting its financial statements following the Generally Accepted Accounting Principles and Philippine Public-Sector Accounting Standards.

Financial statements comprise of financial performance, statement of cash flows, statement of changes in net assets/equity, statement of comparison of budget, and actual amounts for the year.

The recommendations of the COA and other stakeholders serve to further aid the GCG to continuously improve its processes and become more effective in its role as the central advisory, monitoring, and oversight body of the GOCC sector.

The COA also commended the GCG Management for its good procurement planning that brought an effective, efficient, and economical discharge of the financial and operational functions of the agency.

For media contact:

Kristine Joyce B. Reaño

(02) 5328 – 2030 to 34 local 442

kjbreano@gcg.gov.ph

www.gcg.gov.ph