FREQUENTLY ASKED QUESTIONS
- GCG Standardized Customer Satisfaction Survey
- On Directors and Officers Liability Insurance (DOLI) and the Directors and Officers Liability
- On Compensation of Appointive Directors
Q: What is the GCG?
A: It is a central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies to govern Government-Owned or-Controlled Corporations, which shall be attached to the Office of the President.
Q: What are its powers and functions?
A: (a) Evaluate the performance and determine the relevance of the GOCC, to ascertain whether such GOCC should be reorganized, merged, streamlined, abolished or privatized, in consultation with the department or agency to which a GOCC is attached. For this purpose, the GCG shall be guided by any of the following standards:
(1) 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;
(2) The GOCC’s functions or purposes 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-à-vis the resource inputs;
(4) The GOCC is in fact dormant or nonoperational;
(5) The GOCC is involved in an activity best carried out by the private sector; and
(6) The function, purpose or nature of operations of any group of GOCCs require consolidation under a holding company.
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:
(i) Implement the reorganization, merger or streamlining of the GOCC, unless otherwise directed by the President; or
(ii) Recommend to the President the abolition or privatization of the GOCC, and upon the approval of the President, implement such abolition or privatization, unless the President designates another agency to implement such abolition or privatization.
(b) Classify GOCCs into: (1) Developmental/Social Corporations; (2) Proprietary Commercial Corporations; (3) Government Financial, Investment and Trust Institutions; (4) Corporations with Regulatory Functions; and (5) Others as may be classified by the GCG, without prejudice to further sub-classifications in each category and/or any other classification based on parameters as it may find relevant or material such as, but not limited to, industry type. The classification shall guide the GCG in exercising its powers and functions as provided herein;
(c) In consultation with the relevant government agencies and stakeholders, adopt within one hundred eighty (180) days from its constitution, an ownership and operations manual and the government corporate standards governing GOCCs: Provided, That the government corporate governance standards applicable to GOCCs shall be no less rigorous than those required by the Philippine Stock Exchange or the Securities. and Exchange Commission of listed companies, or those required by the Bangko Sentral ng Pilipinas or the Insurance Commission for banking institutions and insurance companies, as the case may be. The manual shall be consistent with the Medium-Term Philippine Development Plan issued by the National Economic and Development Authority (NEDA) and shall include:
(1) Objectives of State ownership;
(2) Role of national government in the governance of GOCCs;
(3) Modes of implementation of the ownership policy;
(4) 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;
(5) The roles, relationships and responsibilities of the State, the Government Agencies to which the GOCC is attached, and the GOCC;
(6) Disclosure and transparency requirements;
(7) Code of Ethics of Directors and Officers;
(8) Creation of board committees and similar oversight bodies;
(9) Integrated corporate reporting system;
(10) Statement of the social responsibilities of the GOCC; and
(11) Such other matters as the GCG may deem proper to include in the ownership policy.
(d) Without prejudice to the filing of administrative and criminal charges, recommend to the Board of Directors or Trustees the suspension of any member of the Board of Directors or Trustees who participated by commission or omission in the approval of the act giving rise to the violation or noncompliance with the ownership manual for a period depending on the nature and extent of damage caused, during which period the director or trustee shall not be entitled to any emolument;
(e) In addition to the qualifications required under the individual charter of the GOCCs and in the bylaws of GOCCs. without original charters, the GCG shall identify necessary skills and qualifications required for Appointive Directors and recommend to the President a shortlist of suitable and qualified candidates for Appointive Directors;
(f) Establish the performance evaluation systems including performance scorecards which shall apply to all GOCCs in general and to the various GOCC classification;
(g) Conduct periodic study, examination, evaluation and assessment of the performance of the GOCCs, receive, and in appropriate cases, require reports on the operations and management of the GOCCs including, but not limited to, the management of the assets and finances of the GOCCs;
(h) 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;
(i) Provide technical advice 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 vis-a-vis established objectives and targets;
(j) 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.
(k) 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
(l) 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 in consultation with the Government Agency to which such GOCC is attached, the privatization of the GOCCs commercial operations, or the transfer of the regulatory functions to the appropriate government agency, or such other plan of action to ensure that the commercial functions of the GOCC do not conflict with such regulatory functions.
Q: What is a Chartered GOCC?
A: It refers to a GOCC, including Government Financial Institutions, created and vested with functions by special law.
Q: What is a Chief Executive Officer?
A: It refers to the highest ranking corporate executive, who could be the President or the General Manager, Chairman or the Administrator of a GOCC.
Q: What is the Fit and Proper Rule?
A: It refers to the standard for determining whether a member of the Board of Directors/Trustees or CEO is fit and proper to hold a position in a GOCC which shall include, but not limited to, standards on integrity, experience, education, training, and competence.
Q: What does Government Corporate Standards mean?
A: It means a set of principles derived from law and practices, rules and standards prescribed by the Governance Commission for Govenment-Owned or-Controlled Corporations (GCG) that generate long-term and desirable economic value for the State. It shall also refer to a system whereby shareholders, creditors and other stakeholders ofa corporation ensure that management enhances the value of the corporation as it competes in an increasingly global market place.
Q: What is a Government-Owned or Controlled Corporation?
A: It refers to any agency organized as a stock or nonstock corporation, vested with functions 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 instrumentahties 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.
Q: What is a nonchartered GOCC?
A: It refers to a GOCC organized and operating under Batas Pambansa Bilang 68, or “The Corporation Code of the Philippines”.
Q: What is an ownership manual?
A: It refers to guidelines and rules pertaining to the ownership by the State or corporations and enterprises or the exercise of such ownership governing the GOCCs or any classification thereof.
Q: What is a per diem?
A: It refers to the compensation granted to members of the Board of Directors or Trustees of a GOCC for actual attendance in meetings.
Q: What is a performance evaluation system?
A: It refers to the process of appraising the accomplishments of GOCCs in a given fiscal year based, on set performance criteria, targets and weights.
Q: What are Performance Scorecards?
A: It refers to a governance and management tool forming part of the performance evaluation system which consists 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.
Q: What are the GOCCs under the jurisdiction of the GCG?
A: There are 157 GOCCs under the jurisdiction of the GCG. See About Us.
Q: What is a Compensation and Position Classification System (CPCS)?
A: The GCG, after conducting a compensation study, shall develop a Compensation and Position Classification System (CPCS) which shall apply to all officers and employees of the GOCCs whether under the Salary Standardization Law or exempt therefrom and shall consist of classes of positions grouped into such categories as the GCG may determine, subject to approval of the President.
Q: What will happen to the current position titles and salary grades governing GOCCs?
A: All positions in the Positions 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 n 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.
Q: What about additional incentives?
A: The GCG may recommend to the President, incentives for certain position titles in consideration of the good performance of the GOCC: Provided, That no incentives 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.
Q: What is meant by non-diminution of salaries?
A: 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 authorized salaries as of December 31, 2010 of incumbent employees of GOCCs, including those exempt under Republic Act No. 6758, as amended, upon the implementation of the Compensation and Position Classification System for GOCCs.
Q: How shall a Director/Trustee of a GOCC be appointed?
A: An Appointive Director shall be appointed by the President of the Philippines from a shortlist prepared by the GCG. To be included in the shortlist, prospective appointees should have satisfied the selection and nomination criteria formulated by the GCG, and have met the Fit and Proper Rule as determined by the GCG in coordination with the relevant government agency to which the GOCC is attached. The GCG shall ensure that the shortlist shall exceed by at least fifty percent (50%) of the number of directors/trustees to be appointed. However, in the event that the President does not see fit to appoint any of the nominees included in the shortlist, the President shall ask the GCG to submit additional nominees.
Q: What is the term of office of an Appointive Director?
A: Any provision in the charters of each GOCC to the contrary notwithstanding, the term of office of each Appointive Director shall be for one (1) year, unless sooner removed for cause provided, however, that the Appointive Director shall continue to hold office until his/her successor is appointed.
Q: When can an Appointive Director be re-appointed?
A: An Appointive Director may be nominated by the GCG for re-appointment by the President only if one obtains a performance score of above average or its equivalent or higher in the immediately preceding year of tenure as Appointive Director based on the performance criteria for Appointive Directors of the GOCC.
Q: What are the limitations to the compensation, per diems, allowances, and incentives of GOCC Directors/Officers?
A: The charters of each of the GOCCs to the contrary notwithstanding, the compensation, per diems, allowances and incentives of the members of the Board of Directors/Trustees of the GOCCs shall be determined by the GCG using as reference, among others, Executive Order No. 24 dated February 10, 2011; provided, that, Directors/Trustees shall not be entitled to retirement benefits as such directors/trustees.
Q: What does the fiduciary duty and trustee relation of a GOCC Director/Officer entail?
A: Where a member of the Board or an Officer, by virtue of the office, acquires or receives for oneself 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, without prejudice to any administrative, civil, or criminal action against such Board member or Officer.
Furthermore, except for the per diem received for actual attendance in board meetings and the reimbursement of actual and reasonable expenses and incentives as authorized by the GCG, any and all realized and unrealized profits and/or benefits including, but not limited to, the share in the profits, incentives of members of the Board or Officers in excess of that authorized by the GCG 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 in 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 Board member or Officer for the exclusive benefit of the GOCC represented.
Q: Does the creation of a new GOCC or related corporation under the Corporation Code require prior approval?
A: 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 approval before registering the same with the Securities and Exchange Commission (SEC). The SEC shall not register the articles of incorporation and bylaws 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.
Q: Does the acquisition of controlling interest in another corporation require prior approval?
A: Any government agency seeking to purchase a corporation or acquire controlling interest therein shall submit its proposal to the GCG for review and approval of the President.