Press Release
May 11, 2011


Drilon: Today we have approved a landmark legislation which will finally put to an end what we have seen in the past to be the abuses of the GOCCs. We have today approved in the bicameral conference committee the GOCC Governance Act of 2011 which will have wide ranging reform in the GOCC sector which constitutes a substantial portion of government assets and liabilities. We have established a Governance Commission for GOCCs that will look over the shoulder of the 157 GOCCs that we have today. Nobody supervises them. This law will create a Governance Commission for GOCCs which will review the performance of these GOCCs. The abusive practices of the board--as we have seen in the MWSS--of granting 36 months pay for 12 months of work, or in GSIS where the directors would earn half a million for attending one board meeting, or worse, where members of the board of the GOCC who sit in investee corporations who personally benefit from stock option plans and bonuses that we have seen, all of these practices will no longer be possible. The GOCC Governance Act will also professionalize the membership of the board and the various CEOs and presidents. We have in the law a fit and proper rule, in other words, not everyone can be appointed. In the past, there were instances where a manicurist was appointed to a trust fund. Hindi na po pwede ang manikurista na magiging miyembro ng board ng GOCC because we have imposed that only those qualified to a fit proper rule can be appointed and there should be nominations from the GCG on who should sit as members of the board. Also, the GCG is authorized to review the operations of the GOCCs so that they can determine whether these GOCCs should be abolished, merged or privatized. All of this is subject to the approval of the President. The GCG will make a recommendation to the President that a particular corporation should be abolished because it's dormant, it's no longer performing its functions, or that particular corporations should be merged or privatized. These, the GCG can do under a certain set of standards. If it is not necessary for Congress to act on it, we have delegated the function, for example, abolition of a GOCC. But they can only exercise such authority under a reasonable set of standards, subject to the approval of the President. I want to emphasize, however, that Congress can any time reorganize any GOCC. So this is without prejudice to the power of Congress to reorganize a GOCC. This is part of the reform agenda promised by President Noynoy Aquino to be implemented during his term. This is the first major reform law that this Congress would pass.

Cavite Rep. Joseph Abaya (House counterpart): I wanna emphasize that a policy has been made to rectify whatever wrong has been done and to put into order and likewise put due importance, given a Cabinet rank secretary or chairman, to oversee the operations of GOCCs. As we have seen they operated on their own and got away with things on their own.

Q: Who's going to head the GCG at saan manggagaling ang fund allocation nila?

Abaya: There will be 5 members, to be headed by a chairman, 2 other commissioners--all 3 are going to be appointed by the President, and 2 will be ex-officio members--the DBM and Finance secretaries.

Drilon: The question kung saan manggagaling ang pondo nila, initially shall be sourced from the President's contingent fund and subsequently from the General Appropriations Act.

Q: Once ma-implement ang batas na ito madadagdagan ba ang government revenues?

Drilon: Hindi ko masabi ngunit ang maliwanag, kung ano ang karapat-dapat sa pamahalaan in terms of dividend, it will be remitted to the government because one of the provisions is that there can be no incentive to any member of the board unless all the taxes and dividends have been paid. That's part of the reform that we are doing and the GCG is supposed to be oversee the law on dividend declaration and that taxes are paid.

Q: Ano ang mangyayari sa GOCC charters dahil yun ang ginagamit nilang depensa sa pagbigay ng bonuses?

Abaya: Basically itong batas na ito ay binagao ang lahat ng individual charters na iyon as far as those are concerned--yung bonuses, salaries and incentives. Binabago ng batas na ito para uniform and rules on bonuses. Dun sa katanungan niyo kung malaki ang makukubra, at least yung nawawala ang maikukubra ng gobyerno. Ganun din yung performance standards, yung pagtutok at monitoring ng GCG, would logically imply more remittance to the government.

Q: Are we talking of multimillion pesos?

Abaya: I assume. If it would be closely monitored and performance standards are exacted of them, I think maraming makukubra.

Drilon: Halimbawa lamang, there are some GFIs with so much retained earnings--billions of pesos. They keep on declaring bonuses. Once this becomes law, they cannot do that and they cannot declare these bonuses unless they first comply with the law which requires 50% of the net earnings must be remitted as dividends. They must justify why they are not declaring dividends out of those billions in retained earnings. In that sense, we can increase the coffers of the National Treasury.

Q: Have you established what GOCCs are due for abolition?

Abaya: It has to be undertaken by the GCG. Katungkulan nila yan at sila ang mag aaral. They will give the proper recommendation to the President.

Q: ...Those who need an extensive study?

Drilon: Hindi natin pwede ilagay sa batas iyan for that particular GOCC must be abolished or privatized. But the law provides certain standards by which the GCG can exercise its recommendation to abolish a GOCC.

Q: On term of office.

Drilon: These are corporations and the stockholder, which is the government, is supposed to elect the board of directors. That's the basic corporate practice. Those corporations which are organized under the Corporation Code, the board of directors have a term of one year. However, in the GOCCs which have their special charters, their term of office varies from 1-5 years without any rhyme or reason. So what this law provides insofar as these corporations are concerned will have a term of office for 1 year, so that uniform, following established corporate practice. The board of directors must be accountable to the government and their performance as individual directors will be reviewed on a yearly basis whether or not they should be reelected to the board as representatives of government. Their term of office is 1 year.

Q: Hanggang ilang beses sila pwde i-reappoint?

Drilon: There is no limit. There is also a holdover provision so that if no new director is appointed...

Q: Ano yung earliest na mag umpisa ang GCG?

Drilon: Once the President signs it, it is published, 15 days after publication it becomes effective. The reality is when the President appoints the 3 members of the GCG. We expect that sometime mid-June, the law should become effective.

Abaya: Just want to add on the terms of offices, there a particular provision that the incumbents right now--whether appointees of the previous administration or even the current President--their term will end on June 30, 2011, although there is a holdover provision.

Q: Under the law, aside from GOCCs, will it include GFIs?

Drilon: Yes.

Q: Can the commission file a case against abusive GOCC or GFI officials?

Drilon: The power to discipline is in the board of directors, but certainly the complaint can be filed by the GCG.

Q: Can Congress recommend to the GCG state firms that would be abolished?

Drilon: Congress need not recommend. Congress can abolish. That power is not taken away from Congress. Even if we have delegated it, it doesn't mean that Congress cannot do it on its own.

Q: You mentioned earlier na dapat hindi mag-increase ang salaries...

Abaya: May provision on non-diminution of salaries. Hindi mo pwedeng bawasan yung natatanggap na nila. Nakalagay doon na hindi dapat mabawasan yung authorized salaries nila. I clarified earlier ano ba ang authority ng board to increase their authorized salaries, technically they have such power, so we included the cut-off date of December 31, 2010 para pag nabasa nila itong batas na ito, maski bill pa lang... kumbaga midnight salary increase, they can do it now and authorize themselves. So that prevents them from doing midnight salary increase.

Q: While the Congress can have the authority to abolish, the GCG can also abolish?

Drilon: That's correct, with the approval of the President. Both GCG and Congress can abolish, because the abolition of a GOCC chartered by Congress can only be done by Congress, unless Congress delegates its authority. But it doesn't mean that Congress is prohibited from, in effect, taking back its authority.

Q: Since filing, ano pa ang major revisions nan a-thresh out sa bicam?

Abaya: Wala naman.

Q: Na-mention ang authorized salary, magkano ang pinakamataas na salary na natatanggap ng board?

Abaya: I don't have that information, we never had the chance.

Q: Pero parang lumilitaw yung cut-off date nila ay December 2010, so kung ano yung natatanggap nila yun lang dapat?

Abaya: Yes. Yun ang magiging cut-off date for the authorized salary.

Drilon: We are talking about the salary of the employees. The rule does not apply to the per diems of the directors. In other words, in the MWSS no way that that 36 months bonus for the board of directors is tapped and no longer authorized under this law. When we talk about non-diminution, we talk about employees, not members of the board.

Q: Other issues, after the Sandiganbayan approved the plea bargain agreement, sabi ni former Ombudsman Gutierrez vindication sa kanila yon at it proves na hindi sila remiss sa kanilang trabaho.

Drilon: In the first place, mali yung ginawa nila so how can it be a vindication? Their having signed the plea bargaining agreement is wrong and the approval by the Sandiganbayan is wrong. So how can two wrongs make right? There is no vindication. In the first place, they displayed incompetence by doing what they did. Entering into this plea bargain, notwithstanding the very clear fact that not the entire amount is being returned, and that was shown during the hearings in the Senate. Hindi naman sinauli ang lahat ng pera. Pangalawa, the public interest was prejudiced. They even failed to oppose the arraignment for a lesser offense and the grant of the bail to Garcia. So this is no vindication. The public interest is prejudiced by this action.

Q: But Sandiganbayan cannot be blamed dahil yun lang ang na-present ng Ombudsman?

Drilon: No. I think the Sandiganbayan erred in approving the plea bargaining given the fact that it is very clear that not all of the funds were returned.

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