The first 200 days of the GOCC Commission | Inquirer Business
Point of Law

The first 200 days of the GOCC Commission

/ 12:53 AM August 16, 2012

As a student of good corporate governance, I have patiently watched the evolution of the GOCC Governance Act of 2011 (R.A. 10149 or GOCC Act) from the time it was filed by Senator Franklin M. Drilon as Senate Bill No. 2640 until it was signed into law by President Aquino on 6 June 2011.

At the point of repeating my previous articles on this, the need for a special law to govern government-owned and -controlled corporations (GOCCs) has been highlighted by the extravagant allowances and questionable incentives and retirement benefits in the MWSS. These were exposed by no less than the President in his first State of the Nation Address (SONA) in 2010. Quite recently, we also have read about the reported spending of P1 billion for coffee by Pagcor.

Governance Commission


The GOCC Act created the Governance Commission for GOCCs (GCG) as the central body to administer and oversee the activities and management of GOCCs.


The GCG is effectively the Securities and Exchange Commission for the GOCCs. It has five commissioners. Its chair has the rank of a cabinet secretary with no less than the secretaries of finance and budget as ex-officio members. The fourth and fifth commissioners have the rank of an undersecretary.

That the law gave this status to the GCG is understandable. The combined assets of the GOCCs covered by the law amount to P5 trillion compared to P2.879 trillion for the rest of the government. Their subsidies from the government increased by 493 percent from P9.064 billion in 2000 to P53.705 billion in 2011, a significant portion of which could have been spent for basic services had our GOCCs been properly managed.

Fundamental principles

The GOCC Act is the first best thing that happened to our GOCC system under the current administration.

Consistent with the “tuwid na daan” policy of the President, the GOCC Act prescribes certain fundamental principles for the GOCC system—for example, the directors and officers must pass the fitness and proper rule before they are elected or appointed; they are fiduciaries and trustees who are mandated to exercise extraordinary diligence in the management and business of the GOCCs; appointive directors have a one-year term limit and can get reappointed only upon compliance with the minimum standards of performance for the preceding term of office; the CEO of a GOCC is accountable to the firm’s governing board in the same manner that the president and CEO of a private corporation is accountable to the company’s board; there will be a uniform compensation and position classification system for GOCCs; and there will be an ownership manual and government corporate standards for GOCCs similar to the Code of Corporate Governance prescribed by the SEC for publicly listed companies.

Paradigm Shift


The next best thing that happened to our GOCC system under the current administration is that the President chose the right person as the GCG chair. I am referring to lawyer Cesar L. Villanueva, former dean of the Ateneo Law School (short-listed by the Judicial Bar Council for the selection of the next Chief Justice). Secretary Villanueva is not only a CPA-lawyer but a strong advocate of good corporate governance.

Expectedly, soon after the GCG convened for the first time on Oct. 20, 2011, it began its quest to reform and effect a paradigm shift in the governance of GOCCs. The reforms are designed to address the problems besetting the government corporate sector and seek to meaningfully make GOCCs vital tools in the realization of our country’s economic growth and development.

Recently, the GCG submitted its report to Congress and the President on its performance for the first 200 days after its constitution.

Based on the report, the GCG appears on its way to successfully discharging its mandate.

First, it has taken a detailed inventory of all GOCCs within its regulatory ambit and classified those into various sectors as required by the GCG Act. This is to guide it in exercising its powers and functions under the law.

Second, the GCG has submitted, for President Aquino’s approval, certain organic documents on the governance of GOCCs. These are the Fit and Proper Rule, Ownership and Operations Manual for the GOCC Sector and a Code of Corporate Governance for GOCCs, which are essential in inculcating best practices by private corporations in the GOCC system.

Third, the GCG has started networking with various government agencies so that it could carry out its mandate more effectively and efficiently. For example, it initiated the creation of a special task force in conjunction with the Department of Budget and Management to rationalize the benefits and incentives for GOCC officers. It has also coordinated with the Privatization and Management Office (PMO) for the monitoring of GOCCs originally under the PMO’s care and on the initial mechanics on the transfer of PMO’s privatization functions over GOCCs to GCG. The GCG has also coordinated with the Civil Service Commission (CSC) in harmonizing the development of the compensation and position classification system with Civil Service laws, rules and regulations.

Fourth, the GCG issued memorandum circulars providing formal rules on per diems and other allowances for members of the GOCC governing board. This is not even to emphasize that the GCG has ruled on nearly 60 GOCC-applications for per diem entitlements.

A step in the right direction

The GCG has taken the right initial steps toward the achievement of the policy objectives of the GCG Act.

Certainly, there is still a long way to go. The GCG has much more difficult things to do like formulating strategy maps and performance scorecards for all GOCCs and determining whether a particular GOCC should be reorganized, privatized or abolished. But if the GCG continues the paradigm shift it has started in its first 200 days, we will very soon see the end of a P1-billion annual expense on coffee alone by a GOCC.

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(The author is former president of the Philippine Stock Exchange and now the co-managing partner of the ACCRA Law  Offices. He may be contacted at [email protected].)

TAGS: Governance Commission for GOCCs (GCG), government corporations, Laws, Philippines

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