Coverage.
SEC. 12. Coverage.—The duties, obligations, responsibilities and standards of care provided under this Chapter shall be applicable to all members of the Board of Directors/Trustees and Officers of GOCCs and subsidiaries now existing or hereafter created including government appointed directors in affiliate corporations. These duties, obligations and responsibilities shall be addition to the powers and functions provided in the individual charters or articles of incorporation and by laws of the respective GOCCs.
Number of Directors/Trustees.
SEC. 13. Number of Directors/Trustees.—The present number of Directors/Trustees provided in the charter of the GOCCs shall be maintained.
Ex Officio Alternates.
SEC. 14. Ex Officio Alternates.—The ex officio members of the GOCC may designate their respective alternates who shall be the officials next-in-rank to them and whose acts shall be considered the acts of their principals.
Appointment of the Board of Directors/Trustees of GOCCs.
SEC. 15. Appointment of the Board of Directors/Trustees of GOCCs.—An Appointive Director shall be appointed by the President of the Philippines from a shortlist prepared by the GCG.
The GCG shall formulate its rules and criteria in the selection and nomination of prospective appointees and shall cause the creation of search committees to achieve the same. All nominees included in the list submitted by the GCG to the President shall meet the Fit and Proper Rule as defined un this Act and such other qualifications which the GCG may determine taking into consideration the unique requirements of each GOCC. The GCG shall ensure that the shortlist shall exceed by at least fifty percent (50%) of the number of directors /trustees to be appointed. 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.
Fit and Proper.
SEC. 16. Fit and Proper.—All members of the Board, the CEO and other officers of the GOCCs including appointive directors in subsidiaries and affiliate corporations shall be qualified by the Fit and Proper Rule to be determined by the GCG in consultation and coordination with the relevant government agencies to which the GOCC is attached and approved by the President.
To maintain the quality of management of the GOCCs, the GCG, in coordination with he relevant government agencies shall, subject to the approval of the President, prescribe, pass upon and review the qualifications and disqualifications of individuals appointed as officers, directors or elected CEO of the GOCC and shall disqualify those found unfit.
In determining whether an individual is fit and proper to hold the position of an officer, director or CEO of the GOCC, due regard shall be given to one’s integrity, experience, education, training and competence.
Term of Office.
SEC. 17. Term of Office.—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 the successor is appointed. An Appointive Director may be nominated by the GCG for reappointment 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 for the GOCC.
Appointed to any vacancy shall be only for the unexpired term of the predecessor. The appointment of a director to fill such vacancy shall be in accordance with the manner provided in Section 15 of this Act.
Any provision of law to the contrary notwithstanding, all incumbent CEOs and appointive members of the Board of GOCCs shall, upon approval of this Act, have a term of office until June 30, 2011, unless sooner replaced by the President: Provided, however, That the incumbent CEOs and appointive members of the Board shall continue in office until the successor have been appointed by the President.
The Chief Executive Officer of the GOCC.
SEC. 18. The Chief Executive Officer of the GOCC.—The CEO or the highest-ranking officer provided in the charters of the GOCCs, shall be elected annually by the members of the Board from among its ranks. The CEO shall be subject to the disciplinary powers of the Board and may be removed by the Board for cause.
Fiduciary Duties of the Board and Officers.
SEC. 19. Fiduciary Duties of the Board and Officers.—As fiduciaries of the State, members of the Board of Directors/Trustees and the Officers of GOCCs have the legal obligation and duty to always act in the best interest of the GOCC, with utmost good faith in all its dealings with the property and monies of the GOCC.
The members of the Board and Officers of GOCCs shall:
(a) Act with utmost and undivided loyalty to the GOCC;
(b) Act with due care, extraordinary diligence, skill and good faith in the conduct of the business of the GOCC;
(c) Avoid conflicts of interest and declare an interest they may have in any particular matter before the Board;
(d) Apply sound business principles to ensure the financial soundness of the GOCC; and
(e) Elect and/or employ only Officers who are fit and proper to hold such office with due regard to the qualifications, competence, experience and integrity
Where a member of the Board or an Officer, by virtue of the office, acquires or 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 under Section 24 of this Act, without prejudice to any administrative, civil or criminal action against members of the Board of Directors/Trustees or Officers. This provision shall be applicable notwithstanding the fact that such member of the Board or Officer risked one’s own funds in the venture.
Trustee Relation to the Properties, Interests and Monies of the GOCC.
SEC. 20. Trustee Relation to the Properties, Interests and Monies of the GOCC.—Except for the per diem received for the actual attendance in board meetings and the reimbursement for 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 the authorized 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 of 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 member of the Board or Officer for the exclusive benefit of the GOCC represented.
Care, Diligence and Skill in the Conduct of the Business of the GOCC.
SEC. 21. Care, Diligence and Skill in the Conduct of the Business of the GOCC.—The members of the Board and the Officers must exercise extraordinary diligence in the conduct of the business and in dealing with the properties of the GOCC. Such a degree of diligence requires using the utmost diligence of every cautious person with due regard for all circumstances.
Power of the Board of Directors/Trustees to Discipline, Remove Officers of the GOCC.
SEC. 22. Power of the Board of Directors/Trustees to Discipline, Remove Officers of the GOCC.—Subject to existing civil service laws, rules and regulations, the Board shall have the authority to discipline the CEO, or order the removal from office, upon a majority vote of the members of the Board who actually took part in the investigation and deliberation.
Limits to Compensation, per Diems, Allowances and Incentives.
SEC. 23. Limits to Compensation, per Diems, Allowances and Incentives.—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 a reference, among others, Executive Order No. 24 dated February 10, 2011: Provided, however, That Directors/Trustees shall not be entitled to retirement benefits as such directors/trustees.
In case of GOCCs organized solely for the promotion of social welfare and the common good without regard to profit, the total yearly per diems and incentives in the aggregate which the members of the Board of such GOCCs may receive shall be determined by the President upon the recommendation of the GCG based on the achievement by such GOCC of its performance targets.
Restitution.
SEC. 24. Restitution.—Upon the determination and report of the Commission on Audit (COA) that properties or monies belonging to the GOCC are in the possession of a member of the Board or Officer without authority, or that profits are earned by the member of the Board or Officer in violation of the fiduciary duty, or the aggregate per diems, allowances and incentives received in a particular year are in excess of he limits provided under the Act, the member of the Board or Officer, receiving such properties or monies shall return the same to the GOCC.
Failure to make the restitution within thirty (30) days after a written demand has been served shall, after trial and final judgment, be punished by an imprisonment of one (1) year and a fine equivalent to twice the amount to be restituted, and in the discretion of the court of competent jurisdiction, disqualification to hold public office.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
