(Second of three parts)

Governing body. An essential feature of the law provides for the creation of a central advisory body, the Governance Commission for Government-Owned and -Controlled Corporations (GCG), to monitor and oversee around 157 GOCCs. Unlike its predecessor, the Government Corporate Monitoring and Coordinating Committee (GCMCC), the GCG will be a body attached to the Office of the President itself and is not a mere subcommittee of the Cabinet. It will be composed of just five members, three of whom will come from the private sector.

The chairman, who will have the rank of a Cabinet secretary, and two members, with the rank of undersecretary, shall be appointed by the President, while the secretaries of the Department of Budget and Management and the Department of Finance shall sit as ex officio members.

The GCG also has broader powers than the GCMCC. Of significance are the GCG’s power to prescribe the skills and qualification standards for appointive directors, vet and recommend a shortlist of appointees to sit in the board of directors/trustees of GOCCs, as well as its power to reorganize, merge, consolidate, abolish, privatize or otherwise streamline any GOCC.

Although it may only be done with the President’s approval, the GCG’s power to abolish offices is tricky, as there is a general legal principle that only the Legislature can abolish an office it created. Sen. Franklin Drilon has argued before the Bicameral Conference Committee that this is a defensible and valid delegation of legislative powers, as the law itself enumerates six standards to guide the GCG in its evaluation of a GOCC’s performance.

One-year terms of office. While the law maintains the number of directors/trustees provided in the respective charters of GOCCs, it repeals all provisions of earlier laws on terms of office. To mirror the rule in private corporations where elections of corporate officers are held yearly, the law imposes a one-year limit on the terms of office of all appointive directors and officers in GOCCs. Reappointment is not precluded, however, as the President may choose to reappoint officers if their performance scores (to be gauged based on GCG-provided criteria) are above average, in the same way that corporate directors and officers may still be reelected.

Perhaps, the law’s most contentious provision is that, as a necessary consequence of this one-year term limit, all incumbent chief executive officers and appointive members of the board of GOCCs covered by the law are to be ushered out of office by June 30, 2011, unless sooner replaced by the President. They can, however, stay in a holdover capacity until they have been duly replaced.

Fit and proper rule. The law also seeks to obviate the practice of using appointments to GOCCs as sources of political patronage, especially in light of numerous appointments of cronies, relatives and friends of powerful political and religious leaders and retired military officials to high-ranking directorships and managerial positions in various GOCCs. The new law now makes it unlikely for “non-experts” to be appointed, since it requires the GCG to come up with a shortlist of nominees who are fit and proper to fill senior management posts in any given GOCC. This “fit and proper rule” refers to qualifications/criteria that the GCG will formulate for each GOCC, and shall include standards on integrity, experience, education, training and competence.

Implied in the law is the fact that the President can only choose his/her appointees from this shortlist, because the President “shall ask the GCG to submit additional nominees” if he does not find anyone on the shortlist fit and proper. In this regard, the GCG seems to be the equivalent of the Judicial and Bar Council when it comes to filling vacancies in GOCCs.

Apart from this power to vet nominees before appointment can take place, the GCG also has the power to prescribe, pass upon and review the qualifications and disqualifications of individuals already appointed as officers, and to disqualify those found to be unfit, upon approval of the President.

(To be continued)

Atty. Dada G. Roxas-Rivera is a partner, Corporate and Commercial Law Group of Villaraza Cruz Marcelo & Angangco Law Offices. Her areas of practice include commercial law, taxation, foreign investments, gaming, mergers and acquisitions, project development and real-estate transactions.

Disclaimer:

This article has been prepared for informational purposes only and should not be treated as legal advice.