A collection of Philippine laws, statutes and codes not included or cited in the main indices of the Chan Robles Virtual Law Library.
Presidential Decrees :
is desirable that the participation of government corporations, both
collectively and individually, in the development process be clarified
and rationalized, taking into consideration inter alia the significant
primary role of private enterprise in the various economic sectors, and
therefore the importance of maintaining conditions of effective
WHEREAS, the Supreme Court has recently ruled that under the Constitution, government-owned or controlled corporations include those created by special law as well as those through the Corporation Code;
WHEREAS, the identification of which government entities shall be considered as government-owned or controlled corporations should now be undertaken on a consistent and identical basis, so that the appropriate service-wide supervisory agencies may be so guided;
WHEREAS, there is need to assure the flexibility of such government corporations consistent with the need for public accountability by providing for differential treatment for government corporations; and
WHEREAS, it is now necessary to promulgate an integrated general statement of national policies on government-owned or controlled corporations for purposes of providing the necessary conceptual and operational guidelines on the appropriate role of the government corporate sector as a whole.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree:
It is recognized, nevertheless, that private enterprise shall play the primary role in undertaking desirable economic activities, especially in the production and distribution of goods and services. It is therefore also the policy of the State to encourage the participation of and to avoid competition with private enterprise in economic activities. For this purpose, the areas of operation appropriate for the government corporate form shall be defined.
Provided, that a corporation organized under the general corporation law under private ownership at least a majority of the shares of stock of which were conveyed to a government financial institution, whether by a foreclosure or otherwise, or a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of time, shall not be considered a government-owned or controlled corporation before such disposition and even if the ownership or control thereof is subsequently transferred to another government-owned or controlled corporation;
Provided, further, that a corporation created by special law which is explicitly intended under that law for ultimate transfer to private ownership under certain specified conditions shall be considered a government-owned or controlled corporation, until it is transferred to private ownership; and
Provided, finally, that a corporation that is authorized to be established by special law, but which is still required under that law to register with the Securities and Exchange Commission in order to acquire a juridical personality, shall not on the basis of the special law alone be considered a government-owned or controlled corporation.
Chartered universities, colleges, and schools, as well as municipal corporations, which are nonetheless government corporations, are likewise not covered by this Decree.
The financial viability criterion shall not apply to those corporate operations involving direct and explicit subsidy programs as authorized by law, and where the subsidies involved are adequately funded by appropriate external sources such as the General Fund.
The test of financial viability shall, when circumstances warrant, not be applicable to civic, cultural, educational, scientific, and other similar government corporations which do not engage in activities usually associated with economic gain, and which do not compete by and large with the private sector.
Operational flexibility for this purpose shall mean the ability of the corporation to act promptly on its own on individual transactions or matters, without need for further prior clearance from supervisory authority external to the corporation, provided such actions are within the purview of their respective charters, explicit general policies, programs, and guidelines, including budgetary constraints provided by external supervising authorities.
For purposes of this provision, government corporations may in addition be classified into functional or sectoral groupings; however, any such functional or sectoral classification shall be agreed upon and consistently applied by the service-wide agencies involved. Any such classification shall consider, among others: (1) existing private shareholdings in the government corporation, (2) any mandatory provision in its enabling act or other applicable law for the ultimate conversion of the specific government corporation into a private corporation, and (3) sustained satisfactory financial and economic performance indicative of continuing financial viability. Such agreed classifications may be used as a basis for further differentials in treatment among the different categories of government corporations.
The Commission on Audit shall observe the applicable industry standards in the promulgation of appropriate accounting and auditing regulations, and towards this end shall ensure that government corporations establish and adopt accounting and auditing systems and standards which are consistent with the appropriate and applicable guidelines of the Commission on Audit, and which in any case shall be as uniform as possible and shall conform with law and with generally accepted accounting principles and sound auditing practices. The policy of the withdrawal of resident auditors shall be fully implemented; Provided, that adequate funding support shall be provided the Commission on Audit for the exercises of its audit function over government corporations, which support shall come from reasonable audit services charges levied by it on the individual government corporations, and supplemented as necessary from budgetary appropriations.
The audit of government corporations by the Commission on Audit shall not preclude government corporations from engaging the services of private auditing firms; Provided, however, that even if the services of the latter are availed of, the audit report of the Commission on Audit shall serve as the report for purposes of compliance with audit requirements as required of government corporations under applicable law.
The Civil Service Commission shall be guided by comparable industry practices and shall develop appropriate standards in its personnel policies pertaining to selection, movement, training, discipline and related matters.
The Office of Budget and Management through the Office of Compensation and Position Classification shall formulate compensation and position classification policies which shall endeavor to make the government corporate salary scales competitive with those for similarly situated industry personnel.
Nothing in this Section and in Sec. 9 hereinbelow shall be construed as in any way diminishing or limiting the responsibilities and accountabilities of government corporations and their corporate officials.
Issues concerning terms and conditions of employment for such corporations shall be referred by the Civil Service Commission to the Ministry of Labor and Employment, which shall act upon such matters in accordance with applicable law.
Such corporations may engage the services of private external auditors, and the Commission on Audit may, at its option and with respect to its financial audit function, review the private external audit.
The personnel of such corporations shall not be subject to the position classification and compensation rules and regulations of the Office of Budget and Management.
The revised policies and regulations shall provide for a reasonable period of time for their effectivity; Provided, however, that the status quo shall be maintained for a period of two years with respect to government corporations existing at the time of the issuance of this Decree which had been previously deemed excluded from the definition of a government-owned or controlled corporation insofar as the application of existing policies and regulations of the Commission on Audit, the Civil Service Commission, and/or the Office of Compensation and Position Classification of the Office of Budget and Management are concerned; Provided, however, that any provision of existing law to the contrary notwithstanding, all chartered government corporations shall be immediately subject to the audit jurisdiction of the Commission on Audit. The President may, at his discretion, institute such changes or otherwise modify the conditions of the status quo.
Collective bargaining agreements existing at the time of the issuance of this Decree in those corporations previously deemed excluded from the coverage of the definition of government corporations, including renewals made during the status quo, shall continue to be in full force and effect until their expiration.
DONE in the City of Manila, this 4th day of February, in the year of Our Lord, nineteen hundred and eighty-six.
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