MEASURING GOVERNMENT CORPORATIONS’ PERFORMANCE: ENHANCING GOCCS’ ACCOUTABILITY

AND ECONOMIC VIABILITY By Algamar Latiph (April 2009)

Author’s Note: Incidentally, the recommendations here were answered by the GOCC Governance Act (RA 10149)

1. Introduction

The evaluation of public enterprises is an area of concern for

policymakers in most countries,1 such that it has become a relatively common practice in the public sector worldwide (Ospina, et al., 2004). Developing countries urgently need appropriate mechanisms for securing responsible and accountable governments and such performance evaluation can be a viable instrument of control over accountable officers (Dwivedi, 1985). The challenge, therefore, of every government is to develop performance indicators that can be debated as a basis for meaningful disclosure2 and accountability. For as long as there is no performance evaluation based not only on a corporation’s financial performance but also on whether it is able to meet social objectives, there will be no transparency in public corporate sector and the temptation to use government funds are there.3

The United States has legislated the Government Performance and

Results Act of 1993 (GPRA) as a formal, outcome-based performance evaluations mandatory for federal agencies.4 New Zealand has its Performance Management and Reporting Framework which seeks to link government policy outcomes with public sector outputs and budget process. Likewise, most countries in Europe have their own model of performance evaluation. This holds true in Latin America, particularly: Chile, Colombia, Costa Rica, Uruguay, Brazil, Mexico, Paraguay, Venezuela and Argentina.

In 1984, the Government Corporate Monitoring and Coordination

Council (GCMCC) was created. For the first time, performance evaluation of government-owned and controlled corporations (GOCCs)* was institutionalized under the supervision of GCMCC. * For purposes of this study GOCCs, public corporate sector and public enterprise are interchangeably used. Included in these terms are government financial institutions and government instrumentalities.

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From 1988 to 1992, the performance and efficiency of GOCCs improved because of the monitoring and evaluation of GCMCC.5 In contrast, preceding the creation of GCMCC and subsequent to its abolition in 2001, their liabilities, borrowings and deficits tremendously increased on a yearly basis. This is the reason why the Asian Development Bank recommended the re-launching of GCMCC.6

This paper presents the rationale of the public corporate sector, particularly in the Philippines and as such, the performance public enterprise and the reforms that have been integrated in this sector since 1984 will be examined. This paper will discuss relationship between accountability and performance evaluation. A review of literature on performance evaluation is provided and it submits a possible model as a mechanism of accountability for public enterprise.

2. Public Enterprise, Its Rationale The main reason given by many governments around the world

why they create government corporations is to ‘further push development’.7 In the Philippines, GOCCs were utilized as major tool for attainment of economic and social development goals.8

In 1965, there were only 37 GOCCs. By 1984, their number

increased to 303.9 The dramatic proliferation of GOCCs coincided with the aggressive push towards development.10 It entered nearly all fields of government activity and sometimes even beyond.11 From 1978 to 1982, GOCCs operated in areas which are "capital intensive, pioneering and vital to the national interest."12 As a vehicle of development, GOCCs’ contribution to GDP was merely 2.8 percent from 1980 to 1984.13

The sole constitutional requirement before a GOCC may be

created is that it must be economically viable (Sec. 16, Art. XII, 1987 Const.). This contemplates the idea that every GOCC must show capacity to function efficiently in business and that it should not go into activities which the private sector can do better.14 Moreover, economic viability is more than financial viability but also includes capability to make profit and generate benefits quantifiable in financial terms.15

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3. Facts and Figures: The Sad Story of Public Enterprise Sector

a. Debt-Ridden Currently, there is no mandated ceiling on public debt.16 This

resulted in unlimited contracting of loans and issuance of guarantees, and continuous programming of expenditures over and above the estimated income. 17 There was an instance when a private mining company was extended with sovereign guarantee in the tune of P500 million by the Philippine Export-Import Credit Agency.18 This shows how loose financial accountability GOCCs. That is the reason why it is not surprising that the accrued debts of GOCCs amounted to P3.89 trillion last 2005.19 In 1982, 73 cents out of every dollar of outstanding foreign public debt were accounted for by GOCCs20 with 45 percent of this amount attributable to non-financial GOCCs and the rest to government financial institutions.21

b. Huge Losses and Deficits Public enterprise although it was reduced to 133 in number,

nevertheless accumulated a staggering liability of P3.7 trillion compared to its total assets of P4.5 trillion in 2004.22 Deficits have become normal occurrence. From 1999 to 2004, fourteen monitored GOCCs23 had posted an aggregate deficit on a yearly basis, to wit: P14 billion (2000), P27 billion (2001), P67 billion (2002), P462 billion (2003), and P308 billion (2004). The National Power Corporation alone had incurred financial loss of P33.7 billion (2002), P117 billion (2003) and P29.9 billion (2004)24 or a consolidated financial loss of P180.6 billion. Similarly, NFA losses will hit P110 billion by 2010 and its outstanding debt will reach P436 billion.25 This huge amount constitutes half of Philippine National Budget in 2006.

c. Heavy Reliance on Government Subsidy and Equity The dismal performance of many of these corporations has

contributed to the fiscal deficits of the public sector.26 To date, GOCCs rely heavily on national government for budget subsidy and equity. For the overall GOCCs, in 2003, 77% of them generated a low return of 5% or less on government’s equity investment of which 42% of these GOCCs operated at a loss.27 And yet they were given P27.33 billion in government subsidies in 2008. This is 98% higher compared

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to 200628 excluding their losses, deficits, and borrowings mostly backed by sovereign guarantee.

3. Accountability: Holds Society Like a Glue

The basic idea of government in the Philippines, is that of a popular representative government, the officers being mere agents and not rulers of the people, one where no one man or set of men has a proprietary or contractual right, to an office, but where every officer accepts office pursuant to the provisions of the law and holds the office as a trust for the people whom he represents.29 Hence, the 1987 Constitution provides that “Public office is a public trust. Public officers and employees must at all times be accountable to the people” (Sec. 1, Art. XI, 1987 Const.).

The notion of public trust connotes accountability (Bernas, 1996),

for the interest and the benefit of the people30 and it holds government and society together like glue (Hodge and Coghill, 2007). This is the reason that government officers and employees must maintain the principle of public accountability31 as it cuts to the soul of government and unmasks the government of the day of whatever façade it wears (Briones, 1991). In Aberca v Ver,32 it held that “the principle of accountability of public officials under the Constitution acquires added meaning and aspires a larger dimension. No longer may a superior official relax his vigilance or abdicate his duty to supervise his subordinates.”

On the other hand, accountability and performance relation is

symbiotic in corporate governance. Performance evaluation is considered as an accountability mechanism in the organizational context and a major component of accountability (Frink and Ferris, 1998). It has been at the core of management reforms to enhance accountability (Julnes, 2006). The requirement of program performance reports was intended to provide political accountability for results and the opportunity for increased responsiveness to program stakeholders and constituencies (Heinrich, 2002).

4. Public Enterprise Reform

In 1983, the government declared its inability to pay its $28 billion foreign debt (80% is by GOCCs).33 A year later, Executive Order No. 93634 created GCMCC with a mandate to serve as the central

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monitoring, coordinating, and performance evaluation body for GOCCs. This was briefly interrupted by the People’s Revolution in 1986. Consequently, in order to pursue a program of economic recovery and stability and so that the public sector finances could be carefully planned, evaluated, and coordinated, then President Corazon Aquino reconstituted GCMCC in Memorandum Circular No. 10. It was later strengthened by the subsequent promulgation of EO 236. In 1988, EO 59 mandated the rationalization of the entire gamut of government corporate sector.35 The Integrated Corporate Reporting System was introduced by MC 320 to further complement GCMCC.

From 1988 to 1992, GCMCC conducted regular monitoring and

performance evaluation. There were 18 GOCCs monitored in 198836 and 1989.37 It increased to 25 in 1990,38 38 in 199139 and 44 in 1992.40 In the meantime, the government consistently pursued privatization through various laws and executive orders41 as a means of rationalization and to unburden itself from financial liabilities and subsidies on non-performing assets of certain GOCCs.

When the GCMCC discontinued its functions in 1992, it was

reconstituted in EO 55.42 Unfortunately, the GCMCC met its demise in 2001 and its functions were transferred to the Department of Finance under EO 16. Unlike the DOF, GCMCC is an inter-departmental body. It is composed of the Executive Secretary as Chairman, and the heads of the DOF, Department of Budget and Management (DBM), Department of Trade and Industry, Presidential Management Staff, and Banko Sentral ng Pilipinas (BSP), as members. Under EO 55, the Government Corporate Counsel was included as member.

Despite the GCMCC’s abolition,43 the rationalization, streamlining,

privatization, and merger of public corporations continued. In 2002, corporate boards of various GOCCs were required to take an orientation course on good governance and to adopt an evaluation system or a corporate performance audit which will serve as basis for corporate officers appointment and re-appointment.44 Through the initiative of the Government Corporate counsel and with the support of other departments, Joint Venture Agreement guidelines as well as the proposed Model Corporate Governance for GOCCs were introduced.

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5. Process-Based versus Performance-Based Accountability

Accountability is essentially about the controllability or answerability of public officials (Gregory and Hicks, 1999) and to prevent the misuse of power and other forms of inappropriate behavior (O’Loughlin, 1990). Obligations in accountability include: first, to account for the performance of their duties and, second, to accept sanctions (Mulgan, 2000).

It was pointed out that accountability for results in government cannot work similarly to accountability for process because process is different from results (Leavitt and Morris, 2004; see also Behn, 1998). Thus, we have to distinguish between performance-based and process-based accountability. A process-based accountability emphasizes that proper procedures, mandates, and laws are being applied and complied with rather than whether the intended result is achieved (Romzek, 2000). On the other hand, performance-based accountability requires the specification of output and outcomes in order to measure result and link them to goals that have been set, in accordance with the norms of management practice (Roberts, 2002).

The Code of Conduct and Ethical Standards for Public Officials

and Employees (RA 6713) is an example of process-based accountability. It enjoins positive duties on civil servants to act promptly on letters and requests, process documents and papers expeditiously, act immediately on the public's personal transactions, and make documents accessible to the public. It also enumerates for prohibited acts and transactions and provides disclosure and divestment requirements. Essentially, the law calls for a mere conformance to the positive duties enumerated therein and it does not extend to regulate and supervise performance.

Under the said law, the head of agencies and GOCCs are required

to submit annual performance reports. But the important component of evaluation is absent. What has been required is a mere reporting; the law lacks goal-setting mechanism, descriptions on how to attain it, and the mode of evaluation. This is so since the expressed aim of the required report is solely for transparency but never as a mechanism to deliver result quantified by monetary profit.

So far the Lateral Attrition Law (RA 9335) is a bold initiative that

employs performance-based accountability. Unfortunately, it is

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applied only to the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR). Under this law, security of tenure is linked to performance and failure to meet the revenue collection target by at least 7.5% is a ground for termination from service.45 Its legality was brought before the Supreme Court which decided in favor of its constitutionality in Abakada Guro Pary List v Purisima.46 At first the statute increased the April tax collections of the BIR in 2005 by 18 percent compared to the same period in 2004.47 But in 2006 the controversial P500-million bonus appropriated to BOC employees was exposed. The BOC premised its justification that since it has collected P198.2 billion, P2.2 billion in excess of its target of P196 billion, it deserved to receive the half billion pesos bonus.48 The next year, the BOC missed its target. 49 BIR on its part has consistently fallen short of its targets in 2005, 2006 and 2007. Yet, no BIR official or employee has been dismissed.50

Although the law has shown some shortcomings, it cannot be

used as an argument against the institutionalization of performance evaluation. On the contrary, it serves as lesson for future legislation towards a more effective performance evaluation for public corporations.

6. Review of Literature: Performance Evaluation

a. As a Means of Increasing Accountability

Performance and evaluation plays a central role in helping public officials and analysts assess achievements against key targets and creating results-based accountability mechanisms (Ospina, et al., 2004). Departments and officials are potentially accountable to the public for all aspects of their performance, including not only their final actions and decisions but also the processes by which these actions and decisions were made (Camerron, 2004). Performance evaluation enhances efficiency of the public enterprise sector. It makes them a more transparent and lucid articulation of government policy on the role and management of public enterprises, and accountability.51 From the point of view of holding managers accountable for results, it provides information to those delegating responsibility (Ospina, et al., 2004). The original impetus for implementing it was a desire for accountability and the focus of the system remains on accountability for services provided

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(Cunningham & Harris, 2005). It is non-political, neutral instrument that deliver improved accountability (McGarvey, 2001).

b. Focused on Goals, Planning, Reporting, Outcome, and Result

Performance reporting is widely touted worldwide as a means to achieve increased public accountability by governments with claims that it leads to greater efficiency and effectiveness (Cunningham and Harris, 2005). A well-documented and reported performance information is fundamental to public agency accountability and effective management. It is a primary vehicle by which assurance is provided to legislature and the public that government objectives are being met (Camerron, 2004).

In order to have a much broader appreciation of the role of public enterprises, there is a need to adopt a systems approach by relating measurement of performance to the achievement of objectives (Mascarenhas, 1985), with an emphasis on outcomes as one way to respond to demands for results-oriented accountability (Julnes, 2006). As in New Zealand’s performance framework is made up of three components: outputs, objectives and government outcomes. (Camerron, 2004). Accountability can also involve setting goals, providing and reporting on results and the visible consequences for getting things right or wrong, including rewards or sanctions as appropriate (Hodge & Coghill, 2007).

7. Government Corporate Sector’s Oversights a. Institutional Oversights

The Commission on Audit (COA), Office of the Ombudsman

(OMB), Civil Service Commission (CSC), Congress, and courts exercise oversight authority over public enterprise. The COA can hold public officers and employees accountable for public funds and property. Both the CSC and OMB can impose administrative penalties and the latter is vested with power to investigate and prosecute criminal acts. The courts’ jurisdiction meeting out penal and civil sanctions while Congress can dissolve GOCCs, withhold fund or subpoena its officials in aid of legislation. The President meanwhile exercises continuing power to reorganize, rationalize, streamline, merge, and deactivate GOCCs and also wields the power of appointment.

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These oversight institutions do not have the power to make the

accountable officers of GOCCs’ answerable for their poor performance. Only upon violation of penal laws, anti-graft laws and code of ethical conduct can penal sanctions can be imposed to officers but never due to poor performance. On the administrative aspect, appointments and incumbency of government corporate officers rest conveniently on security of tenure or at the pleasure of the President.

b. Supervision and Attachment Albeit, GCMCC was abolished, inter-department supervision

remained in the government corporate structure wherein the DBM, National Economic Development Authority, BSP, and DOF maintains inter-department supervision on matters of budget, planning and policy, borrowings and finance.

Lateral relations termed as attachment exists between certain

departments and GOCCs for purposes of program and policy coordination (Book IV, Sec. 38, Chap. 7(3a), EO 292) and general supervision (Id., Sec. 42). The structure is made in such a way that adepartment Secretary, Undersecretary or Assistant Secretary shall have one-third membership in the board (Id.). Aside from that, most of the charters of GOCCs provide that the Secretary of the Department to which they are attached become ex oficio chairman of the board.

Attachment is distinct from administrative supervision inasmuch as

in the latter, the department requires its agencies to submit report and conduct management audit and performance evaluation (Id. Sec. 38, Chap. 7(2a)). In attachment, the only requirement to GOCCs is the periodic reporting of audited financial statement (Id., 7(3c)). But administrative supervision will be only applied when a GOCC incurs deficit. In which case, its operation and capital budget will be examined, reviewed, modified and approved by the department. (Id., (3d)).

Neither attachment nor administrative supervision can discharge

its function effectively. They lack the very essence of accountability which calls for neutrality and independent relation in supervising department and the attached GOCC. Supervision by the department is inherently defective. The situation where the department can

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simultaneously sit as ex oficio chairman of the board of a GOCC and hold one-third of the membership of the same board is a classic example of a conflict of interest. The Secretary cannot simply supervise the board of which he is not only holding 1/3 voting interest member but also an ex oficio chairman. This system is a legacy of cronyism and political favors during the Marcos regime and is not surprising since most of GOCCs were created during the time of Marcos through Presidential Decrees. Unfortunately, the defect was not removed; instead, it was reinstated in the Administrative Code.

8. US’ Performance Evaluation Mechanism: A Possible Model

Under the US’ GPRA, a federal agency can be held accountable on its actual performance vis-à-vis the performance goals previously adopted. The US’ GPRA requires agencies to develop five-year strategic plans and identify program performance goals and quantifiable measures for performance-based budgeting (Romzek, 2000). It continued and broadened the federal government’s effort to realign the focus of government accountability and performance analysis away from measuring activities and process and towards results or outcomes.52 It was a redirection of activity from activities and processes to a focus on outcomes or results, and provides more emphasis on addressing citizens’ needs (Julnes 2006).

Federal agencies under GPRA are required. First, to develop a

strategic plan that includes the general goals and objectives of the agency’s major function and description on: a) how the goals will be achieved; b) key external factors that could affect achievement of the goals; c) how evaluations are used; and, schedule of future evaluation. Second, annual performance plans are also required for each activity derived from the strategic plan and specific performance targets for a fiscal year. The targets should generally be expressed in objective, quantifiable, and measurable form. If targets cannot be so expressed, an alternative description form may be used. Third, annual performance reports, which include information on actual performance relative to the targets in the annual performance plan, explain why specific goals have not been met and provide plans and schedules for meeting the goals. 53

Supervising and monitoring the implementation of the GPRA is

the Office of Management and Budget. It receives the strategic plan for program activities and submits a report to the President and to

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the Congress respecting the implementation of GPRA. Further, it determines whether it is feasible to express the performance goals for a particular program activity in an objective, quantifiable, and measurable form.

The defunct GCMCC had adopted a performance evaluation

tool for GOCCs. Under it, performance evaluation is rather left to the discretion of the GOCC being evaluated since the measures and standard of their performance requires the GOCC’s concurrence (Sec. 4, 236). It is observed that it is based on immeasurable and vaguely worded parameters inasmuch as the evaluation of corporate performance shall consider the degrees of attainment of performance targets “in relation to applicable international commitments… and similar matters of global or multi-sectoral economic significance.” (Sec. 4, EO 236). Notwithstanding the defect in the GCMCC, it was described as a success in one study.54 It found that “the hemorrhaging of funds from the national government to GOCCs was put under control… indicating that GOCCs are making a net contribution to the national treasury.” The research further found that:

The financial performance of GOCCs improved as a result of the institutionalization of a performance evaluation incentive system and standardized corporate planning models. Consequently, the leakage of national government financial resources to GOCCs has been contained even as the investment program of the retained GOCCs have been sustained.55

9. Conclusion and Recommendation

“To make profit and generate benefits quantifiable in financial terms,” sums up constitutional mandate for public corporations. Statistics reveals that they failed to fulfill this constitutional injunction. Although they fell short of what the Constitution expects of them, their corporate officers were not made answerable in the form of sanctions. What has been remitted to the public treasury are billions of pesos in losses, deficits and loans instead of profits. Performance evaluation was finally realized in Lateral Attrition Law but its application was limited to the BIR and BOC. It is ironical that while the law penalizes poor performance on revenue collection,

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there is no law sanctioning poor performance in public spending and in contracting liabilities. The creation of GCMCC was then a great leap forward but since it was merely created by an executive order which can be easily changed by presidential policy it did not find permanency in world of public corporate governance. The creation of GCMCC had resulted to financial discipline and enhanced corporate performance in the late 80s and early 90s. The attachment and administrative supervisions of departments cannot be considered because these kind of administrative relations had proven their failure ever since.

Private corporations’ deficits and losses could drive them to bankruptcy, GOCCs never go bankrupt as they rely on borrowings and government subsidies. Unlike line agencies whose budget emanates from the General Appropriation Act, GOCCs have no ceiling in spending. What has been instituted is a culture of corporate mendicancy instead of economic viability. The institutional oversights are impotent to make them answerable on the quality of performance since there is no law that confers them that jurisdiction. In this respect, these oversight bodies reduced to mere spectators in the financial sufferings of our public corporate sector.

The author, therefore, submits these recommendations: There

should be legislation on performance evaluation system where GOCCs will be required to develop and submit: (a) a strategic plan that specifies agency goals and how they will be achieved; (b) an annual performance plan that specifies quantitatively measurable goals and performance to be achieved; and (c) an annual program performance report that compares actual performance and performance goals. It should also: a) institutionalize an incentives and sanctions system; b) establish a system wherein the security of tenure should be linked to their performance; and c) create a central supervising and monitoring agency to implement the objective of the law.

A Department Secretary’s ex oficio chairmanship as well as his/her

one-third membership in the board of a GOCC should be reconsidered in order to maintain corporate flexibility, independence and autonomy. Transparency in appointments for membership in the board, the board chairman and the corporate executive officers should be based on merit and experience and under a transparent

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selection process. Of course, this calls for the amendments of GOCCs’ charters and Administrative Code.

These proposals are not sure antidotes to our ailing corporate

sector as there is no one-fix-all mechanism to solve the problems. What we have here are alternatives intended to reform GOCC that would somehow close the gap in corporate good governance. REFERENCES Acar, M. et al., Partnership Practitioners Accountability When

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END NOTES 1 ____________ (1985), Philippine Public Enterprise in the 80s: Problems and Issues, p. Volume III, No. 4 July-Aug 1985, Development Research News. Philippine Institute for Development Studies devotes. 2 Ryan, C. and Ng, C., Public Sector Corporate Governance Disclosures: An Examination of Annual Reporting Practices in Quensland, Australia Journal of Public Administration, 59 (2): 11-23 (June 200). 3 Lugo, L.M., 2002. State firms lack transparency, Business World, 26 July, internet edition,http://www.afrim.org.ph/Archives/2002/BusinessWorld/July/26/State%20firms%20lack%20transparency.txt (Visited on October 31, 2008) 4 Heinrich, C., Outcomes-Based Performance Management in the Public Sector: Implications for Government Accountability and Effectiveness, Public Administration Review, Vol. 62, No. 6 (November/December 20020) citing statement of Leonor Briones, former head of Bureau of Treasury. 5 Manasan R.G., Public Enterprise Reform: The Case of the Philippines, 1986-1987, Discussion Paper Series No. 95-01, Philippine Institute for Development Studies, May 1995. 6_____________ (2008). Government Owned and Controlled Corporations Reform (GOCC) : Philippines, A Project Summary, A Study Made by Asian Development Bank,http://pid.adb.org:8040/pid/TaView.htm?projNo=39606&seqNo=01&typeCd=2 (Visited on October 31, 2008) 7 Oplas, B. Jr., From Privatization to Tax Cut:Some Theoretical Considerations and the Philippine Experience, a paper presented at the Pacific Rim Conference, Sheraton Waikiki, Honolulu, Hawaii, May 23-24, 2007. Event cosponsored by State Policy Network, Americans for Tax Reforms, International Policy Network, Asian Forum Japan, Lion Rock Institute, and Grassroots Institute Hawaii. 8 Briones, L., The Role of Government-Owned or Controlled Corporations in Development, Philippine Journal of Public Administration, Vol. XXIV, No. 4 (Oct. 1985) citing Leviste, J., The Management of Public Enterprises and the Monitoring of Government Corporations, Philippine Budget Management, Vol., IX, No. 1 (June 1985). 9 Supra., see note 5. 10 Supra., see note 8. 11 Id. 12 Supra., see note 5. 13 Id.. 14 Bernas, S.J., The 1987 Constitution of the Republic of the Philippines: A Commentary 1050 (1986) citing III RECORD 623; IV RECORD 230-233. 15 Id. 16 Sectoral Performance Audit Report on Public Debt (CY 2004), Commission on Audit, http://www.coa.gov.ph/GWSPA/2004/PublicDebt2004-04.htm (visited Nov. 1, 2008). 17 Id. 18 Gonzales, I., Government may cancel sovereign guarantee to GOCCs. The Philippine Star, 10th Feb., B-5.

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19 Press Release, Senate President Manuel Villar, March 20, 2006, http://www.senate.gov.ph/press_release/2006/0320_villar1.asp (visited on Oct. 23, 2008) 20 Supra., see note 7. 21 Supra., see note 5. 22 _____________ (2006), Senate Economic Planning Office and United Nations Development Programme, A Profile of Selected Philippine Government-Owned and –Controlled Corporations, 2006. 23 Id., The fourteen GOCCs are: Home Guaranty Corporation (HGC), Light Rail Transit Authority (LRTA), Local Water Utilities Administration (LWUA), Metropolitan Waterworks and Sewerage System (MWSS), National Development Company (NDC), National Electrification Administration (NEA), National Food Authority (NFA), National Housing Authority (NHA), National Irrigation Administration (NIA), National Power Corporation (NPC), Philippine Amusement and Gaming Corporation (PAGCor), Philippine Charity Sweepstakes Office (PCSO), Philippine Economic Zone Authority (PEZA), Philippine National Oil Company (PNOC), Philippine National Railways (PNR), and Philippine Ports Authority (PPA). 24 COA Report 2002, 2003 and 2004 cited in Senate Economic Planning Office and United Nations Development Programme, A Profile of Selected Philippine Government-Owned and –Controlled Corporations, 2006. 25 ______________ (2008). Senate bill wants sate-owned firms submit annual budget to Congress. Business World, 10th Jan., 12. 26 Supra., see note 22. 27 Supra., see note 7. 28 Gonzales, I., GOCCs get P27.33 billion in subsidies. The Philippine Star, 18th Feb., B-1 and B-2. 29Bernas, J., The 1987 Constitution of the Republic of the Philippines a Commentary 988, 1996 ed.) citing Cornejo vs. Gabriel, 41 Phil. 188, 195 (1920). 30 Adaza v Pacana, Jr., G.R. No. L-68159 March 18, 1985. 31 Sec. 4(g), RA 6713. 32 Supra., see note 7 citing Aberca v Ver, G.R. No. L-69866 April 15, 1988. 33 Corral, L., IFIs & Privatization in the Philippine Power & Water Sectors, Asian Labor Network on IFIs (ALNI)-Philippines, November 2003. 34 As found in EO 936’s “WHEREAS” the presidential issuance was intended for efficient, effective, and economical government and considering the corporate sector claims substantial government subsidies and borrowings there is a need to rationalize “the allocation of the investment resources of the government sector in order to improve upon financial and social investment returns and productivity.” To this end “there is need to develop further the institutional mechanisms for monitoring and coordinating the activities of government-owned and controlled corporations’ for effective monitoring and coordination of the operations of GOCCs. So that the government is better informed about their respective plans, projects, resources requirements and extent of funding support which will be needed from the national government and from external sources. It is an inter-departmental council consisting of the cabinet ministers headed by the Prime Minister as Chairman, and the Minister of Finance, the Director-General of the Office of Budget and Management, the Governor of the Central Bank, the Director-General of the National Economic and Development Authority, and the Chairman of the Commission on Audit as members. (Sec. 1, EO 936). Its core functions are: a) to developing appropriate guidelines on the monitoring of the operations of GOCCs which includes utilization of public fund, borrowings, and their financial and operational conditions; b) to recommend policies and guidelines relevant to government corporate operations; and, c) to determine GOCCs’ priorities, on the basis of the policies and guidelines approved by the President through the Cabinet. 35It reiterates departmental supervision over attached GOCCs such as oversight, management audit, supervise corporate operations while harmonizing the seemingly overlapping responsibilities of GCMCC, departmental supervision and decision-making on the attached GOOCs, the roles of National Economic Development Authority and Department of Budget and Management. The compensation and appointments of the governing board and executive. And reiteration of performance evaluation, reporting, and auditing. 36 Memorandum Order No. 153. 37 Memorandum Order No. 234. 38 Memorandum Order No. 263. 39 Memorandum Order No. 314. 40 Memorandum Order No. 386 41 Various presidential issuances were promulgates namely: Proclamation No. 50; Administrative Order No. 43; Executive Order Nos. 11; Executive Order Nos. 323; and Executive Order Nos. 471. There were laws passed institutionalizing privatization, to wit: RA 7181; RA No. 7661; and RA No. 8758. 42 Executive Order No. 55. Its implementing rules was subsequently issued on August 16, 1993 viz: Memorandum Circular No. 64, Guidelines to Implement Executive Order No. 55 (1993). Its content however is similar to the previous presidential issuances.

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43 With the abolition of GCMCC, the public sector is now back to the pre-reform period: the department’s attachment supervision and inter-departmental supervision. In the attachment-supervision system, the primary responsibility for monitoring and coordinating the activities of GOCCs are entrusted to the head of departments to which they are attached under their capacity as alter ego of the President. (Santos, M.F., Jr., The Imperative of Adopting the Pillars of Good Governance Towards a More Rational and Effective Monitoring and Coordination of Government-Owned or Controlled Corporations, 2007 (unpublished). While Department of Budget and Management (DBM), National Economic Development Authority (NEDA), Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DOF) to look after the different concerns of GOCCs such as budgeting, policy, borrowings and financial matters (Administrative Order No. 24) in inter-departmental supervision. (Manasan R.G., Public Enterprise Reform: The Case of the Philippines, 1986-1987, Discussion Paper.) Apart from this supervision are oversights created by the Constitution such as: Commission on Audit (COA), the Office of the Ombudsman (OMB), the Congress through statutory oversights, budget hearings and hearings in aid of legislation, Civil Service Commission (CSC). The President under the Administrative Code, on the other hand, has a continuing power to reorganize public corporations and also vested with the power of appointment. 44____________ (2002). GMA calls on all directors of GOCCs, GFIs, to undergo orientation, courses on good governance, http://www.gov.ph/news/default.asp?i=1417 (Visited on October 31, 2008). 45 Abakada Guro Pary List v Purisima, G.R. No. 166715, Aug. 14, 2008. 46 G.R. No. 166715, Aug. 14, 2008 47 http://www.gov.ph/news/default.asp?i=9421 (Visited, Nov. 4, 2008) 48http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20080702-145947/Senate-to-review-Customs-attrition-law (Visited, Nov. 4, 2008) 49 http://opinion.inquirer.net/inquireropinion/editorial/view/20080822-156096/Attrition (Visited, Nov. 9, 2008) 50 Id. 51 Supra., see note 5. 52 Supra., see note 4. 53 Id. 54 Supra., see note 5. 55 Id.