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: ADMINISTRATIVE ORDERS
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ADMINISTRATIVE ORDER NO. 10
ADMINISTRATIVE ORDER NO. 10 -
STRENGTHENING AND ENHANCING THE PROCEDURES FOR SETTING THE ANNUAL NET
LENDING PROGRAM FOR GOVERNMENT OWNED AND/OR CONTROLLED CORPORATIONS
(GOCCs), AND GUIDELINES FOR THE CONVERSION OF NATIONAL GOVERNMENT
ADVANCES, INCLUDING INTEREST ON NATIONAL GOVERNMENT ADVANCES INTO
EQUITY AND/OR SUBSIDY TO GOCCs
WHEREAS, several Government Owned and/or
Controlled Corporations (GOCCs) have continuously relied on the
National Government (NG) for advances on the servicing of their relent
and/or guaranteed domestic and foreign borrowings resulting in the
distortion of the macroeconomic targets of the NG;
WHEREAS, there is a need to rationalize and improve the procedures
which govern the extension of advances by the NG for the abovementioned
obligations, and the conversion of NG advances, interest on net
advances, into equity and/or subsidy to GOCCS;
NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the
Philippines, by virtue of the powers vested in me by law, do hereby
order:
ARTICLE
I
Policy
Section 1. Policy Orientation. — Consistent with the
existing policy on the extension of advances by the NG for the
servicing of guaranteed and re-lent domestic and foreign borrowings of
GOCCs and the conversion of NG advances including interest on net
advances into equity and/or subsidy to GOCCs, this Administrative Order
shall enhance the existing principles and procedures in the a)
programming and application of NG advances for debt servicing of GOCCs'
borrowings; and b) conversion of NG advances and interest on NG
advances into equity and/or subsidy.
ARTICLE
II
Procedures for
Obtaining/Granting NG Advances
Sec. 2. Requests for Programming of Assistance and
Actual Drawdowns from the Programmed Advances.
(a) All requests for programming of net lending
assistance should be submitted to the Department of Finance (DOF) on or
before February 15 for the programming of required advances for the
succeeding year; and
(b) All applications for actual drawdowns from the
net lending program should be submitted to the DOF ninety (90) days
prior to the scheduled actual drawdown.
Sec. 3. Principles and Procedures in the Review of
Proposals and Recommendations on Requests from GOCCs for NG Advances.
(a) All requests for NG advances shall be reviewed
and evaluated by the DOF. Specifically, the DOF shall review and
evaluate the projected receipts and expenditures of the requesting GOCC
taking into consideration the reasonableness of its existing tariff
structure/policy, credit and collection policy and procedures,
operating and capital expenditure levels and asset management and
disposal;
(b) Advances shall be programmed only when the cash
flow of the requesting GOCC which already takes into account NG subsidy
and equity support, clearly indicates insufficiency of funds for the
settlement of maturing obligations. After evaluation by the DOF,
advances for net lending to GOCCs shall only then be allowed if
included in the approved annual net lending program. Net lending to
GOCCs outside the program shall be allowed only under exceptionally
meritorious circumstances resulting from unforeseen events which hinder
GOCCs from paying its maturing obligations or resulting from, but not
limited to circumstances outlined under Article III, Sec. 4;
(c) An Inter-Agency Committee chaired by the
Department of Finance with members from the Department of Budget and
Management (DBM) and Bureau of the Treasury (BTr) shall determine the
appropriate amount to be programmed for net lending and submit its
final recommendations to the Development Budget and Coordinating
Committee (DBCC). The decision of the DBCC shall be considered in the
fiscal programming and monitoring of the Consolidated Public Sector
Financial Position; and
(d) DOF shall endorse to the BTr meritorious requests
of GOCCs for actual drawdowns from the net lending program.
(e) Penalty charge, in addition to the interest on NG
advances, shall be imposed on advances made by the NG as
guarantor/direct borrower of the GOCC obligations without favorable
endorsement from the DOF.
(f) The BTr shall submit to the DOF a monthly summary
of advances to and collections from GOCCs.
ARTICLE
III
Proposals and Recommendations on
the Conversion of NG Advances and Interest on NG Advances
Sec. 4. Principles and procedures in the
Conversion of NG Advances into Equity and/or Subsidy to GOCCs.
All proposals for conversion shall be addressed to the Secretary of
Finance through the Corporate Affairs Group (CAG) for evaluation and
processing, copy furnished the Treasurer of the Philippines. The DOF
shall make an evaluation on the merits of the proposal for conversion.
In order to be considered meritorious, the proposal should clearly show
that:
(a)
the GOCC is experiencing cash flow difficulties as a result of, but not
limited to: i) high interest payments and foreign exchange losses; ii)
heavy reliance on loans; and iii) tariff/pricing structure that is not
cost recoverable;
(b) there is
no workable option for improving its cash position; and
(c) loans
advanced by NG being requested for conversion were used for
undertakings/projects which are not purely recoverable or which by its
nature require NG support.
Likewise, the evaluation of the DOF shall consider the proposal's
effect on corporate operations, financial position, international
commitments and other applicable covenants which shall be coordinated
with the Government Corporate Monitoring and Coordinating Committee
(GCMCC) in so far as it relates to performance commitments to the
GCMCC. On the other hand the BTr shall make an evaluation as to the
implications of the proposal on the NG's cash position and submit the
same to the Secretary of Finance.
Before full conversion is recommended and endorsed to DBM, the
requesting GOCC shall agree to and accomplish performance standards and
targets prescribed and to be monitored by the DOF.
The recommendations of the Secretary of Finance on the approved
conversion shall be endorsed to the DBM in writing and proposed for
inclusion in the appropriation for the succeeding year. The Secretary
of Finance shall likewise inform the GOCC concerned if the proposal for
conversion was disapproved.
Sec. 5. The DBM shall, upon receipt of
recommendation from the Secretary of Finance, include the DOF-approved
conversion for consideration of an appropriations cover during the
budget year.
Sec. 6. The BTr shall cease from charging interest
on NG advances on the recommended accounts for conversion based on the
cut-off date recommended by the Secretary of Finance.
Sec. 7. Implementing Guidelines. — The DOF is
hereby empowered to issue the necessary implementing rules and
regulations three months after the issuance of this Administrative
Order.
Sec. 8. All executive issuances, orders, rules and
regulations, and/or similar issuances inconsistent with this
Administrative Order are hereby revoked, amended or modified
accordingly.
ARTICLE
IV
Effectivity
Sec. 9. This Administrative Order shall take
effect immediately upon approval.
DONE in the City of Manila,
this 14th day of August, in the year of Our Lord, Nineteen Hundred and
Ninety Eight.
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