Philippine Postal Corporation Act

Policy, objectives, and governing privacy

Section 3 declares the delivery of letters, parcels and other mail matters as a basic and strategic public utility the State shall provide, directly or indirectly, with other duly authorized entities or persons.
Section 3 requires collection, sorting, storage, transporting, and delivery to be done with utmost dispatch in the most economical, reliable and secure manner that available technology will permit.
Section 3 requires a nationwide postal system to pursue:
- economical and speedy transfer of mail with full recognition of privacy or confidentiality;
- promotion of international interchange, cooperation, and understanding through unhampered postal exchange;
- wide-ranging postal services catering to different users and needs, including philately, transfer of monies and valuables, and similar services; and
- generation of sufficient revenues to finance overall cost of providing postal delivery and messengerial services and the expansion and continuous upgrading of service standards.

What the Corporation must do

Section 5 requires the Corporation to provide for collection, handling, transportation, delivery, forwarding, returning, and holding of mails, parcels, and like materials throughout the Philippines.
Section 5 requires the Corporation, pursuant to agreements with foreign countries, to handle mail-related services for international operations.
Section 5 authorizes the Corporation to determine and dispose of confiscated or non-available mail matters, prohibited articles, dead letters, and undelivered mails in a manner it deems most advantageous with law and settled jurisprudence, except it may not sell prohibited drugs, dangerous materials, and other banned articles as defined by law.
Section 5 requires planning, developing, promoting, and operating a nationwide postal system with a network that extends or makes available at least ordinary mail service to any settlements in the country.

Corporate powers and operational authority

Section 6 authorizes the Corporation to charge fees for postal services, receive them, and prescribe the manner they are paid and collected, subject to the Act.
Section 6 authorizes the establishment and maintenance of post offices, postal stations, collection points, and related facilities and equipment so postal users throughout the Philippines have ready access to essential services consistent with reasonable operating economies.
Section 6 authorizes the issuance and sale of postage stamps and other stamped paper, cards, and envelopes as the Corporation deems necessary or desirable.
Section 6 authorizes the Corporation to issue money orders or checks for transmittal through the mails and authorize issuance of a replacement in cases of lost, stolen, stale, or destroyed money orders or checks.
Section 6 authorizes postal services beyond ordinary mail and parcels, but mandates they shall be not compulsory, not discriminatory, and not unfairly competing with similar private enterprises (including money order, parcel, postal savings bank, philatelic, and other internationally accepted postal business services).
Section 6 authorizes the Corporation to adopt and promulgate rules and regulations to improve the postal system or implement the Act.

Corporate powers under the Corporation Code

Section 7 provides that the Corporation has all corporate powers defined under the Corporation Code, including authority to:
- sue and be sued in its official name;
- enter into and perform contracts and execute instruments, and determine expenditures’ character and necessity;
- determine and keep its own system of accounts using generally accepted accounting principles and set forms and contents of contracts and business documents;
- acquire, hold, maintain, sell, lease, or dispose of lawful personal or real property or interests;
- construct, operate, lease, and maintain buildings and improvements on property it owns, controls, or leases;
- accept gifts, donations, bequests, services, or properties;
- settle claims by and against it on the most advantageous terms;
- adopt and use a corporate seal; and
- exercise incidental, necessary, or appropriate powers to its postal business.

Board of Directors governance rules

Section 8 vests the Corporation’s powers in and requires their exercise by a Board of Directors composed of seven (7) members elected by shareholders of record at the annual business meeting.
Section 8 requires that initially and to organize the Corporation, the President appoints all members, with the Postmaster General as one member representing government shareholdings.
Section 8 provides that when private shareholdings become sufficient to elect at least one (1) Director, directors are appointed or elected under the Corporation Law, with the Secretary of Transportation and Communications exercising the right to vote government shares.
Section 8 requires the Board to elect a chairman from among its members.
Section 8 sets five-year terms for Board members appointed by the President, and specifies first staggered terms: two (2) with five (5) years, two (2) with three (3) years, and two (2) with one (1) year.
Section 8 requires regular Board meetings once a month, and special meetings upon call of the Chairman or any three (3) members; it requires a majority as quorum and validates corporate acts by a majority vote of members present at a quorum meeting.
Section 8 limits Board per diem for members (except the Postmaster General or his alternate) to not exceeding the lowest monthly pay of a regular postal employee, and prohibits total per diem in any one (1) month from exceeding four times (4x) the per diem per meeting; it requires reimbursement for actual expenses including traveling and subsistence.
Section 8 prohibits any Board member from having a financial or pecuniary interest, directly or indirectly, in any business contract or transaction entered into by the Corporation or any privilege granted by it, and also prohibits any interest in any undertaking with an inherent conflict of interest.

Capital structure and subscriptions

Section 9 establishes authorized capital stock of Ten billion pesos (P10,000,000,000.00) divided into forty-five (45) million Class “A” shares and fifty-five (55) million Class “B” shares, each with voting rights and par value of One hundred pesos (P100.00).
Section 9 mandates that Class “A” shares are fully subscribed by the Government or any of its instrumentalities and may only be owned by, sold to, bought or held by a government entity.
Section 9 provides that Class “B” shares may be owned by private entities and sold through tenders, public offerings, or the stock market, at time, price, or numbers authorized by the Board under the Corporation Law.
Section 9 requires Government subscription payments through:
- unexpended balances of appropriations in the current General Appropriations Act, Executive Order No. 182, and other acts in force upon approval hereof relating to, held or used by, or available to the former Bureau of Posts and its successor Postal Services Office of the Department of Transportation and Communications;
- values of existing assets of the Bureau of Posts and its successor Postal Services Office and postal facilities owned by it, to be determined by an independent appraiser within one (1) year of effectivity;
- surplus income accrued to the Corporation upon organization and assumption of Postal Services Office assets and liabilities; and
- such amount appropriated from time to time from the National Treasury funds not otherwise appropriated, including any outlay from the Infrastructure Program.

Funds, investments, budgets, and obligations

Section 10 provides that operating expenses may be drawn against: revenues from postal and allied services (including remittances from foreign postal administrations), proceeds of grants/donations/disposal of assets/sale of non-mailable or confiscated mail matters, loans and other forms of indebtedness, interest from investments or idle cash, and drawings upon capital or surplus.
Section 11 authorizes investment of funds not immediately required for expenses or functions in secured notes, government securities, and other negotiable instruments that satisfy guidelines prescribed by the Board.
Section 11 requires depositing all Corporation funds in commercial and universal banks accredited by the National Treasurer as depository of government funds, and requires Board designation of official signatories for deposit/withdrawal.
Section 12 authorizes the Corporation to secure loans/credits and issue bonds, notes, debentures, securities, and other instruments of indebtedness necessary to carry out the Act, subject to limits:
- outstanding foreign and domestic liabilities at any time shall not exceed fifty percent (50%) of its net worth;
- foreign indebtedness requires concurrence of the Department of Finance or terms and conditions established by the Central Bank;
- annual amortizations of principal and interest shall not be more than twenty percent (20%) of prior year’s gross revenues;
- if obligations from private capital are secured, they must be secured by suitable assets or backed by priority claims against Corporation property;
- obligations are the sole liability of the Corporation unless the Republic of the Philippines guarantees through the Secretary of Finance; and
- issuance of bonds or long term notes requires prior approval of or issuance according to rules of the National Treasurer.
Section 13 requires annual preparation and adoption of income, expenditures, and capital budget for the ensuing year; it provides that unless the Corporation requires subsidy and/or a guarantee from the National Treasury, its budget need not be submitted to Congress for approval for inclusion in the General Appropriations Act.
Section 13 authorizes supplementary estimates prepared and adopted at Board meetings called for that purpose.

Tax, customs, accounts, and auditing

Section 14 exempts importation of equipment, machineries, spare parts, accessories, and other materials including supplies and services used directly in Postal System operations that are not obtainable locally on favorable terms from all direct and indirect taxes, customs duties, fees, imports, tariff duties, compensating taxes, wharfage fees and other charges and restrictions, notwithstanding contrary existing laws.
Section 14 provides tax exemption for obligations entered into by the Corporation and income derived therefrom, including with private international banking and financial institutions, from all taxes on both principal and interest.
Section 14 exempts the Corporation from payment of capital gains tax, local government imposts and fees after December 31, 1997, with authority to offset the full value of capital investments not otherwise funded by the National Government against any income tax due for the same period.
Section 15 requires accounts and records under a commercial system of accounting on a calendar year basis, and requires Board publication of the annual statement of income and expenditures including the balance sheet.
Section 15 requires the audited annual statement to present a true and fair value of financial position and results of operations.
Section 15 requires recording postal statistics on official business mails and equivalent revenues foregone had corresponding postage been collected, including “franked mail” transmitted without payment under autographic or facsimile signature of officials to whom privilege is extended by law, with rules to prevent unauthorized use.
Section 16 requires the Commission on Audit to appoint and assign personnel to audit Corporation accounts, while allowing the Board to engage any duly authorized person or firm to audit for international contractual commitments or Class “B” shareholders’ requirements; it gives the Board authority to set remuneration/compensation/reimbursement for internal and external auditors.
Section 17 requires the auditor to submit an annual report to the Board as soon as practicable but not later than three (3) months after submission for audit, and authorizes periodical or special reports as necessary or as requested by the Board.
Section 18 requires the Board to submit annual reports to appropriate regulatory agencies identified in Article V, and to both Houses of Congress, together with the Auditor’s Report, covering activities and operations of the preceding year and other information assessing corporate performance, including statistics on mails and parcels and productivity indicators relating output with resources used.

Officers, staffing, merit, and labor controls

Section 19 allows the Board to delegate authority to the Postmaster General except powers specifically vested in the Board, and allows Board establishment of committees; it requires that delegation not relieve the Board of full responsibility and be revocable by the Board in its exclusive judgment.
Section 20 requires management by a Postmaster General, assisted by as many Assistant Postmasters General as the Board deems necessary for postal efficiency.
Section 20 requires the Postmaster General and Assistant Postmasters General to be natural-born citizens of the Philippines, at least thirty five (35) years old, holders of a college degree, of good moral character, and with proven executive ability and competence.
Section 20 provides appointment rules: initially and until issued Class “A” shares do not fall below sixty percent (60%) of total voting stocks, the Postmaster General is appointed by the President; thereafter appointment follows the Corporation Law.
Section 20 requires that at least a majority of Assistant Postmasters General be career postal officials appointed and removable for cause by the Board upon recommendation of the Postmaster General.
Section 20 caps yearly total monetary compensation: for the Postmaster General, not exceeding twenty times (20x) the lowest annual salary of a regular employee; for each Assistant Postmaster General, not exceeding eighteen times (18x) the lowest annual salary of a regular postal employee.
Section 21 gives the Postmaster General Chief Executive Officer powers to: represent the Corporation in all dealings with government offices and instrumentalities and with all persons and entities, sign authorized contracts and debt instruments approved by the Board, subject to Board approval determine staffing pattern and number of personnel and fix salaries/emoluments per approved compensation structure, appoint/promote/assign/reassign/transfer/remove personnel below Assistant Postmaster General rank with removal appeal to the Board, delegate powers subject to Board approval, and perform Board-directed duties.
Section 22 requires a human resources management system governing selection, hiring, appointment, transfer, promotion, or dismissal aiming at professionalism and excellence, with a progressive compensation structure based on job evaluation studies and wage surveys subject to Board approval.
Section 22 authorizes across-the-board salary increases or modifications resulting in higher salaries only upon either condition: evidences of prior improvement in productivity measured by quantitative indicators such as mail volume per employee and delivery times, or enactment of a law raising the minimum wage with application to all government employees or effecting classification of some postal positions below the floor wage.
Section 23 subjects permanent officers and employees below Assistant Postmaster General rank to the Civil Service Law while the Corporation is majority-owned by the Government; it provides exemption for hiring temporary workers or casuals to meet peak or seasonal volume.
Section 24 prohibits officers and employees from conducting strikes, work slowdowns or stoppages, and other acts disrupting timely mail delivery, while expressly allowing union or employee association formation under Civil Service rules for securing employment terms and conditions changes.
Section 25 exempts all personnel and positions from coverage of the Compensation and Position Classification Office rules and regulations as governed by Section 22, while requiring the system conform as closely as possible with Republic Act No. 6758.

Regulatory authority and postal offenses

Section 26 vests exclusive power and authority to regulate the postal delivery services industry and those engaged in domestic postal commerce under Presidential Decree No. 240 in the Department of Transportation and Communications (DOTC), with delegation possible by the DOTC Secretary to the National Telecommunications Commission.
Section 26 requires the regulatory authority to investigate and prosecute postal offenses of postal service establishments, whether civil or criminal, and institute necessary actions or proceedings.
Section 26 preserves the Corporation’s authority to investigate, prosecute, or penalize offenses committed by its employees.
Section 27 requires the regulatory authority to register and prequalify persons (natural or juridical), other than freight forwarders, engaged in letter and parcel messengerial services, door-to-door delivery, or transporting property of others similar to mail or parcel.
Section 27 requires, upon petition and public hearing, approval of the rate to be charged by the Corporation for ordinary mail.
Section 28 empowers the regulatory authority, if it judges postal laws are violated, being violated, or about to be violated, to: conduct searches of vehicles/vessels/aircraft for stolen mail matter or mail transported in violation when there is reasonable ground; issue search warrants authorizing searches of places not used as dwelling for stolen mail matter; with law enforcers make arrest and seizure for violation of postal laws; and offer and pay rewards for information and services connected with postal law violations.

Transit and operational succession rules

Section 29 abolishes the Postal Services Office under the Department of Transportation and Communications and transfers its powers, duties, rights, and choses of action to the Corporation.
Section 29 transfers real and personal properties vested in or owned by the Postal Services Office upon effectivity of the Act to the Corporation without need of conveyance, transfer, or assignment.
Section 29 transfers funds, revenues, and properties of the defunct Postal Savings Bank, administered by the Philippine National Bank, to the Corporation notwithstanding Presidential Decree No. 241; it directs the Philippine National Bank to turn over all funds, revenues, and properties after deducting liabilities connected with such assets.
Section 29 transfers all contracts, records, and documents relating to Postal Services Office operations and postal field offices to the Corporation.
Section 29 requires the incumbent Assistant Secretary for Postal Services to continue holding office and assume Postmaster General powers/functions under Section 21 until successor is appointed and inducted.
Section 29 requires absorption of Postal Services Office officials and employees into the Corporation on the basis of merit and fitness.
Section 29 grants gratuity to officers and employees laid off during the first two (2) years of effectivity due to organization of the Corporation at the rate of one and one-fourth (1 1/4) months’ salary for every year of continued and satisfactory service or the nearest fraction, plus retirement benefits or pensions under existing retirement law; it makes such retirement gratuities for those not retained be for account of and reimbursed by the National Government.
Section 29 requires refund of the unearned portion of gratuity before reinstatement or rehiring in any government office or instrumentality if later reinstated in the Corporation or rehired.
Section 30 appropriates for extraordinary expenses of the Corporation upon organization any unavailed portion of the excess of actual operating income over estimated expenses of the Postal Service Office, considered part of paid-up capital under Section 9(c).
Section 30 appropriates Three hundred million pesos (P300,000,000.00) inclusive of the above-described amount for funding the gratuity in Section 29 out of any available and not otherwise appropriated National Treasury funds.
Section 31 continues in effect orders, determinations, rules, regulations, permits, certificates, licenses, and privileges issued or allowed effective by the former Postal Services Office or predecessors until modified, terminated, superseded, set aside, or repealed.
Section 31 provides that suits/actions/proceedings commenced by or against an officer in official capacity as officer of a division or agency of the former Postal Services Office whose functions are transferred do not abate by reason of the Act; it provides that causes of action may be asserted by or against the Corporation through the appropriate officer.

Relationships, limited liability, and institutional operations

Section 32 requires that if the Corporation reactivates or reopens the Postal Savings Bank after ascertaining financial viability and in response to public clamor, it must operate services without unduly competing with rural, commercial, or universal banks to the extent practicable.
Section 32 requires the Corporation to utilize banks’ facilities whenever convenient and economical under agreed terms and conditions.
Section 32 requires the Corporation to establish a working arrangement with the Bureau of Customs to facilitate inspection, release, or delivery of foreign parcels and mail matters liable for customs taxes and import charges, including organizing a special unit or designating specific postal branches for handling such mail matters.
Section 32 allows the Bureau of Customs to appoint the Corporation or delegate customs and collection powers to it, subject to mutually agreed terms and conditions, including reimbursement of costs to the Corporation or payment for services based on a percentage of tax collected.
Section 32 allows any Local Government Unit to contract with the Corporation for use of former’s building/facilities/land gratis or for consideration, or for management and operation by the LGU of a post office or postal branch in its territory.
Section 33 limits the Corporation’s liability for contractual obligations to delivery mail matters to the amounts or values provided for by the Universal Postal Union and by international or bilateral agreements to which the Philippines is a signatory, unless otherwise declared and mutually agreed upon at posting.

Repeal, separability, and franking privilege rules

Section 34 provides separability: if any section or provision is declared unconstitutional or invalid, the unaffected sections and provisions continue in full force and effect.
Section 35 repeals or modifies all acts, decrees, orders, executive orders, instructions, rules and regulations or parts inconsistent with the Act.
Section 35 repeals all franking privileges authorized by law except those under Commonwealth Act No. 265 and Republic Acts Numbered 69, 180, 1414, 2087 and 5059.
Section 35 allows the Corporation to continue franking privileges under Circular No. 35 dated October 24, 1977 and that of the Vice President, subject to arrangements and conditions to avoid abuse or unauthorized use.

Full effectivity and enactment dates

Republic Act No. 7354 was approved on April 3, 1992.
Section 36 provides effectivity after thirty (30) days from approval and publication in the Official Gazette.
The Act was finally passed on February 6, 1992.