Declaration of Policy
- The State mandates GOCCs to share a substantial amount of their Net Earnings with the National Government to generate additional revenues.
- This sharing should not impair GOCCs' viability or the purposes for which they were established.
- The Rules aim to promote fiscal discipline among GOCCs and improve National Government cash management.
Definitions
- "Act": Republic Act No. 7656.
- "Acquired Asset Corporation": Corporations under private ownership acquired by the Government due to debt or judicial processes, or subsidiaries managing such assets to be disposed of to private ownership.
- Key government agencies are abbreviated: BIR, BSP, BTr, COA, DBM, DOF, DOJ, GCG.
- "Dividends": Distribution of profits to stockholders in cash, shares, or property; all declared dividends to the National Treasury are non-refundable.
- "Dividend Year": The calendar year during which Net Earnings were realized.
- "Financial Institutions Owned or Controlled by the National Government": Institutions with majority government ownership, supervised by BSP or handling public funds.
- "GOCCs": Corporations with government ownership of at least 51% capital stock, engaged in public needs, excluding acquired asset corporations and state universities.
- "Net Earnings": Income net of allowed deductions and taxes, excluding reserves and certain subsidies; includes tax-exempt income.
- "Parent GOCC": A GOCC receiving dividends from another GOCC.
- "Property": Land, buildings, securities, or assets approved by the Secretary of Finance.
- "Reserves": Portions of retained earnings appropriated for specific uses.
Coverage
- Applies to all GOCCs defined above, including those with charter or special law provisions on profit distribution.
- Excludes GOCCs managing properties in trust for members (e.g., GSIS, SSS, HDMF).
- Net Earnings from operations funded by non-fiduciary monies of excluded GOCCs are subject to the rules.
Dividend Declaration and Remittance
- GOCCs must annually declare and remit at least 50% of their Net Earnings as dividends to the National Government by May 15 each year.
- The DOF may require remittance above 50% if the GOCC has excess cash without impairing viability or purpose.
- Dividends are generally remitted in cash; other forms (stock or property) require DOF approval.
- Stock dividends can be declared if authorized capitalization is not fully paid.
- Property dividends must be assets not used in operations, free of liens, and valued at fair market value as approved by COA.
- Procedures for delivering stock and property dividends are strictly defined, including transfers, costs, and approvals.
- Parent GOCCs handling dividends from subsidiaries must remit directly to the National Government, excluding such dividends from their own Net Earnings.
- Government-owned banks follow applicable banking laws for dividend remittance.
Schedule of Remittance
- Dividends must be remitted to the Bureau of the Treasury in the name of the Treasurer of the Philippines by May 15.
- GOCCs must submit supporting documents to DOF including dividend computations, tax returns, financial statements, and subsidy schedules.
- The DOF-Corporate Affairs Group reviews computations; amendments to tax returns affecting Net Earnings require reevaluation and possible additional payments.
- GOCCs facing cash flow difficulties may request an alternative payment schedule with requisite documents.
Adjustment of Dividend Rates
- The President may adjust the dividend rate below 50% upon recommendation of the Secretary of Finance considering national economy and GOCC viability.
- Downward adjustments may be allowed if:
- The GOCC has a deficit.
- Payment impairs viability or statutory purposes.
- It breaches regulatory capital requirements.
- Dividends exceed unrestricted retained earnings under applicable laws.
- Requests for adjustments must be submitted by May 15 with required documentation.
Accounting and Recording of Dividends
- Cash dividends recorded as income to the General Fund.
- Property dividends recorded as assets upon receipt, and as income upon sale.
- Stock dividends from listed GOCCs recorded as assets at receipt and income upon sale; from non-listed GOCCs, recorded as income and additional paid-up equity.
- Stock dividends from subsidiary corporations recorded as income.
Responsibility and Penalties
- GOCC governing board approves dividend declarations.
- Chief executive and finance officers handle dividend remittances.
- Failure to declare/remit properly results in:
- Possible deferral or disapproval of performance incentives for officials.
- Penalties assessed by BTr equivalent to 364-day Treasury bill rate plus 5%.
- Immediate cash remittance required if stock or property dividends are not delivered as due, with additional sanctions for noncompliance.
Criminal Liabilities
- Officials violating these rules may be fined between P10,000 and P50,000, or imprisoned from one to three years, or both.
- Penalties are without prejudice to other sanctions provided by law.
Resolution of Issues
- Matters not covered by these Rules are referred to the DOF for resolution.
Amendments
- Previous Implementing Rules and Regulations from 1994 and 1998 are amended, revised, or repealed accordingly.
Separability Clause
- If any part of these Rules is declared unconstitutional or invalid, the rest remains effective.
Effectivity
- These Rules are effective immediately upon publication.
Documentary Requirements for Requests
- GOCCs must submit detailed letters, board resolutions, financials, dividend computations, budgets, DOJ opinions (if applicable), and other required information when requesting:
- Downward adjustment of dividends.
- Alternative payment schedules.
- Permission to remit dividends in stock or property.
- Additional requirements apply for property dividends including confirmation of asset status, COA valuation, transfer documents, and agreements with the Republic of the Philippines.
This comprehensive framework governs the declaration and remittance of dividends by GOCCs to the National Government, ensures fiscal discipline, and protects public revenues through well-defined procedures, responsibilities, and penalties.