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2018 Corporate Governance Seal

Transparency Seal
Corporate Governance
Freedom Of Information
ISO

2018 Corporate Governance Seal 

| 2017 | 2019 |

I. Stakeholder Relationships

     1. Does GOCC disclose a policy that:

Question
Link Source
a. Stipulates the existence and scope of its effort to address customer’s welfare?See PNOC EC Manual for Corporate GovernanceSection 8.3 (f), CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS (CUSTOMERS), page 31.
b. Elaborates its efforts to interact with the communities in which they operate?See PNOC EC Manual for Corporate GovernanceSection 8.3 (e), CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS (COMMUNITIES), pages 30-31.
c. Ensure that its value chain is environmentally friendly or is consistent with promoting sustainable development?See PNOC EC Manual for Corporate Governance, Sections 8.4, HEALTH AND SAFETY and 8.5, ENVIRONMENT, page 33.

 

     2. Does the GOCC disclose the activities that it has undertaken to implement the abovementioned policies?

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a. Customer health and safety

The Company integrates in its policies and procedures all applicable health, safety, security, and environmental (HSSE) rules and regulation to protect its employees, the environment, and the general public. For 2018, PNOC EC recognizes the value of competent people leading the job on the ground. The Company ensures that front-line employees and contractors have relevant safety skills and trainings, Basic Occupational Safety and Health (BOSH) and Basic Incident Command System (BICS) training programs were conducted in June and October 2018, respectively. The Company also intensifies employee engagement to communicate best practices and increase employee awareness on timely HSSE issues. These initiatives helped the Company achieve its 2018 goal of maintaining an injury-free performance for the Head Office and field operations. The Company conducted the required safety audits in the Head Office and field offices to check and review operational compliance. The Company took preventive actions to minimize the occurrence of incidents and employed regular safety audits on operational safety and environmental compliance. The decommissioning of COC 41 Mine 1 was safely and successfully completed without any recordable incidents. Consequently, the Safety and Health Association of the Philippine Energy Sector (SHAPES) recognized PNOC EC for the injury-free completion of the COC 41 Mine 1 decommissioning, surface and underground mine equipment rehabilitation, and base camp renovation

See 2018 PNOC EC Annual Report, HSSE, page 18 and 19.

b. Interaction with the communitiesPNOC EC conducts regular interaction with communities within its areas of operation. See 2018 PNOC EC Annual Report, Corporate Social Responsibility Section, pages 16 to 17.
c. Environmentally-friendly value chain

In its exploration sites, PNOC EC is steadfast in its commitment towards preservation of ecological balance through the following: 

(1) Use of environment-friendly and internationally-accepted drilling fluids, equipment, and technology in drilling operations;
(2) Safe conduct of seismic survey, suspending activities during migration of marine mammals (e.g., whales and dolphins) and other endangered marine species, and by hiring marine mammal observers on board seismic vessels during operation to ensure the safety of these animals;
(3) Conduct of Information, Education, and Communication (IEC) campaigns as well as Free, Prior and Informed Consent (FPIC) activities, as mandated by law, in the affected host communities prior to exploration work;
(4) Strict adherence to the terms and conditions of the Environmental Compliance Certificate (ECC) and other permits and clearances; and
(5) Keeping up with good oil and coal industry practices.

The Company adheres to all environmental commitments by strictly complying with the ECC conditions of the Malangas Coal Operations through the conduct of periodic environmental audits, Multi-Partite Monitoring Team (MMT) meetings, compliance with the Environmental Management and Monitoring Plan (EMMP), and other improvements that include updates on best practices. The EMMP, which includes the continuous monitoring of waste water discharges, ambient air, and noise, is in place to reduce the impacts of the project to the environment. Waste segregation and proper handling of hazardous wastes are also being practiced in the sites. In addition, PNOC EC promotes good environmental practices to the Small-Scale Coal Mine (SSCM) permittees through the formulation of the environmental management guidelines specific for SSCM operations. The Company conducted regular environmental and safety inspections at each of SSCM permittees’ sites. For SC 37 Cagayan project, PNOC EC safely conducted land gravity and magnetic surveys during post-harvest season to avoid damage to crops and minimize its effect on the local livelihood. In cases where the original gravity stations were situated in highly vegetated areas, the survey stations were relocated. The Company also employed local personnel on the conduct of the geophysical activity. For 2018, Malangas Coal Operations started the reconstitution process for MMT in compliance with the recently approved DENR Administrative Order (DAO) 2017-15 or the “Guidelines on Public Participation under the Philippine Environmental Impact Statement System” and DAO 2018-18 or “Establishing a Centralized Management and Coordinative Mechanism at the Regional Offices of DENR, MGB and EMB, and designating the DENR Regional Director as the Regional Executive Director Providing Overall Command of Regional Operations”. The said administrative orders, which exclude the project proponent and EMB, aim to ensure improvement of the check-and-balance mechanisms of MMT.

     3. Does the GOCC have a separate Corporate Social Responsibility (CSR) report/section or sustainability report/section?

Link Source

There is a CSR Section in the 2018 PNOC EC Annual Report on pages 16 to 17.

See PNOC EC Manual for Corporate Governance under Section 8, CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS, pages 26 to 33. Refer to PNOC EC Website under GCG Requirements.


     4. Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain effective redress for violation of their rights.

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Does the GOCC provide contact details via the Company’s website or Annual Report which stakeholders (e.g. customers, suppliers, general public, etc.) can use to voice their concerns and/or complaints for possible violation of their rights?A form is provided in the Contact Us Section of the website for concerns and issues of the stakeholders or they may contact MS. MYRANNOR B. HANDIG-MIRABEL, Social Performance Specialist, at mbhandig@pnoc-ec.com.ph, or at 8479-9400 local 444. 

     5. Performance-enhancing mechanisms for employee participation should be permitted to develop.

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a. Does the GOCC explicitly mention the health, safety and welfare policy for its  employees?See  2007 EHS Policy and Revised 2018 HSSE Policy Statement.
b. Does the GOCC publish data relating to health, safety and welfare of its employees?

See 2018 PNOC EC Annual Report on Safety Performance, page 18.

HSSE CGS

c. Does the GOCC have training and development programmes for its employeesSee Competency Development Framework.
d. Does the GOCC publish data on training and development programmes for its employees?See Training and Development Programs Participated by Employees 2017.

     6. Stakeholders including individual employee and their representative bodies, should be able to freely communicate their concerns about illegal or unethical practices to the board and their rights should not be compromised for doing this.

Question
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a. Does the GOCC have procedures for complaints  by employees concerning illegal (including corruption) and unethical behavior?PNOC EC has a Whistle Blowing Policy in accordance with GCG Memorandum Circular No. 2014-04, or the Whistle Blowing Policy on the GOCC Sector, among other relevant regulations, and approved by GCG. See PNOC EC Whistle Blowing Policy.
b. Does the GOCC have procedures to protect an employee/person who reveals illegal/unethical behavior from retaliation?PNOC EC has a Whistle Blowing Policy in accordance with GCG Memorandum Circular No. 2014-04, or the Whistle Blowing Policy on the GOCC Sector, among other relevant regulations, and approved by GCG. See PNOC EC Whistle Blowing Policy.

II. Disclosure and Transparency

     7.Quality of Annual Report. Does the GOCC’s annual report disclose the following items:

Question
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a. Corporate objectivesPNOC EC has disclosed its Corporate Objectives. See 2018 PNOC EC Annual Report, Strategic Objectives and Measures, Page 29.
b. Financial performance indicatorsPNOC EC has disclosed its Financial Performance Indicators. See 2018 PNOC EC Annual Report, Financial Highlights, pages 22 to 23.
c. Non-financial performance indicatorsPNOC EC has disclosed its Non-Financial Performance Indicators. See 2018 PNOC EC Annual Report, Strategic Objectives and Measures, Page 29.
d. Details of whistle blowing policyPNOC EC adopted its internal whistle blowing policy in May 2017 in compliance with GCG MC 2016-02. See 2018 PNOC EC Annual Report Corporate Governance, Conflicts of Interest, Page 26.
e. Biographical details of directorsPNOC EC included the biographical details of its Board of Directors. See 2018 PNOC EC Annual Report, Board of Directors , pages 31 to 32.
f. Training and/or continuing education    programme attended by each directorPNOC EC Directors underwent some training in 2018. See 2018 PNOC EC Annual Report, Collective Knowledge of Highest Governing Body, Page 26.

     8. Are the Annual Reports downloadable from the GOCC’s website?

Link Source

See PNOC EC's Annual Reports.

     9. Corporate Governance Confirmation Statement

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Does the Annual Report contain a statement confirming the company’s full compliance with the code of corporate governance and where there is non-compliance, identify and explain reasons for each such issue?Refer to the 2017 PNOC EC Annual Report, Corporate Governance Statement, opening paragraph, page 23.

     10. Timely filing/release of annual/financial reports

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a. Are the audited annual financial report/statement released within 60 days upon receipt from COA?

PNOC EC released its 2018 Annual Audit Report 13 days after receipt from COA.

2018 ANNUAL AUDIT REPORT

Date of Receipt from COA

Date Released/Published

May 31, 2019
June 13, 2019
b. Is the annual report released within 90 days from release of audited financial report?

PNOC EC released its 2018 Annual Report 31 days after release of its Annual Audit Report.

2018 ANNUAL REPORT

Date of Receipt from COA

Date Released

Date Published

May 31, 2019
July 1, 2019
June 27, 2019
c. Is the true and fairness/fair representation of the annual financial statement/reports affirmed by the board of directors and/or the relevant officers of the company?

The true and fair representation of the annual financial statements/reports is affirmed in the Statement of Management Responsibility signed by the Chairman of the Board, President and CEO and the VP for Management Services/CFO.

 

See 2018 PNOC EC Annual Report, page 35

III. Responsibilities of the Board

11. Corporate Vision and Mission/ Strategy

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a. Has the Board of Directors reviewed the vision and mission/ strategy in the last financial year?The Board of Directors reviewed the Company’s Strategy Map and Performance Scorecard, among others, during PNOC EC’s 2018 Strategic Planning Session held from January 15 to 17, 2018.
b. Does the Board of Directors monitor/oversee the implementation of the corporate strategy?PNOC EC regularly holds an Annual Planning Session attended by members of the Board of Directors and Management, where the Company’s Vision and Mission are deliberated on. The Board of Directors and Management also discuss the implementation of the Company’s plans and programs aligned with its corporate strategies.

12. Did the GOCC achieve 90% in the PES?

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PNOC EC achieved 100% in its 2018 Performance Scorecard, as validated by the GCG

See 2018 PNOC EC Performance Scorecard

13. Code of ethics or conduct

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a. Are the details of the code of ethics or conduct disclosed?The PNOC EC Board of Directors, Management, and employees are covered by and are required to comply with the following:
  1. Republic Act No. 6713
  2. Republic Act No. 6713 IRR
  3. Company Policy on Discipline
  4. Table of Penalties
  5. Rules and Regulations on Discipline of Corporate Officers and Secretary Certificate on Board Resolution No. 7-7, S’2012.
  6. Republic Act No. 10149
  7. GCG Memorandum Circular No. 2012-05
  8. Anti-Sexual Harassment Policy
b. Does the GOCC disclose that all Directors, senior management and employees are required to comply with the code?
c. Does the company disclose how it implements  and monitors compliance with the code of  ethics or conduct?

14. Does the Board appoint a Nomination and Compensation / Remuneration Committee?

Link Source

PNOC EC Board of Directors created a Nomination and Remunerations Committee, whose functions were merged with the existing Compensation, Education and Employee Welfare Committee, and renamed to Nomination, Remuneration, Education, and Employee Welfare Committee. 

In 2018, said Committee was composed of the following:

Chairperson:  Oscar H. Rabena
Members:  Pedro A. Aquino, Jr. 
                    Carlo Magno D. Aldevera
                    Karl Ignatius P. Young
                    Johnny L. Tuason
                    Alejandro A. Cobol 
                    Farah C. Cañezal-Lumbatan 
                    Avelino M. Tayag

See Secretary’s Certificate for PNOC EC Board Resolution No. 7-9, Series of 2017 and Secretary’s Certificate for PNOC EC Board Resolution No. 11-1, Series of 2017, and Secretary’s Certificate for PNOC EC Board Resolution No. 2-7, Series of 2018 

 

 

15. Did the Nomination and Compensation/Remuneration Committee meet at least twice during the year?

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The Nomination, Remuneration, Education, and Employee Welfare Committee had six (6) meetings in 2018. The Committee met on February 20, April 17, June 8, August 6, November 27, and December 19, 2018.

 

See Board and Committee Meetings Attendance 2018.

16. If yes, is the report of the Nomination and Compensation/Remuneration Committee publicly disclosed?

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See 2018 Nomination, Renumeration, Education and Employee Welfare Committee Report.

17. Does the Board appoint an Audit Committee?

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PNOC EC formally combined the Audit Committee and Risk Management Committee into the Audit and Risk Management Committee pursuant to Section 16.6 of the GCG Code of Corporate Governance, as well as Section 3.15(f) of the PNOC EC Manual of Corporate Governance. 

In 2018, the PNOC EC Audit and Risk Management Committee was composed of the following:

Chairperson:  Johnny L. Tuason
Members:  Carlo Magno D. Aldevera
                    Karl Ignatius P. Young
                    Oscar H. Rabena
                    Alejandro A. Cobol 
                    Farah C. Cañezal-Lumbatan 
                    Avelino M. Tayag
 

See Secretary’s Certificate for PNOC EC Board Resolution No. 7-9, Series of 2017 and Secretary’s Certificate for PNOC EC Board Resolution No. 11-1, Series of 2017, and Secretary’s Certificate for PNOC EC Board Resolution No. 2-7, Series of 2018 

18. If yes, is the report of the Audit Committee publicly disclosed?

Link Source
See 2018 Audit and Risk Management Committee Report.

19. Does at least one member of the Audit Committee have an audit, accounting or finance background (qualification or experience)?

Link Source              
See Resumé of Director Johnny L. Tuason.

20. Did the Audit Committee meet at least four times during the year?

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The Audit and Risk Management Committee had twelve (12) meetings in 2018. The Committee met on January 15, February 20, March 20, April 3, May 4 and 22, June 19, July 2, August 20, October 4, November 13, and December 5.  

See Board and Committee Meetings Attendance 2018.

21. Does the Board appoint a Risk Management Committee?

Link Source
PNOC EC formally combined the Audit Committee and Risk Management Committee into the Audit and Risk Management Committee pursuant to Section 16.6 of the GCG Code of Corporate Governance, as well as Section 3.15(f) of the PNOC EC Manual of Corporate Governance. 

In 2018, the PNOC EC Audit and Risk Management Committee was composed of the following:

Chairperson:  Johnny L. Tuason
Members:  Carlo Magno D. Aldevera
                    Karl Ignatius P. Young
                    Oscar H. Rabena
                    Alejandro A. Cobol 
                    Farah C. Cañezal-Lumbatan 
                    Avelino M. Tayag

See Secretary’s Certificate for PNOC EC Board Resolution No. 7-9, Series of 2017 and Secretary’s Certificate for PNOC EC Board Resolution No. 11-1, Series of 2017, and Secretary’s Certificate for PNOC EC Board Resolution No. 2-7, Series of 2018 

22. If yes, is the report on Risk Management Committee publicly disclosed?

Link Source
See 2018 Audit and Risk Management Committee Report.              

23. Does at least one member of the Risk Management Committee have a background in finance and investments?

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See Resumé of Director Carlo Magno D. Aldevera, and Resumé of Director Johnny L. Tuason.         

24. Board meetings and attendance

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a. Are the Board of Directors meetings scheduled at the beginning of the year?(end of Q1)As a practice, the PNOC EC Board of Directors holds its Board meetings at least once every month, usually on a Tuesday.
b. Does the Board of Directors meet at least monthly?The Board of Directors hold at least one (1) meeting every month.

See Board and Committee Meetings Attendance 2018.

c. Did the Board of Directors meet on at least 75% on their scheduled meetings?The Board of Directors held twenty-four (24) meetings in 2018.

See Board and Committee Meetings Attendance 2018.

d. Has each of the directors attended at least 90% of all the board meetings held during the year?All the appointed Members of the Board attended all the duly-called Board meetings for 2018.

See Board and Committee Meetings Attendance 2018.

e. Did the Board of Directors meet separately atleast once during the year without the President/CEO present?See Board and Committee Meetings Attendance 2018.

25. Access to information

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a. Does the GOCC have a policy that stipulates board papers for Board of Directors  meetings be provided to the Board at least three (3) working days in advance of the board meeting?As a practice, materials for Board Meetings are provided to the Board at least three (3) working days in advance of all Board Meetings.
b. Is the Board Secretary trained in legal, accountancy or company secretarial practices?

PNOC EC’s Legal Manager, Atty. Armin Noel B. Villamonte, and Legal Counsel, Atty. Maria Mercedes A. Maglaya, have been appointed by the Board of Directors as Assistant Corporate Secretaries.

See Secretary’s Certificate for PNOC EC Board Resolution No. 7-6, Series of 2011 and Secretary’s Certificate for PNOC EC Board Resolution No. 8-2, Series of 2015 

26. Internal Audit

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a. Does the company have a separate internal audit function?PNOC EC has a separate internal audit function. See PNOC EC Table of Organization.
b. Does the appointment and removal of the internal auditor require the approval of the Audit Committee?See PNOC EC Manual for Corporate Governance,

 

Section 3.15 (b) (vi).

27. Risk Oversight

Question
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a. Does the company disclose the internal control procedures/risk management systems it has in place?PNOC EC discloses its internal control procedures/risk management systems in the existing Risk Management Manual that is in place since 1993. Included in the Manual is the Risk Management System/Process which provides for the identification of risks, risk management/analysis, risk selection techniques, implementation of risk management techniques and monitoring and improving the risk management system. Financial Risk and Capital Management is also disclosed in the 2018 PNOC EC Audit Report, pages 93 to 98.
b. Does the Annual Report disclose that the Board of Directors has overseen a review of the company’s material controls (including operational, financial and compliance controls) and risk management systems?

As disclosed in the Company’s Annual Report, the Board of Directors oversee the risk management functions, particularly in the areas of managing credit, market liquidity, operational, legal, reputational, and other risks of PNOC EC.  The Company’s Management regularly reports to the Audit and Risk Management Committee and to the Board of Directors all matters concerning PNOC EC’s material controls and risk management system. 

Refer to Corporate Governance section, of the 2018 PNOC EC Annual Report, pages 24 to 28.

c. Does the company disclose how key risks are managed?Management of key risks affecting PNOC EC are disclosed in the existing Risk Management Manual that is in place since 1993. PNOC EC also has an existing Guidelines on Risk Assessment. See also Risks and Strategies.
d. Does the Annual Report contain a statement from the Board of Directors or Audit Committee commenting on the adequacy of the GOCC’s internal controls/risk management systems?

The annual report contains a statement that the Board of Directors oversee the risk management functions, particularly in the areas of managing credit, market liquidity, operational, legal, reputational, and other risks of PNOC EC. The Company’s Management regularly reports to the Audit and Risk Management Committee and to the Board of Directors all matters concerning PNOC EC’s material controls and risk management system. 

Refer to Corporate Governance section, of the 2018 PNOC EC Annual Report, pages 24 to 28.

28. Board Chairman

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Do different persons assume the roles of Chairman and CEO?For 2018, PNOC EC’s President and CEO is Pedro A. Aquino, Jr.; while the Ex-Officio Chairperson is Alfonso G. Cusi (Secretary, Department of Energy).

29. Board of Directors Development

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a. Does the GOCC have orientation programs for new Directors?The Office of the Corporate Secretary holds an orientation session for new directors, covering the following topics: (1) Company overview; (2) Role of PNOC EC Board of Directors; and (3) PNOC EC Operations.
b. Does the GOCC have a policy that encourages Directors to attend on-going or continuous professional education programmes?The Annual Work Program and Budget of PNOC EC contains provision for the attendance of all members of the Board of Directors to training programmes and seminars as part of the continuous professional educational programme.
c. Did all Appointive Directors attend at least 1 training for the calendar year?All Appointive Directors attended the “Strategy Design for Directors” seminar organized by the Institute of Corporate Directors (ICD).

30. Board Appraisal

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a. Is an annual performance assessment conducted of the Board of Directors?The Board of Directors conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Board's structure and composition; (b) whether the Board has fulfilled its responsibilities for PNOC EC's performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses.

See Board Assessment Questionnaire.

b. Does the GOCC disclose the process followed in conducting the Board assessment?The Board of Directors conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Board's structure and composition; (b) whether the Board has fulfilled its responsibilities for PNOC EC's performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses.

See Board Assessment Questionnaire.

c. Does the GOCC disclose the criteria used in the Board assessment?The Board of Directors conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Board's structure and composition; (b) whether the Board has fulfilled its responsibilities for PNOC EC's performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses.

See Board Assessment Questionnaire.

31. Committee Appraisal

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Is an annual performance assessment conducted of the Board of Directors Committees?

The Board of Directors Committees conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Committee's structure and composition; (b) whether the Committee has fulfilled its responsibilities for PNOC EC's performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses. 

See Board Committee Assessment Questionnaire – Audit and Risk Management CommitteeBoard Committee Assessment Questionnaire – Nomination, Remuneration, Education, and Employee Welfare Committee, and  Board Committee Assessment Questionnaire – Project Development and New Ventures Committee.

BONUS

Stakeholder Relationships

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1. Does the GOCC practice Global Reporting Initiative (GRI) on its annual reports?2018 PNOC EC Annual Report’s About the Report, About PNOC EC, Report from the President and CEO, Operational Highlights, Corporate Social Responsibility, Health, Safety, Security, and the Environment, Manpower Development, and Corporate Governance Sections are all referenced to the Global Reporting Initiative (GRI) standards.

Disclosure Transparency

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2. Quality of Annual Report
Are the audited annual financial report/statement released within 30 days upon receipt from COA?

PNOC EC released its 2018 Annual Audit Report 13 days after receipt from COA.

2018 ANNUAL AUDIT REPORT

Date of Receipt from COA

Date Released/Published

May 31, 2019
June 13, 2019

PENALTY

Responsibilities of the Board

            
Question
            
            
Link Source
            
1. Are there members of the Board of Directors who hold more than five (5) positions in GOCCs and PLCs?No PNOC EC Board Member holds more than  five (5) positions in GOCCs and PLCs.
2. Is there non-compliance with Good Governance Conditions? PNOC EC is fully compliant with all Good Governance Conditions.

Projects and Operations

In line with PNOC EC's mandate of providing a stable energy supply for the Philippines, the company is also involved in the exploration, development and production of coal in the country.

PNOC Exploration Corporation’s presence in the Philippine petroleum industry spans over 30 years, with its role evolving from that of a catalyst and promoter of local petroleum exploration to that of

PNOC EC's Trading and Marketing business continue to serve the fuel requirements of its industrial customers with coal supply coming from its own COC 41 small scale mines and other indigenous sources.

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