II. Commitment to Principles of Good Corporate Governance
2.1. NORTHRAIL as an Active Partner of the Government in National
Development. NORTHRAIL shall perform its functions as an active partner of the
government in national development. Such functions include the delivery of public
services, as well as the production and creation of wealth necessary to support vital
2.2. Governing Principles of Good Corporate Governance of NORTHRAIL. The
corporate governance framework for NORTHRAIL shall be governed by the following
2.2.1. NORTHRAIL shall conduct its business strictly in accordance with the
rule of law and shall be supportive of the primary goals and objectives of the
2.2.2. Timely and accurate disclosure shall be made for transparency on all
material aspects and development regarding NORTHRAIL, including its
financial condition, performance, ownership, and governance.
2.2.3. The strategic guidance of NORTHRAIL shall be in accordance with the
objectives set by the government, the effective monitoring of Management by
the Board, and the Board's accountability to the corporation, its holding
company (BCDA), and the State. Strategic direction of NORTHRAIL shall be
in accordance with the National Transportation Program and other directives
and policies of DOTC regarding transportation.
2.2.4. NORTHRAIL shall adhere to the highest degree of ethical standards
and promote accountability and fairness in all its business transactions.
2.2.5. The long-term growth, development and strength of NORTHRAIL shall
2.2.6. NORTHRAIL recognizes its corporate responsibility for the common
good of society.
2.2.7. Active cooperation between NORTHRAIL, and its partners, affiliates,
subsidiaries and stakeholders in creating wealth, jobs, and the sustainability
of a financially sound enterprise shall be encouraged.
2.3 Commitment to Institutionalize the Principles of Corporate Governance.
NORTHRAIL is committed to institutionalize the principles of good corporate
governance in the entire organization. The Board of Directors, Management and
Employees of NORTHRAIL equally commit to the principles contained in the Code of
Corporate Governance for GOCCs and acknowledge that this Manual will serve as
guide in the achievement of corporate goals.
2.4 Care, Diligence and Skill in the Conduct of the Business of NORTHRAIL.
The members of the Board and the Officers must exercise extraordinary diligence in
the conduct of business and in dealing with the properties of NORTHRAIL. Such
degree of diligence requires using the utmost diligence of a very cautious person
with due regard for all circumstances.
2.5 Promotion of Corporate Governance. The Board of Directors, Management
and Employees believe that good corporate governance is an integral component of
sound strategic business management and of transparency and accountability in
public corporate governance, and will undertake every effort necessary to create
awareness of such within NORTHRAIL.
2.6 Governance Policy on Conflict of Interest
Public policy dictates that the personal interest of board members and officers
should never prevail over the interest of NORTHRAIL. As such, Board Members and
officers may not directly or indirectly derive any personal profit or advantage by
reason of their position in the corporation.
2.6.1. Determination of conflict of interest. Conflict of Interest exists when
an official, employee or a member of the board of directors, an officer of the
corporation, or a partner in a joint venture with NORTHRAIL whose interest or
whose company’s interest or his rights or duties in said corporation or
business, are opposed to or is affected by the faithful performance of official
duty. A conflict of interest exists when a Board Member or officer of
184.108.40.206. Supplies or is attempting or applying to supply goods or services to
220.127.116.11. Supplies or is attempting to supply goods, services or information to
an entity in competition with NORTHRAIL;
18.104.22.168. By virtue of his office, acquire or is attempting to acquire for himself a
business opportunity which should belong to NORTHRAIL;
22.214.171.124. Is offered or receive consideration for delivering NORTHRAIL's
business to a third party; and
126.96.36.199. Is engaged or is attempting to engage in a business or activity, which
competes with or works contrary to the best interests of NORTHRAIL.
2.6.2. Disclosure of Conflict of Interest. If an actual or potential conflict of
interest should arise on the part of board members, it should be fully disclosed
and the concerned Board Member should not participate in the decisionmaking.
A Board Member who has a continuing conflict of interest of a
material nature should either resign or, if the Board deems appropriate, be
removed from the Board.
2.6.3. Void Contracts. NORTHRAIL must not enter into any contract or
agreement with one or more of its board members or officers in order to
prevent a situation where there is actual or potential conflict of interest or one
that could create the appearance of conflict of interest. Any such contract
entered into by NORTHRAIL is considered void.
2.6.4. Liability of Board Members. Where a Board Member, by virtue of
his/her office, acquires a business opportunity that should belong to
NORTHRAIL, thereby obtaining profits to the prejudice of the corporation, the
Board Member must account to the latter for all such profits by refunding the
same, unless his/her act has been ratified. This provision shall be applicable
notwithstanding the fact that the board member risked his own funds in the
venture. The foregoing is without prejudice to NORTHRAIL’s Rules or Code of
Conduct and Ethics for its officers, employees and staff.
2.7 No Gift Policy
NORTHRAIL shall adhere to the highest form of ethical standards. The NORTHRAIL
Board of Directors, Officers, Managers and employees shall demonstrate fairness,
professionalism and deliver quality services without expectations of any undue favor
2.7.1. NORTHRAIL adopts a No Gift Policy. The Chairman and Members
of the Board, Officers, Managers and Employees shall not solicit or accept,
directly or indirectly, any gift, gratuity, favor, entertainment, loan, or use, or
anything of monetary value (“gift”) from a person, group, association, or
juridical entity, whether from the public or the private sectors, at any time, on
or off the work premises, in the course of their official duties or in connection
with any operation being regulated by, or any transaction which may be
affected by the functions of their office, where such gift:
188.8.131.52. Would be illegal or in violation of law.
184.108.40.206. Is part of an attempt or agreement to do or refrain from doing anything
220.127.116.11. Has a value beyond what is normal and customary in the business of
18.104.22.168. Is being made to influence the Chairman and Members of the Board,
Officers, Managers and Employees’ actions as such.
22.214.171.124. Could create the appearance of a conflict of interest.
2.8 Relations with Stakeholder. NORTHRAIL recognizes the rights of stakeholders
established by law or through mutual agreements, and encourage active cooperation
between NORTHRAIL and its stakeholders in creating wealth, jobs, and the
sustainability of financially sound enterprises.
2.8.1. Recognition and respect of stakeholders' rights established by law
or through mutual agreements. Recognizing the vital contribution of its
stakeholders, NORTHRAIL shall ensure that stakeholders have access to
relevant, sufficient and reliable information on a timely and regular basis.
2.8.2. Report on Stakeholder Relations. NORTHRAIL shall communicate
with investors, stakeholders and the public at large on their stakeholder
policies and provide information on their effective implementation.
NORTHRAIL shall allow its stakeholder reports to be independently
scrutinized in order to strengthen their credibility.
2.8.3. Development, Implementation and Communication of Compliance
Programs for Internal Codes of Ethics. The Board shall apply high ethical
standards in the organization with checks and balances that will ensure the
corporation is protected from deviation from these standards in the course of
the interaction of business considerations with political and public policy ones.
NORTHRAIL shall develop an internal code of ethics that would give clear
and detailed guidance as to the expected conduct of all employees and
disciplinary measures for non-compliance therewith. The internal code of
ethics should include guidance on procurement processes, as well as develop
specific mechanisms protecting and encouraging stakeholders, and
particularly employees, to report on illegal or unethical conduct by corporate
2.9 Disclosure and Transparency
NORTHRAIL shall continue to enhance disclosure and transparency and impose a
duty of loyalty of Board Members. Timely and accurate disclosure shall be made on
all material matters regarding NORTHRAIL, including its financial situation,
performance, ownership, and governance.
2.9.1. Disclosure on Material Information. NORTHRAIL shall make a
disclosure on, among others, the following material information:
126.96.36.199. Objectives and their fulfillment. Corporate objectives shall be made
clear to all stakeholders, investors and the general public. NORTHRAIL shall
report on how it fulfills its objectives by disclosing key performance indicators.
188.8.131.52. Material risk factors and measures taken to manage such risks.
NORTHRAIL shall establish sound internal risk management systems to
identify, manage, control and report on risks. Appropriate disclosure by
NORTHRAIL of the nature and extent of risk incurred in their operations shall
be made. Public-Private partnerships shall also be adequately disclosed as
such ventures are often characterized by transfers of risks, resources and
rewards between public and private partners for the provision of public
services or public infrastructure and may consequently induce new and
specific material risks.
184.108.40.206. Financial assistance, including guarantees, received from the
government and commitments made on behalf of NORTHRAIL. To give a
fair and complete picture of NORTHRAIL’s financial situation, the mutual
obligations, financial assistance or risk sharing mechanisms between the
government and NORTHRAIL shall be appropriately disclosed. Disclosure
shall include details on any government grant or subsidy received by
NORTHRAIL, any guarantee granted by the government to NORTHRAIL for
its operations, as well as any commitment that the government undertakes for
and on behalf of NORTHRAIL.
220.127.116.11 Material transactions with related entities. Transactions between
NORTHRAIL and related entities, such as an equity investment of one
government owned or controlled corporation in another shall be disclosed.
Reporting on transactions with related entities shall provide all information that
is necessary for assessing the fairness and appropriateness of these
18.104.22.168 Information on Financial and Operating Results. NORTHRAIL shall
also disclose information on its financial and operating results; the
remuneration policy for members of the Board and key executives, and
information about board members, including their qualifications, the selection
process, other company directorships and whether they are regarded as
independent by the Board; related party transactions; issues regarding
employees and other shareholders; and governance structures and policies
and the process by which they are implemented.
2.9.2 Electronic Disclosure of Information. NORTHRAIL shall maintain a
website and post therein for unrestricted public access:
22.214.171.124. Institutional Matters:
126.96.36.199.1. The latest version of the NORTHRAIL Charter.
188.8.131.52.2. List of Subsidiaries and Affiliates.
184.108.40.206.3. Government Corporate Information Sheet (GCIS) as mandated by
the GCG in its Memorandum Circular No. 2012-01.
220.127.116.11. Board and Officers:
18.104.22.168.1. Complete Listing of the Directors and Officers with attached resume
and their membership in Board Committees.
22.214.171.124.2. Complete compensation package of all the board members and
officers, including travel, representation, transportation and any other form of
expenses or allowances.
126.96.36.199.3. Information on Board Committees and their activities.
188.8.131.52.4. Attendance Record of Directors in Board and Committee Meetings.
184.108.40.206. Financial Matters:
220.127.116.11.1. Their latest annual audited financial and performance report within
thirty (30) days from receipt of such report.
18.104.22.168.2. Audited financial statements in the immediate past five (5) years.
22.214.171.124.3. Quarterly, annual reports and trial balance.
126.96.36.199.4. Current Corporate Operating Budget (COB).
188.8.131.52.5. Local and foreign borrowings.
184.108.40.206.6. Government subsidies and net lending.
220.127.116.11.7. All borrowings guaranteed by the government.
18.104.22.168.8. Any material risk factors and measures taken to manage such risk.
22.214.171.124.9. Performance Evaluation System (PES).
126.96.36.199. Governance Matters:
188.8.131.52.1. Charter Statement/Mission-Vision Statements.
184.108.40.206.2. Performance Scorecards and Strategy Map.
220.127.116.11.3. Organizational Chart.
18.104.22.168.4. Manual of Corporate Governance.
22.214.171.124.5. CSR Statement.
126.96.36.199.6. Such other information or report that the Commission on Audit
(COA), the Governance Commission of GOCCs (GCG), or the Government
Procurement Policy Board (GPPB) may require.
2.9.3. Development of Internal Audit Procedures. NORTHRAIL shall
develop efficient internal audit procedures and establish an internal audit
function that is monitored by and reports directly to the Board and its Audit
2.9.4. Conduct of an independent external audit based on international
standards. NORTHRAIL may opt to undergo a periodic independent external
audit based on international standards.
2.9.5. Observance of the highest quality accounting and auditing
standards. NORTHRAIL shall take all measures to be as transparent as
publicly listed companies. It shall disclose financial and non-financial
information according to high quality internationally recognized standards.
2.10.1. Communication within the organization. The Board and
Management shall ensure the thorough dissemination of this Manual to all
employees and third parties, and shall enjoin the development of
organizational policies and processes consistent with the GOCC Code of
Corporate Governance and this Manual.
2.10.2. Education on the Code of Good Public Corporate Governance.
Funds shall be allocated for the conduct of an orientation program to
operationalize this Corporate Governance Manual and for the continued
education and training of all officers and employees to ensure compliance
with the GOCC Code of Corporate Governance and this Manual.
2.11 Penalties for Non-Compliance
2.11.1. Table of Penalties. To ensure faithful compliance with the GOCC
Code of Corporate Governance and the strict adherence to and
implementation of the provisions of this Manual, the following penalties shall
be imposed, after due notice and hearing, on the Members of the Board and
officers who are found liable for any violation, in addition to such penalties as
may have been specifically provided:
188.8.131.52. The penalty of reprimand shall be meted for the first infraction;
184.108.40.206. The penalty of suspension from office shall be imposed upon the
offender for the second infraction. The duration of suspension, which shall be
determined by the Board, shall be commensurate to the gravity of the
220.127.116.11. The penalty of removal from office, in the case of an appointive
director, or dismissal from service, in the case of an officer of Management,
shall be imposed on the offender for the third infraction. In cases where the
offender is a Member of the Board, the Board shall recommend the imposition
of the penalty to the GCG.
The Board may, at its discretion, constitute a committee or appoint a Member
or officer to conduct a fact-finding investigation or a hearing for this purpose.
The results of the investigation and/or hearing shall be submitted to the Board
for its consideration and approval.