VII. Obligations of Northrail to Directors and Officers
7.1. Providing Staff Support to Directors. NORTHRAIL shall, as appropriate,
provide independent board members with technical support staff to assist them in
performing their duties. Independent board members may, when necessary, also
request and receive support from officers, employees or outside professionals such
as auditors, advisers and counsel to perform such duties. NORTHRAIL shall cover
the reasonable expenses of providing such support.
7.2. Obtaining Director’s and Officers’ Liability Insurance (DOLI). The authority
to provide the DOLI for members of GOCC’s governing Boards and for officers is
stipulated under Section 32 of the Code of Corporate Governance.
7.2.1. Purpose. Having imposed the highest level of responsibility and
accountability on the members of the Board and Officers, i.e., that of
extraordinary diligence, it is equitable that when the BCDA itself and/or the
members of the Board and Management are sued before tribunals on matters
that are within the official functions and capacity and on matters where
business judgment has been exercised in good faith, that there be proper
recovery of the costs of litigation and the judgment liability imposed. It is
prudent for BCDA to obtain DOLI coverage for itself and the BCDA Board and
Officers against contingent claims and liabilities that may arise from, as well
as expenses that may be incurred in prosecuting, the actions that may be filed
against BCDA arising from the actions of the BCDA Board and/or Officers that
may cause loss or damage to third parties.
7.2.2. Definition and Scope. The DOLI Policy is an insurance cover
designed to protect the Government-Owned and Controlled Corporation
(GOCC), Government Financial Institution (GFI), agency, or commission and
its directors/trustees and officers against the cost of litigation and liability in
the course of performing the official acts of its governing Board and
7.2.3 Procurement. Procurement of DOLI coverage is subject to public
bidding for private insurers, pursuant to all applicable procurement laws, rules
and regulations, Republic Act 9184, and Administrative Order No. 33, or
through direct contracting with GSIS.
7.2.4 Directors’ and Officers’ Liability Fund (DOLF). In the event that
NORTHRAIL finds itself in a situation where under the mandates of its
corporate charter, obtaining DOLI coverage from accredited insurance
providers may not be feasible because the premium costs may have proven
to be prohibitive for NORTHRAIL’s situation that a procurement process
would not attract accredited insurance providers, or that the reimbursement
process afforded by the insurance company may be a long and tedious
process that undermines the annual budget of NORTHRAIL,
may establish a DOLF (The Fund) as an alternative to obtaining a DOLI
coverage, based on actuarial and feasibility studies commissioned by the
Board. The DOLF (The Fund) is a trust fund which provides indemnity
coverage for NORTHRAIL and the members of its Board of Directors who are
either Appointive Directors or Ex-Officio Directors and its Officers who are
either Board Officers, Executive Officers or Bids and Awards Committee
(BAC) members (the "Beneficiaries") who are sued or included as parties to
any action or proceeding against the NORTHRAIL pursuant to provisions of
law, executive order or regulation or by reason of their being Directors or
Officers of the NORTHRAIL.
1. Funding. The funding of the DOLF shall be determined by the Actuarial
Advisor and payment of the benefits thereunder shall be provided for
through the medium of a Fund held by a Trustee under an appropriate
Trust Agreement. The contributions to the Fund so created together with
gains and losses realized and unrealized plus contributed accrued
liabilities, if any, shall constitute the Fund.
2. Valuation. The contributions to the Fund shall be actuarially determined at
least once every two or three years.
3. Administration and Management. The DOLF shall be administered by a
Trustee appointed by NORTHRAIL who shall be responsible for the
general administration and management of the Fund. The NORTHRAIL
Board may appoint a Board of Trustees that will coordinate with the
Trustee in the implementation of the DOLF. The Trustee may seek the
advice of counsel and may appoint an investment manager or managers
to manage the Fund, an independent accountant to audit the Fund and an
actuary to value the Fund. Fees and expenses incurred in the investing
and accounting and / or actuarial audit, amendment and other services for
the DOLF may be charged to the Fund.
4. Trust Agreement. The NORTHRAIL Board shall appoint a government
bank as trustee. The powers, authorities and discretion necessary or
expedient for the Trustee to perform its duties shall be expressed in the
Trust Agreement executed by NORTHRAIL and the duly appointed entity.
5. Board of Trustees. The duties of the Board of Trustees shall consist of
the following functions solely as they relate to the DOLF:
1. Enact and implement the rules and procedures in filling applications
for benefits, for furnishing proofs necessary to establish the
eligibility of the claimant and the claim.
2. Recommend to the Trustee the appropriate payment of the amount
due to a claimant in accordance less accountabilities to