2020 Corporate Governance Seal

The Company integrates in its policies and procedures all applicable health, safety, security, and environmental (HSSE) legislations and regulations to protect its employees, the environment, and the general public.

For 2020, the unprecedented threat of the COVID-19 pandemic was experienced in a global scale. This prompted the Company to implement the Business Continuity Plan (BCP) and organized an internal COVID-19 Task Force which acted as oversight and monitoring of the Company’s response on the health crisis. In addition to the BCP, the Company formulated internal health and safety guidelines to complement the enforcement of government’s mandatory health protocols which became part of the “PNOC EC Guideline on New Normal Work Arrangement”. The Company regularly complied with the Department of Energy (DOE) COVID-19 Response Protocol which was implemented in May 2020. PNOC EC received an outstanding citation from the Safety & Health Association of the Philippine Energy Sector (SHAPES) for the COVID-19 response efforts.

As part of the new normal work guidelines and to prevent the transmission of COVID-19 in the workplace, the Company implemented the following measures, among others: work-from-home arrangement, work permit and health clearance (WPHC) system to limit personnel reporting in the office, reduced face to face meetings and use of online platforms, teleconsultation with Company physician, reviewed office layout to ensure physical distancing, conducted daily health surveillance and monitoring of all personnel through the submission of online health questionnaire, personnel with no private vehicle were provided with shuttle service and sleeping quarters, quarantine for those who travelled locally and overseas, and provision of flu vaccines and health supplements.

PNOC EC conducted a series of health lectures and seminars to intensify the awareness of employees in managing the ever-increasing threat of COVID-19. Also, the Company organized a webinar on “Mental Health during COVID-19” which was facilitated by distinguished mental health professionals or experts in order to address the “quarantine stress” and mental health issues that most of the personnel are experiencing during Community Quarantine.

Whenever the Company recorded COVID-19 confirmed cases, contact tracing, intensive disinfection and swab testing of close contacts followed. For 2020, a total of 244 RT-PCR tests were conducted for identified close contacts and as requirement of personnel who travel to project sites. Other travel requirements such as medical certificates and Philippine National Police (PNP) travel authority were secured before any deployment of personnel to project sites.The Company updated its Security Management Manual and security risk assessment for its project sites.

On the development of Mine 3 in Zamboanga Sibugay, the contractor’s personnel were provided with the needed orientation of the HSSE policies and guidelines. Procedures for high risk activities including permit-to-work system and important guidelines were cascaded to ensure that processes will be observed and complied. The Company took preventive and mitigating measures to minimize if not eliminate the occurrence of accidents and employed regular safety inspections on operational safety. The Mine 3 Coal Project development was strictly and competently supervised by the dedicated COC41 HSSE unit which was composed of HSSE practitioners duly accredited by the DOE. The safety performance of the Mine 3 Coal Project was also recognized by SHAPES for its zero lost time incident for 2020.

See 2020 PNOC EC Annual Report, HSSE, page 22 and 23.

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 sea creatures;
(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 any 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 inspections or 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 to the lowest level the project’s impact to the environment. 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 periodic environmental inspections at each of SSCM permittees’ sites. Waste segregation and proper handling of hazardous wastes are also being practiced in the sites. In 2020, material recovery facilities (MRF) in the mine areas of COC41 were rehabilitated. Various recyclable materials were sorted in each MRF to promote waste reduction.

See 2020 PNOC EC Annual Report, HSSE, page 22 and 23.

See 2020 PNOC EC Annual Report, HSSE, page 22 and 23.

PNOC EC has disclosed its Non-Financial Performance Indicators.
See Non-Financial Performance Indicators in the 2020 Performance Scorecard included in PNOC EC's 2020 Annual Report, page 33.

See PNOC EC's Annual Reports.

PNOC EC’s 2020 Annual Report (page 28) includes a statement which reads: “PNOC EC affirms its full compliance with the provisions of the Code of Corporate Governance (GCG Memorandum Circular No. 2012-07 dated November 2012) and PNOC EC’s Manual of Corporate Governance dated January 2014. As a model GOCC, PNOC EC continuously lives up to such status through practice of good corporate governance towards active promotion and pursuit of corporate governance reforms and conscious observance of the principles of accountability and transparency."

See Annual Report 2020, page 28

PNOC EC released its 2020 Annual Audit Report 27 days
after receipt from COA.

See Annual Financial Statements

PNOC EC released its 2020 Annual Report 58 days after release of its Annual Audit Report.

See Annual Financial Statements

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 2020 Annual Audit Report, page 4

The Board of Directors reviewed the Company's Strategy Map and Performance Scorecard, among others, during PNOC EC's 2020 Strategic Planning Session held from November 25-26, 2019

See Secretary’s Certificate for PNOC EC’s 2020 Strategic Planning Session / Special Board Meeting

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.

See Summary of Agreed Actions

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

As a practice, the PNOC EC Board of Directors schedules a Board meeting at least once every month, the date of which is subject to the availability of the Secretary of the Department of Energy – PNOC EC’s Ex Officio Chairman of the Board.

See PNOC EC Manual for Corporate Governance, page 8-9, Sec 3.4

The Board of Directors hold at least one (1) meeting every month.

See Board and Committee Meetings Attendance 2020.

The Board of Directors held twenty-one (21) meetings in 2020.

See Board and Committee Meetings Attendance 2020.

All the appointive Members of the Board attended all the duly-called Board meetings for 2020.

See Board and Committee Meetings Attendance 2020.

See Board and Committee Meetings Attendance 2020.

Although the By-Laws and existing rules mandate that the Board must be provided the materials two (2 days) before a 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.

See Secretary’s Certificate for Board Resolution No. 2574 Series of 2019

PNOC EC's Corporate Secretary and Assistant Corporate Secretaries, appointed by the Board of Directors as such, are members in good standing of the Philippine Bar.

See PNOC EC Corporate Secretary and Assistant Corporate Secretaries in 2020

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 PNOC EC 2020 Annual Audit Report, pages 85 to 91.

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 2020 Annual Report, pages 28 to 32.

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 2020 Annual Report, pages 28 to 32.

For 2020, PNOC EC’s Ex-Officio Chairperson is Alfonso G. Cusi (Secretary, Department of Energy), while its Officer-in-Charge was Ms. Lourdes S. Gelacio until February 2020, and thereafter, the President and CEO is Lt Gen Rozzano D Briguez (Ret).

See Executive Order No. 39 and Secretary’s Certificate for Board Resolution No. 2-3, Series of 2020

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.

See Briefing Materials for New Directors

One of the functions of the Governance Committee is to recommend to the Board the continuing education of Directors.

Furthermore, 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.

See PNOC EC Manual for Corporate Governance, page 18, Sec 3.15 (c)(iii)

All Appointive Directors attended at least 1 training in 2020. They attended the following: “New Code of Corporate Governance for Public Companies and Registered Issuers” in July 2020; and “Technology Governance for Directors” in October 2020.

See Secretary’s Certificate Directors Seminars

The Board of Directors conducts an annual assessment of its performance for the year based on an appraisal system developed for the purpose. For its performance for the year 2019, the Board of Directors conducted its assessment during the first quarter of 2020.

See Board Assessment Questionnaire.

The Board of Directors conducts an annual assesment of Its performance for the year based on an appraisal system developed for the purpose, which determines , among others, (a) the adequacy of the Boards 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 strenghts and weaknesses.

See Board Assessment Questionnaire.

The Board of Directors Committees conducts an annual 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.

For the performance of each Board Committees in the year 2019, the respective members of each Board Committee conducted the assessment of their respective Committees during the first quarter of 2020.

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

For the 2020 PNOC EC Annual Report, the following sections are referenced to the Global Reporting Initiative (GRI) standards: About the Report, About PNOC EC, Report from the President and CEO, Operational Highlights, Corporate Social Responsibility, HSSE, People Development, and Corporate Governance Section.

See Annual Report 2020

PNOC EC released its 2020 Annual Audit Report 27 days
after receipt from COA.

See Annual Financial Statements

No PNOC EC Board Member holds more than five (5) positions in GOCCs and PLCs.

See Secretary's Certificate for Appointive Directors do not hold 5 Positions in any GOCC

 PNOC EC is fully compliant with all Good Governance Conditions.

See 2019 PBB IAFT Validation Result