Presidential
Decree No. 334
CREATING THE
PHILIPPINE NATIONAL OIL COMPANY, DEFINING
ITS POWERS AND FUNCTIONS, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES
WHEREAS, in spite of the planned accelerated power development program using indigenous
resources and the planned institution of conservation measures, the country
will still be highly dependent on oil for a considerable length of time;
WHEREAS, it is imperative for the government to take a more active role in
assuring adequate supply of oil reducing the element of uncertainty on sources
of crude oil supply.
WHEREAS, international political development in 1973 which led to an oil
situation of crisis proportions have emphasized the need for such government
activity; and
WHEREAS, there is a compelling need for the government to embark on measures
which will help insure stable supply of petroleum products in order to sustain
the growth of the economy and of the social well-being of the nation;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue
of the powers vested in me by the Constitution as Commander-in-Chief of all the
Armed Forces of the Philippines and pursuant to Proclamation No. 1081 dated
September 21, 1972 and General Order No. 1 dated September 22, 1972, as
amended, do hereby order and decree as part of the law of the land, the
following:
SECTION 1. Short Title. – This decree
shall be known as the “Charter of the
Philippine
National Oil Company.”
SEC. 2. Declaration of Policy. – It
is the declared policy of the State to promote industrial and over-all economic
development through the effective and efficient utilization of energy sources,
including oil and oil-based resources.
In line with this policy, the establishment of an organized entity is
necessary in order to assure adequate supply of oil and oil products to all
users and consequently to enable the unimpeded and efficient growth of the
economy.
SEC. 3. Creation, Name, Domicile and Term.
– There is hereby created a body corporate to be known as the
Philippine National Oil Company, hereinafter
referred to as the “Company,” which shall undertake and transact the corporate
business relative primarily to oil or petroleum operations as defined
hereunder, and for that purpose, the
Company
shall have capacity to sue and be sued.
“Oil or Petroleum Operation” shall include actual exploration, production,
refining, tankerage and/or shipping, storage, transport, marketing, and related
activities concerning oil and petroleum products.
The principal office of the
Company shall
be determined by its Board of Directors.
It may establish such offices, agencies, subsidiaries, branches or
correspondents in the
The
Company shall have a term of fifty
(50) years from the issuance hereof, which shall be deemed renewed for an equal
period unless sooner dissolved by law.
SEC. 4. Purposes. – The
Company shall have the following purposes:
(a) To
provide and maintain an adequate and stable supply of oil and petroleum
products for the domestic requirement;
(b) To
promote the exploration, exploitation and development of local oil and
petroleum sources; and
(c) To
foster oil or petroleum operation conditions conducive to a balanced and
sustainable growth of the company.
SEC. 5. Powers and Functions of the
Company. – The
Company
shall have the following powers and functions:
(a) To
undertake, by itself or otherwise, exploration, exploitation and development of
all areas of oil or petroleum deposits in the country, including surveys and
activities related thereto;
(b) To
establish, maintain, control and direct in any area within the national
territory as it may deem appropriate, a petroleum base territory and construct,
install or maintain therein duty-free ports adequate for the use of vessels
engaged in offshore oil drilling operations, ports sufficient for direct
service flights, telecommunications center and ship-to-shore communications
facilities, provide electric power and fresh water supply, and perform such
other acts as it may deem necessary and advantageous or convenient to such
operations;
(c) To
lease, at reasonable rates, to private domestic entities or persons such
portion or portions of the petroleum base, including facilities therein, under
its administration, as may be necessary for warehousing, logistical centers for
the storage of oil drilling and oil well supplies, fabrication of offshore
drilling components and structures, mechanical repair facilities and the like;
spaces for the office, habitation and recreational requirements of personnel
directly engaged in offshore oil drilling and in manning the various logistical
support operations and their immediate dependents;
(d) To
undertake all other forms of petroleum or oil operations;
(e) To
enter into contracts, with or without public bidding, with any person or
entity, domestic or foreign and with governments for the undertaking of the
varied aspects of oil or petroleum operation, including the acquisition, by way
of purchase, lease or rent or other deferred payment arrangements of equipment
and/or raw materials and supplies, as well as for services connected therewith
under such terms and conditions as it may deem proper and reasonable;
(f) To
borrow money from local and foreign sources as may be necessary for its
operations;
(g) To
invest its funds as it may deem proper and necessary in any activity related to
oil or petroleum operations, including in any bonds or securities issued and
guaranteed by the Government of the Philippines;
(h) To
purchase, hold, alienate, mortgage, pledge or otherwise dispose of the shares
of the capital stock of, or any bond, security of other corporations or
associations of this or any other country; and while the owner of said stock,
to exercise all the rights of ownership, including the right to veto thereon;
(i) To
hold lands and acquire rights over mineral lands in excess of the areas
permitted to private corporations, associations and persons by statute;
(j) To
engage in export and import business of oil or petroleum and its derivatives,
as well as in related activities;
(k) To
acquire assets, real or personal, or interests therein, and encumber or
otherwise dispose the same as it may deem proper and necessary in the conduct
of its business;
(l) Subject
to existing regulations, if it deems necessary, to establish and maintain such
communication system, whether by radio, telegraph or any other manner, without
the need of a separate franchise therefor;
(m) To
determine its organizational structure, and the number and salaries of its
officers and employees;
(n) To
establish and maintain offices, branches, agencies, subsidiaries,
correspondents or other units anywhere as may be needed by the
Company and
reorganize or abolish the same as it may deem proper;
(o) To
exercise the right of eminent domain as may be necessary for the purpose for
which the
Company is created;
(p) Subject
to payment of the proper amount, to enter private lands for the purpose of
conducting geological or geophysical studies in connection with petroleum
exploration and exploitation;
(q) To
acquire easement over public and private lands necessary for the purpose of
carrying out any work essential to its petroleum exploration and exploitation,
subject to payment or reasonable considerations;
(r) To
establish and maintain technical educational system for the sustained
development of the necessary manpower to manage and operate its affairs and
business;
(s) To
adopt a code of by-laws to complement this charter;
(t) To
adopt and use a corporate seal which shall be judicially noticed;
(u) To
perform such acts and exercise such functions as may be necessary for the
attainment of the purposes and objectives herein specified;
(v) To
promulgate such rules and regulations as may be necessary to carry out the
purposes of this Decree;
(w) To
perform such other functions as may be provided by law.
SEC. 6. Governing Body. – The
Company shall be governed by a Board of
Directors, hereinafter referred to as the “Board” which shall be composed of
seven (7) members, to be appointed by the President of the
No person shall be appointed as member of the Board unless he is a natural born
citizen of the
The Chairman of the Board, as well as the President of the
Company, shall be appointed by the President
of the
SEC. 7. Capital Stock. – The
Company shall have a capital stock divided
into three million no-par shares to be subscribed, paid for the vetoed as
follows:
(a) Two
million shares of stock shall be originally subscribed and paid for by the
Republic of the
(b) The
remaining one million shares of stock may be subscribed and paid for by the
Republic of the
The voting power pertaining to shares of stock subscribed by the government of
the Republic of the
The voting power pertaining to shares of stock subscribed by the government
financial institutions shall be vested in them.
SEC. 8. Duties and Responsibilities of the President. – The President, who shall be the chief
executive of the
Company, shall have the
following duties and responsibilities:
(a) To
prepare the agenda for the meetings of the Board, and to submit for the
consideration of the Board such policies and measures as he believes necessary
to carry out the purposes and objectives of this Decree;
(b) To
execute, administer and implement the policies and measures approved by the
Board;
(c) To
direct and supervise the operations and administration of the
Company;
(d) To
represent the
Company in all dealings
with other offices, agencies and instrumentalities of the government and with
all persons and other entities, public or private, domestic or foreign; and
(e) To
exercise such other powers and perform such other duties provided in the
by-laws and as may be vested in him by the Board.
SEC. 9. Issuance of Bonds. – The
Company, upon the recommendation of the
Secretary of Finance and with the approval of the President, is hereby
authorized to issue bonds or other securities, whether tax-exempt or not, which
may be guaranteed by the government, to finance its oil or petroleum
operation.
SEC. 10. Legal Counsel. – The
Secretary of Justice shall be the ex-officio legal counsel of the
Company and he may designate a
representative for that purpose.
SEC. 11. Auditor. – The
Commission on Audit shall appoint, subject to
the approval of the Board, a representative who shall be the Auditor of the
Company and such personnel as may be
necessary to assist said representative, in the performance of his duties. The salaries of the Auditor and his staff
shall be approved by the Board. The
Auditors of corporations owned or controlled by the
Company shall be appointed by their
respective boards of directors.
SEC. 12. Exemption from Civil Service Law.
– The officers and employees of the
Company
shall not be subject to the Civil Service
Law, rules and regulations, and shall likewise be exempt from the
regulations of the Wage and Position Classification Office.
SEC. 13. Loans. – The
Company is hereby authorized to contract
loans, credits, any convertible foreign currency or capital goods, and
indebtedness from time to time from foreign governments, or any international
financial institutions or fund sources, or any other entities, on such terms
and conditions it shall deem appropriate for the accomplishment of its purposes
and to enter into and execute agreements and other documents specifying such
terms and conditions.
The
Republic of the Philippines, through the President of the Philippines, or his
duly authorized representative, may guarantee, absolutely and unconditionally,
as primary obligor and not as surety merely, the payment of the loans, credits
and indebtedness issued up to the amount herein authorized, which may be over
and above the amount which the President of the Philippines is authorized to
guarantee under Republic Act Numbered Sixty One Hundred Forty-Two, as amended,
as well as the performance of all or any of the obligations undertaken by the
Company in the territory of the Republic of the Philippines pursuant to loan agreements
entered into with foreign governments or any international financial
institutions or fund sources.
SEC. 14. Government Financial Institutions Guarantees. – The provision of any law to the contrary
notwithstanding, any financial institution owned or controlled by the
Government of the Republic of the Philippines, other than the
Central Bank,
Government Service and Insurance System and
the
Social Security System, is hereby
empowered to guarantee acceptance credits, loans, transactions, undertakings,
or obligations of any kind which may be incurred by the
Company, whether directly or indirectly, in
favor of any person, association or entity, whether domestic or foreign.
SEC. 15. Privileges and Incentives. –
The
Company shall be entitled to all the
incentives and privileges granted by law to private enterprises engaged in
petroleum or oil operations.
SEC. 16. Appropriations. – For the
initial funding requirements of the
Company,
the sum of Two Hundred Million Pesos is hereby set aside and appropriated from
the General Funds, not otherwise appropriated.
SEC. 17. Reports. – The
Company shall, within three months after the
end of every fiscal year, submit its annual report to the President. It shall likewise submit such periodic or
other reports as may be required of it from time to time.
SEC. 18. Separability Clause. –
Should any provision of this Decree be held unconstitutional, no other
provision hereof shall be affected thereby.
SEC. 19. Repealing Clause. – All
laws, decrees, executive orders, administrative orders, rules or regulations
inconsistent herewith are hereby repealed, amended or modified accordingly.
SEC. 20. Effectivity. – This Decree
shall take effect immediately.
DONE in the City of
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