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PRESIDENTIAL DECREE NO. 334
PRESIDENTIAL DECREE NO. 334
- CREATING THE PHILIPPINE NATIONAL OIL COMPANY, DEFINING ITS POWERS AND
FUNCTIONS, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES
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WHEREAS,
inspite 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; chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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:cralaw:red
Section 1. Short Title. — This decree shall be known
as the "Charter of the Philippine National Oil Company."
Section 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.
Section 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. chanroblesvirtualawlibrary
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 Philippines or abroad as its business
operations would require.
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.
Section 4. Purposes. — The Company shall have the
following purposes:cralaw:red
a) To provide and maintain an adequate and stable
supply of oil and petroleum products for the domestic requirement;chanroblesvirtualawlibrary
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.
Section 5. Powers and Functions of the Company. — The
Company shall have the following powers and functions:cralaw:red
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;chanroblesvirtualawlibrary
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,rports 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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
d) To undertake all other forms of petroleum or oil
operations;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
f) To borrow money from local and foreign sources as
may be necessary for its operations;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
i) To hold lands and acquire rights over mineral
lands in excess of the areas permitted to private corporations,
associations and persons by statute;chanroblesvirtualawlibrary
j) To engage in export and import business of oil or
petroleum and its derivatives, as well as in related activities;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
m) To determine its organizational structure, and the
number and salaries of its officers and employees;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
o) To exercise the right of eminent domain as may be
necessary for the purpose for which the Company is created;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
r) To establish and maintain technical educational
system for the sustained development of the necessary manpower to
manage and operate its affairs and business;chanroblesvirtualawlibrary
s) To adopt a code of by-laws to complement this
charter;chanroblesvirtualawlibrary
t) To adopt and use a corporate seal which shall be
judicially noticed;chanroblesvirtualawlibrary
u) To perform such acts and exercise such functions
as may be necessary for the attainment of the purposes and objectives
herein specified;chanroblesvirtualawlibrary
v) To promulgate such rules and regulations as may be
necessary to carry out the purposes of this Decree;chanroblesvirtualawlibrary
w) To perform such other functions as may be provided
by law.
Section 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 Philippines. The members of the Board shall
serve for a term of three (3) years or until their successors shall
have been appointed and qualified. In case of any vacancy in the Board,
the same shall be filled by the President of the Philippines for the
unexpired term.
No person shall be appointed as member of the Board unless he is a
natural born citizen of the Philippines, at least thirty-five (35)
years of age and established integrity.
The Chairman of the Board, as well as the President of the Company,
shall be appointed by the President of the Philippines. The other
officers of the Company shall be appointed by the Board. chanroblesvirtualawlibrary
Section 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:cralaw:red
a) Two million shares of stock shall be originally
subscribed and paid for by the Republic of the Philippines at an
original issue value of P50 per share.
b) The remaining one million shares of stock may be
subscribed and paid for by the Republic of the Philippines or by
government financial institutions at values to be determined by the
Board, but in no case less than the original issued value above stated
to the Republic of the Philippines.
The voting power pertaining to shares of stock subscribed by the
government of the Republic of the Philippines shall be vested in the
President of the Philippines or in such person or persons as he may
designate.
The voting power pertaining to shares of stock subscribed by the
government financial institutions shall be vested in them.
Section 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:cralaw:red
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;chanroblesvirtualawlibrary
b) To execute, administer and implement the policies
and measures approved by the Board;chanroblesvirtualawlibrary
c) To direct and supervise the operations and
administration of the Company;chanroblesvirtualawlibrary
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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 18. Separability Clause. — Should any
provision of this Decree be held unconstitutional, no other provision
hereof shall be affected thereby.
Section 19. Repealing Clause. — All laws, decrees,
executive orders, administrative orders, rules or regulations
inconsistent herewith are hereby repealed, amended or modified
accordingly. chanroblesvirtualawlibrary
Section 20. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 9th day of November, in the year of Our Lord, nineteen hundred and
seventy-three.
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