Creating The Philippine National Oil Company, Defining Its Powers And Functions, Providing Funds Therefor, And For Other Purposes

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 334 November 9, 1973

CREATING THE PHILIPPINE NATIONAL OIL COMPANY, DEFINING ITS POWERS AND FUNCTIONS, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES

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;

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...

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Summary of Presidential Decree No. 334

Declaration of Policy and Creation of the Philippine National Oil Company (Sections 1-4)
- Declares the policy of promoting economic development through effective utilization of energy sources like oil.
- Creates the Philippine National Oil Company (PNOC) as a body corporate to undertake oil/petroleum operations, defined as exploration, production, refining, storage, transport, marketing, and related activities concerning oil and petroleum products (Section 3).
- PNOC's purposes are: (a) provide stable domestic oil/petroleum supply (Section 4a), (b) promote exploration/exploitation of local oil sources (Section 4b), and (c) foster conditions for balanced company growth (Section 4c).

Powers and Functions of PNOC (Section 5)
- Undertake oil/petroleum exploration, exploitation, development, surveys in the country (Section 5a).
- Establish petroleum base territories with duty-free ports, airports, telecom facilities for offshore drilling operations (Section 5b).
- Lease portions of petroleum base for warehousing, logistical centers, fabrication facilities to domestic entities (Section 5c).
- Undertake all other oil/petroleum operations (Section 5d).
- Enter contracts for oil operations, acquire equipment/materials, obtain services (Section 5e).
- Borrow money from local/foreign sources (Section 5f).
- Invest funds in oil operations, government bonds/securities (Section 5g).
- Purchase/hold shares of other companies, exercise ownership rights (Section 5h).
- Hold lands, acquire mineral land rights beyond limits for private entities (Section 5i).
- Engage in oil/petroleum export/import business (Section 5j).
- Acquire/dispose assets for business conduct (Section 5k).
- Establish communication systems without separate franchise (Section 5l).
- Determine organizational structure, employee salaries (Section 5m).
- Establish offices, branches, agencies, subsidiaries (Section 5n).
- Exercise eminent domain as necessary (Section 5o).
- Enter private lands for geological/geophysical studies, subject to payment (Section 5p).
- Acquire easements over public/private lands for exploration/exploitation work (Section 5q).
- Establish technical educational system for manpower development (Section 5r).
- Adopt by-laws, corporate seal (Sections 5s, 5t).
- Perform necessary acts for objectives, promulgate rules/regulations (Sections 5u, 5v).
- Perform other functions provided by law (Section 5w).

Governing Body and Management (Sections 6-8)
- Governed by 7-member Board of Directors appointed by the President for 3-year terms (Section 6).
- Chairman and President appointed by the President (Section 6).
- Capital stock of 3 million no-par shares: 2 million originally subscribed by Philippines at P50 per share, 1 million may be subscribed by Philippines or govt financial institutions (Section 7).
- President is chief executive, prepares agenda, executes policies, supervises operations, represents company (Section 8).

Financing and Privileges (Sections 9-16)
- Authorized to issue govt-guaranteed bonds/securities to finance operations (Section 9).
- Secretary of Justice is ex-officio legal counsel (Section 10).
- Commission on Audit appoints company Auditor and staff (Section 11).
- Exempt from Civil Service Law, Wage and Position Classification rules (Section 12).
- Can contract loans from foreign govts, intl financial institutions (Section 13).
- Philippines govt can guarantee loans over limit in RA 6142 (Section 13).
- Govt financial institutions can guarantee PNOC's obligations (Section 14).
- Entitled to incentives/privileges for private oil companies (Section 15).
- Initial P200 million funding appropriated from General Funds (Section 16).

Reporting, Separability, Repealing, and Effectivity Clauses (Sections 17-20)
- Submit annual report to President within 3 months after fiscal year end (Section 17).
- Separability clause for unconstitutional provisions (Section 18).
- Repeals inconsistent laws, decrees, orders, rules (Section 19).
- Takes effect immediately (Section 20).