QuestionsQuestions (PRESIDENTIAL DECREE NO. 927)
The policy is to promote industrial and overall economic development through the effective and efficient utilization of energy sources, including oil and oil-based resources. An organized entity is necessary to ensure adequate supply of oil and oil products as well as power and energy to all users to enable unimpeded and efficient economic growth.
PNOC is created as a body corporate. It undertakes and transacts corporate business primarily relative to oil or petroleum operations and other energy resource exploitation as defined in the charter, and it has the capacity to sue and be sued.
It includes actual exploration, production, refining, tankerage and/or shipping, storage, transport, marketing, and related activities concerning oil and petroleum products.
Energy resources exploitation includes exploration, discovery, development, extraction, utilization, refining, processing, transport, and marketing of all forms of energy resources. Energy resources means any substance or mineral which by itself or in combination, after processing/refining or application of technology, generates heat or power/energy—examples include petroleum or oil, coal, marsh gas, methane gas, geothermal sources, uranium, and other minerals and fossil deposits.
PNOC’s term is fifty (50) years from issuance and is deemed renewed for an equal period unless sooner dissolved by law.
They include: (1) providing and maintaining adequate and stable supply of oil and petroleum products for domestic requirements, including activities such as transportation, storage, importation/exportation, refining, supply, sale and distribution; (2) promoting exploration, exploitation, and development of local oil, petroleum, and other energy resources; and (3) fostering conditions conducive to balanced and sustainable growth of the economy relating to oil/petroleum operations and other energy resources exploitation.
Among others, PNOC may undertake exploration, exploitation, and development of all energy resources of the country (including surveys and related activities), and perform all other forms of petroleum/oil operations and energy resources exploitation.
PNOC may establish and maintain petroleum and energy base territories, construct/install/maintain duty-free ports for vessels engaged in offshore oil drilling, airports for direct service flights, telecommunications centers and ship-to-shore communications facilities, and provide electric power and fresh water supply—plus other acts necessary or advantageous for such operations.
Yes. PNOC may enter into contracts, with or without public bidding, with any person or entity (domestic or foreign) and with governments for varied aspects of oil/petroleum operations and energy resources exploitation.
PNOC may invest its funds as it may deem proper and necessary in activities related to its purposes. The charter explicitly allows investment in bonds or securities issued and guaranteed by the Government of the Philippines and PNOC may organize and incorporate subsidiary corporations for that purpose.
If PNOC has controlling interest of not less than fifty-one percent (51%) of the issued and outstanding capital stock of subsidiaries, the securities—including shares issued by subsidiaries and corporations owned/controlled by PNOC—and the sale/subscription to such securities/shares are exempt from registration, licensing, or other requirements under the Securities Act (C.A. No. 88, as amended) and any other law, decree, order, or regulation.
PNOC may hold lands and acquire rights over mineral lands in excess of the areas permitted to private corporations, associations, and persons by statute.
Yes. PNOC may exercise the right of eminent domain as necessary for the purpose for which it is created. It may also enter private lands for geological or geophysical studies, subject to payment of the proper amount/just compensation.
Subject to existing regulations, PNOC may establish and maintain a communication system whether by radio, telegraph, or other manner without the need of a separate franchise.
PNOC is governed by a Board of Directors composed of nine (9) members appointed by the President of the Philippines. Board members serve for three (3) years or until successors are appointed and qualified; vacancies are filled by the President for the expired term.
Board members must be natural-born citizens, at least thirty-five (35) years old, and of established integrity. The Chairman of the Board (chief executive officer) and the President are appointed by the President of the Philippines; other officers are appointed by the Board.
COA appoints, subject to approval of the Board, a representative who shall be the Auditor of the Company and such personnel as necessary. Salaries of the Auditor and staff are approved by the Board. Auditors of corporations owned or controlled by PNOC may be appointed by their respective boards, provided the firms are reputable accounting and auditing firms.
The Board, upon recommendation of the President of the Company, appoints officers and employees; fixes compensation, allowances, benefits, working hours and employment conditions; grants leaves under regulations it promulgates; disciplines/removes for cause; and establishes and maintains a recruitment and merit system for PNOC and its affiliates/subsidiaries.
It takes effect immediately.