Creation and Corporate Identity
- Creation of the Philippine National Oil Company (PNOC) as a corporate body with the capacity to sue and be sued.
- PNOC’s principal office and branches may be established as determined by its Board of Directors.
- The Company’s term is 50 years from enactment, renewable unless dissolved by law.
- "Oil or Petroleum Operation" encompasses exploration, production, refining, shipping, storage, transport, marketing, and related activities.
Objectives of the PNOC
- To ensure adequate and stable domestic supply of oil and petroleum products.
- To promote exploration, exploitation, and development of local oil resources.
- To create favorable oil industry conditions that support balanced and sustainable economic growth.
Powers and Functions
- Authority to conduct exploration, development, and production of oil deposits nationwide.
- Establish and manage petroleum base areas with facilities such as duty-free ports, airports, communication centers, power, and water supply.
- Lease petroleum base facilities to private entities on reasonable terms.
- Conduct all forms of oil operations and enter into contracts with local and foreign parties, with or without public bidding.
- Borrow funds domestically and internationally to finance operations.
- Invest in oil-related activities and government-guaranteed securities.
- Acquire, hold, or dispose shares, bonds, securities, and real or personal assets.
- Engage in import and export of oil products.
- Establish communication systems without separate franchise.
- Organize its corporate structure, appoint officers, and manage staff salaries.
- Exercise eminent domain and enter private lands for geological studies and petroleum activities, subject to just compensation.
- Establish technical educational systems for manpower development.
- Promulgate rules and adopt by-laws and a corporate seal.
Governance
- Governed by a seven-member Board of Directors appointed by the President of the Philippines for three-year terms.
- Board members must be natural-born Filipino citizens, at least 35 years old, and of established integrity.
- The President of the Company and Board Chairman appointed by the President of the Philippines.
- Other officers appointed by the Board.
Capital Structure
- Authorized capital stock of three million no-par shares:
- Two million shares subscribed and paid by the Republic of the Philippines at P50 per share.
- One million shares may be subscribed by Government or government financial institutions at no less than original value.
- Voting power of government shares vested in the President or designated representatives.
Powers of the Company President
- Prepare agendas and submit policies for Board consideration.
- Execute and implement Board-approved policies.
- Supervise Company operations and administration.
- Represent Company in all dealings with government and private entities.
Financing and Issuance of Bonds
- Authorized to issue bonds or securities, subject to Treasury Secretary recommendation and Presidential approval.
- Government may guarantee loans and indebtedness, including those exceeding prior statutory limits.
- Authority to contract loans and credits from foreign and local sources.
Legal Counsel and Audit
- Secretary of Justice serves as ex officio legal counsel, with delegation allowed.
- Commission on Audit appoints an Auditor, subject to Board approval.
- Corporations controlled by PNOC appoint their own auditors.
Employment and Civil Service
- PNOC officers and employees are exempt from the Civil Service Law and Wage and Position Classification regulations.
Guarantees by Government Financial Institutions
- Government-owned or controlled financial institutions may guarantee PNOC’s financial obligations, except for specified institutions.
Incentives and Privileges
- PNOC entitled to incentives granted by law to private petroleum enterprises.
Appropriations and Reporting
- Initial funding of P200 million appropriated from the General Funds.
- Mandatory submission of annual and periodic reports to the President.
Legal Provisions
- Separability clause ensuring unaffected validity of remaining provisions if any part is declared unconstitutional.
- Repeal of any inconsistent laws, decrees, orders, or regulations.
- Immediate effectivity upon issuance.