PRESIDENTIAL DECREE NO. 927

Law Summary

Background and Purpose

Presidential Decree No. 927, issued on April 30, 1976, amends the charter of the Philippine National Oil Company (PNOC) to broaden its powers and enhance its role in ensuring a stable energy supply in light of rising oil costs.

Legal Context: This decree builds upon Presidential Decree No. 334 and serves to reinforce the PNOC’s capabilities.
Objectives: Aims to accelerate the exploration and development of alternative energy sources while assuring a stable supply of oil and petroleum.

Declaration of Policy

This section outlines the state’s commitment to promoting economic development through effective energy resource management.

Key Principle: The State declares the necessity of creating an organized entity to ensure an adequate supply of energy resources.
Implication: This policy aims to facilitate the unimpeded growth of the national economy.

Creation and Structure of the Company

The decree formally establishes the Philippine National Oil Company as a corporate entity.

Entity Creation: A body corporate named the Philippine National Oil Company (referred to as "the Company") is created.
Operations: The Company is empowered to engage in activities related to oil and petroleum operations, including exploration, production, refining, and marketing.
Duration: The Company is given a term of fifty (50) years, renewable unless dissolved by law.

Purposes of the Company

The specific purposes for which the Company is established are delineated.

Supply Assurance: Maintain an adequate supply of oil products for domestic needs and regulate transportation, storage, and distribution.
Resource Exploration: Promote the exploration and development of local energy resources.
Economic Growth: Foster conditions conducive to balanced and sustainable economic growth.

Powers and Functions of the Company

The decree enumerates the powers and functions of the Company, providing extensive authority to undertake various energy-related activities.

Exploration and Development: The Company can explore and develop all energy resources in the country.
Infrastructure Development: Authority to establish petroleum bases, duty-free ports, and telecommunications facilities.
Leasing and Contracts: Can lease facilities to private entities and enter into contracts without public bidding.
Financial Activities: May borrow funds and invest in government-backed securities.

Governance Structure

The governance of the Company is vested in a Board of Directors.

Board Composition: Comprised of nine members appointed by the President of the Philippines.
Terms of Service: Members serve a term of three years; vacancies are filled by the President.
Qualifications: Board members must be natural-born Filipino citizens, at least 35 years old, and of established integrity.

Duties and Responsibilities of the Leadership

The roles of the Chairman and the President of the Company are outlined.

Authority: The Chairman and President exercise powers as designated by the Board and By-Laws.
Approval of Actions: Must act within the framework established by the Board.

Audit and Financial Oversight

The auditing structure of the Company is established to ensure accountability.

Auditor Appointment: The Commission on Audit appoints an auditor, subject to Board approval.
Salary Approval: Salaries of auditors and staff require Board approval.

Personnel Management

The Board has the authority to manage personnel matters.

Appointment and Control: The Board, upon the President's recommendation, appoints Company officers and employees.
Compensation and Discipline: The Board sets salaries and can discipline or remove employees for cause.

Implementation

The decree takes effect immediately upon its issuance.

Effective Date: April 30, 1976.

Key Takeaways

Purpose and Empowerment: The decree empowers PNOC to ensure energy security and economic growth through a structured approach to energy resource management.
Broad Authorities: PNOC is granted extensive powers, including exploration, development, and operational management of energy resources.
Governance Structure: Clear governance and accountability mechanisms are established through the Board of Directors and oversight roles.
Immediate Effect: The decree’s provisions are effective immediately, underscoring the urgency of the energy challenges addressed.