EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE
S.B. No.
1992
21 JftN 18 P4'.03
REG ,
Introduced by Senator WIN GATCHALIAN
AN ACT PROVIDING A NATIONAL ENERGY POLICY AND FRAMEWORK FOR 
GOVERNMENT-INITIATED PETROLEUM EXPLORATION AND 
DEVELOPMENT FURTHER AMENDING FOR THE PURPOSE THE CHARTER OF 
THE PHILIPPINE NATIONAL OIL COMPANY (PNOC), AS AMENDED
EXPLANATORY NOTE
Given the nature of petroleum exploration and development as a capital-intensive 
industry and its importance in achieving energy security and self-sufficiency, 
governments have historically played a major role in jumpstarting and developing the 
sector.1 This is evidenced by some of the most prominent oil companies being state 
owned national companies: Saudi Arabia's Saudi Aramco, China's China National 
Offshore Oil Corporation, Brazil's Petrobras, Indonesia's Pertamina, Vietnam's 
Petrovietnam, and Malaysia's Petronas.
The Philippines has its own state owned national oil company - the Philippine National 
Oil Company (PNOC) which was created in 1973 to provide an adequate and stable 
supply of petroleum products to meet domestic requirement, and to promote the 
exploration and development of local petroleum sources.2 However, during its almost 
50 years in operation, the PNOC has engaged in various activities that are far removed 
from its original mandate, organizing and incorporating a total of eight subsidiary
• Page 5. The Role of National Oil Companies in the InternaOonal Oil Market United SUtes Congressional Research Service. 21 August 2007. 
1 Section 4, PO 334.


companies whose involvement range from deveioping geothermai resources to 
promoting energy efficiency programs.3 Moreover, PNOC and its subsidiaries have 
faced problems arising from financial mismanagement. For example, PNOC Shipping 
and Transport Corporation, at the time of its dissolution in 2013, suffered an annual 
loss of Php 533.73 million,4 while PNOC Alternative Fuels Corporation failed to remit a 
total of Php 121.60 million in unpaid dividends to the national government from 2013 
to 2018.5
Currently, PNOC has focused its resources only on three companies: PNOC which acts 
as the holding company with current operations primarily focused on leasing real 
estate which includes the energy supply base, PNOC Exploration Corporation (PNOC 
EC) which is engaged in upstream operations with projects geared towards the 
exploration and development of the country's petroleum and coal resources, and PNOC 
Renewables Corporation (PNOC RC) which is involved in renewable energy projects. 
However, even these existing corporations are not exempt from financial challenges. 
To illustrate, PNOC EC was unable to collect a total of Php 748 million of receivables 
from previous business transactions it has undertaken,6 while PNOC RC has 
continuously operated at a loss since 2013, with its total net loss until 2019 amounting 
to Php 301.438 million.7
This proposed legislation thus seeks to address the challenges faced by PNOC by laying 
down a national energy policy and framework for government-initiated petroleum 
exploration and development. This policy will be implemented by the PNOC, 
refocusing the company's mandate exclusively to upstream petroleum operations. To 
do so, the company is empowered to invest in petroleum operation projects, both here 
and abroad, and is given the power to retain 50% of its annual net earnings for local 
petroleum exploration and development. Moreover, strict professional and technical 
qualifications on the members of its Board of Directors and officers have been
1 These companies are: PNOC Shipping and Transport Corporation (PSTQ which was tasked to engage In the movement of oil products throughout the countir, the PNOC Coal Corporation (PCC) which was 
mandated to engage In coal exploration and development activities; the PNOC Energy Development Corporation (PNOC EDQ which was mandated to engage In geotheriMl exploration aixl povw plant 
operations and management; the PNOC Exploration Corporation (PNOC EQ which was tasked to engage In on and gas exploration, utmatloo, and development; the PNOC PeOochemIcal ^lopment 
Corporation (PPOQ which was eventually renamed to PNOC Alternative Fuels Corporation (PAFC) was tasked to engage In developing alternative sources of energy; the PNOC OMtopmwt and Managenwt 
Corporation (POMC) which was mandated to engage In the development of key energy Infrastructure such as reflnertes and pipelines; and the PNOC Renewables Corporation (PNOC RQ vrhlch was tasked 
to engage In the promotion and development of renewable energy and energy efficiency programs In the country. .
• Executive Summary of 2014 Commission on Audit Annual Audit Report tor PNOC Shipping and Transport Corproatkxi.
’Executive Summary of 2019 commission on Audit Annual Audit Report for PNOC Alternative Fuels Corporation. 
«.«,•
• Broken down M follows; A total of Php 192 million ftom A Backstone Energy Corp. for the Ulat Coal Prelect; Php 147 million from PNOC (Or leasing of the Energy Supply Base; Php Wmflikxi from PNOC
for the Batongas-Manlla gas pipeline project 1 and Batangas44anlla gas pipeline project 2 projects; Php 150 million horn various customers of Its coal trading and marketing operations; Php 115 million from 
various customers of Its bunkering services
’ Various Commission on Audit Annual Audit Report for PNOC Renewables Corporation.


imposed. All these are with the end in view of achieving energy security and self- 
sufficiency.
For these reasons, the immediate passage of this measure Is ^ght.
lATCHALIAl


EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE
S.B. No. 1992
of !l;t' ^rCI rfitlT
21 JAN 18 P4 :Q3
RECcr
Introduced by Senator WIN GATCHALIAN
AN ACT PROVIDING A NATIONAL ENERGY POLICY AND FRAMEWORK FOR 
GOVERNMENT-INITIATED PETROLEUM EXPLORATION AND 
DEVELOPMENT FURTHER AMENDING FOR THE PURPOSE THE CHARTER OF 
THE PHILIPPINE NATIONAL OIL COMPANY (PNOC), AS AMENDED
Be It enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
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Section 1. Sections 1, 2, 3, 4, 5, 6, 7, 8, 9,10,11,12,13,14,15,16, and 17 
of Presidentiai Decree No. 334, as amended by Presidentiai Decree No. 334, and 
further amended by Presidentiai Decree No. 405, Presidential Decree No. 572, 
Presidential Decree No. 927, Presidential Decree No. 1516, Memorandum Order No. 
18 Series of 1986, Executive Order No. 171 Series of 1987, and Republic Act No. 
7638, is further amended to read as follows:
"Section 1. Short Title. This ACT [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 ADVANCEMENT OF ENERGY SECURITY AND 
ENERGY SELF-SUFFICIENCY, AND the effective and efficient


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Utilization of energy. In line with this poliq^, the establishment 
of an organized entity is necessary in order to assure adequate 
supply of [oil-and-oil products-os well-as-powor-and] energy to 
all users and consequently 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] 
PNOC", which shall undertake and transact the corporate 
business OF [rGlativG-primarily to oil -or] petroleum operations 
[and other energy rcGOurcGS-exploitation-as defined-hcrounder],
and for that purpose, the [Company] PNOC shall have capacity 
to sue and be sued.
roll or Petroleum Operations" shall include [actual-exploratioRj
production7—refining;—tankerage—and/or shipping;—storage;
transport; marketing, and-related activities concerning oil-and
petroleum- products?
■"Energy—resources—exploitation"—shall include—exploration,
discovery;—development;—extraction;—utilization;—refining;
processing; transport, and marketing-of all forms of energy
resources.-
"Energy-resources"-means any substance, mineral or otherwise;
which-by-itself or-in-combination with-other substonces or after
processing or refining or-the application to it- of technology
emanates; gives off; generates or causes, the emanation or
generation of heat-or power or- energy such as, but-not limited
to, petroleum or oil, coal, marsh gas,-methane gas, geothermal
sources of heot and power,-uronium and other minerals-and 
depositsr]


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The principal office of the [Company] PNOC 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] PNOC 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 PRIMARY PURPOSE OF THE
Philippine National Oil Company (PNOC) shall BE [have-the 
following purposes:
(a) To providG-and-maintaln-an-adcquate-and stablo supply-ef
oil-and-potrolGum products-for-thc domestic roquirement and-for
that-purpose to engage—in-the transportation, storage,-
importation, exportation, refining, supply, sale-and-distribution
of -crude-oil,-refined; petroleum and-petreleum-based products/
whcther-imported-er-produced-by local -refineriGSt
(b) ] To engage in the exploration, exploitation and development 
[operations] OF PETROLEUM AND UNDERTAKE ALL FORMS 
OF PETROLEUM OPERATIONS IN THE COUNTRY, and 
[other-energy-resoureesj
(€)} To foster conditions relating to [oH-or] petroleum operations 
[and-other—energy"resources- exploitation] conducive to a 
balanced and sustainable growth of the economy.[t
(d) —Te—undertake;—by—Itself—er—otherwise,—exploration,-
exploitationr-and-development of-all-energy-resources-of-the
country; including-surveys-and-octivities-related theretet
(e) To undertake all other-forms of petroleum or oil operations
and other energy resources exploitatierh]


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SECTION 5. DEFINITION OF TERMS. - THE FOLLOWING 
TERMS AS USED IN THIS ACT SHALL BE DEFINED AS:
(A) 
DOWNSTREAM OIL INDUSTRY REFERS TO THE
BUSINESS OF IMPORTING, EXPORTING, RE­
EXPORTING, SHIPPING, TRANSPORTING, 
PROCESSING, 
REFINING, 
STORING,
DISTRIBUTING, MARKETING AND/OR SELLING 
CRUDE OIL, GASOLINE, DIESEL, LIQUEFIED 
PETROLEUM GAS (LPG), KEROSENE, AND OTHER 
PETROLEUM PRODUCTS;
(B) 
PETROLEUM REFERS TO THE NATURALLY 
OCCURRING MIXTURE OF COMPOUNDS OF 
HYDROGEN AND CARBON WITH A SMALL 
PROPORTION OF IMPURITIES AND SHALL 
INCLUDE ANY CRUDE MINERAL OIL, NATURAL 
GAS, HYDROGEN GAS, BITUMEN, ASPHALT, 
MINERAL WAX, AND ALL OTHER SIMILAR OR 
NATURALLY-ASSOCIATED SUBSTANCES, WITH 
THE EXCEPTION OF COAL, PEAT, BITUMINOUS 
SHALE OR OTHER STRATIFIED MINERAL FUEL 
DEPOSITS;
(C) 
PETROLEUM BASE TERRITORY REFERS TO LAND, 
BUILDINGS, AND FACILITIES THAT ARE DIRECTLY 
RELATED AND NECESSSARY TO PETROLEUM 
OPERATIONS. IT MAY INCLUDE:
(1) 
DUTY-FREE PORTS ADEQUATE FOR THE USE 
OF VESSELS ENGAGED IN PETROLEUM 
OPERATIONS,
(2) 
AIRPORTS SUFFICIENT FOR DIRECT 
SERVICE FLIGHTS,
(3) 
TELECOMMUNICATIONS CENTER AND SHIP- 
TO-SHORE COMMUNICATIONS,


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(D)
(4) 
WAREHOUSES AND LOGISTICAL CENTERS 
FOR THE STORAGE OF PETROLEUM 
DRILLING AND PETROLEUM WELL 
SUPPLIES, FABRICATION OF OFFSHORE 
AND ONSHORE DRILLING COMPONENTS, 
AND CONDUCT OF MECHANICAL REPAIR 
AND THE LIKE, AND
(5) 
SPACES FOR THE OFFICE, HABITATION AND 
RECREATIONAL REQUIREMENTS OF 
PERSONNEL ENGAGED IN PETROLEUM 
OPERATIONS AND THEIR IMMEDIATE 
DEPENDENTS; AND
PETROLEUM OPERATIONS SHALL REFER TO 
ACTIVITIES INVOLVING THE EXPLORATION, 
DISCOVERY, AND EXTRACTION OF PETROLEUM 
WITHIN OR OUTSIDE THE PHILIPPINES 
THROUGH DRILLING AND PRESSURE, OR 
SUCTION, OR THE LIKE, AND ALL OTHER 
OPERATIONS INCIDENTAL THERETO INCLUDING 
THE TRANSPORTATION, STORAGE, HANDLING, 
AND MARKETING OF EXTRACTED PETROLEUM, 
BUT EXCLUDING THE ACTIVITIES IN THE 
DOWNSTREAM OIL INDUSTRY;
Section [5]6. Powers and Functions of [tho-Gompany] PNOC. - 
[^The [Company] PNOC shall have the following powers and 
functions:
(a) To undertake AND ENGAGE IN, by itself or otherwise,
PETROLEUM OPERATIONS PRIMARILY IN THE 
COUNTRY AND SECONDARILY ABROAD, WHICH 
INCLUDES exploration, exploitation, and development of


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all areas of [oil-er] petroleum deposits in the country, 
including surveys and activities reiated thereto;
(B) 
TO DIRECTLY EXPLORE FOR AND PRODUCE 
INDIGENOUS PETROLEUM FOR THE GOVERNMENT 
PURSUANT TO SECTION 4 OF PRESIDENTIAL 
DECREE NO. 87 OTHERWISE KNOWN AS THE OIL 
EXPLORATION AND DEVELOPMENT ACT OF 1972 
AS AMENDED;
(C) 
TO UNDERTAKE ALL THE POWERS, FUNCTIONS, 
AND RESPONSIBILITIES OF THE PETROLEUM 
BOARD PURSUANT TO PRESIDENTIAL DECREE NO. 
87 AS AMENDED;
([fe] D) To establish, maintain, control, and direct in any area 
within the national territory as it may deem appropriate, 
a petroieum [and—energy] base territory WHICH 
INCLUDES [and-construct, install or maintain therein] 
CONSTRUCTING, INSTALLING, OR MAINTAINING 
duty-free ports adequate for the use of vessels engaged 
in offshore [eH] PETROLEUM drilling operations, airports 
sufficient for direct service flights, telecommunications 
center, and ship-to-shore communications faciiities, 
[providc-clectric-power and-fresh water suppiy,-] and 
perform such other acts as it may deem necessary and 
advantageous or convenient to [sueh] PETROLEUM 
operations;
([e] E) To lease, at reasonable rates, to private domestic entities 
or persons such portion or portions of the petroleum [and 
energy] base TERRITORY WHICH INCLUDES [7 
including] facilities necessary for warehousing, logistical 
centers for the storage of [eH] PETROLEUM drilling and 
[eH] PETROLEUM well supplies, fabrication of offshore 
driiling components and structure, mechanicai repair


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facilities and the like [j], AND spaces for the office, 
habitation and recreational requirements of personnel 
directly engaged in offshore [eH] PETROLEUM drilling 
and in manning the various logistical support operations 
and their immediate dependents: PROVIDED, THAT 
THE LEASED PORTIONS OF THE PETROLEUM BASE 
TERRITORY SHALL BE EXCLUSIVELY UTILIZED 
FOR PETROLEUM OPERATIONS;
([d] F) To undertake all other forms of petroleum [or-oil] 
operations CONSISTENT WITH THIS ACT [and-other 
cncrgyrcsourecG exploitations];
([e] G) 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 operations, [ond -energy resources 
exploitatien] 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 term and conditions as it may deem proper 
and seasonable;
([f] H) To borrow money from local and foreign sources as may 
be necessary for its PETROLEUM operations;
([§} I) [Any-provision of-law to the contrary-notwithstandin§7 
including but not-limited-to Section 13 of Act 1^59,-as
amondedT] [t]To invest its funds as it may deem proper 
and necessary in any activity related to PETROLEUM 
OPERATIONS PRIMARILY IN THE COUNTRY AND 
SECONDARILY ABROAD [its purposes], [including] 
AND in any bonds, [er] securities, OR FINANCIAL 
INSTRUMENTS issued and guaranteed by the 
Government of the Philippines, and the [Company]


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PNOC may organize and incorporate subsidiary 
corporations for [the] THIS purpose. The capitai stock of 
corporations organized and incorporated by the 
[Company] PNOC may be subscribed in whole or in a 
part by the [Company] PNOC. Where the [Company] 
PNOC has a controlling interest of not less than fifty-one 
percent (51%) of the issued and outstanding capital 
stock, of such subsidiaries, the securities, including 
shares of capital stock, issued by the subsidiaries and 
corporations owned and/or controlled by it, as well as the 
sale of and/or subscription to such securities and shares 
of capital stock shall be exempt from registration, 
licensing or other requirements imposed under the 
Securities Act (C. A. No. 83, as amended) any other law, 
decree, order or regulationH;
([hi 3) 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 vote thereon: PROVIDED, THAT SUCH 
CORPORATIONS OR ASSOCIATIONS ARE 
ENGAGED IN PETROLEUM OPERATIONS 
PRIMARILY IN THE COUNTRY, AND SECONDARILY 
ABROAD;
[i)To-hold lands and acquire rights ovGr-minoral-lands in-oxeess
ef—the—areas—permitted—te—private—corporati0RS7
associations and persons by-statutet
j)-T-o-cngage-in-export-and-import business of-oil-or petroleum
and its derivatives-as-well as in related activitiesj]


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(k) To acquire assets, real or personal, or interest therein, and
encumber or otherwise dispose the same as it may deem 
proper and necessary in the conduct of its business;
(l) Subject to existing regulations, if it deems necessary, to
establish and maintain [sueh] A communication system, 
whether by radio, telegraph, or any other manner, 
without the need of a separate franchise therefor: [t] 
PROVIDED, THAT SUCH COMMUNICATION 
SYSTEM SHALL BE EXCLUSIVELY UTILIZED FOR 
PETROLEUM OPERATIONS;
(m) To determine its organizational structure, and the number
and salaries of its officer and employees: [t] PROVIDED, 
THAT ITS ORGANIZATIONAL STRUCTURE, 
NUMBER, AND SALARIES OF ITS OFFICERS AND 
EMPLOYEES SHALL BE SUBJECT TO THE 
PROVISIONS OF SECTION 13 OF THIS ACT;
(n) To establish and maintain offices, branches, agencies,
subsidiaries, correspondents, or other units anywhere as 
may be needed by the [Company] PNOC and reorganize 
or abolish the same as it may deem proper: H 
PROVIDED, THAT SUCH OFFICES, BRANCHES, 
AGENCIES, SUBSIDIARIES, CORRESPONDENTS, 
OR UNITS ARE DIRECTLY ENGAGED IN AND 
NECESSARY FOR PETROLEUM OPERATIONS, OR 
ORGANIZED AND INCORPORATED PURSUANT TO 
SECTION 6(1) OF THIS ACT;
(o) To exercise the right of eminent domain as may be
necessary for the purpose for which the [Company] 
PNOC is created; [t]
(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


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OPERATIONS [7-mincral-and-ot-her- energy -rcGourccs; 
Gxploration-and-Gxpleitation];
(q) To acquire easement over public and private lands necessary
for the purpose of carrying out any work essential to [its] 
petroleum operations [and—energy—resourees 
exploitation], subject to payment of just compensation;
(r) 
To CONDUCT RESEARCH AND STUDIES ON
PETROLEUM OPERATIONS, PRIMARILY IN THE 
COUNTRY, AND SECONDARILY ABROAD, AND
establish and maintain a technical educational system for 
the sustained development of the necessary manpower 
to manage and operate its affairs and business;
(S) TO RETAIN AT LEAST FIFTY PERCENT (50%) OF ITS 
ANNUAL NET EARNINGS: PROVIDED, THAT THE 
ENTIRE RETAINED ANNUAL NET EARNINGS SHALL 
BE EXCLUSIVELY UTILIZED FOR PETROLEUM 
OPERATIONS IN THE COUNTRY;
([s] T) To adopt a code of by-laws to complement this charter; 
([t] U) To adopt and use a corporate seal which shall be 
judicially noticed;
([e] V) To perform such acts and exercise such functions as 
may be necessary for the attainment of the purposes and 
objectives herein specified; AND 
([v] W) To perform such other functions as may be provided by 
law.
Section [6]7. Governing Body. - The [Company] PNOC shall be 
governed by a Board of Directors, hereinafter referred to as the 
"Board" which shall be composed of nine (9) members, to be 
appointed by the President of the Philippines: PROVIDED, 
THAT THE CHAIRPERSON OF THE BOARD AND THE 
BOARD OF DIRECTORS OF ALL OF THE PNOC'S
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SUBSIDIARY CORPORATIONS SHALL BE THE 
SECRETARY OF THE DEPARTMENT OF ENERGY WHO 
SHALL SERVE AS SUCH IN EX OFFICIO CAPACITY. [TKe 
members of the Board shall scrvo-for-aHiorm of three (-3) years
or until their—successors—shall have-been—appointed--and
qtjaHfiedr^n-c-ase-of-any-vaeaney in the-Board,-the-same shall -be
filled-bythe-President-of-the-Philippines for theunexpired term?]
[No-porson-shall bo appointed-as-momber of tho-board-unless
hc-is-a-natural-born-citizen-of-the Philippines, at-loast-thirty-five
(35)-yoars of agoA and of-establishod integrity.
T-ho-€hairman of-tho-Board;-who shall bo -tho-chiof-exeeabve
officer of tho-Gompanyr^s-woli-as the President of the Company
shali-bo-appointod-by-the-Prosidont-of-t-he-Philippinos: The other
effieers-of-the-Gompany shall bo appointod-by-the-Board^]
THE APPOINTMENT, REMOVAL, AND TERM OF OFFICE OF 
THE MEMBERS OF THE BOARD, EXCLUDING THE 
CHAIRPERSON, SHALL BE GOVERNED BY SECTIONS 15, 
16, AND 17 OF REPUBLIC ACT NO. 10149, OTHERWISE 
KNOWN AS THE GOCC GOVERNANCE ACT OF 2011: 
PROVIDED, THEY SHALL LIKEWISE POSSESS THE 
FOLLOWING QUALIFICATIONS:
(A) 
A NATURAL BORN CITIZEN OF THE PHILIPPINES;
(B) 
AT LEAST THIRTY-FIVE (35) YEARS OF AGE;
(C) 
AT LEAST TEN (10) YEARS OF CUMULATIVE 
EXPERIENCE IN ANY OF THE FOLLOWING FIELDS: 
PETROLEUM OPERATIONS, ENERGY, LAW, 
ECONOMICS, FINANCE, OR ENGINEERING; AND
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(D) OF RECOGNIZED GOOD MORAL CHARACTER, 
INTEGRITY, PROBITY, INDEPENDENCE, AND 
COMPETENCE.
THE DUTIES AND RESPONSIBILITIES OF THE MEMBERS
OF THE BOARD SHALL BE GOVERNED BY SECTIONS 19,
20, 21, AND 22, OF REPUBLIC ACT NO. 10149:
PROVIDED, THAT IN ADDITION TO THE FOREGOING
PROVISIONS, THE MEMBERS OF THE BOARD SHALL:
(A) 
UPON APPOINTMENT, DIVEST THROUGH SALE OR 
LEGAL DISPOSITION ANY AND ALL INTERESTS 
FROM ANY PETROLEUM OPERATIONS OR 
DOWNSTREAM OIL INDUSTRY BUSINESS;
(B) 
UPON APPOINTMENT, RELINQUISH ANY 
EXISTING EMPLOYMENT, CONSULTANCY, OR ANY 
CONNECTION WITH, AND ANY PECUNIARY 
INTEREST IN ANY PETROLEUM OPERATIONS OR 
DOWNSTREAM OIL INDUSTRY BUSINESS;
(C) 
PUBLICLY DISCLOSE ANNUALLY ANY RELATIVE BY 
CONSANGUINITY OR AFFINITY WITHIN THE 
FOURTH CIVIL DEGREE WHO HAS A PREVIOUS OR 
EXISTING EMPLOYMENT, CONSULTANCY, 
CONNECTION WITH, OR PECUNIARY INTEREST IN 
ANY ENERGY COMPANY;
(D) 
ACT IN THE BEST INTEREST OF THE PNOC WITH 
THE COUNTRY'S ENERGY SECURITY AND ENERGY 
SELF-SUFFICIENCY AS THE UTMOST OBJECTIVE;
(E) 
EXERCISE OBJECTIVE AND INDEPENDENT 
JUDGMENT, AND EXTRAORDINARY DILIGENCE 
AND SKILL IN THE PERFORMANCE OF THEIR 
DUTIES;
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(F) 
ESTABLISH CONCRETE POLICIES AND SPECIFIC 
PROCEDURES TO ENSURE THE HIGHEST 
STANDARDS OF ETHICS, PROFESSIONALISM, 
TRANSPARENCY, AND ACCOUNTABILITY OF THE 
MEMBERS OF THE BOARD, AND THE OFFICERS 
AND EMPLOYEES OF THE PNOC,
(G) 
ENSURE THAT THE OPERATIONS OF THE PNOC'S
SUBSIDIARY CORPORATIONS 
REMAIN
CONSISTENT WITH THE MANDATE OF THE PNOC 
AS PROVIDED IN THIS ACT;
(H) 
APPOINT, DISCIPLINE, AND REMOVE THE 
MEMBERS OF THE BOARD OF DIRECTORS AND 
THE PRESIDENTS OF THE PNOC'S SUBSIDIARY 
CORPORATIONS; AND
(I) 
RECOMMEND A SHORTLIST OF QUALIFIED 
CANDIDATES FOR THE PNOC PRESIDENT TO THE 
PRESIDENT OF THE PHILIPPINES: PROVIDED, 
THAT THE CANDIDATES SHALL POSSESS THE 
FOLLOWING QUALIFICATIONS:
(1) 
AT LEAST THIRTY-FIVE (35) YEARS OF AGE;
(2) 
AT LEAST TEN (10) YEARS OF CUMULATIVE 
EXPERIENCE IN ANY OF THE FOLLOWING 
FIELDS: PETROLEUM OPERATIONS, ENERGY, 
LAW, ECONOMICS, FINANCE, OR 
ENGINEERING;
(3) 
PROVEN TRACK RECORD AND EXPERIENCE 
IN MANAGING COMPANIES IN THE PRIVATE 
OR PUBLIC SECTOR; AND
(4) 
OF RECOGNIZED GOOD MORAL CHARACTER, 
INTEGRITY, PROBITY, INDEPENDENCE, AND 
COMPETENCE.
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THE COMPENSATION AND ALLOWANCES, AND 
LIABILITIES OF THE MEMBERS OF THE BOARD SHALL BE 
GOVERNED BY SECTIONS 23 AND 24 OF REPUBLIC ACT 
NO. 10149.
Section [7]8. Capital Stock. - The [company] PNOC shall have 
a capital stock divided into ten million no-par shares to be 
subscribed, paid for and voted as follows:
(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 eight 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 cases 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 by 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 institutions shall be vested in them.
Section [8]9. Duties and Responsibilities of the [Chairman] 
CHAIRPERSON of the Board and THE PNOC President. - The 
[Chairman] CHAIRPERSON of the Board [and the President]
SHALL HAVE THE FOLLOWING DUTIES AND 
RESPONSIBILITIES:
(a) SET, IN COORDINATION WITH THE BOARD, THE 
GENERAL POLICY DIRECTION FOR THE PNOC AND 
ITS SUBSIDIARY CORPORATIONS;
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(b) 
CONVENE THE BOARD FOR REGULAR AND SPECIAL 
MEETINGS;
(c) 
PREPARE THE AGENDA FOR THE REGULAR AND 
SPECIAL MEETINGS OF THE BOARD;
(d) 
RECOMMEND TO THE PRESIDENT THE 
REORGANIZATION OF THE BOARD AS MAY BE 
DEEMED NECESSARY; AND
(e) 
[e]Exercise such powers and perform such duties as may 
be provided in the By-Laws [or-as-may-be-VGSted-irHthem 
by-thc-Board],
IN ADDITION TO THE PROVISIONS UNDER SECTIONS 18
AND 22 OF REPUBLIC ACT NO. 10149, THE PNOC
PRESIDENT SHALL:
(a) 
UPON APPOINTMENT, DIVEST THROUGH SALE OR 
LEGAL DISPOSITION ANY AND ALL INTERESTS 
FROM ANY PETROLEUM OPERATIONS OR 
DOWNSTREAM OIL INDUSTRY BUSINESS;
(b) 
UPON APPOINTMENT, RELINQUISH ANY EXISTING 
EMPLOYMENT, CONSULTANCY, OR ANY 
CONNECTION WITH, AND ANY PECUNIARY 
INTEREST IN ANY PETROLEUM OPERATIONS OR 
DOWNSTREAM OIL INDUSTRY BUSINESS;
(c) 
PUBLICLY DISCLOSE ANNUALLY ANY RELATIVE BY 
CONSANGUINITY OR AFFINITY WITHIN THE 
FOURTH CIVIL DEGREE WHO HAS A PREVIOUS OR 
EXISTING EMPLOYMENT, CONSULTANCY, 
CONNECTION WITH, OR PECUNIARY INTEREST IN 
ANY ENERGY COMPANY;
(d) 
SERVE AS THE CHIEF EXECUTIVE OFFICER OF THE 
PNOC;
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(e) 
EXECUTE, ADMINISTER, AND IMPLEMENT THE 
GENERAL POLICY DIRECTION AND SPECIFIC 
MEASURES APPROVED BY THE BOARD;
(f) 
DIRECT AND SUPERVISE THE OPERATIONS AND 
ADMINISTRATION OF THE PNOC;
(g) 
SUBMIT FOR CONSIDERATION BY THE BOARD 
SUCH POLICIES AND MEASURES NECESSARY TO 
CARRY OUT THE PURPOSES AND OBJECTIVES OF 
THIS ACT;
(h) 
REPRESENT THE PNOC IN ALL DEALINGS WITH 
THIRD PARTIES: PROVIDED, THAT THE REQUISITE 
AUTHORITY HAS BEEN ISSUED BY THE BOARD; 
AND
(i) 
EXERCISE SUCH OTHER POWERS AND DUTIES 
PROVIDED IN THE BY-LAWS AND VESTED UPON BY 
THE BOARD.
Section [9] 10. Issuance of Bonds. - The {-Gompany] PNOC, 
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 [eH-ar] 
petroleum operations.
Section [iO]ll. General Counsel. - The [Seeretary-of Justice-or 
the] Solicitor General shall perform the duties of General 
Counsel of the Company. [Any] SUBJECT TO APPLICABLE 
[provision—of] iawS, [to—the—contrary notwithstanding,—the 
Secretary of Justice of] the Solicitor General and such personnel 
as may be necessary to assist him in the performance of his 
duties and responsibilities [shaH] MAY receive such allowances 
as shall be fixed by the Board.
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Section. [ii]12. Auditor. - Any provision of law to the contrary 
notwithstanding, the Commission on Audit shall appoint [7 
subject-to thG approval-of-thc-Board,-] a representative who shall 
be the Auditor of THE PNOC [the-Gompany] and such 
personnel as may be necessary to assist said representative in 
the performance of [his] duties. [Tho-salariGS-of-thG-Auditor-and 
his staff shall-bG.approvGd by-the-6eard. ThG Duditors of
eerporations owned or-controllGd by-thG-Gompany-who-shall-bG
reputable accounting-and auditing firms shall be appointed by
their-respective-boards of directors.]
Section [i2]13. Appointment, COMPENSATION, Control, and 
Discipline of Personnel. - Any provision of law to the contrary 
notwithstanding, the Board, upon recommendation of the 
President of THE PNOC [the-Company], shall appoint THE 
PNOC'S [the] officers [and employees-of-the Company] and 
THAT OF its [subsidiaries] SUBSIDIARY CORPORATIONS; 
fix their compensation, allowances and benefits, their working 
hours and such other conditions of employment as it may deem 
proper; grant them leaves of absence under such regulations as 
it may promulgate; discipline or remove them for cause; and 
establish and maintain a recruitment and merit system for the 
[Company] PNOC and its SUBSIDIARY CORPORATIONS 
[affiliates—and—subsidiaries]; PROVIDED, THAT THE 
APPOINTMENT, COMPENSATION, ALLOWANCES AND 
BENEFITS, WORKING HOURS, DISCIPINE AND 
REMOVAL, AND OTHER EMPLOYMENT CONDITIONS OF 
EMPLOYEES OF THE PNOC'S SUBSIDIARY 
CORPORATIONS SHALL BE DETERMINED BY THEIR 
BOARD OF DIRECTORS, UPON RECOMMENDATION OF 
THEIR PRESIDENT; PROVIDED FURTHER, THAT THE
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PROVISIONS OF THIS SECTION SHALL BE IMPLEMENTED 
IN ACCORDANCE WITH REPUBLIC ACT NO. 10149.
THE EMPLOYEES OF THE PNOC SHALL BE ENTITLED TO 
ALL RETIREMENT AND INSURANCE BENEFITS AS WELL 
AS LEAVE PRIVILEGES OF GOVERNMENT EMPLOYEES: 
PROVIDED, THAT THE PNOC'S SUBSIDIARY 
CORPORATIONS SHALL NOT BE SUBJECT TO THE 
PROVISIONS OF THE GOVERNMENT SERVICE AND 
INSURANCE SYSTEM, AS PROVIDED UNDER 
COMMONWEALTH ACT NO. 186 OTHERWISE KNOWN AS 
GOVERNMENT SERVICE INSURANCE ACT, AS AMENDED.
Section [43] 14. Loans. - The [Company] PNOC 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 [tiis] THE 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 NO. 
6142 [Numbcrcd-Sixty-Qne- Hundred Forty-Two], as amended, 
as well as the performance of all or any of the obligations 
undertaken by the [Company] PNOC in the territory of the
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Republic of the Philippines pursuant to loan agreements entered 
into with foreign governments or any international financial 
institutions or fund sources.
Section [44]15. Government Financial Institutions Guarantees. - 
The provision of any law to the contrary notwithstanding, any 
financial institution owned or controiled by the Government of 
the Republic of the Phiiippines, 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] PNOC, whether 
directly or indirectly, in favor of any person, association or entity, 
whether domestic or foreign.
Section [iSlie. Priviieges and Incentives. - The [Company] 
PNOC shall be entitled to all the incentives and privileges 
granted by law to private enterprises engaged in petroieum [or 
eti] operations.
In addition, the [Company] PNOC shali be exempt from ail 
taxes, duties, fees, imposts, and all other charged imposed 
directly or indirectly by the Republic of the Phiiippines, its 
provinces, cities, municipaiities and other government agencies 
and instrumentalities:[7] Provided, That [tho Company affiliate] 
THE PNOC'S SUBSIDIARY corporations [as provided-in 
5eetion-13 hereefT-as-amonded,-] shail be exempt oniy from ail 
taxes, duties, fees, imposts, and all other charges imposed 
directiy or indirectiy by the Republic of the Philippines, its 
provinces, cities, municipalities and other government agencies 
and instrumentaiities, on importations of aircrafts, vesseis, 
tankers, barges, and other floating structures, inciuding any
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machinery, engines, motors, equipment, spare parts and 
materials thereof.
Other government offices and other government-owned or 
controlled corporations shall extend whatever assistance may be 
needed by the [Gemparty] PNOC or any of its SUBSIDIARY 
CORPORATIONS [afffiiat-es-and -subGidiarlGs], including the 
details of its officials and employees to the [Company] PNOC or 
any of its subsidiaries on full time or part time basis under 
arrangements satisfactory to the [Company] PNOC or any of its 
subsidiaries and the other government office or corporation 
concerned. Said officials and employees, as well as the directors 
of the [Company] PNOC and its SUBSIDIARY 
CORPORATIONS [affiliates—and GubsidiariGS], may receive 
allowances and other emoluments, IN ACCORDANCE WITH 
THE PROVISIONS OF SECTION 13 OF THIS ACT. 
[notwithstanding -the -provision-of-any-law-te-tfie-c-ontraryr]
Section [i6]17. Appropriations AND BUDGETARY 
REQUIREMENTS. - For the initial funding requirements of the 
[Company] PNOC, the sum of Two Hundred Million Pesos is 
hereby set aside and appropriated from the General Funds, not 
otherwise appropriated. THE ANNUAL BUDGET OF THE PNOC 
SHALL BE SUBMITTED TO CONGRESS FOR APPROVAL.
Section [i7]17-A. Reports AND CONGRESSIONAL 
OVERSIGHT. - THE JOINT CONGRESSIONAL ENERGY 
COMMISSION (JCEC) CREATED UNDER REPUBLIC ACT 
NO. 9136, OTHERWISE KNOWN AS THE ELECTRIC 
POWER INDUSTRY REFORM ACT OF 2001, AND 
RENAMED UNDER REPUBLIC ACT NO. 11285, 
OTHERWISE KNOWN AS THE ENERGY EFFICIENCY AND
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CONSERVATION ACT, SHALL EXERCISE OVERSIGHT 
POWERS OVER THE IMPLEMENTATION OF THIS ACT.
IN ADDITION TO THE DISCLOSURE REQUIREMENTS 
PROVIDED UNDER REPUBLIC ACT NO. 10149, the 
[Gempany] PNOC shall, within three months after the end of 
every fiscal year, submit TO THE HOUSE OF 
REPRESENTATIVES AND THE SENATE OF THE 
PHILIPPINES AND UPLOAD ON THE ITS WEBSITE its 
annual report [to - the President—It-shall-likcwisG submit-such 
periodic or other feports-as-may- bG-roquirod of it-from-time-to
ttmer^-']
SECTION 17-B. TRANSITORY PROVISIONS. - THE PNOC 
SHALL WIND DOWN ALL FUNCTIONS, ACTIVITIES, 
RESPONSIBILITIES, PERSONNEL, PROPERTIES, ASSETS,
AND LIABILITIES WHICH ARE INCONSISTENT WITH THE 
PROVISIONS OF THIS ACT WITHIN THREE (3) YEARS 
FROM ITS EFFECTIVITY, INCLUDING SUBSIDIARY 
CORPORATIONS WHOSE FUNCTIONS, ACTIVITIES, 
RESPONSIBILITIES, PERSONNEL, PROPERTIES, ASSETS,
AND LIABILITIES ARE INCONSISTENT HERETO.
ALL REGULAR EMPLOYEES TRANSFERRED TO THE PNOC 
SHALL NOT SUFFER ANY LOSS OF SENIORITY OR RANK,
OR DECREASE IN EMOLUMENTS: PROVIDED, THAT ANY 
EMPLOYEE WHO CANNOT BE ACCOMMODATED SHALL BE 
GIVEN ALL THE BENEFITS AS MAY BE PROVIDED UNDER 
EXISTING LAWS, RULES, AND REGULATIONS."
Section 2. Separabiiity Clause. - Should any provision of this Act be held 
unconstitutional, no other provision hereof shali be affected thereby.
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Section 3. Repealing and Amendatory Clause. - The following are hereby 
repealed: Presidential Decree No. 334 entitled Creating The Philippine National Oil 
Company, Defining Its Powers And Functions, Providing Funds Therefor, And For 
Other Purposes; Presidential Decree No. 405 entitled Amending The Charter Of The 
Philippine National Oil Company, As provided for in Presidential Decree No. 334 
dated November 9, 1973, and for other purposes; Presidential Decree No. 572 
entitled Further Amending The Charter Of The Philippine National Oil Company 
(PNOC), as provided for in Presidential Decree No. 334, as amended, and for other 
purposes; Presidential Decree No. 927 entitled Further Amending the Charter of the 
Philippine National Oil Company (PNOC) as provided for in Presidential Decree No. 
334, as amended, and for other purposes; Presidential Decree No. 1516 entitled 
Further Amending The Charter Of The Philippine National Oil Company as Provided 
for in Presidential Decree No. 334, as amended; Memorandum Order No. 18, Series 
of 1986 entitled Modifying Presidential Decree No. 334 Creating The Philippine 
National Oil Company, Defining Its Powers And Functions, Providing Funs therefor, 
and for other purposes; Executive Order No. 171 entitled Amending Certain 
Provisions of Presidential Decree No. 334, as amended and Executive Order No. 131.
The following laws are hereby amended: Republic Act No. 7638 otherwise 
known as the Department of Energy Act of 1992, Republic Act No. 7656 otherwise 
known As An Act Requiring Government-Owned Or Controlled Corporations to 
Declare Dividends Under Certain Conditions to the National Government And For 
Other Purposes, and Presidential Decree No. 87 as amended.
All other laws, presidential decrees, ordinances, rules, regulations, and any 
other issuance or parts thereof, which are inconsistent with this act, are hereby 
amended, modified, or repealed accordingly.
Section 4. Effectivity. -This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation.
Approved,
22