among the export products of the Philippines, sugar has proven to be
one of the biggest and most reliable sources of foreign exchange
earnings, accounting for an industry average of US$450 million annually
for the last ten years;
WHEREAS, many of the obligations of the sugar mills, refineries, and
other sugar facilities acquired after the war at heavy financing cost
to rehabilitate the damaged sugar industry remain unpaid and in
arrears, creating an onerous burden not only to their owners but to the
local financing institutions;
WHEREAS, in view of their vital role in our economy, it is hereby
declared as a governmental policy to continue assisting the sugar
industry through a government corporation especially charged and
empowered to design and implement a program for sugar mills, refineries
and other sugar facilities.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, hereby order
Section 1. Philippine Sugar Corporation. — There is
hereby created a body corporate to be known as the Philippine Sugar
Sec. 2. Primary Purposes. — The primary purposes
of the Corporation shall be as follows:
(a) To provide financing in the acquisition,
rehabilitation and/or expansion of sugar mills, refineries, and other
related facilities used in the manufacture, packing, storage,
distribution, and shipment of sugar and its by-products and derivatives;
(b) To see to the viability and stability in the
operation of the aforesaid entities; and
(c) To provide for the eventual redemption and/or
reacquisition of the aforesaid entities by the private sector.
Sec. 3. Functions. — The Corporation shall have
the following functions:
(a) To render assistance to sugar mills, refineries,
and other related facilities either in the form of loans, guarantees,
investment in equity, outright purchase, lease, management, including
other suitable credit accommodations or arrangements;
(b) To borrow and lend money for itself or for sugar
accounts, to issue bonds and debentures from time to time as may be
necessary and/or to guarantee obligations in accordance with its
corporate purposes and functions;
(c) To assist in the repayment and/or restructuring
of the accounts of sugar mills, refineries, and other related
facilities used in the manufacture, packing, storage, distribution, and
shipment of sugar and its by-products and derivatives;
(d) To provide assistance in the preparation,
financing and execution of sugar development or expansion programs
including the formulation of specific project proposals;
(e) To acquire during the duration of the
indebtedness of each mill through importation and/or local purchase of
such equipment, machinery, spare parts as may be necessary for the
development, expansion, and/or rehabilitation of such sugar mills,
refineries, transport systems, storage facilities and other activities
in the manufacture, packing, distribution and shipment of sugar and
hauling or transportation of sugar cane in which Philippine Sugar
Corporation may have an interest, including agricultural machinery and
road construction and maintenance equipment to be used in the Mill
(f) To acquire, operate, lease, or manage sugar
mills, refineries, and other related facilities used in the
manufacture, packing, storage, distribution, and shipment of sugar and
its by-products and derivatives.
Sec. 4. Corporate Powers. — The Corporation is
hereby authorized to enter into contracts or own real and personal
property, and to pledge, encumber, transfer or otherwise dispose of the
same; to borrow and lend money and/or guarantee obligations in
accordance with its corporate purposes and functions; to sue and be
sued; and otherwise to do and perform any and all things that may be
necessary or proper to carry out its purposes and functions as
specified in this Decree, or as essential to the proper conduct of its
Sec. 5. Borrowing and other Miscellaneous Powers.
— In addition to the powers specified elsewhere in this Decree, the
Corporation shall have the power:
(a) To borrow funds locally through loan as debtor or
guarantor of loans of sugar mills refineries and other related
facilities and subsidiaries of the Corporation, float bonds and
debentures, and avail of other credit accommodations and facilities;
and in the case of foreign loans, to negotiate for itself or as
Guarantor, in accordance with Central Bank rules and regulations and
upon the recommendation of the Minister of Finance and finally subject
to the approval of the President of the Philippines;
(b) To buy and sell securities that the Corporation
has issued or guaranteed, or those issued by entities in which the
Corporation may have an interest;
(c) To underwrite or participate in the underwriting
of securities issued by any domestic entity or enterprises for purposes
consistent with the purposes of the Corporation;
(d) To invest funds not needed in its operations;
(e) To exercise such other powers and establish such
rules and regulations as may be necessary and appropriate in
furtherance of its purposes and functions;
(f) To have subsidiaries either by investment in
existing companies or by organizing new companies.
Sec. 6. Operating Guidelines. — The operations of
the Corporation shall be conducted in accordance with the following
(a) The Corporation may borrow funds for re-lending,
subject to a service charge, to sugar mills, refineries, etc. or as an
investment in equity.
(b) The Corporation may float bonds from time to time
up to Six Billion Pesos (P6 Billion) under such terms and conditions as
may be approved under existing procedures.
(c) The Corporation may assist the sugar mills,
refineries, and sugar facilities in obtaining loans from local and
foreign sources at advantageous terms, subject to the guarantee of the
Corporation, if necessary.
(d) Where the control of the sugar mills, refineries,
or sugar facilities is transferred to the Corporation, the management
or supervision may be undertaken through an affiliate or subsidiary of
the Corporation organized as a private corporation under the
(e) The Corporation shall at all times be guided by
sound business procedures and principles in its operations.
Sec. 7. Capital Stock. — The authorized capital
stock of the Corporation shall be Five Billion Pesos
(P5,000,000,000.00) of which P2 Billion shall be initially subscribed
by the Philippine Sugar Commission (65%) and the Philippine National
Bank (35%), with an initial paid-in capital of One Hundred Twenty Five
Million Pesos (P125 Million).
Sec. 8. Board of Directors, Composition. — The
powers and functions of the Corporation shall be exercised by a Board
of Directors, hereinafter referred to as the "Board", which shall be
composed of Eleven (11) members, as follows:
(a) The Chairman of the Philippine Sugar Commission
who shall be the Chairman of the Board.
(b) The President of the Corporation, who shall be
the Vice-Chairman of the Board, shall assist the Chairman and act in
his stead in case of absence or incapacity.
(c) All the eleven members of the Board shall be
appointed by the President of the Philippines, seven to be nominated by
the Philippine Sugar Commission and four by the Philippine National
(d) The members of the Board shall hold office for
one year, or until their successors have been appointed and qualified.
(e) Vacancies in the Board may be temporarily filled
by the action of a majority of the other members of the Board, if there
is a quorum.
Sec. 9. Powers of the Board. — The Board shall
have the authority:
(a) To formulate policies to carry out effectively
the provisions of this Decree.;
(b) To prepare and issue rules and regulations
necessary for the effective discharge of the responsibilities and
exercise of the powers assigned to the Corporation under this Decree;
(c) To direct the management, operations and
administration of the Corporation;
(d) On the recommendation of the President of the
Corporation, appoint, fix the remunerations and other emoluments, and
remove the personnel of the Corporation;
(e) To authorize such expenditures by the Corporation
as are in the interest of the effective administration and operations
of the Corporation.
Section 10. Meetings. — The Board shall convene as
frequently as is necessary, but meet at least once a month.
Stockholders meetings shall be held annually or as may be fixed by the
Board of Directors.
Section 11. President. — The Chief Executive Officer
of the Corporation shall be the President who shall be appointed by the
Board. He shall be assisted by such executive officials as may be
necessary for the efficient operations of the Corporation.
Section 12. Powers and Duties of the President. — The
powers and duties of the President of the Corporation shall be:
(a) To prepare the agenda for meetings of the Board
and to submit for the consideration of the Board the policies and
measures which he believes to be necessary to carry out the purposes
and provisions of this Decree;
(b) To execute and administer the policies and
measures approved by the Board;
(c) To direct and supervise the operations and
internal administration of the Board. He may delegate certain of his
administrative responsibilities to other officers of the Corporation,
subject to the rules and regulations of the Board; and
(d) To exercise such other powers as may be vested in
him by the Board.
Section 13. Remuneration of the President. — The
salary of the President of the Corporation shall be fixed by the Board.
The Board may authorize payment of allowances and other emoluments to
the President of the Corporation.
Section 14. Other Officials and Employees of the
Corporation. — All officials and employees of the corporation shall be
appointed and removed by the Board, on recommendation of the President
of the Corporation.
Section 15. Auditor. — The Chairman of the Commission
on Audit shall act as the ex-officio Auditor of the corporation and, as
such, he is empowered and authorized to appoint a representative who
shall be the Auditor of the Corporation and, in accordance with law,
fix his salary, and to appoint and fix the salaries and number of the
personnel to assist said representative in his work, but in all cases
subject to the approval of the Board. The salaries and all other
expenses of maintaining the Auditor's office shall be paid by the
The funds of the Corporation subject to audit shall be limited to the
proceeds of the bond issues and the portion of the accountee-Central/s
remittances earmarked for the bond redemption, exclusive of the service
charge and other income of the Corporation, to the end that such funds
are applied to the specific purposes herein prescribed. The
accountee-Central/s shall continue to function as purely private
business corporations and shall not be subject to government audit.
Section 16. Effectivity Clause. — This Decree shall
take effect immediately.
Done in the City of Manila,
this 14th day of November, in the year of our Lord, nineteen hundred