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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 696
PRESIDENTIAL DECREE NO. 696 -
REVISING PRESIDENTIAL DECREE NO. 286, DATED SEPTEMBER 5, 1973, AS
AMENDED, OTHERWISE KNOWN AS THE CHARTER OF THE PHILIPPINE AEROSPACE
DEVELOPMENT CORPORATION AND FOR OTHER PURPOSES
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I,
FERDINAND E. MARCOS, Commander-in-chief of all Armed Forces of the
Philippines, pursuant to Proclamation Order No. 1081, dated September
21, 1972, and General Order No. 1, dated September 22, 1972, as
amended, and in order to strengthen the corporate structure of the
Philippine Aerospace Development Corporation, do hereby order and
decree the revision of its charter, Presidential Decree No. 286, dated
September 5, 1973, as amended, which shall henceforth read in its
entirety as follows:cralaw:red
WHEREAS, it has been a continuing national policy to develop an
integrated land, sea, andr transport infrastructure throughout the
country; chanroblesvirtualawlibrary
WHEREAS, it is the policy of government to encourage and promote the
development of advanced technology in the country in order to improve
the quality of life of our people;chanroblesvirtualawlibrary
WHEREAS, in order to optimize the national utility of the aviation and
aerospace industry, a definite policy for its rationalization has
become imperative;chanroblesvirtualawlibrary
WHEREAS, such a rationalization calls for positive government
involvement and initiative in the development and improvement ofr
transport services and facilities in the development of local
capability for design, assembly and manufacture of appropriatercraft or
aerospace-related devices; and the development and improvement of the
technical, maintenance and engineering services required to support the
above activities;chanroblesvirtualawlibrary
WHEREAS, such government involvement and initiative shall in the long
run result in substantial savings of valuable foreign exchange, effect
standardization of aerospace and associated ground equipment and
facilities, optimize the utilization of skilled manpower in the
country, and extendr transport services to a larger segment of the
population as well as increase and improve such services between the
country and the outside world;chanroblesvirtualawlibrary
WHEREAS,, such a government involvement and initiative shall further
the national objective and policy of developing national self-reliance,
best serve the interests of national security, and facilitate the
performance of other essential governmental functions, such as mail
service, relief and rehabilitation and other civil undertakings;chanroblesvirtualawlibrary
WHEREAS, a well-developed and technically reliable aviation and
aerospace industry shall serve to meet the market demands and service
requirements of neighboring countries in Southeast Asia;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers vested
in me by the Constitution as Commander-in-chief of all the Armed Forces
of the Philippines, and pursuant to Proclamation No. 1081, dated
September 21, 1972, and General Order No. 1, dated September 22, 1972,
as amended, and in order to effect the desired changes and reforms in
the social and economic structure of our Society, do hereby order and
decree that:cralaw:red
Section 1. Creation of the Corporation. — There is
hereby created a body corporate and politic under the Office of the
president of the Philippines to be known as the Philippine Aerospace
Development Corporation, hereinafter referred to as the Corporation,
which shall be governed by this Decree and its by-laws as authorized
hereunder and shall have succession for a period of fifty (50) years
from and after the date of approval of this Decree. The principal
office of the Corporation shall be located in a place to be determined
by the Board of Directors.
Section 2. Purposes of the Corporation. — The
Corporation, by itself or through its subsidiary/subsidiaries, shall
undertake all manner of activity, business or development projects for
the establishment of a reliable aviation and aerospace industry that
shall include but not be limited to:cralaw:red
a) The design, assembly, manufacture, and sale of all
forms ofrcraft and aviation/aerospace devices, equipment or
contraptions, and studies or researches for innovations and
improvements thereon.
b) The development of local capabilities in the
maintenance, repair/overhaul, and modification of aerospace and
associated flight and ground equipment and components thereof in order
to provide technical services and overhaul support to government
agencies owning aerospace equipment, the Philippiner Force, the
nationalrline, foreignrline companies, foreignr forces and to the
aviation industry in general.
c) The operation and provision ofr transport
services, whether for cargo or passengers on a scheduled, or charter
basis on domestic and/or international scale.
Section 3. Powers of the Corporation. — In order to
accomplish the foregoing corporate purposes, the Corporation shall be
vested with the following powers:cralaw:red
a) To prescribe and thereafter to amend and repeal
its by-laws not inconsistent with this Decree;chanroblesvirtualawlibrary
b) To adopt and use a seal and alter it when
necessary;chanroblesvirtualawlibrary
c) To sue and be sued in any court, Provided, that
PADC, shall, unless it consents otherwise, be immune to suits for acts
ex delicti;chanroblesvirtualawlibrary
d) To carry on any other lawful business whatsoever
in pursuance of or in connection with the foregoing primary purpose;chanroblesvirtualawlibrary
e) To enter into, make, perform and carry out
contracts of every kind and description for the foregoing corporate
purpose with any person, firm or association or corporation, domestic
or foreign; to have one or more offices in and outside of the
Philippines, and to conduct its business and exercise its power
throughout and in any part of the Republic of the Philippines and/or in
any and all foreign countries, states and territories;chanroblesvirtualawlibrary
f) To hold public agricultural lands and mineral
lands in excess of the areas permitted to private corporations,
associations and persons by the laws of the Philippines for a period
not exceeding twenty-five years renewable by the President of the
Philippines for another twenty-five years;chanroblesvirtualawlibrary
g) To acquire, hold, mortgage and alienate personal
and real property in the Philippines or elsewhere;chanroblesvirtualawlibrary
h) 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;chanroblesvirtualawlibrary
i) To borrow funds, from any source, private or
government, foreign or domestic; chanroblesvirtualawlibrary
j) To invest, own or otherwise participate in equity
in any establishment, firm or entity engaged in the aviation and
aerospace industry; to form, organize establish and maintain subsidiary
or subsidiaries;chanroblesvirtualawlibrary
k) To submit to the President of the Philippines,
whenever appropriate, recommendations on policies and measures that
shall promote and stabilize the industry, including recommendations on
import and export limitation, tariffs, subsidiaries or anti-dumping
measures and to recommend to the appropriate authorities such policies
and measures as may be necessary to promote the development of the
aviation and aerospace industry;chanroblesvirtualawlibrary
l) To cooperate, coordinate and exchange such
information, studies and reports with; and to seek such cooperation and
coordination from the private sector as well as other departments,
agencies and instrumentalities of the National Government as will most
effectively contribute to the achievement of the purpose of this
Decree; chanroblesvirtualawlibrary
m) To coordinate, cooperate and consult with the
Department of National Defense and its affiliated entities on
activities of the Corporation related to national defense and security
and to avail itself of or share any resources, incentives exemptions or
benefits granted or in connection with national defense and security
activities under laws, rules and regulations now existing or hereafter
promulgated;chanroblesvirtualawlibrary
n) To execute any and all acts which a partnership or
a natural person is authorized to perform under the laws now existing
or which may hereafter be enacted and;chanroblesvirtualawlibrary
o) To exercise such powers and perform such acts as
may be necessary to carry out the purpose for which the PADC was
established or which from time to time may be declared by the Board of
Directors to be necessary, useful, incidental or auxiliary to
accomplish such purpose.
Section 4. Capital Stock and Appropriation Therefore.
— The Corporation shall have a capital stock divided into FIVE MILLION
no-par shares to be subscribed, paid for and voted on as follows:cralaw:red
a) Two million shares of stock shall be subscribed
and paid for by the Government of the Republic of the Philippines. Such
shares shall have an initial value of forty pesos (P40.00) per share
and may be redeemed by the Corporation and resold only to the National
Government at re-issue value determined by the Board of Directors and
approved by the President of the Philippines.
For this purpose the amount of P10 million set aside and appropriated
from the General Fund, under Presidential Decree No. 286, dated
September 5, 1973, and an additional sum of SEVENTY MILLION PESOS out
of the General Fund, not otherwise appropriated, are hereby
appropriated for the payment of the two million shares subscribed by
the Republic of the Philippines.
b) Five hundred thousand shares of stock shall each
be subscribed and paid for by the Development Bank of the Philippines
and the Government Service Insurance System at issue values to be
determined by the Board of Directors of the Corporation.
c) Subject to the approval of the President of the
Republic of the Philippines, the remaining two million shares shall be
subscribed to by the Government of the Republic of the Philippines or
any of its national financial institutions or government-owned or
controlled corporations at issue values to be determined by the Board
of Directors of the Corporation. In no case, however, shall the
Government lose majority control over the total number voting shares of
the Corporation.
d) Twenty-five per centum of the value of all stock
subscribed under paragraphs (b) and (c), this section shall be paid for
at the time of subscription, and the balance thereof shall be subject
to call upon a majority vote of the Board of Directors.
e) The voting power pertaining to shares of stock
subscribed by the Government of the Republic of the Philippines shall
be vested in the President of the Philippines or in such person or
persons as he may designate.
f) The voting power pertaining to shares of stock
subscribed by the development Bank of the Philippines and the
Government Service Insurance System shall be vested in the Chairman,
Board of Governors, and the General Manager, respectively. chanroblesvirtualawlibrary
g) The voting power pertaining to shares of stock
hereinafter subscribed by or transferred to national financial
institutions or government-owned or controlled corporations shall be
vested in the Chairman of their respective Board of Directors/Trustees,
or, in the absence of a Board of Directors/Trustees, or when so
delegated by the Chairman of the Board of Directors/Trustees, in their
respective chief executive official.
h) Each share of stock shall represent one vote.
Issuances or transfers of shares be allowed only upon offer of such
shares for subscription or purchase having first been made to the
Government of the Republic of the Philippines. Any agreement, contract,
arrangement, scheme or plan that shall transfer ownership and voting
rights over such shares such that the majority control by the National
Government over the total number of voting shares of the Corporation
shall be impaired is prohibited.
Section 5. Authority for Fund Appropriation. — In
addition to the appropriation of funds authorized under Section 4,
paragraph (a), there are hereby set aside and appropriated from the
General Fund, not otherwise appropriated, such amounts as may be
necessary to pay for (1) the total reissue values of shares of stock
whenever the same are resold by the Corporation to the National
Government under Section 4, paragraph a, (2) any subscription of the
national Government under Section 4, paragraph c and (3) any
subscription of the National Government to the capital stock of
subsidiaries of the Corporation under Section 8.
Section 6. Board of Directors. — The Corporation
shall be governed and its activities shall be directed, controlled and
managed by a board of Directors, which shall be composed of the
following ex-officio members, namely the Executive Secretary, the
Secretary of Finance, the Secretary of Industry, the Secretary of
National Defense, the Chairman, Board of Governors of the Development
Bank of the Philippines, the General Manager of the Government Service
Insurance System and three (3) other members to be appointed by the
President of the Philippines. The first three appointive directors
shall serve for a term of one (1) year, the second, for a term of two
(2) years, and the third, for a term of three (3) years, after which
their successors shall serve for a term of two (2) years. In addition,
any official exercising voting powers in accordance with Section 4,
paragraph g, of this Decree shall automatically become an ex-officio
member of the Board of Directors, provided that the number of shares of
stock of the Corporation owned or subscribed by the institution
represented by such official constitute at least nine percentum (9%) of
total subscribed capital stock of the Corporation. All members of the
Board, whether appointed or ex-officio shall enjoy the same powers,
rights, and privileges as may be established by the Board for the
conduct of its affairs. The President of the Philippines shall appoint
a Chairman from among the directors. chanroblesvirtualawlibrary
Section 7. Function and Duties of the Board of
Directors. — The General functions and duties of the Board of Directors
shall be as follows:cralaw:red
a) To prescribe and amend by-laws of the Corporation.
b) The board shall appoint and fix the salaries of
such executive officers and other officials and employees as may be
necessary for the management and internal administration of the
Corporation, except that the appointing power may be delegated by the
Board to the Management of the Corporation. chanroblesvirtualawlibrary
c) To act as initial incorporators of any subsidiary
formed by the Corporation.
d) The Board shall establish such number and Division
and/or Departments in the Corporation as may be necessary for the
accomplishment of its corporate purpose.
e) The Board shall constitute appropriate standing
committees that it may deem necessary to effectivity carry out its
governing powers over the affairs and activities of the
Corporation. chanroblesvirtualawlibrary
f) The Board shall submit to the President of the
Philippines and shall publish an annual report of the condition of the
Corporation on or before the 15th of September of each year.
Section 8. Subsidiaries, Definition. — The
corporation shall have the power to form, establish, organize and
maintain subsidiary corporation or corporations. Such subsidiary or
subsidiaries shall be formed in accordance with the Philippine
Corporation Law and existing rules and regulations promulgated by the
Securities and Exchange Commission, unless otherwise provided in this
Decree.
A subsidiary of the Corporation shall have a Board of Directors of at
least five (5) members of which at least one of the directors shall be
elected from among the members of the Board of Directors of the
Corporation. In addition, the Chief Executive Official of the
Corporation, or his designated representative from the Corporation,
shall be an ex-officio member of the Board of Directors of each
subsidiary established by the Corporation.
In all cases, the Corporation shall own at least fifty-one percentum
(51%) of the capital stock of each subsidiary. Subject to the foregoing
conditions, the capital stock of a subsidiary may be offered for
subscription to the Government of the Republic of the Philippines, its
national financial institutions or government-owned or controlled
corporations, or to the private sector, domestic or foreign, provided
that subscriptions by the National Government shall be subject to the
recommendations by the Board of Directors of the Corporation and
approved by the President of the Philippines.
Unless otherwise provided in this Decree, a subsidiary of the
Corporation shall be entitled to all the benefits, privileges and
exemptions expressly granted to the Corporation under this Decree,
provided that the combined total of at least eighty (80) percentum of
its authorized capital stocks is owned by the Corporation either
entirely or in combination with the National Government, its national
financial institutions or government-owned or controlled corporations.
A subsidiary shall be governed by its Board of Directors, provided that
no policies shall be prescribed or adopted that are inconsistent with
or contrary to the objectives set forth in this Decree and policies
established by the Board of Directors of the Corporation for the
conduct of the affairs of the corporation and its subsidiaries.
Section 9. The Auditor. — The Chairman of the
Commission on Audit shall appoint a representative who shall be the
Auditor of the Corporation and its subsidiaries. He shall likewise
appoint the necessary personnel to assist said representative in the
performance of his duties. The salaries of the auditor and his staff
shall be fixed by the Chairman of the Commission on Audit with the
advise of the Board of Directors, and said salaries and other expenses
for the auditor's office shall be paid by the Corporation. The Auditor
of the Corporation and personnel under him may be removed only by the
Chairman of the Commission on Audit.
The Auditor must be a certified public accountant with at least ten
(10) years experience as a certified public accountant. No relative of
any member of the Board of Directors of the Corporation or its
subsidiaries or the Chairman of the Commission on Audit within the
fourth degree of consanguinity or affinity shall be appointed as such
representative.
Section 10. Exemptions. — The Corporations shall be
exempt from all national and local taxes, duties and fees for a period
of seven (7) years from the date set under Section 14 hereof, or, in
the case of a subsidiary defined under Section 8 hereof as eligible for
such exemption from the date of its incorporation if such date is later
then the date under Section 14 hereof, provided that no subsidiary
shall be exempt from payment of corporate income tax.
Further, within said period Corporation shall not be subject to tariff,
compensating tax and shall other taxes, assessments and charges for
their importation of machineries equipment, devises, goods and spare
parts and other items to be used for the purpose authorized under this
Decree.
All transactions between the Corporation and its subsidiaries or among
the subsidiaries shall likewise be exempt from tariff duties, taxes,
and other duties during the life of the Corporation, provided that
subsidiaries eligible for this exemption shall be limited only to those
defined in Section 8 of this Decree as entitled to all benefits,
privileges and exemptions provided under this Decree.
The exemptions granted herein are in addition to any other exemptions,
benefits, or privileges which the Corporation or its subsidiaries may
be for under existing laws, rules and regulations.
Section 11. Foreign Loans. — The Corporation, through
its President or any duly authorized representative, upon approval by
the Board of Directors, is hereby authorized to contract loans, credits
in 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 to issue bonds, the total
outstanding amount of which, exclusive of interest, shall not exceed
one billion United States Dollars to the equivalent thereof in other
currencies, on such terms and conditions as 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.
Further, the President of the Philippines, by himself, or through his
duly authorized representative, is hereby authorized to negotiate and
contract with foreign governments or any international financial
institutions or fund sources, in the name and in behalf of the
Corporation, one several loans, for the accomplishment of its
purpose. chanroblesvirtualawlibrary
The President of the Philippines, by himself, or through his duly
authorized representative is hereby further authorized to guarantee,
absolutely and unconditionally, as primary obligor and not as surety
merely in the name and in behalf of the Republic of the Philippines,
the payment of the loans, credits, indebtedness and bonds issued as
well as the performance of all or any of the obligations undertaken by
the Corporation in the territory of the Republic of the Philippines
pursuant to loan agreements entered into with foreign governments or
any international institutions or fund sources. chanroblesvirtualawlibrary
The loans, credits, and indebtedness contracted under this subsection
by the Corporation or by the president of the Philippines or his duly
authorized representative in behalf of the Corporation, and the payment
of the principal, interests and other charges thereon, as well as the
importation of machinery, equipment, materials, and supplies by the
Corporation, paid from the proceeds of any loan, credit or indebtedness
incurred under this Decree shall be exempt from all direct and indirect
taxes, fees, imports, other charges and restrictions, including import
restrictions imposed by the Republic of the Philippines, or any of its
agencies and political subdivisions.
Interests payments on foreign loans shall likewise be exempted from
withholding tax if the Corporation has assumed the liability for
payment of the tax due from the lender-remittee.
The tax exemption privilege granted under this section is not limited
to the time period prescribed under Section 10 of this Decree.
Section 12. Corporate Personnel. — Appointments to
positions in the Corporation other than to those classified under the
clerical and janitorial categories are hereby deemed as either
primarily confidential or highly technical in nature. The positions and
corresponding wage structure adopted by the Corporation shall be exempt
from the coverage of the Wages and Positions Classification Office.
Officials and employees of the Corporation shall be entitled to
insurance coverage and other employee benefits under the Government
Service Insurance System. Employment by the Corporation of persons
previously retired from government service shall be subject to existing
applicable laws.
Other government officials and government-owned or controlled
corporations shall extend assistance as may be needed by the
Corporation or any of its subsidiaries, including the detail
assignments of its officers and employees to the Corporation or any of
its subsidiaries on a full or part time basis. Notwithstanding any
provision of law to the contrary, such officials and its subsidiaries
shall receive allowances or other emoluments from the Corporation
and/or its subsidiaries.
Section 13. Fiscal Year. — The Corporation shall
observe the fiscal year beginning on July 1 of one year and ending on
June 30 of the following year.
Section 14. Effectivity of the Revised Charter. —
This Decree shall take effect upon its approval. The Chairman of the
Board, shall within thirty (30) days from the date of his appointment,
call for an organizational meeting of the Board in order that corporate
business may immediately be commenced. The new provisions on tax
exemption, privileges granted to the Corporation and its subsidiaries
shall, however, be effective beginning July 1, 1974.
DONE in the City of Manila,
this 9th day of May, in the year of Our Lord, nineteen hundred and
seventy-five.
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