CREATING THE PHILIPPINE SUGAR CORPORATION

• Number: Presidential Decree No. 1890
• Sections: 17

Preamble

WHEREAS, 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 and decree:

Section 1

SECTION 1. Philippine Sugar Corporation — There is

hereby created a body corporate to be known as the Philippine Sugar

Corporation.

Section 2

SEC. 2. Primary Purposes. The primary purposes of

the Corporation shall be as follows:

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;

To see to the viability and stability in the operation of the aforesaid

entities; and

To provide for the eventual redemption and/or reacquisition of the aforesaid

entities by the private sector.

Section 3 Functions.

SEC. 3. Functions. — The Corporation shall have the

following functions:

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;

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;

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;

To provide assistance in the preparation, financing and execution of sugar

development or expansion programs including the formulation of specific project

proposals,

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 Districts concerned;

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.

Section 4 Corporate Powers.

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 operations.

Section 5 Borrowing and other Miscellaneous Powers.

SEC. 5. Borrowing and other Miscellaneous Powers. —

In addition to the powers specified elsewhere in this Decree, the Corporation

shall have the power:

To borrow funds locally through loans 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;

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;

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;

To invest funds not needed in its operations;

To exercise such other powers and establish such rules and regulations as

may be necessary and appropriate in furtherance of its purposes and functions;

To have subsidiaries either by investment in existing companies or by

organizing new companies.

Section 6 Operating Guidelines.

SEC. 6. Operating Guidelines. — The operations of

the Corporation shall be conducted in accordance with the following

guidelines:

The Corporation may borrow funds for re-lending, subject to a service

charge, to sugar mills, refineries, etc. or as an investment in equity.

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.

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.

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 Corporation Law.

The Corporation shall at all times be guided by sound business procedures

and principles in its operations.

Section 7 Capital Stock.

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).

Section 8 Board of Directors, Composition.

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:

The Chairman of the Philippine Sugar Commission who shall be the Chairman of

the Board.

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.

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 Bank.

The members of the Board shall hold office for one year, or until their

successors have been appointed and qualified.

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.

Section 9 Powers of the Board.

SEC. 9. Powers of the Board. — The Board shall have

the authority:

To formulate policies to carry out effectively the provisions of this

Decree;

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;

To direct the management, operations and administration of the Corporation;

On the recommendation of the President of the Corporation, appoint, fix the

remunerations and other emoluments, and remove the personnel of the Corporation;

To authorize such expenditures by the Corporation as are in the interest of

the effective administration and operations of the Corporation.

Section 10 Meetings.

SEC. 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.

SEC. 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.

SEC. 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 lo 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;

To execute and administer the policies and measures approved by the Board;

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

To exercise such other powers as may be vested in him by the

Board.

Section 13 Remuneration of the President.

SEC. 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.

SEC. 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.

SEC. 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

Corporation.

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.

SEC. 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 and eighty-three.