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PRESIDENTIAL DECREE NO. 1961
PRESIDENTIAL DECREE NO. 1961 - AN
ACT AUTHORIZING THE PRESIDENT OF THE PHILIPPINES, ON BEHALF OF THE
REPUBLIC OF THE PHILIPPINES, AND AUTHORIZING THE CENTRAL BANK OF THE
PHILIPPINES, TO ENTER INTO FOREIGN CURRENCY LOAN, DEPOSIT AND GUARANTEE
AGREEMENTS AND ARRANGEMENTS IN SUPPORT OF THE NATIONAL ECONOMIC
RECOVERY PROGRAM, AND FOR OTHER PURPOSES
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WHEREAS,
the current economic crisis amounts to a grave emergency which affects,
the stability of the nation and requires immediate action; chanroblesvirtualawlibrary
WHEREAS, in pursuance of the above goals, the Philippines has presented
a National Economic Recovery Program to its foreign creditors, and in
furtherance thereof, (i) a multinational arrangement had been agreed
upon by the Philippines for the rescheduling of certain credits made,
guaranteed or insured by foreign governments and their agencies, and
(ii) the Philippines is currently negotiating with the international
banking community for the establishment of a new credit facility of US
$925 million, a revolving short-term trade credit facility in an
aggregate amount equal to approximately US $3 billion, and the
restructuring of certain foreign currency debts of public and private
sectors owing to international banking and financial institutions and
falling due from October 17, 1983 through December 31, 1986, amounting
in the aggregate to approximate US $5.8 billion;chanroblesvirtualawlibrary
WHEREAS, the issuance of this Decree is an essential and necessary
component of the National Economic Recovery Program formulated to meet
and overcome the emergency.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
direct and order:cralaw:red
Section 1. This Decree shall be known as the
"Philippine Economic Recovery Program Financing Law of 1985."
Section 2. In furtherance of the National Economic
Recovery Program, the Central Bank of the Philippines is hereby
authorized to contract foreign currency loans with the guarantee of the
Republic of the Philippines, upon such terms and conditions as may be
agreed with the lenders.
Section 3. In furtherance of the National Economic
Recovery Program of the Philippines, the Republic of the Philippines,
political subdivisions and instrumentalities of the Republic of the
Philippines, and corporations, including financial institutions owned
or controlled by the Government of the Republic of the Philippines and
corporations more than fifty percent of the beneficial ownership of
which is held by one or more of such government-owned or controlled
corporations, may reschedule, refinance or restructure their foreign
currency loans, credits and indebtedness, including suppliers' credits
deferred payment arrangements and official assistance, upon such terms
and conditions as may be agreed with the lenders, creditors or
suppliers.
Section 4. In order to promote and maintain the
availability of trade credit to the Philippines, the Central Bank of
the Philippines may contract trade facilities in foreign currency for
the benefit of both the public and private sectors. Under such trade
facilities, the Central Bank of the Philippines may establish foreign
currency deposits in respect of, or assume by means of other
obligations, certain foreign currency loans, credits and indebtedness
of Philippine public and private borrowers or obligors, upon such terms
and conditions as may be agreed with the lenders, creditors or
suppliers. In the event that the Central Bank of the Philippines shall
become liable with respect to such foreign currency loans, credits and
indebtedness of the Republic of the Philippines, political subdivisions
or instrumentalities of the Republic of the Philippines, or
corporations, including financial institutions owned or controlled by
the Government of the Republic of the Philippines and corporations more
than fifty percent of the beneficial ownership of which is held by one
or more of such government-owned or controlled corporations, the
Government, such political subdivisions and instrumentalities, and such
corporations shall deliver to the Central Bank of the Philippines the
peso equivalent of such loans, credits and indebtedness in respect of
which the Central Bank of the Philippines shall become liable, or shall
deliver consideration satisfactory to the Central Bank of the
Philippines, upon such terms and conditions as may be prescribed by the
Central Bank of the Philippines.
Section 5. The Central Bank of the Philippines may
likewise establish foreign currency deposits in respect of, or assume
by means of other obligations, certain foreign currency loans, credits
and indebtedness of Philippine public and private borrowers or
obligors, not related to trade transactions, in connection with the
rescheduling, refinancing or restructuring of foreign currency loans,
credits and indebtedness, upon such terms and conditions as may be
agreed with the lenders, creditors or suppliers.
Section 6. Whenever necessary or advisable in
connection with the National Economic Recovery Program of the
Philippines, the President of the Republic of the Philippines may, on
behalf of the Republic of the Philippines, guarantee (i) foreign
currency loans, credits and indebtedness, including suppliers' credits,
deferred payment arrangements and official assistance, of the Central
Bank of the Philippines, political subdivisions and instrumentalities
of the Republic of the Philippines, corporations, including financial
institutions owned or controlled by the Government of the Republic of
the Philippines and corporations more than fifty percent of the
beneficial ownership of which is held by one or more of such owned or
controlled corporations, and (ii) foreign currency loans, credits and
indebtedness related to the financing of trade and directed by the
Central Bank of the Philippines to specific private sector obligors or
borrowers, upon such terms and conditions as may be agreed with the
lenders, creditors or suppliers. Subject to the terms and conditions
contained in such guarantees issued by the Republic of the Philippines
under any such guarantee shall be unconditional, irrespective of any
circumstance (other than payment in full) which might otherwise
constitute a defense available under Philippine law to the principal
obligor or to the Republic of the Philippines in respect of such
guarantee.
Section 7. Whenever necessary or advisable in
connection with the National Economic Recovery Program of the
Philippines, the President of the Philippines, upon recommendation of
the Monetary Board of the Central Bank of the Philippines, may exclude
specific categories of external debt contracted or obtained under the
provisions of this Decree from the twenty percent ceiling on external
debt service prescribed under Section 2 of Republic Act No. 4860, as
amended.
Section 8. Loans, credits and indebtedness obtained
by, and guarantees extended by, the Republic of the Philippines
pursuant to the provisions of this Decree shall not be subject to the
provisions of Republic Act No. 4860, as amended, as to purpose, terms
and ceilings on borrowings and guarantees. chanroblesvirtualawlibrary
Section 9. Whenever necessary or advisable in
connection with the National Economic Recovery Program and in
connection with the rescheduling, refinancing or restructuring of the
external debt of the Philippines, the Central Bank of the Philippines,
directly or through a subsidiary, may adopt and implement a foreign
exchange cover program. Any such subsidiary shall have the power to
obtain foreign borrowings and such other powers as may be necessary to
accomplish its objectives. The receipts, expenditures, profits, income,
contracts, deeds, documents and transactions related to the foreign
exchange cover program shall be exempt from all national, provincial,
municipal and city taxes, fees, charges and assessments now in force or
hereafter established. The Republic of the Philippines may extend such
financial assistance to the foreign exchange cover program as may be
necessary to accomplish it objectives.
Section 10. The Monetary Board of the Central Bank of
the Philippines shall issue such rules and regulations as may be
necessary to implement the provisions of this Decree.
Section 11. The loan and guarantee agreements and
other documents to which the Republic of the Philippines may become a
party pursuant to this Decree may be executed and delivered by the
President of the Philippines or by such representatives as he may
designate.
Section 12. Interests, fees and other payments on or in respect of
foreign currency loans, credits, deposits or obligations of the Central
Bank of the Philippines that may be incurred pursuant to this Decree
shall be exempt from any and all Philippine taxes. Certificates and
other documents that may be issued by the Central Bank pursuant to this
Decree shall be exempt from stamp, excise and other similar taxes.
Section 13. Any amount necessary in order to enable
the Republic of the Philippines to pay the principal, interest, fees
and other charges on or in respect of the loans, credits, deposits or
other obligations that may be incurred by the Republic of the
Philippines pursuant to this Decree, and not otherwise covered by a
specific appropriation, are hereby appropriated out of any funds in the
National Treasury not otherwise appropriated.
Section 14. Any provision of law or regulation
inconsistent herewith is hereby repealed, revoked or modified
accordingly: Provided, that this Decree shall not be construed as
repealing or modifying the regulations of the Central Bank of the
Philippines requiring the approval and registration by the Central Bank
of the Philippines of foreign loans and borrowings or the authority of
the Central Bank of the Philippines to borrow or obtain loans under
Republic Act No. 265, as amended, and other relevant laws. chanroblesvirtualawlibrary
Section 15. This Decree shall take effect immediately.
DONE in the City of Manila this
11th day of January in the Year of Our Lord nineteen hundred and
eighty-five.
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