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PRESIDENTIAL DECREE NO. 81
PRESIDENTIAL DECREE NO. 81 -
AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NUMBERED FOUR THOUSAND
EIGHT HUNDRED SIXTY, AS AMENDED (RE: FOREIGN BORROWING ACT)
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WHEREAS, the Government is vigorously
engaged in a continuing program of reconstruction and development of
infrastructure facilities, food production, and industrialization;chanroblesvirtualawlibrary
WHEREAS, for this purpose, the Government has presented, and will
continue to present before financial institutions, specific proposals
for the funding of both public and private sector projects;chanroblesvirtualawlibrary
WHEREAS, availment of financial assistance from these institutions to
be able to undertake these priority projects would require responsible
foreign borrowing legislation;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers in me vested 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, in order to
assure a sustained and accelerated implementation of its development
program do hereby order to amend further R.A. 4860, as amended, and to
adopt this decree as part of the law of the land. chanroblesvirtualawlibrary
Section 1. Section one of Republic Act Numbered Four
Thousand Eight Hundred Sixty, as amended, is further amended to read as
follows:cralaw:red
"Sec. 1. The President of the Philippines is hereby
authorized in behalf of the Republic of the Philippines, to contract
such loans, credits, including supplier's credit, deferred payment
arrangements, or indebtedness as may be necessary and upon terms and
conditions as may be agreed upon, not inconsistent with this Act, with
Government of foreign countries with whom the Philippines has
diplomatic or trade relations or which are members of the United
Nations, their agencies, instrumentalities or financial institutions or
with reputable international organizations or non-governmental national
or international lending institutions or firms extending supplier's
credit deferred payment arrangements to enable the government of the
Republic of the Philippines to: chanroblesvirtualawlibrary
"(A) Undertake, through any government office, agency
or instrumentality, or government-owned or controlled corporation,
industrial, agricultural or other economic and social development
projects and feasibility studies, which are authorized by law,
including but not limited to those enumerated in Annex "A" including
lists 1, 2, 3, and 4 hereof, which are made integral parts of the Act
and such projects which may from time to time be recommended by the
National Economic Development Authority and approved by the President
of the Philippines: Provided, That at least seventy-five percent of the
loans, credits or indebtedness authorized to be obtained under this
paragraph shall be spent for projects which are income-generating. Such
foreign loans, credits or indebtedness shall be used to meet the direct
and indirect foreign exchange requirements and up to twenty per centum
of the peso costs to cover the costs of studies, technical surveys,
equipment, machineries, supplies, construction, installation and
related technical services: Provided, further, That whenever necessary,
part of the proceeds of such loans, credits or indebtedness shall be
used for environmental, health, and ecologic management and control;chanroblesvirtualawlibrary
"(B) Lend the proceeds of such loans, credits or
indebtedness to government-owned or controlled corporations to finance
development projects which are authorized by the charters of such
corporations or by law: Provided, That the proceeds of said loans,
credits or indebtedness shall likewise be used to meet the direct and
indirect foreign exchange requirements and up to twenty per centum of
the peso costs to cover the costs of studies, technical surveys,
equipment, machineries, supplies, construction, installation and
related technical services; chanroblesvirtualawlibrary
"(C) Lend the proceeds of such loans, credits or
indebtedness to the Development Bank of the Philippines which shall
administer said proceeds in accordance with the agreement with the
foreign creditor for relending to individuals, partnerships,
cooperatives, associations or private corporations, whose capital
stock, if not fully subscribed, is open to subscription by the general
public to meet the direct and indirect foreign exchange requirements as
well as up to twenty per centum of the peso costs for such industrial,
agricultural and other economic development projects, subject to the
provisions of the charter, rules and regulations of said bank and to
the terms and conditions agreed upon by the government and the
institution providing financing for the projects: Provided, That the
Development Bank of the Philippines shall pay the Republic of the
Philippines at least for the principal, interests and other charges on
such loans, credits or indebtedness turned over to it: Provided,
further, That of the total authorized borrowing for relending to the
private sector:cralaw:red
1. Sixty per centum shall be for the individual and
public utility projects which are approved by the Board of Investments
or their corresponding Boards; and
2. Forty per centum must be allocated to agricultural
projects which are recommended by the Department of Agriculture and
Natural Resources and approved by the National Economic Development
Authority and which satisfy any or all the following criteria:cralaw:red
(a) New and/or export-oriented
(b) Import-substitute-oriented
(c) Necessary to increase agricultural production; or
(d) Necessary to improve the quality and
marketability of agricultural products. chanroblesvirtualawlibrary
"The proceeds of the loans, credits or indebtedness under this
paragraph shall not be re-loaned to any individual, partnership,
cooperative, association or private corporation, the account of which
with the Development Bank of the Philippines or with any government
financial institutions, is in-arrears for three or more installments
for causes other than force majeure or those beyond its control, nor
shall paid proceeds or portions thereof be used for any purpose other
than that for which the loan, credit or indebtedness has been granted.
The failure of any debtor to meet three amortization payments of its
loan when due, for causes other than force majeure or those beyond its
control, will render the entire obligation or any balance thereof due
and demandable, and the debtor shall pay a special penalty of two per
centum of the total amount due.
"The authority of the President of the Philippines, as hereby provided
in this Section shall include the power to issue, for the purposes
stated, bonds, debentures, securities or other evidences of
indebtedness for sale in the international market, the income from
which shall be fully tax exempt in the Philippines.
Section 2. Section 2 of the same Act is hereby
further amended to read as follows: chanroblesvirtualawlibrary
"Sec. 2. The total amount of loans, credits or
indebtedness, including interests and other normal banking charges
which shall not be in excess of those imposed or charged by the
International Bank for Reconstruction and Development, the Asian
Development Bank or other reputable international organization or
non-governmental national or organizational-lending institution, which
the President is authorized to incur under Section one of this Act
shall not exceed one billion United States dollars or its equivalent in
other foreign currencies at the exchange rate prevailing at the time
the loans, credits or indebtedness are incurred at terms of payment of
not less than 10 years except those contracted in the interest of
national security and rehabilitation resulting from natural calamities:
Provided, That the price, interest rates and other charges on loans,
credits or indebtedness from non-governmental national or international
lending institutions or firms extending supplier's credits or deferred
credit arrangements shall be determined by the rules and regulations
which may be promulgated by the Central Bank: Provided, finally, That
seventy per centum of such total authorized amount of one million
United States dollars or its equivalent in other currencies shall be
incurred for projects of the public sector contemplated under
paragraphs "A" and "B" of Section one and twenty-five per centum
thereof shall be utilized for projects of the private sector
contemplated under paragraph "C" of Section one, and that no
individual, partnership, cooperative, association or private
corporation shall be allowed to borrow more than fifteen per centum of
the total of such loans, credits, indebtedness authorized to be
incurred for relending by the Development Bank of the Philippines,
except those who may, undertake projects whose financial requirements
are in excess of such limitation, in which case the recommendation of
National Economic Development Authority and the approval by the
President to exceed such limit is required.
The Central Bank of the Philippines shall promulgate and enforce such
measures as shall be necessary to eventually reduce the external debt
service requirements to an annual level not exceeding twenty per centum
of the average of the foreign exchange receipts of the immediately
preceding year. chanroblesvirtualawlibrary
Section 3. Section three of the same Act is hereby
further amended to read as follows:cralaw:red
"Sec. 3. The President of the Philippines, upon
recommendation of the Secretary of Finance, the Monetary Board of the
Central Bank of the Philippines and the National Economic Development
Authority, is further authorized, in behalf of the Republic of the
Philippines, to guarantee such loans, credits or indebtedness as may be
necessary and upon such terms and conditions, not inconsistent with
this Act, as may be agreed upon with the governments of foreign
countries with whom the Philippines has diplomatic or trade relations
or which are members of the United Nations, their agencies,
instrumentalities or financial institutions or with reputable
international organizations or non-governmental national or
international lending institutions, loans, credits or indebtedness
extended directly to, or bonds, debentures, securities or other
evidences of indebtedness for sale in international markets issued by:cralaw:red
"(A) Corporations-owned or controlled by the
Government of the Philippines, Provided, that the proceeds of bonds,
debentures, securities or other evidences of indebtedness floated or
issued, shall be used to undertake industrial, agricultural, or other
economic development projects which are authorized by law or by their
respective charters, including but not limited to those enumerated in
Annex "A" or by their respective charters and such projects which may
from time to time be recommended by the National Economic Development
Authority and approved by the President of the Philippines.
"(B) Government-owned or controlled financial
institutions for relending to individuals, partnerships, cooperatives,
associations or private corporations, whose capital stock, if not fully
subscribed, is open to subscription by the general public for projects
authorized by the charters of such financial institutions or by
law. chanroblesvirtualawlibrary
Seventy-five per centum of the total amount authorized to be guaranteed
under this section shall be incurred for projects under paragraph "B"
hereof; and that of the total amount guaranteed, no individual,
partnership, cooperative, association or private corporation except
development finance corporations using funds supplied by International
Bank for Reconstruction and Development, the Asian Development Bank and
other similar international financial institutions, shall be allowed to
borrow more than fifteen per centum of the total amount of loans,
credits or indebtedness authorized to be guaranteed hereunder.
Section 4. Section three-A of the same is hereby
amended to read as follows:cralaw:red
"Sec. 3-A. Only Filipino citizens, partnerships,
cooperatives, associations or private corporations organized under the
laws of the Philippines, at least seventy per centum of the outstanding
and paid-up capital of which is owned and held by citizens of the
Philippines, such proportion to be maintained until such time as the
loan is fully paid and whose capital structure is open to public
participation, are qualified to borrow from government financial
institutions the proceeds of loans, credits or indebtedness incurred
under authority of this Act.
"Failure of the private borrower to maintain the capital ownership
requirement stipulated herein, throughout the period that any part of a
loan remains outstanding, shall render the entire loan immediately due
and demandable, together with all interests and penalties, plus an
additional special penalty of two per centum of the total amount due
for every month or fraction thereof that the violation of the capital
ownership requirement continues to subsist."
Section 5. Section 4 of the same Act is hereby
repealed and Section four-A shall be renumbered Section Four and
further amended to read as follows:cralaw:red
"Sec. 4. In the contracting of any loan, credit or
indebtedness under this Act, the President of the Philippines may, when
necessary, agree to waive or modify the application of any law granting
preferences or imposing restrictions on international competition
bidding, including among others, Act Numbered Four Thousand Two Hundred
Thirty-Nine, Commonwealth Act Numbered One Hundred Thirty-Eight, the
provisions of Commonwealth Act Numbered Five Hundred Forty-One, insofar
as such provisions do not pertain to constructions primarily for
national defense or security purposes, Republic Act Numbered Five
Thousand One Hundred Eighty-Three: Provided, however, That as far as
practicable, utilization of the services of qualified domestic firms in
the prosecution of projects financed under this Act shall be
encouraged: Provided, further, That in case where international
competitive bidding shall be conducted preference of at least fifteen
per centum shall be granted in favor of articles, materials, or
supplies of the growth, production or manufacture of the Philippines.
Provided, finally, That the method and procedure in the comparison of
bids shall be the subject of agreement between the Philippine
Government and the lending institution.
Section 6. Section five of the same Act is hereby
further amended to read as follows:cralaw:red
"Sec. 5. It shall be the duty of the President,
within thirty days after the opening of every regular session, to
submit a separate report to Congress on the amount of loans, credits
and indebtedness contracted and in the process of negotiation and of
the bonds, debenture, securities, or other evidences of indebtedness
sold in international markets and proposed to be sold, as well as the
guarantees extended, their respective terms and conditions, and the
purposes and projects for which the loan, credits, or indebtedness were
incurred and for which the bonds, debentures, securities or other
evidences of indebtedness were floated, and the guarantees extended.
Section 7. Section six of the same Act is hereby
further amended to read as follows:cralaw:red
"Sec. 6. Any provision of law to the contrary
notwithstanding, and in order to enable the Republic of the Philippines
to pay the principal, interest, taxes and other normal banking charges
on the loans, credits or indebtedness, or on the bonds, debentures,
securities or other evidences of indebtedness sold in international
markets incurred under the authority of this Act, the proceeds of which
are deemed appropriated for the projects, all the revenue realized from
the projects financed by such loans, credits or indebtedness, shall be
turned over in full, after deducting actual and necessary expenses for
the operation and maintenance of said projects, to the National
Treasury by the government office, agency or instrumentality, or
government-owned or controlled corporation concerned, which is hereby
appropriated for the purpose as and when they shall become due. In case
the revenue realized is insufficient to cover the principal, interest
and other charges, such portion of the budgetary savings as may be
necessary to cover the balance or deficiency shall be set aside
exclusively for the purpose by the government office, agency or
instrumentality, or government-owned or controlled corporation
concerned: Provided, That if there still remains a deficiency, such
amount necessary to cover the payment of the principal and interest on
such loans, credit or indebtedness as and when they shall become due is
hereby appropriated out of any funds in the national treasury not
otherwise appropriated: Provided, further, That the Monetary Board
shall make provisions out of current foreign exchange receipts for the
foreign exchange requirements to service the external debt: And,
provided, finally, That this requirement to turnover the net revenues
shall not apply in relending arrangements covered under Section 1 (B)
and (C)." chanroblesvirtualawlibrary
Section 8. Section 6-A of the same Act is hereby
repealed.
Section 9. Any provision of law, executive orders,
rules and regulations inconsistent with this Decree are hereby repealed
or modified accordingly.
Section 10. This Decree shall take effect
immediately. chanroblesvirtualawlibrary
Done in the City of Manila,
this 14th day of December, in the year of Our Lord, nineteen hundred
and seventy-two.
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