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REPUBLIC ACT NO. 6424 - AN ACT
CREATING THE PHILIPPINE EXPORT CREDIT INSURANCE AND GUARANTEE
CORPORATION, DEFINING ITS POWERS, FUNCTIONS AND OBJECTIVES AND FOR
OTHER PURPOSES Section 1. Short Title. — This Act shall be known as the "Philippine Export Credit Insurance and Guarantee Corporation Act." Sec. 2. Declaration of Policy. — It is the policy of the State of actively encourage, promote, and diversify exports and foreign markets of Philippine goods and services in order to attain a rising level of production and employment, increase foreign exchange earnings, hasten the economic development of the country, and assure that the benefits of economic growth accrue to the Filipino people. Towards this end, it is important that sufficient incentives and protection be extended to exporters so that the export capabilities of the country may be better exploited and encouraged to develop to the fullest extent possible. Sec. 3. Definition of Terms. — For purposes of
this Act, the following definitions shall apply: ARTICLE I Sec. 4. Creation, Name, Domicile and Term. — There is hereby created a public corporation capitalized at Ten Million Pesos (P10,000,000.00), to be known as the "Philippine Export Credit Insurance and Guarantee Corporation", which shall be organized within three (3) months from the approval of this Act. The domicile and principal place of business of the Corporation shall be within the Greater Manila area, but it may establish such branches and agencies in other places, within and outside the Philippines, as may be necessary for the proper conduct of its business. The Corporation shall have a term of fifty (50) years from and after the date of organization, unless sooner dissolved by law or for any of the causes provided for by law. Sec. 5. Purposes — The Corporation is established for the purposes of facilitating and developing trade between the Philippines and other countries by means of the powers and authority provided in this Act. Sec. 6. Corporate Powers. — The Corporation shall
have the power: ARTICLE II Sec. 7. Board of Directors. — The powers and functions of the Corporation shall be vested in a Board of Directors which shall be composed of seven (7) members as follows: (a) The President of the Corporation, who shall preside at all meetings of the Board. He shall be appointed to serve on a full-time basis for a term of six (6) years by the President of the Philippines, with the consent of the Commission on Appointments; and (b) A representative each from the Department of Agriculture and Natural Resources, the Department of Finance, the Department of Foreign Affairs, the Department of Commerce and Industry, the Board of Investments, and the Central Bank of the Philippines, other than their respective heads, to be designated by the latter, to serve for a period of two (2) years. All members of the Board hereinabove-mentioned may be reappointed or redesignated to their respective positions: provided, however, that a member who has been appointed or designated to fill up a vacancy due to death, resignation, removal or permanent incapacity of a member, who shall serve the unexpired portion of the term of the member concerned, may likewise be reappointed or redesignated to the same position. Sec. 8. Qualifications. — No person shall be appointed as President, or appointed or designated as a member of the Board, unless he be a natural-born Filipino citizen, at least thirty (30) years old, of good moral character, integrity and responsibility, not previously convicted of a crime involving moral turpitude, and of recognized competence in any of the fields of international finance, export and import trade, commercial law, insurance, economics, international banking, or credit management: provided, however, that in making appointments, the President of the Philippines may give due consideration to nominations which may be submitted by Filipino agricultural, industrial, commercial, banking, insurance, and other allied associations. Sec. 9. Disqualifications. — No member of the
Board shall, during his term of office, be an officer, director,
stockholder, or owner of any insured firm or be personally interested,
directly or indirectly, in any transaction with an insured firm. ARTICLE III SECTION 13. Powers and Duties of the President of the Corporation. — The President of the Corporation shall be the chief executive of the organization. His powers and duties in addition to that provided in Sec. 7(a) of this Act shall be: (a) To prepare the agenda for the meetings of the Board, and to submit for the consideration of the Board such policies and measures as he believes necessary to carry out the purposes and provisions of this Act; (b) To execute, administer and implement the policies and measures approved by the Board; (c) With the approval of the Board, to appoint and fix the number and salaries of such subordinate personnel as may be necessary in carrying out the objectives of this Act, and to remove, suspend, or otherwise discipline for cause any subordinate officer or employee of the Corporation; (d) To direct and supervise the operations and internal administration of the Corporation. The President may delegate certain of his administrative responsibilities to other officers of the Corporation, subject to the rules and regulations promulgated by the Board; (e) To represent the Corporation in all dealings with other offices, agencies, and instrumentalities of the Government and with all persons and other entities, public or private, domestic or foreign; (f) To act, in the conduct of the business of the Corporation, in all matters that are not by this Act or by the by-laws of the corporation specifically reserved to the Board; and (g) To exercise such other powers and perform such other duties as may be vested in him by the Board. SECTION 14. Applicability of Civil Service Law. — Appointments to, suspension and removal from the Corporation except those pertaining to positions which the President of the Philippines may, upon recommendation of the Board, declare as policy determining, primarily confidential or highly technical in nature shall be made only in accordance with the Civil Service Law, and rules and regulations: provided, however, that the provisions of the WAPCO Law shall not apply to appointments made under this Act. SECTION 15. Conflict of Interests of the President of the Corporation. — The President of the Corporation shall work on a full-time basis and shall limit his professional activities to those pertaining directly to his position with the Corporation and, accordingly, he may not accept any other employment, whether public or private, remunerated or gratuitous with the exception of appointments to academic positions. SECTION 16. Compensation of the President of the Corporation. — The President of the Corporation shall receive an annual salary of Fifty Thousand Pesos (P50,000.00) and a monthly commutable allowance in an amount as may be fixed by the Board which shall, in no case, exceed Two Thousand Pesos (P2,000.00). SECTION 17. Management Succession. — In the absence or incapacity of the President, or in the event of a vacancy in the office of the President due to death, resignation, removal or permanent incapacity and pending the appointment of his successor, the Board shall elect from among its members an acting President. SECTION 18. Auditor — The Auditor General shall recommend to the Board a representative who shall be the auditor of the Corporation, and such personnel as may be necessary to assist said representative in the performance of his duties. The salaries of the auditor and his personnel, which shall be appropriated by the Corporation, as well as the number of personnel which may be necessary to assist him, shall be subject to the approval of the Board. Upon approval by the Board, the Auditor General shall appoint the auditor of the Corporation and his staff. The auditor of the Corporation and the personnel under him may be removed for cause only by the Auditor General. The representative of the Auditor General must be a certified public accountant or a member of the Philippine Bar, preferably a certified public accountant and member of the Philippine Bar, with at least ten years of service in the General Auditing Office, at least five years of which shall have been in positions requiring the knowledge or practice of international banking and/or insurance business. No relative of any member of the Board or of the Auditor General within the sixth degree of consanguinity or affinity shall be appointed as such representative. ARTICLE IV SECTION 19. Issuance of Insurance Policies and Guarantee Certificates. — The Corporation shall have full authority to issue policies of insurance and certificates of guarantee against credit risks arising out of or in connection with export transactions. Such insurance policies shall be limited in coverage to export transactions where there are reasonable expectations of repayment from the buyer, and to risks in the form of circumstances, happenings, or events which are outside of or beyond the control of the insured: provided, however, that preference shall be given to Philippine nationals as defined under Sec. 3 (f) of Republic Act Numbered Fifty One Hundred Eighty-Six or to Board of Investments registered export producers, export traders, or service exporters or to any export products whose local contents shall be no less than twenty per cent (20%) of the individual F.O.B. Philippine port value as defined under Sec. 3 (b), (c), (d) and (e) of Republic Act Numbered Sixty-One Hundred Thirty-Five, known as the Export Incentives Act of 1970: provided, further, that the insurance coverage shall in no case exceed eighty per cent (80%) of the invoice value of the goods and/or services exported or contracted to be exported: provided, finally, that the Corporation shall not enter into contracts of insurance against risks of devaluation or changes in the exchange rates and risks that are normally insured with commercial insurers licensed to do business in the Philippines such as fire, marine, casualty, accident, fidelity, surety and physical damage. The Corporation shall conduct its operations in a manner which will make it self-sustaining by deriving sufficient income from premiums and investments to pay and compensate for any losses and expenditures. Sec. 20. Export Credit Insurance and Guarantee. —
The Corporation may: Sec. 21. Contracts of Re-Insurance. — The Corporation may enter into a contract of re-insurance with any duly organized export credit agency or insurance organization whereby: (a) the Corporation shall undertake to insure that agency or organization against its liability to any person carrying on business or other activities in the country in which that agency or organization is established as a result of loss arising out of an export transaction; or (b) that agency or organization shall undertake to insure the Corporation against its liability to a person under a contract of insurance entered into under Sec. 20 of this Act. Sec. 22. Liability Under Outstanding Contracts. — The total outstanding liability of the Corporation under contracts of insurance entered into and guarantees issued under Section s 20 and 21 of this Act shall not exceed a total of thirty (30) times the aggregate of the Insurance Fund and the amount credited to the surplus account of the Corporation within the first three years of operation; sixty (60) times within the next three years thereafter; and one hundred (100) times beyond a period of six years; provided, however, that whenever eighty per cent (80%) of such maximum liability shall have been issued by the Corporation, no policy of insurance or certificate of guarantee shall be issued except to Philippine nationals or a Board of Investments registered export producer, export trader, or service exporter, or an export product as provided under Sec. 3 of Republic Act Numbered Fifty-One Hundred Eighty-Six and Sixty-One Hundred Thirty-Five. Sec. 23. Premium Rates. — The Board shall approve schedules of premium rates that are reasonable and based on risks involved, and consistent with premium rates currently charged for similar export credit insurance coverage throughout the world taking into consideration relevant factors including, but not limited to: a) country of the buyer; b) length of the credit and forms of payment instrument under which it is granted; and c) the type, the products, and the principal markets of the exporter. Sec. 24. Settlement of Claims. — The Board of Directors shall promulgate such rules and regulations for the settlement of claims that may be filed by the insured by virtue of any insurance policy issued by the Corporation under the provisions of this Act, and for the conduct of the proceedings of the Board of Arbitrators which may be constituted hereunder. Such claim(s) should be settled within a reasonable time taking into consideration the circumstances surrounding the case.n case of conflict or failure to have the claim(s) settled within a reasonable time or that the insured believes that the award made is unfair, the parties may agree to arbitrate in which case the insured shall submit to the Board a written request that the claim(s) be referred to a Board of Arbitrators for settlement. Sec. 25. Board of Arbitrators. — The Board of Arbitrators shall be composed of three (3) members, one from the designated members of the Board to be selected by the President of the Corporation, one member to be selected by the policyholder concerned who shall be drawn from one of the industry chambers, and one member to be selected by the first two members, who shall be drawn from a competent relevant group. Sec. 26. Capital or Insurance Fund. — The Corporation shall have a capital which shall constitute its Insurance Fund in the amount of Ten Million Pesos (P10,000,000.00). Upon formal organization of the Corporation, the amount of Ten Million Pesos (P10,000,000.00) shall be drawn from the Special Account with the Central Bank of the Philippines provided under Section four, paragraphs (a) and (b) of Republic Act No. 6125, and shall be set aside and credited by the Central Bank of the Philippines to the account of the Corporation. The Central Bank of the Philippines, within the month following the formal organization of the Corporation as herein provided, is hereby authorized to make the necessary adjustments for this purpose in the distribution of the proceeds of said Special Account under Republic Act. No. 6125. Sec. 27. Appropriation. — The sum of Ten Million
Pesos (P10,000,000.00) is appropriated, out of any funds in the
National Treasury not otherwise appropriated, to constitute the initial
fund of the Technical Reserve. Sec. 28. Working Fund. — Upon the formal organization of the Corporation, the Central Bank of the Philippines shall extend a loan at the lowest preferred rate to the Corporation the sum of One Million Pesos (P1,000,000.00) to constitute the initial Working Fund of the Corporation: provided, however, that this amount shall be independent of and shall not form part of the borrowings authorized under the provisions of this Act. Sec. 29. Stand-by Credit Line. — The Central Bank of the Philippines is authorized to extend a stand-by credit line to the Corporation, the provisions of any law to the contrary notwithstanding: provided, however, that the total amount of such credit line shall not exceed an aggregate amount of One Hundred Million Pesos (P100,000,000.00) at any one time: provided, further, that the rate of interest to be charged by the Central Bank in connection therewith shall be the lowest rate normally granted by the Central Bank for high priority types of credit: and provided, finally, that such credit line shall be availed of by the Corporation only for the purpose of paying insurance claims in accordance with this Act, and only whenever the Board considers the working fund to be impaired. Sec. 30. Commencement of Operations. — Within
three (3) months from approval of this Act, the President of the
Philippines shall appoint the President of the Corporation and shall
complete the organization of the Board by directing the Secretary of
Agriculture and Natural Resources, the Secretary of Foreign Affairs,
the Secretary of Commerce and Industry, the Chairman of the Board of
Investments, and the Governor of the Central Bank of the Philippines to
designate their respective representatives to said Board. Within six
(6) months from such formal organization of the Board, the Corporation
shall commence operations and conduct its business in accordance with
this Act. ARTICLE V Sec. 31. Additional Financial Powers. — By the affirmative vote of at least five (5) members of the Board, the Corporation may negotiate, purchase, lend money against, sell or otherwise dispose of a negotiable instrument insured or guaranteed by it, a negotiable instrument made payable to the Corporation or an interest in any such instrument, or a negotiable instrument made or accepted by a foreign customer under or in connection with an export transaction in respect of which a contract of insurance has been entered into under Sec. 20 of this Act. Sec. 32. Tax Exemptions. — The Corporation shall,
for a period of five (5) years from the approval of this Act, be exempt
from all national, provincial, municipal and city taxes, fees, imposts
and assessments now in force or hereafter established, except import
duties. Sec. 33. Auditing and Legal Service. — The Auditor General and the Secretary of Justice shall be the ex-officio auditor and legal adviser of the Corporation, respectively. The Auditor General, or his authorized representative, shall submit to the Board, soon after the close of each fiscal year, audited statements showing the financial condition and progress of the Corporation for the fiscal year just closed: provided, however, that the Insurance Commissioner or his authorized representative shall make an examination into the financial condition and methods of transacting business of the Corporation at least once in two years and the report of said examination shall be submitted to the Board and the copies thereof furnished the Congress and the Office of the President of the Philippines within a reasonable time after the close of the examination: and provided, finally, that for each examination the Corporation shall pay to the Office of the Insurance Commissioner an amount equal to the actual expenses of said office in the conduct of the examination, including salaries of the examiners of said office who have been assigned to make such examination for the actual time spent in said examination. Sec. 34. Prohibitions. — No official or employee
of the Government, its sub-divisions or instrumentalities shall appear
as counsel for or act as agent or representative of, or in any manner
intervene or intercede, directly or indirectly, in behalf of any party
applying for insurance with the Corporation. Sec. 35. Penal Clause. — Any violation of the
provisions of this Act or of the rules and regulations promulgated by
the Board pursuant to this Act, shall be punished by a fine not to
exceed Fifty Thousand Pesos (P50,000.00) or imprisonment for not more
than three (3) years or both, at the discretion of the Court.f the
offender is not a citizen of the Philippines, he shall be deported
without further proceedings on the part of the Deportation Board, in
addition to the penalty prescribed herein and after service of the
sentence therefor.f the guilty party is a government official or
employee, he shall, in addition, be dismissed from the service with
prejudice to reinstatement and subsequent appointment to any public
office.f the violation is committed by a member of the Board, such
member shall be punished with double the penalty herein provided. Sec. 36. Applicability of the Corporation Law. — The provisions of the Corporation Law which are not inconsistent with the provisions of this Act shall be applicable to this Corporation. Sec. 37. Separability Clause. — If any provision or section of this Act, or the application thereof to any person or circumstance, is held invalid, the other provisions or sections of this Act, or the application of such provision or section to other persons or circumstances, shall not be affected thereby. Sec. 38. Repealing Clause. — All acts or parts of Acts and executive orders, administrative orders or parts thereof, which are inconsistent with the provisions of this Act, are hereby repealed or amended accordingly. Sec. 39. Effectivity. — This Act shall take effect
upon its approval. Approved: March 30, 1972 |
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