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.

• Number: Presidential Decree No. 1961
• Sections: 16

Preamble

WHEREAS, the current economic crisis amounts to a grave

emergency which affects, the stability of the nation and requires immediate

action;

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;

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;

Section 1

SECTION 1. This Decree shall be known as the "Philippine

Economic Recovery Program Financing Law of 1985."

Section 2

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

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

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 Philippine 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

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

SECTION 6. Whenever necessary or advisable in Bank of the

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

indebteness 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 this Decree, the liability of 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

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

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, tems and ceilings on borrowings and

guarantees.

Section 9

SECTION 9. Whenever necessary or advisable in connection

with the National Economic Recovery Program and in connection with the

rescheduling, refinancing or restructing 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

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

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

SECTION 12. Interests, fess and other payments on or respect

of foreign currency loans, credits, deposits or other 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 Pursuant to this Decree shall be exempt from stamp,

excise and other similar taxes.

Section 13

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

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.

Section 15

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.