Presidential Decree No. 550 (PD 550) — Creating the Philippine Foreign Loan Guarantee Corporation, Defining Its Powers and Duties and for Other Purposes.
WHEREAS, there is a need to supplement existing domestic
financial resources with borrowings from abroad in order to meet the
country's economic development requirements;
WHEREAS, such foreign obligations contracted by the private
sector may need to be adequately guaranteed by government financial
institutions;
WHEREAS, the Development Bank of the Philippines, the
Philippine National Bank, and the National Investment and Development
Corporation are the only government financial institutions presently
offering guarantee coverage to such foreign obligations incurred by the
private sector;
WHEREAS, there is a felt need to expand the Philippine
Government's guarantee coverage of foreign loans for the private sector
in order to ensure the continuous entry of these resources into the
economy;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution,
do hereby order and decree:
Philippine Foreign Loan Guarantee Corporation.
SECTION 1. Philippine Foreign Loan Guarantee Corporation. —
(a) There is hereby created a body corporate to be known as the
Philippine Foreign Loan Guarantee Corporation, hereinafter referred to
as the Corporation, which shall have succession in its corporate name.
The Corporation shall have its principal office in the Greater Manila
Area.
The Corporation shall be deemed to be a wholly owned
Government corporation and shall accordingly be subject to provisions of
existing laws, rules and regulations applicable to Government-owned
corporations not otherwise inconsistent with the provisions of this
Decree.
Primary Purpose.
SEC. 2. Primary Purpose. — The primary purpose of the
Corporation shall be to guarantee foreign loans, in whole or in part,
granted to any domestic entity, enterprise or corporation, majority of
the capital of which is owned by citizens of the Philippines.
Functions.
SEC. 3. Functions. — The Corporation shall have
the following functions:
To promote and facilitate the entry of foreign loans into the
country for development purposes having special regard to the needs of
export-oriented industries, industries registered with the Board of
Investments, public utilities, and industries the promotion of which is
encouraged by government policy;
To meet requests from domestic entities, enterprises
and corporations to assist them in the coordination of their
development and expansion plans with a view to achieving better
utilization of their resources; and
To provide technical assistance to the preparation, financing
and execution of development or expansion programs,
including the formulation of specific project proposals.
Corporate Powers.
SEC. 4. Corporate Powers. — The Corporation is hereby
authorized to make contracts, to lease or own real and personal
property, and to sell or otherwise dispose of the same, to sue and be
sued; and otherwise to do and perform any and all things that may be
necessary or proper to carry out the purpose of this Decree, or as are
essential to the proper conduct of such operations.
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 in foreign countries or in the Philippines
with the approval of the President of the Philippines and subject to
pertinent provisions of Republic Act No. 265, as amended, and Central
Bank rules and regulations;
To buy and sell securities the Corporation has issued or
guaranteed;
To underwrite, or participate in the underwriting of,
securities issued by any domestic entity or enterprise for purposes
consistent with the purpose of the Corporation;
To invest funds not needed in its operations;
To hold assets in foreign countries subject to Central Bank
rules and regulations; and
To exercise such other powers and establish such rules and
regulations as may be necessary and appropriate in furtherance of its
purpose and functions;
Operating Principles.
SEC. 6. Operating Principles. — The operations of
the Corporation shall be conducted in accordance with the following
principles:
The operations of the Corporation shall principally
facilitate foreign loan financing of specific projects of domestic
entities or enterprises. They may, however, include guarantees and
counter guarantees for sign loans made by banks or other financial
institutions or other suitable entities in order that the latter may
finance specific development projects either by outright ban or
guarantees.
In considering an application for a guarantee, the
Corporation shall pay due regard to the ability of the borrower to
obtain guarantee facilities elsewhere on terms and conditions that the
Corporation considers reasonable for the recipient, taking into account
all pertinent factors;
In guaranteeing a loan, the Corporation shall pay due regard
to the prospect that the borrower will be in a position to meet its
obligations under the loan contract;
In guaranteeing a loan, or in underwriting the sale of
securities, the corporation shall receive suitable compensation for its
risk;
The Corporation shall take the necessary measures to ensure
that the proceeds of any loan guaranteed by the Corporation are used
only for the purposes for which the loan was granted and with due
attention to considerations of economy and efficiency;
The Corporation shall not guarantee a single borrower in an
amount exceeding the Corporation's subscribed capital stock nor shall
the aggragate outstanding guarantee obligations of the Corporation
exceed fifteen (15) times its subscribed capital stock plus surplus;
When payment is made by the Corporation pursuant to a guarantee
it has made, the Corporation shall be subrogated to any right, title,
claim or cause of action belonging to the creditor; and
The Corporation shall be guided by sound banking principles and
sound financial management in its operations.
Capital Stock.
SEC. 7. Capital Stock. — The initial authorized
capital stock of the Corporation shall be One billion pesos (P1,000,
000,000) to be fully subscribed by the Government of the Republic of the
Philippines. For this purpose, the sum of One billion pesos
(P1,000,000,000) is hereby appropriated from any sums not otherwise
appropriated in the National Treasury. The Board may increase the
Authorized capital stock of the Corporation, subject to the approval of
the President of the Philippines.
Loans from Central Bank.
SEC. 8. Loans from Central Bank. — The Central
Bank of the Philippines may grant the Corporation loans and advances
which it may need for its operations secured by any assets which are
defined as acceptable security by a concurrent vote of at least five (5)
members of the Monetary Board.
Guarantee of National Government.
SEC. 9. Guarantee of National Government. — The
payment of obligations incurred by the Corporation under the provisions
of this Decree is fully guaranteed by the Government of the Republic of
the Philippines.
Board of Directors; Composition.
SEC. 10. 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 five (5) members, as follows:
The Secretary of Finance, who shall be the Chairman of the
Board. Whenever the Secretary of Finance is unable to attend a meeting
of the Board, he shall designate an undersecretary to attend as his
alternate, who shall not act as Chairman.
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.
The Secretary of Industry. Whenever the Secretary of
Industry is unable to attend a meeting of the Board, he shall designate
and undersecretary to attend as his alternate.
The Director General of the National Economic and Development
Authority. Whenever the Director General is unable to attend a
meeting of the Board, he shall designate a deputy director general of
the Authority to attend as his alternate.
The Solicitor General. Whenever the Solicitor
General is unable to attend a meeting of the Board, he shall designate
an assistant solicitor general to attend as his alternate.
Powers of the Board.
SEC. 11. 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 as it considers
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: Provided, however, That positions
considered by the Board to be policy-determining, primarily confidential
or highly technical in nature shall not be subject to the Civil
Service Law; and
To authorize such expenditures by the Corporation as are in the
interest of the effective administration and operations of the
Corporation.
Meetings.
SEC. 12. Meetings. — The Board shall convene as
frequently as is necessary to discharge its responsibilities property,
but shall meet at least once every two weeks. The Board may be convoked
either by the Secretary of Finance or by the President of the
Corporation.
The presence of three (3) members shall constitute a
quorum.
All decisions of the Board shall require the concurrence of at
least three (3) members.
Remuneration of Members for Attending Meetings of the Board.
SEC. 13. Remuneration of
Members for Attending Meetings of the Board.— The members of the
Board or their respective alternates, except the President of the
Corporation, shall receive a per diem of two hundred fifty pesos
(P250.00) for every Board meeting attended.
President.
SEC. 14. President. — The chief executive
officer of the Corporation shall be the President who shall be appointed
by the President of the Philippines, upon recommendation of the Board,
for a term of six (6) years unless removed for cause or by reason of
incapacity. No person shall be elected President of the Corporation
unless he is a native-born Filipino citizen, at least forty (40) years
of age, of good moral character and of unquestionable integrity and
responsibility, and who is experienced and of recognized competence in
the fields of foreign loans and other international financial
transactions, banking and law. He shall be assisted by such executive
officials as may be necessary for the efficient operation of the
Corporation.
Powers and Duties of the President.
SEC. 15. Powers and Duties of the President. —
The powers and duties of the President of the Corporation shall be:
To prepare the agenda for meetings of the Board and to 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.
Remuneration of the President.
SEC. 16. Remuneration of the President. — The salary
of the President of the Corporation shall be fixed by the Board with
the approval of the President of the Philippines. Until such salary has
been so fixed, the President of the Corporation shall receive a salary
of Sixty thousand pesos (P60,000) per annum. The Board may
authorized payment of allowances and other emoluments to the President
of the Corporation.
Other Officials and Employees of the Corporation.
SEC. 17. 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.
Assistance by Other Government Offices and Corporations.
SEC. 18. Assistance by Other Government Offices and
Corporations. — Other Government offices and Government-owned and
controlled corporations shall extend whatever assistance may be needed
by the Corporation, including the detail of its officials and employees
to the Corporation on a full-time or part-time basis under arrangements
satisfactory to the Corporation and the other Government offices or
corporations concerned. Said officials and employees may draw allowances
and other emoluments for such assignment, notwithstanding the provision
of any law to the contrary.
Auditor.
SEC. 19. Auditor. — The Chairman of the
Commission on Audit shall act as the ex-officio Auditor of the
Corporation and, as much, 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 Auditor of the Corporation and personnel under him
may be removed only by the Chairman of the Commission on Audit.
The representative of the Chairman of the Commission on Audit
must have at least ten (10) years experience as a certified public
accountant.
Coordination of Policies.
SEC. 20. Coordination of Policies. — Unless
otherwise specifically prescribed by this Decree, the Corporation shall
coordinate its policies and operations with those of the Central Bank of
the Philippines, National Economic and Development Authority, and Board
of Investments.
Availability of Foreign Exchange.
SEC. 21. Availability of Foreign Exchange. —
Subject to the provisions of Republic Act No. 265, as amended,
particularly Section 74 thereof, the Central Bank of the Philippines
shall make available to the Corporation the necessary foreign exchange
to enable it to comply with its obligations incurred under this Decree.
Supervision and Examination by the Central Bank.
SEC. 22. Supervision and Examination by the Central
Bank. — The Corporation shall be subject to the supervision and
examination by the Central Bank of the Philippines in accordance with
Republic Act No. 265, as amended, and Republic Act No. 337, as amended.
Applicability of Central Bank foreign exchange regulations.
SEC. 23. Applicability of Central Bank foreign
exchange regulations. — The guarantee operations and all other
transactions of the Corporation involving foreign exchange shall be
subject to the applicable foreign exchange regulations of the Central
Bank.
Tax Exemptions.
SEC. 24. Tax Exemptions. — Notwithstanding the
provision of any general or special law to the contrary, the
Corporation, its assets, property, income and transactions shall be
exempt from all taxation and government fees and charges.
Non-Applicability of WAPCO Standards and Scales.
SEC. 25. Non-Applicability of WAPCO Standards and
Scales. — The Corporation shall not be subject to standards and
salary scales prescribed by the Wage and Position Classification Office.
Applicability of the Corporation Law and Civil Service Law.
SEC. 26. Applicability of the Corporation Law and
Civil Service Law. — The provisions of the Corporation Law and Civil
Service Law shall apply to the Corporation insofar as they are not
inconsistent with the provisions of the Decree.
Repealing Clause.
SEC. 27. Repealing Clause. — All laws and
executive orders and parts thereof inconsistent herewith are hereby
repealed.
Effectivity Clause.
SEC. 28. Effectivity Clause. — This Decree shall
take effect immediately.
Done in the City of Manila, this 11th day of September, in the
year of Our Lord, nineteen hundred and seventy-four.
(Sgd.)
FERDINAND E. MARCOS
President of the Philippines
By the President:
(Sgd.)
ALEJANDRO MELCHOR
Executive Secretary
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
