Capitalization.
SEC. 7. Capitalization.—The Authority shall have an authorized capital of one hundred million pesos which shall be fully subscribed by the Republic of the Philippines and shall be paid out as follows:
The sum of ten million pesos, which is hereby authorized to be appropriated out of any general fund in the National Treasury not otherwise appropriated, and from the proceeds of bond issues, loans and from any
other sources of income of the National Government, upon approval of this Act.
The sum of ten million pesos every fiscal year thereafter for a period of nine years, from the same sources mentioned in paragraph (a) hereof, which is hereby authorized to be appropriated and to be included in the
General Appropriations Act for such subsequent years
beginning with the fiscal year nineteen hundred sixty-four to sixty-five. The authorized capital of one hundred million pesos shall constitute a revolving fund for the purpose of financing its business transaction, except as herein provided for.
Funds for road-building.
SEC. 8. Funds for road-building.—The sum of thirty million pesos is hereby set aside exclusively for road building projects for a period of five years after the approval of this Act, from the same sources mentioned in paragraph (a), Section seven hereof.
Operating expenses.
SEC. 9. Operating expenses.—For the operating expenses of the Authority in fiscal year nineteen hundred sixty-four to sixty-five the sum of five hundred thousand pesos is hereby appropriated out of any funds in the National Treasury not otherwise appropriated. For the succeeding fiscal years, the Board of Directors may appropriate out of the Authority's paid-in capital a sum not exceeding one million pesos during each fiscal year for operating expenses and a standing annual appropriation is hereby made out of any general fund in the National Treasury of the total amount actually expended out of the said one million pesos for overhead expenses at the end of each fiscal year, which reimbursement shall accrue to the revolving fund. The unexpended balance of the appropriation for overhead expenses at the end of each fiscal year shall automatically revert to the said revolving fund and whatever earnings of the Authority, if any, shall also accrue to the revolving fund.
Power to issue bonds.
SEC. 10. Power to issue bonds.—Whenever the Board of Directors may deem it necessary for the Authority to incur an indebtedness or to issue bonds to carry out the provisions of this Act, it shall by resolution, so declare and state the purpose for which the proposed debt is to t incurred. In order that such resolution be valid, it shall be passed by the affirmative vote of at least four members of such board and approved by the President the Philippines upon the recommendation of the Secretary of Finance, after consultation with the National Economic Council and the Monetary Board of the Central Bank.
Bond limits.
SEC. 11. Bond limits.—The bonds issued under provision shall in no case exceed the amount of thirty million pesos: Provided, That no single issue shall exceed ten million pesos and that no further issue shall be made if eighty per centum of the immediately preceding issue not yet sold.
The bonds shall be issued in such amounts as will needed at any one time, taking into account the rate at which said bonds may be absorbed by the buying public and the fund requirements of projects ready for execution, and considering further a proper balance between productive and non-productive projects so that inflation shall be held to the minimum.
Forms, rates of interest, etc. of bonds.
SEC. 12. Forms, rates of interest, etc. of bonds.—The Secretary of Finance, in consultation with the Monetary Board, shall prescribe the form, rates of interest, denominations, maturities, negotiability, convertibility, call and redemption features, and all other terms and conditions of issuance, placement, sale, servicing, redemption, and payment of all bonds issued under the authority of this Act.
The bonds issued by virtue of this Act may be made payable both as to principal and interest in Philippine currency or any readily convertible foreign currency. Said bonds shall be acceptable as security in any transaction with the government in which such security is required.
Exemption from tax.
SEC. 13. Exemption from tax.—The Authority should be exempt from all taxes incidental to its operations: Provided, That its subsidiary corporations shall be subject to all said taxes five years after their establishment under a graduated scale as follows: twenty per centum of all said taxes during the sixth year, forty per centum of all said taxes during the seventh year, sixty per centum of all said taxes during the eight year, eighty per centum of all said taxes during the ninth year, and one hundred per centum of all said taxes during the tenth year, after said establishment. Such exemption shall include any tax or fee imposed by the government on the sale, purchase or transfer of foreign exchange. All notes, bonds and debentures and other obligations issued by the Authority shall be exempt from all taxes, both as to principal and interest except inheritance and gift taxes.
Sinking fund.
SEC. 14. Sinking fund.—A sinking fund shall be established in such a manner that the total annual contributions hereto, accrued at such rate of interest as may be determined by the Secretary of Finance in consultation with the Monetary Board, shall be sufficient to redeem at maturity the bonds issued under this Act. Said fund shall be under the custody of the Central Bank of the Philippines which shall invest the same in such manner as the Monetary Board may approve; charge all expenses of such investments to said sinking fund, and credit the same with the interest on investments and other income belonging to it.
Guarantee by the Government.
SEC. 15. Guarantee by the Government.—The Republic of the Philippines hereby guarantees the payment by the Authority of both the principal and the interest of the bonds, debentures, collateral, notes or such other obligations issued by the Authority by virtue of this Act, and shall pay such principal and interest in case the Authority fails to do so. In the event that the Authority shall be unable to pay the said principal and interest, the Secretary of Finance shall pay the amount thereof which is hereby appropriated out of any funds in the National Treasury not otherwise appropriated, and thereupon, to the extent of the amounts so paid, the Government of the Republic of the Philippines shall succeed to all the rights of holders of such bonds, debentures, collaterals, notes or other obligations, unless the same so paid by the Republic of the Philippines shall be refunded by the Authority within a reasonable time.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
