Section 1
SECTION 1. Section one of Republic Act Numbered Four Thousand Eight Hundred Sixty, as amended, is further amended to read as follows: "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 such terms and conditions as may be agreed upon, not inconsistent with this Act, with 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 or firms extending supplier's credit deferred payment arrangements to enable the Government of the Republic of the Philippines to: "(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 per cent 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; "(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; "(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: Sixty per centum shall be for industrial and public utility projects which are approved by the Board of Investments or their corresponding Boards; and 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 of the following criteria: (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. "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 institution 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 marker the income from which shall be fully tax-exempt in the Philippines."