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 CUR…

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. This Decree shall be known as the “Philippine
Economic Recovery Program Financing Law of 1985.”

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.