AN ACT STRENGTHENING THE GUARANTEE AND PAYMENT POSITIONS OF THE REPUBLIC OF THE PHILIPPINES ON ITS CONTINGENT LIABILITIES ARISING OUT OF RELENT’ AND GUARANTEED LOANS BY APPROPRI…

WHEREAS, the current economic crisis amounts to a grave
emergency which affects the stability of the nation and requires immediate
action:

WHEREAS, the Republic of the Philippines as well as
government-owned or controlled corporations and/or government financial
institutions such as the Philippine National Bank, the Development Bank of the
Philippines and the Philippine Export and Foreign Loan Guarantee Corporations
have obtained various loans, relent substantial portion of its proceeds, and
have likewise extended guarantees on loans both of the public and private sector
to finance long-term economic and development projects;

WHEREAS, due to certain constrainst, contingent or
otherwise, payments on maturity schedules of relent and guaranteed loans
sometimes could not be made by loan end-users, and creditors make payment
demands and resort to calls on the guarantee of the Republic of the Philippine
either as primary obligor or as direct and indirect guarantor;

WHEREAS, to avoid cross default situations and to protect
and maintain the credit standing of the country, most specially in the
international community, the National Government makes prompt payments and/or
advances for all loans, including those relent and/or guaranteed by the Republic
of the Philippines, government—owned or controlled corporations and/or
government financial institutions;

WHEREAS, the issuance of this Decree is an essential and
necessary component of the National 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
order and decree:

SECTION 1. There is hereby appropriated, out of any funds in
the National Treasury not otherwise appropriated, such amounts as may be
necessary to effect payments on foreign or domestic loans, or foreign or
domestic loans whereon creditors make a call on the direct and indirect
guarantee of the Republic of the Philippines, obtained by:

a. the Republic of the Philippines the proceeds of which were relent to
government-owned or controlled corporations and/or government financial
institutions;

b. government-owned or controlled corporations and/or government financial
institutions the proceeds of which were relent to public or private
institutions;

c. government-owned or controlled corporations and/or financial institutions
and guaranteed by the Republic of the Philippines;

d. other public or private institutions and guaranteed by government-owned or
controlled corporations and/or government financial
institutions.

SECTION 2. All repayments made by borrower institutions on
the loans for whose account advances were made by the National Treasury which
revert to the General Fund.

SECTION 3. in the event that any borrower institution is
unable to settle the advances made out of the appropriation provided herein, the
Treasurer of the Philippines shall make the proper recommendation to the
Minister of Finance on whether such advances shall be treated as equity or
subsidy of the National Government to the institution concerned, which shall be
considered in the budgetary program of the Government.

SECTION 4. The Minister of the Finance shall issue
appropriate rules and regulations to implement this decree.

SECTION 5. All laws, decrees, executive orders and
regulations contrary or inconsistent with the provisions of this Decree are
hereby repealed or amended accordingly.

SECTION 6. 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.