AN ACT TO AUTHORIZE THE CENTRAL BANK OF THE PHILIPPINES TO ESTABLISH A MARGIN OVER BANKS'' SELLING RATES OF FOREIGN EXCHANGE.

Case Overview and Summary

Summary of Republic Act No. 2609

Authorizes the Central Bank of the Philippines to Establish a Margin Over Banks' Selling Rates of Foreign Exchange

- Section 1: Allows the Central Bank to establish a uniform margin of up to 40% over banks' selling rates of foreign exchange, subject to certain conditions:
-- Margin can only be changed once a year, except upon recommendation of the National Economic Council and approval of the President.
-- Margin is intended to curtail excessive demand on international reserves.
-- Monetary authorities shall take steps for a four-year program of gradual decontrol.

- Section 2: Exempts the following from the margin:
-- I. Drugs and medicines (with detailed list of exempted items)
-- II. Medical, dental, and hospital supplies (with detailed list of exempted items)
-- III. Fertilizers, soil conditioners, and fertilizer components
-- IV. Spare parts for agricultural industries
-- V. Textbooks, reference books, religious books, and technical/scientific books (with conditions)
-- VI. Scientific and technical equipment and materials for research (with conditions)
-- VII. Newsprint imported by publishers
-- VIII. Cinematographic films, raw materials, and equipment for local movie production
-- IX. Canned white salmon, sardines, corned beef, raw cotton, and breeding/dairy cattle (with conditions)
-- X. Canned condensed milk with no local substitute
-- XI. Cyanide, metallurgical reagents, grinding balls, explosives, and dynamite for authorized end-users
-- XII. Materials for manufacturing containers for local food products (if not locally produced)
-- XIII. Seeds for planting purposes (with detailed list and conditions)
-- XIV. Spare parts for vessels of Philippine registry
-- XV. Poultry and animal food ingredients (if not locally produced)
-- XVI. Spare parts for commercial aircraft of Philippine registry
-- XVII. Unassembled kerosene lamps and fishing paraphernalia for end-users
-- XVIII. Urea formaldehyde for plywood and hardboard manufacturing
-- XIX. Payment of premiums by veterans on U.S. life insurance policies
-- XX. Spare parts for machineries used by cottage industries

- Section 3: Exempts liquidation of drafts under existing letters of credit, contractual obligations, repayment of government loans, and importation of machineries/equipment for public utilities.

- Section 4: Requires importers to declare true purchase price and landed cost, and not fix unreasonable prices.

- Section 5: Proceeds from the margin accrue to the Central Bank.

- Section 6: Prohibits selling or transferring foreign exchange obtained from government agencies.

- Section 7: Authorizes the Monetary Board to promulgate rules and regulations.

- Section 8: Penalties for violations include fines up to 20,000 pesos, imprisonment up to 2 years, deportation for aliens, and forfeiture of right to purchase foreign exchange.

- Section 9: Severability clause.

- Section 10: Effective until December 31, 1964.