Revising Presidential Decree No. 550 Creating The Philippine Foreign Loan Guarantee Corporation So It Will Now Be Entitled The Philippine Export And Foreign Loan Guarantee Corporation
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Revising Presidential Decree No. 550 Creating The Philippine Foreign Loan Guarantee Corporation So It Will Now Be Entitled The Philippine Export And Foreign Loan Guarantee Corporation
Presidential Decree No. 1080
January 31, 1977
Case Overview and Summary
Summary of Presidential Decree No. 1080 (as amended by RA 8494):Creation and Purpose of the Philippine Export and Foreign Loan Guarantee Corporation (PEFGLC):
- A body corporate known as the Philippine Export and Foreign Loan Guarantee Corporation (PEFGLC) is created. (Section 1)
- Primary purposes are:
1. To guarantee approved foreign loans granted to domestic entities/corporations owned by Filipino citizens. (Section 2a)
2. To guarantee Philippine banking and financial institutions against losses from:
a. Loans/credit to Filipino exporters, producers of export products, or contractors with approved service contracts abroad. (Section 2b)
b. Issuance of standby letters of credit or letters of guarantee to secure performance of approved service contracts abroad by Filipino entities. (Section 2b)
Functions of PEFGLC:
- Promote and facilitate entry of foreign loans for development purposes, especially export-oriented industries, BOI-registered industries, public utilities, and government-encouraged industries. (Section 3a)
- Guarantee loans granted by Philippine banks/financial institutions to qualified exporters, producers of export products, and contractors with approved service contracts abroad. (Section 3b)
- Facilitate implementation of approved service contracts abroad by Filipino entities by providing counter-guarantees to banks issuing standby L/Cs or letters of guarantee. (Section 3c)
- Assist domestic entities in coordinating development/expansion plans and resource utilization. (Section 3d)
- Provide technical assistance in preparing, financing, and executing development/expansion programs and project proposals. (Section 3e)
Corporate Powers of PEFGLC:
- Make contracts, lease/own/dispose of real and personal property, sue and be sued, and perform necessary acts to carry out its purpose. (Section 4)
Borrowing and Other Powers of PEFGLC:
- Borrow funds in foreign countries or Philippines with President's approval and subject to RA 265 and Central Bank rules. (Section 5a)
- Buy and sell securities it has issued or guaranteed. (Section 5b)
- Underwrite or participate in underwriting securities by domestic entities for its purposes. (Section 5c)
- Invest funds not needed in operations. (Section 5d)
- Exercise other necessary powers and establish rules/regulations. (Section 5e)
Operating Principles of PEFGLC:
- Facilitate foreign or domestic loan financing of specific projects, as well as implementation of approved service contracts abroad with net foreign exchange earning potentials by domestic entities. (Section 6a)
- Consider borrower's ability to obtain guarantee facilities elsewhere on reasonable terms. (Section 6b)
- Consider prospect of borrower/service contractor meeting obligations under loan/service contract. (Section 6c)
- Receive suitable compensation for risks in guaranteeing loans/standby L/Cs/letters of guarantee or underwriting securities. (Section 6d)
- Ensure loan proceeds are used for intended purposes with economy and efficiency. (Section 6e)
- Not guarantee a single borrower/standby L/C/letter of guarantee exceeding its subscribed capital stock, nor exceed 15 times its subscribed capital stock plus surplus in aggregate outstanding guarantees. (Section 6f)
- Be subrogated to rights/claims of creditor/service contractor upon payment under guarantee. (Section 6g)
- Be guided by sound banking principles and financial management. (Section 6h)
Capital Stock and Funding:
- Initial authorized capital stock of ₱2 billion to be fully subscribed by the Philippine government. (Section 7)
- Central Bank may grant loans/advances secured by acceptable assets. (Section 8)
- Payment of PEFGLC's obligations is fully guaranteed by the Philippine government. (Section 9)
Board of Directors:
- Composed of 9 members: Secretary of Finance (Chairman), PEFGLC President (Vice-Chairman), Secretaries of Industry, Trade, Natural Resources, and Agriculture, Governor of Central Bank, Director-General of NEDA, and Chairman-President of Philippine Export Council. (Section 10)
- Powers include formulating policies, issuing rules/regulations, directing management/operations, appointing/removing personnel, and authorizing expenditures. (Section 11)
- Meets at least once every two weeks, with quorum of 5 members and decisions requiring concurrence of at least 5 members. (Section 12)
- Members (except PEFGLC President) receive ₱500 per diem for attending meetings. (Section 13)
President of PEFGLC:
- Appointed by the President of the Philippines for a 6-year term, upon Board's recommendation. (Section 14)
- Must be a native-born Filipino citizen, at least 40 years old, of good moral character and integrity, and experienced in international financial transactions, banking, and law. (Section 14)
- Powers and duties include preparing Board agenda, executing/administering Board policies, directing/supervising operations, and exercising other vested powers. (Section 15)
- Salary fixed by the Board with President's approval, initially ₱60,000 per annum plus allowances/emoluments. (Section 16)
Other Officials and Employees:
- Appointed and removed by the Board on President's recommendation. (Section 17)
Assistance from Other Government Offices and Corporations:
- Other government offices and GOCCs shall extend assistance, including detailing officials/employees to PEFGLC on full-time or part-time basis with allowances/emoluments. (Section 18)
Auditor:
- Chairman of Commission on Audit acts as ex-officio Auditor and appoints a representative as PEFGLC's Auditor with at least 10 years of CPA experience. (Section 19)
- Auditor's office expenses paid by PEFGLC. (Section 19)
Coordination of Policies:
- PEFGLC shall coordinate policies and operations with Central Bank, NEDA, Philippine Export Council, and relevant government departments involved in exports. (Section 20)
Foreign Exchange Availability:
- Central Bank shall make available necessary foreign exchange to enable PEFGLC to comply with obligations under this Decree, subject to RA 265. (Section 21)
Supervision and Examination by Central Bank:
- PEFGLC is subject to supervision and examination by Central Bank under RA 265 and RA 337. (Section 22)
Applicability of Central Bank Foreign Exchange Regulations:
- PEFGLC's guarantee operations and transactions involving foreign exchange are subject to Central Bank's foreign exchange regulations. (Section 23)
Tax Exemption:
- PEFGLC, its assets, property, income, and transactions are exempt from all taxation and government fees/charges. (Section 24)
Non-Applicability of WAPCO Standards and Scales:
- PEFGLC is not subject to standards and salary scales prescribed by the Wage and Position Classification Office. (Section 25)
Applicability of Corporation Law and Civil Service Law:
- Corporation Law and Civil Service Law apply to PEFGLC insofar as not inconsistent with this Decree. (Section 26)
Repealing Clause:
- Presidential Decree No. 1074 and all inconsistent laws, executive orders, and parts thereof are repealed. (Section 27)
Effectivity Clause:
- This Decree takes effect immediately. (Section 28)
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Revising Presidential Decree No. 550 Creating The Philippine Foreign Loan Guarantee Corporation So It Will Now Be Entitled The Philippine Export And Foreign Loan Guarantee Corporation
Presidential Decree No. 1080
•January 31, 1977
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 1080
Sec. 1,2,3 & 10 Amended by RA 8494
REVISING PRESIDENTIAL DECREE NO. 550 CREATING THE PHILIPPINE FOREIGN LOAN GUARANTEE CORPORATION SO IT WILL NOW BE ENTITLED THE PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION
I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the revision of Presidential Decree No. 550, dated September 11, 1974, which shall henceforth read in its entirely as follows:
WHEREAS, there is a need to supplement existing domestic financial resources with borrowings from abroad in order to meet the country's economic development requirements;
WHEREAS, such foreign obligations contracted by the private sector may need to be adequately guaranteed by government financial institutions;
WHEREAS, the Development Bank of the Philippines, the Philippine National Bank, and the National Investment and Development Corporation are the only government financial institutions presently offering guarantee coverage to such foreign obligations incurred by the private sector;
WHEREAS, there is a felt need to...
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