CBP CIRCULAR NO. 1389
Series of 1993
CONSOLIDATED FOREIGN EXCHANGE RULES AND REGULATIONS
Pursuant to Monetary Board Resolution No. 246 dated March 26, 1993 the foreign exchange rules and regulations on current accounts, capital accounts, foreign currency deposit units, offshore banking units and representative offices of foreign banks are hereby consolidated as follows:
Non-Trade Foreign Exchange Receipts and Disbursements, Transfers of Local Currencies and Gold Transactions
SECTION 1. Disposition of Foreign Exchange Receipts. — Foreign exchange receipts, acquisitions or earnings of residents from non-trade sources may, at the option of said residents, be sold for pesos to Authorized Agent Banks (AABS) or outside the banking system, retained, or deposited in foreign currency accounts, whether in the Philippines or abroad. All categories of banks (except Offshore Banking Units [OBUs]), duly licensed by the Central Bank shall be considered as AABs.
SECTION 2. Sales of Foreign Exchange by AABs. — AABS may sell foreign exchange to residents, (including the Government, its political subdivisions and instrumentalities and government-owned and -controlled corporations, upon the latter's written application for any non-trade purpose without need of prior Central Bank approval. However, foreign exchange for payment of obligations that are foreign loan- or foreign-investment related, may be sold by AABs to residents upon showing that Central Bank approval and/or registration has been obtained for the loan or investment, whenever required by these regulations. AABs selling foreign exchange for remittance abroad shall ensure that taxes, when required, have been paid and that the remittance is net of such taxes.
SECTION 3. Purchases of Foreign Exchange by Non-Residents. — Non-residents may purchase foreign exchange from AABs only to the extent of the amount shown to have been sold by them for pesos to AABs. Departing non-residents may reconvert at airports or other ports of exit unspent pesos of up to a maximum of US$200 or an equivalent amount in any other foreign currency calculated at prevailing exchange rates, without need of showing proof of previous sale by them of foreign exchange to AABs.
SECTION 4. Import/Export of Philippine Currency. — No person may import or export nor bring with him into or out of the country, or electronically transfer legal tender Philippine notes and coins, checks, money order and other bills of exchange drawn in pesos against banks operating in the Philippines in an amount exceeding P5,000.00 without authorization by the Central Bank.
The term "electronic transfer" as used herein shall mean a system where the authority to debit or credit an account (bank, business or individual) is provided by wire, without a source document being mailed to evidence the authority.
SECTION 5. Buying and Selling of Foreign Exchange and of Gold by Residents.
1. Foreign exchange may be freely bought and sold outside the banking system.
2. Except as provided in this Circular, gold and gold-bearing metals may likewise be bought and sold without specific approval of the Central Bank.
3. Gold from small-scale miners shall be sold to Central Bank. All other forms or types of gold may, at the option of the owner or producer thereof and with the consent of Central Bank, be sold and delivered to the Central Bank.
The Central Bank may sell gold grains/pellets/bars and sheets to local jewelry manufacturers and other industrial users upon application, or to banks exclusively for resale to jewelry manufacturers/industrial users, at the Central Bank gold-selling price plus a service fee to cover costs including cost of conversion and packaging.
Foreign Trade Transactions
A. Import Trade Transactions
SECTION 6. General Policy. — As a general rule, all kinds of merchandise imports are allowed. However, the importation of certain commodities are regulated or prohibited for reasons of public health and safety, national security, international commitments, and development/rationalization of local industry.
SECTION 7. Classification of Imports. — Imports are classified as follows:
1. Freely Importable Commodities. These are commodities the importation of which is neither regulated nor prohibited as defined under (2) and (3) hereunder. The importation may be effected without the prior approval of or clearance from any government agency.
2. Regulated Commodities. These are commodities the importation of which requires clearances/permits from appropriate government agencies including the Central Bank. They are enumerated under Appendix I of this Circular.
3. Prohibited Commodities. These are commodities the importation of which is not allowed under existing laws. They are enumerated under Appendix 2 of this Circular.
SECTION 8. Modes of Payment for Imports. — Commercial banks may sell foreign exchange to service payments for imports under any of the following arrangements without prior CB approval subject to the provisions of Section 9 to 12:
1. Letter of Credit (L/C);
2. Documents Against Payment (D/P);
3. Documents Against Acceptance (D/A);
4. Open Account Arrangement (O/A); and
5. Direct Remittance.
SECTION 9. Letter of Credit
1. Requirements for L/C Opening. All L/Cs must be opened on or before the date of shipment with maximum validity of one (1) year. Likewise, only one L/C should be opened for each import transaction. For purposes of opening an L/C, importers shall submit to the commercial bank the following documents:
a. The duly accomplished L/C application;
b. Firm offer/proforma invoice which shall contain information on specific quantity of the importation, unit cost and total cost, complete description/specification of the commodity and Philippine Standard Commodity Classification statistical code;
c. Permits/clearances from appropriate government agencies, whenever applicable; and
d. Duly accomplished Import Entry Declaration (IED) Form which shall serve as basis for payment of advance duties as required under PD 1853.
2. Amendments of L/Cs. L/C amendments need not be referred to the Central Bank for prior approval. However, amendments extending the total validity period of an L/C for more than one (1) year, if payment of the L/C is to be sourced from the banking system, shall be referred to the Central Bank for prior approval.
3. Negotiation of L/Cs. L/Cs shall be negotiated in accordance with the terms and conditions set forth in the L/C and shall be governed by the Uniform Customs and Practices on Documentary Credits. The requirement of pre-shipment inspection/Clean Report of Findings (CRF) shall be strictly observed, whenever applicable.
SECTION 10. Documents Against Payment (D/P)
1. Under the D/P arrangement, commercial banks shall advise the importer of the receipt of the complete original shipping documents (inclusive of the CRF whenever applicable) and shall effect the release of said documents to the importer upon receipt of payment.
2. Commercial banks shall remit payment to the supplier through the correspondent bank abroad.
SECTION 11. Documents Against Acceptance (D/A) and Open Account (O/A) Arrangements. — Under a D/A arrangement, the shipping documents are released to the importer by the local bank concerned thru the seller's bank upon the importers acceptance of the seller's bill of exchange obligating the importer to pay for the shipment of some future date. Under an O/A arrangement, the shipping documents are sent and released by the seller directly to the importer without coursing the documents thru the banks, upon the importer's promise to pay at some future date after shipment.
1. Eligible Firms. Producers/manufacturers whether for the domestic or export market, oil firms, franchised public utility concerns and importers-traders importing raw materials required by domestic manufacturers are allowed to import under D/A and O/A arrangements.
2. Registration and Payment of D/A and O/A imports.
a. Importations under D/A and O/A arrangements shall be covered by a Central Bank Release Certificate (CBRC) and registered with the Central Bank upon availment for monitoring purposes. Commercial banks are authorized to issue the CBRC upon receipt of the complete shipping documents inclusive of the CRF, if applicable, and submission by the importer of the duly accomplished Record of Goods Imported (RGI) and the pertinent import permit (if applicable);
b. Payments sourced from the commercial banking system shall not be effected for unregistered DA/OA imports. Payments prior to maturity date can be made provided these have already been registered. Payments subsequent to the original maturity date may be allowed without prior Central Bank approval provided that:
1) the importers report the extension of the maturity period to a specific date; and
2) the cumulative length of the maturity periods, including all extensions, does not in any case exceed one (1) year from date of draft acceptance for D/A and B/L (Bill of Lading) date for O/A.
c. Payments of D/A and O/A obligations, the maturities of which shall have exceeded 360 days from date of draft acceptance in case of D/A or B/L date in case of O/A shall be referred to the Central Bank for approval; and
d. Mechanics of Registration Appendix 3 of this Circular contains the mechanics of reporting and registration of D/A and O/A imports.
SECTION 12. Direct Remittance. — Commercial banks may service applications for direct remittance of import payments effected through modes other than those under L/D, D/P, D/A or O/A only upon presentation of the complete original shipping documents as well as copy of the CRF and/or imports clearance for regulated items issued by concerned government agencies, if applicable.
SECTION 13. Other Import Arrangements. — Import arrangements not involving payments using foreign exchange purchased from the banking system are also allowed without prior Central Bank approval. These include:
1. Self-Funded/(No-Dollar) Imports. These are imports funded from importer's foreign currency deposit accounts or those sent by suppliers abroad for which no payment in foreign exchange will be made whether immediate or potential.
2. Importations on Consignment Basis. These are importations by export producers of raw materials and accessories/supplies from foreign suppliers/buyers abroad for the manufacture or processing of products destined for export to said foreign suppliers/buyers. These shall also include machinery/equipment and spare parts consigned to the local manufacturer/processor for eventual reexport to the consignor, provided that the equipment involved shall be used only in connection with the processing of products for export.
SECTION 14. Comprehensive Import Supervision Scheme (CISS). — Goods destined for importation into the Philippines shall be subject to inspection by the inspector(s) duly authorized by the Government in the countries of supply, as to the quality, quantity, price/HCV, verification of Tariff and Customs Code, classification and verification of Tariff rate, under a Comprehensive Import Supervision Scheme (CISS).
Pursuant to Joint Order 1-91 (Appendix 4) which governs the implementation of the CISS, the following commodities are subject to inspection:
1. Goods sold and/or supplied from all countries with FOB value of US$500.00 and above.
2. Goods invoiced or declared in the shipping documents as off-quality under such descriptive terms as stocklots, side-runs, call rolls, seconds, mill lots, scraps, off-grade, reconditioned, used, junk or similar terms conveying or purporting to convey the condition of the article as not being brand-new or first quality, regardless of value.
B. Export Trade Transactions
SECTION 15. General Policy. — It is the policy of the Central Bank to encourage commodity exports which generate foreign exchange earnings for the country. Accordingly, commodity exports are allowed without restriction except for certain commodities which are regulated or prohibited for reasons of national interest or by provision of law.
SECTION 16. Classification of Exports
1. Freely Exportable Commodities. These are commodities the exportation of which is neither regulated nor prohibited. They may be effected without prior approval of or clearance from any government agency.
2. Regulated Commodities. — These are commodities the exportation of which requires clearances/permits from appropriate government agencies. The list of these products and the appropriate government agencies/offices is shown in Appendix 5.
3. Prohibited Exports. — These are commodities the exportation or sale of which is prohibited/penalized by law.
SECTION 17. Export Declaration (ED)
1. Individual Export Declaration
a. With Foreign Exchange Proceeds. — For every export shipment with foreign exchange proceeds, exporters must accomplish Form (CBP 6-21-02, Revised 1991 (ED With Foreign Exchange Proceeds). Exporters to ASEAN countries must likewise accomplish this ED even if the shipment is paid for in Philippine pesos. The duly accomplished ED shall be submitted to the commercial bank which shall in turn forward the same to the Bureau of Customs (BOC); and
b. Without Foreign Exchange Proceeds. — Every export shipment without foreign exchange proceeds shall be covered by an Export Declaration Without Foreign Exchange Proceeds, issued by a commercial bank using CBP Form No. 6-21-04. Household and personal effects forming part of the accompanied baggage of an outgoing passenger leaving the Philippines shall be exempted from this requirement.
2. Monthly Export Declaration (MED). — The use of a MED may be allowed by the commercial bank for exports with or without foreign exchange proceeds that are frequent and recurring, using the same form for ED under Section 17 but adding the word "Monthly" to the form title provided that the exporter shall submit a summary report to the commercial bank of all shipments effected under the said MED. The authority to use such a MED shall be valid for a period of one (1) year.
3. Registration and Issuance. — The commercial bank shall register all EDs it issues and shall adopt a control number for each ED as prescribed by the Central Bank attached herewith as Appendix 6. No ED shall be issued unless the Letter of Credit (L/C), Purchase Order (P. O.) or Sales Contract (S.C.) is submitted to the commercial bank.
4. Validity Period. — An ED shall have a maximum validity period of ninety (90) days from date of issue, inclusive of extensions, provided that the expiry date does not go beyond the delivery period specified in the L/C, P. O. or S.C.
5. Amendments. — Amendments to the ED may be allowed by commercial banks at any time before export negotiation without prior Central Bank approval.
6. Cancellation of ED. — Requests for cancellation of an ED may be given due course by the commercial bank upon submission by the exporter of the original ED1 thereon or Certificate of Non-Shipment issued by the Bureau of Customs.
SECTION 18. Modes and Currency of Payment
1. Authorized Modes. — Payments for exports may be made under any of the following modes without prior Central Bank approval.
a. Letter of Credit (L/C);
b. Documents Against Payment (D/P)/Cash Against Document (CAD);
c. Documents Against Acceptance (D/A);
d. Open Account (O/A);
e. Intercompany Open Account Offset (Interco O/A) Arrangement (can be availed of only by firms with parent/affiliate relationship abroad); and
2. Other Authorized Modes. — Payments for exports may also be made under the following modes without prior Central Bank approval:
a. Export Advance — if the remittance is received more than thirty (30) days before shipment; and
b. Prepayment — if the remittance is received within thirty (30) days before shipment.
To enable the commercial bank to determine whether the remittance received is a prepayment or an export advance, the exporter upon receipt of such remittance shall disclose to the commercial bank the date the shipment is to be effected. Bank draft/telegraphic transfer, buyer's checks, traveller's checks or acceptable foreign currency notes may be used in prepayment/export advance, but for buyer's checks, the same shall be cleared before shipment.
3. Acceptable Currencies
a. Payments for exports may be made in the following currencies:
1) U.S. Dollar
13) Australian Dollar
2) Japanese Yen
14) Ringgit Malaysia
3) Pound Sterling
15) Italian Lira
4) Deutsche Mark
16) Saudi Rial
5) Hongkong Dollar
17) Kuwaiti Dinar
6) Swiss Franc
18) Bahrain Dinar
7) French Franc
19) Brunei Dollar
8) Canadian Dollar
20) Indonesian Rupiah
9) Netherlands Guilder
21) Thai Baht
10) Austrian Schilling
22) United Arab Emirates Dirham
11) Singapore Dollar
23) Such other currencies that may be
12) Belgian Franc declared
acceptable by Central Bank
b. Payments may, however, be made in Philippine pesos for the following:
1) Exports to ASEAN countries provided that Central Bank shall not be asked to intervene in the clearing of any balances from this payment scheme; and
2) Gold sales to Central Bank which are considered as constructive exports.
SECTION 19. Negotiation and Payment Procedures
1. Negotiation. — The exporter shall negotiate his bill of exchange/account with the commercial bank together with the bill of lading/airway bill, signed commercial invoice and other documents as required.
The commercial bank shall certify to the said negotiation in the ED2 copy which shall form part of the commercial banks Daily Report on Export Negotiations.
In case of availments of export advances, the commercial bank thru which the availment was made must also be the same bank to negotiate the export documents.
In cases where a shipment is fully prepaid, or is on O/A basis, the exporter may send the documents directly to the buyer. However, copies of these documents must be submitted to the commercial bank which issued the ED.
2. Payment. — Payment shall be subject to the guidelines set forth under Appendix 7 of this Circular. Upon receipt of the export proceeds, the commercial bank shall certify to such receipt on the ED5 copy thereof.
SECTION 20. Disposition of Export Proceeds. — Foreign Exchange receipts, acquisitions or earnings of residents from exports may, at the option of said exporter, be sold for pesos to AABs or outside the banking system, retained, or deposited in foreign currency accounts, whether in the Philippines or abroad and may be used freely for any purpose.
SECTION 21. Gold and Constructive Exports
1. Gold. — All exports of gold in any form may be allowed except for gold from small-scale mining which is required to be sold to the Central Bank pursuant to Republic Act No. 7076 dated June 27, 1991. Gold from small-scale mining includes panned gold.
2. Constructive Exports. — In addition to gold sales to the Central Bank, the following sales of residents paid for in foreign currency shall be considered as constructive exports:
a. Gold sales to the Central Bank even if paid for in Philippine currency;
b. Sales of residents paid for in foreign currency to the following entities:
1) Bonded manufacturing warehouses of export producers/manufacturers;
2) Export Processing Zones;
3) BOI-registered export traders operating bonded trading warehouses supplying raw materials used in the manufacture of export products;
4) Diplomatic missions in the Philippines;
5) Duty Free Philippines Inc. (DFP); and
6) Foreign buyers of goods/products to be delivered directly to local consumers at the instruction of the former and paid for in foreign currency.
An ED for each sale shall be accomplished, provided that the exporter shall submit a delivery receipt signed by the buyer in lieu of the bill of lading/airway bill. For sales of DFP, a MED shall be accomplished instead of an ED.
Foreign Currency Loans & Guarantees
SECTION 22. General Policy. — The Central Bank shall regulate foreign currency loans to ensure that interest and principal owed to creditors can be serviced in an orderly manner and with due regard to the economy's overall debt servicing capacity. Pursuant to Article VII Section 20 of the Constitution, all public and private sector publicly guaranteed obligations from foreign creditors, Offshore Banking Units (OBUs) and Foreign Currency Deposit Units (FCDUs) shall be referred to the Central Bank for prior approval. Other private sector loans from these creditors and other financing schemes/arrangements shall require prior approval and/or registration by the Central Bank if to be serviced using foreign exchange purchased from the banking system.
SECTION 23. Loans Requiring Prior Central Bank Approval. — Prior Central Bank approval shall be required for the following loans:
1. Loans of the following public sector entities irrespective of maturity, creditor and the source of foreign exchange for servicing thereof.
a. National Government, its agencies and instrumentalities;
b. Government-owned/controlled corporations;
c. Government financial institutions, except short-term normal interbank borrowings; and
d. Local governments.
Central Bank approvals shall be obtained even before commencement of actual negotiations.
2. Loans of the private sector irrespective of maturity, creditor and the source of foreign exchange for servicing thereof if:
a. guaranteed by government corporations and/or government financial institutions;
b. covered by foreign exchange guarantees issued by local commercial banks; and
c. to be granted by FCDUs and specifically or directly funded from, or collateralized by offshore loans or deposits.
3. Loans with maturities in excess of one (1) year to be obtained by private commercial banks and financial institutions intended for relending to public or private sector enterprises.
4. Loans to be extended by participating creditor banks under the Revolving Trade Facility (RTF) Agreement to a Philippine obligor, having a long-term tenor and is for the purpose of the purchase and importation into the Philippines of tangible personal property (Capital Asset Purchase Credit), pursuant to Article VI (Relending Option of said Agreement.
5. Other private sector loans, irrespective of maturity if to be serviced using foreign exchange purchased from the banking system and not covered by Section 24 hereof.
Loan applications shall be filed using the prescribed forms.
SECTION 24. Loans not Requiring Prior Central Bank Approval. — The following loans may be granted without prior approval of the Central Bank:
1. Loans of the private sector from FCDUs/offshore sources irrespective of maturity to be serviced using foreign exchange purchased from outside of the banking system.
2. Short-term (with maturity not exceeding one  year) loans of financial institutions, both public and private, for normal interbank transactions, e.g., interbank call loans and general liquidity loans.
3. Short-term loans of the private sector in the form of export advances from buyers abroad.
4. Short-term loans of the following private sector borrowers from FCDUs:
a. Commodity and service exporters — provided these loans are used to finance export-related import costs of goods and services as well as peso cost requirements.
Service exporters shall refer to Philippine residents engaged or proposing to engage in rendering technical, professional or other services which are paid for in foreign exchange.
b. Producers/manufacturers, including oil companies and public utility concerns— provided the loans are used to finance import costs of goods and services necessary in the production of goods by the borrower concerned. Producers/manufacturers shall refer to any person or entity who undertakes the processing/conversion of raw materials into marketable form through physical, mechanical, chemical, or other means or by special treatment or a series of actions that results in a change in the nature or state of the products.
Public utility firms shall refer to any business organization which regularly supplies the public with commodities or services such as electricity, gas, water, transportation, telegraph/telephone services and the like.
Proceeds of FCDU loans shall not be eligible for deposit in an FCDU account if to be serviced using foreign exchange purchased from the banking system.
5. Short-term loans of private sector exporters/importers from participating creditor banks under the Revolving Trade Facility (RTF) Agreement, provided that:
a. The loans are not covered by a guarantee from a government financial institution/corporation;
b. The loans shall be exclusively used to finance specific trade transactions in an amount equivalent to the import bills to be liquidated and/or in the case of export financing transactions, to the borrower's pre-export financing requirements;
c. The advice or notification on the loans to be obtained together with the pertinent documents cited in Appendix 8 have been submitted to the Central Bank at least five (5) days prior to drawdown date;
d. Drawdown and registration requirements under Sections 27 and 28 hereof shall be complied with; and
e. Any assignment of the loan by the creditor concerned shall require prior Central Bank approval.
SECTION 25. Projects/Costs Eligible for Foreign Financing.
1. Loans requiring prior Central Bank approval shall as much as possible finance the following types of projects:
a. Export-oriented projects;
b. BOI-registered projects;
c. Projects listed in the Investment Priorities Plan (IPP);
d. Projects listed in the Medium-Term Public Investment Program; and
e. Other projects that may be declared priority under the country's socio-economic development plan by the National Economic and Development Authority or by Congress.
2. Short-term loans shall finance exclusively foreign exchange requirements of projects except as may be specifically allowed under this Circular.
3. Medium and long-term loans may finance foreign exchange costs and local costs (excluding working capital) of eligible projects.
SECTION 26. Terms of Loans
1. Loans shall have terms reflective of those prevailing in the international capital markets.
2. Terms of loans to be obtained by the National Government shall be in accordance with the provisions of pertinent laws governing National Government borrowings.
3. The Monetary Board may require longer grace/maturity periods for medium and long-term loans involving large amounts to reduce the impact thereof on debt servicing.
SECTION 27. Drawdown/Availment on Loans. — Loans intended to be services using foreign exchange purchased from the banking system shall comply with the following procedures/conditions for drawdown.
1. Drawdowns shall be made not earlier than two (2) days prior to the intended utilization of the loan.
2. Loan proceeds shall be inwardly-remitted and sold to the banking system and shall not therefore be eligible for deposit in FCDU accounts. However, amounts intended to finance foreign exchange costs may be remitted directly to the supplier as may be specifically allowed by the Central Bank.
SECTION 28. Registration of Loans
1. Only loans which have been duly registered with the Central Bank shall be eligible for servicing using foreign exchange purchases from the banking system. Applications for registration shall be filed by the borrower with the Central Bank within three (3) banking days from drawdown date for short-term loans and fifteen (15) banking days for medium and long-term loans using the prescribed forms.
2. Private sector loans granted pursuant to Sections 24.4 and 24.5 shall be reported to the Central Bank for registration purposes, using forms prescribed for the purpose.
3. Compliance with the provisions of Section 27 above shall be a precondition for registration of loans with the Central Bank.
4. Loans requiring prior Central Bank approval which have been drawn/availed of without the requisite approval shall not be eligible for registration and subsequent servicing using foreign exchange purchases from the banking system.
SECTION 29. Servicing of Loans
1. Payments for principal, interest, fees and related charges on loans duly registered with the Central Bank may be remitted as they fall due through commercial banks without prior Central Bank approval.
2. Payments for the following shall, however be subject to prior Central Bank approval;
a. Prepayment/acceleration of payments on medium and long-term (MLT) loans;
b. Loans past due for more than thirty (30) calendar days reckoned as follows:
1) For short-term loans, from the 360th day after availment; and
2) For MLT loans, from original maturity date.
c. Other loan-related fees/charges not authorized by the Central Bank; and
d. Loans covered by official rescheduling with Paris Club creditors listed in Appendix 9.
3. Applications for servicing of loan-related transactions shall be submitted to any commercial bank duly supported by the following documents:
a. Central Bank registration letter indicating the charges/costs payable on the due dates cited in the application for remittance and specifically authorizing servicing of the payments involved without prior Central Bank approval;
b. Billing from the foreign creditor showing amounts payable and due dates, and where applicable, the detailed computation (including basis) of the charges to be paid; and
c. Proof of compliance with relevant Bureau of Internal Revenue (BIR) regulations on foreign loan-related payments.
4. Borrowers with existing Central Bank-registered credits shall apply with the Central Bank for a one-time authority to service their outstanding credits using the prescribed forms.
SECTION 30. Approval/Registration and Servicing of Guarantees
1. Guarantees for account of the public sector as well as those to be issued by government-owned and -controlled corporations in favor of non-residents shall continue to be referred to the Central Bank for prior approval.
2. The following guarantees for account of the private sector shall not require prior Central Bank approval but should be reported to the Central Bank, for registration purposes, to be eligible for servicing using foreign exchange purchases from the banking system in the event of a default, by the principal obligor provided that proceeds of guarantees where the beneficiary is a resident shall be inwardly remitted and sold to the banking system:
a. Guarantees to be issued by local banks and financial institutions including government financial institutions in favor of non-residents such as:
1) Payment guarantees (e.g. bid bonds, performance bonds, advance payment bonds); and
2) Guarantees to secure foreign obligations of residents which do not partake the nature of a foreign loan.
b. Guarantees to be issued by foreign banks and financial institutions as well as other foreign entities to secure peso as well as foreign obligations (which do not partake the nature of a foreign loan) of local firms; and
c. Guarantees and other forms of contingent liabilities chargeable against the participating creditor banks' commitment under the RTF.
3. Other guarantees or similar arrangements which may give rise to actual foreign obligations shall require prior Central Bank approval to be eligible for servicing using foreign exchange purchased from the banking system.
4. Fees and charges on guarantees shall be reflective of prevailing market terms, provided that guarantees issued by parent companies to their affiliates shall not be charged any fee.
5. Any payments relative to Central Bank registered guarantees may be remitted by commercial banks as they fall due without prior Central Bank approval. Payments on any foreign liability arising from a call on the guarantee shall require prior Central Bank approval, if to be serviced using foreign exchange purchases from the banking system.
SECTION 31. Approval and Servicing of Other Financing Schemes/Arrangements.
1. Financing schemes requiring total foreign exchange commitment in excess of US one million dollars such as, but not limited to Build-Operate-Transfer (BOT), Build and Transfer (BT) shall require prior approval of the Central Bank to be eligible for servicing using foreign exchange purchases from the banking system.
2. Payments related to financing schemes involving foreign exchange commitments of less than US one million dollars as well as Central Bank-approved transactions under paragraph 1 above may be serviced, as they fall due without prior Central Bank approval.
SECTION 32. General Policy. — Foreign investments need not be registered with the Central Bank. The registration of a foreign investment with the Central Bank is only required if the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon shall be sourced from the banking system. Foreign exchange needed for capital repatriation and remittance of dividends, profits and earnings of unregistered foreign investments may be sourced outside of the banking system.
Foreign investments shall be registered by the Central Bank only upon submission of proof that the foreign exchange funding the investment has been sold to the banking system for pesos, or that there has been an actual transfer of assets to the Philippines, in the case of investments in kind and the required endorsement of the Securities and Exchange Commission (SEC) or Bureau of Trade Regulation and Consumer Protection (BTRCP) has been obtained.
SECTION 33. Categories of Foreign Investments. — For purposes of registration, foreign investments may either be: (1) direct foreign equity investments in Philippine firms or enterprises; (2) investments in government securities and/or securities listed in the Philippine Stock Exchange; or (3) investments in money market instruments and/or bank deposits.
SECTION 34. Direct Foreign Equity Investments. — Direct foreign equity investment may be in cash or in kind.
Assets eligible for registration as investment in kind shall include: (1) machinery and equipment; and (2) raw materials, supplies, spare parts, and other items including intangible assets necessary for the operation of the investee firm. The value of these investments in kind shall be assessed and appraised by the Central Bank before their registration.
Expenses incurred by foreign firms pursuant to government-approved service contracts for oil/geothermal energy exploration/developments may be capitalized and registered as foreign investment with the Central Bank.
SECTION 35. Investments in Government/Listed Securities.
1. Investments in government securities shall mean investments in certificates of indebtedness, issued by the Philippine Government, or its political subdivisions, agencies or instrumentalities.
2. Investments in listed securities shall mean investments in securities listed in the Philippine Stock Exchange, including securities traded over-the-counter.
SECTION 36. Investments in Monetary Market Instruments and/or Bank Deposits. — Investments in money market instruments shall include all debt instruments, such as but not limited to bonds and bills payable, issued by private domestic firms, not included in Section 23 Part Two, Chapter I of this Circular.
Investments in bank deposits shall mean both peso savings and time deposits with an AAB.
SECTION 37. Registration by Custodian Banks. — The foreign investments described in Sections 35 and 36 above may be registered directly with the Central Bank or with an investor's designated custodian bank which shall issue a Central Bank Registration Document on behalf of the Central Bank. A custodian bank may be a commercial bank or an OBU appointed by the foreign investor to register his investments and to hold shares for and in his behalf and to represent him in all the necessary actions in connection with his investments in the Philippines.
SECTION 38. Registration Procedures. — The procedure for registration of foreign investments including the supporting documents is outlined in Appendix 10 hereto.
SECTION 39. Imports and Exports of Stock Certificates of Philippine Firms. — No prior Central Bank authority shall be required for the import/export of stock certificates of Philippine firms issued to foreign investors, including investments prior to March 15, 1973 under Section 43 hereof.
SECTION 40. Repatriation and Remittance Privileges
1. Foreign investments duly registered with the Central Bank or with a custodian bank duly designated by the foreign investor, shall be entitled to full and immediate repatriation of capital and remittance of dividends, profits and earnings.
2. Without prior Central Bank approval, commercial banks are authorized to sell and to remit the equivalent foreign exchange representing sales/divestment proceeds or dividends, profits or earnings of duly registered foreign investments in accordance with the procedures outlined in Appendix 11 hereof entitled, "Capital Repatriation/Dividend/Profits/Earnings Remittance Procedure."
SECTION 41. Deposit of Divestment/Sales Proceeds. — Pending reinvestment or repatriation, divestment/sales proceeds of duly registered foreign investments, including dividends, profits, earnings may be deposited temporarily with any bank. The eventual repatriation thereof including interest earned net of taxes, shall be remittable in full thru any commercial bank without prior Central Bank approval in accordance with the procedures outlined in Appendix 11 hereof.
SECTION 42. Reinvestment. — Foreign investors may reinvest divestment/sales proceeds or remittable dividends/profits or earnings of duly registered investments. The reinvestments shall be registered with the Central Bank or the investors' designated custodian banks.
SECTION 43. Investments. — Prior to March 15, 1973. Foreign investments certified by the stock transfer agents to have been made prior to March 15, 1973, may be serviced through the banking system, without prior Central Bank approval.
SECTION 44. Outward Investments by Philippine Residents. — A resident may invest abroad only if.
1. the investment are funded by withdrawals from foreign currency deposit units (FCDUs); or
2. the funds to be invested are not among those required to be sold to AABs for pesos; or
3. the funds to be invested are sourced from AABs but in amounts of less than $1 million per investor per year.
Parts III and IV