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Philippines

Repeal of uniform currency law

Republic Act No. 8183, approved on June 11 1996, repealed Republic Act No. 529. The old act was entitled the Act to Assure the Uniform Value of Philippines Coin and Currency, or more simply, the Uniform Currency Law. The Uniform currency law, in effect since June 16 1950, declared as "against public policy, and null, void, and of no effect" any provision pertaining to any domestic obligation which "purports to give to the obligee the right to require payment in gold or in a particular kind of coin or currency other than Philippine currency or in an amount of money of the Philippines measured thereby".

While Republic Act No. 8183 provides that "all monetary obligations shall be settled in the Philippine currency which is legal tender in the Philippines", it also allows contracting parties to stipulate in contracts entered into in the Philippines that payment be effected in foreign currency.


Domestic borrowing of foreign firms

The Bangko Sentral ng Pilipinas (the Central Bank) issued Circular No. 120 on December 31 1996, to repeal amended Circular No. 572, effective from January 1 1997.

Amended Circular No. 572 required all foreign firms to obtain certification from the Inter Agency Committee on Domestic Borrowings of Foreign Firms that they had met Monetary Board guidelines on domestic borrowing by foreign firms, before they sought peso loans from banks and other financial intermediaries (foreign firms were defined as partnerships and corporations owned more than 40% by non-Filipino citizens).The foreign firms had to meet and maintain a prescribed debt-to-equity ratio.

The guiding principle applied was that foreign firms operating in the Philippines were expected to bring in adequate capital and to maintain peso borrowings for capital requirements at reasonable levels. Furthermore, foreign firms with outstanding peso borrowings had to meet the requirements of the amended Circular No. 572 before they were allowed to outwardly remit profits, earnings and/or dividends.

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