Exemptions from the margin imposition
- Section 2 provides that the margin established under Section 1 shall not be imposed on the sale of foreign exchange for specified imports.
- Section 2(I) exempts foreign exchange for imports of listed drugs and medicines, including (among many specific items) anaesthetics, antibiotics (with stated exceptions), anti-leprosy preparations, antimalarials (with quinine preparations as exception), vaccines/sera/toxoids/antigens, insulin (all forms), narcotics and hypnotics, vaccines and sera, steroids and preparations, vitamins, and other drugs and medicines that are (1) not mere substitutes of locally produced products and (2) not yet commercially available, when authorized by the Secretary of Health each year upon recommendation of the Philippine Medical Association and the Philippine Federation of Private Medical Practitioners; the Secretary of Commerce and Industry certifies their not being commercially available.
- Section 2(II) exempts foreign exchange for imports of listed medical, dental and hospital supplies, including adhesives/plasters/bandages/gauzes/dressings, dental instruments/equipment/supplies, electro-medical therapy equipment, x-ray equipment/films/supplies including contrast media, radium and radioactive materials for therapy, catheters and plastic venoclysis sets, and other enumerated hospital/surgical and related items.
- Section 2(III) exempts foreign exchange for imports of fertilizers and soil conditioners and fertilizer components needed in fertilizer manufacture.
- Section 2(IV) exempts foreign exchange for spare parts imported and used exclusively by end-users for agricultural industries.
- Sections 2(V) to 2(XX) further exempt foreign exchange for imports covering enumerated categories, including:
- Textbooks, reference books and religious books approved by the Board of Textbooks and/or certified by the Secretary of Education, and technical and scientific books certified by the Secretary of Education (Section 2(V)).
- Scientific and technical equipment and materials imported for exclusive research and scientific work as certified by the National Science Development Board (Section 2(VI)).
- Newsprint directly imported by publishers for exclusive use in publishing (Section 2(VII)).
- Unexposed cinematographic films, raw materials, equipment and spare parts for local moving picture production (Section 2(VIII)).
- Canned white salmon and large sardines in plain tomato sauce, corned beef, raw cotton procured under U.S. Public Laws No. 480 and No. 402 for exclusive use by end-users, and breeding and dairy cattle (Section 2(IX)).
- Canned condensed milk and milk in all forms, for which there is no locally produced substitute (Section 2(X)).
- Cyanide, metallurgical re-agents/flotation chemicals, grinding balls, and explosives/dynamite for exclusive use by lawfully authorized end-users (Section 2(XI)).
- Materials not locally produced or available for manufacture of containers for locally made or manufactured food products (Section 2(XII)).
- Seeds for planting purposes only for enumerated crops, when imported by end-users themselves or through cooperatives for exclusive use, certified by the Secretary of Agriculture and National Resources (Section 2(XIII)).
- Spare parts for maintenance/repair of vessels of Philippine registry for exclusive end-user use (Section 2(XIV)).
- Poultry and animal food ingredients other than cereals or derivatives thereof, when not locally produced (Section 2(XV)).
- Spare parts for maintenance/repair of commercial aircrafts of Philippine registry for exclusive end-user use (Section 2(XVI)).
- Unassembled kerosene air pressure lamps and other fishing paraphernalia imported for exclusive end-user use or through cooperatives (Section 2(XVII)).
- Urea formaldehyde for manufacture of plywood and hardboard, imported for exclusive end-user use (Section 2(XVIII)).
- Premiums by veterans on life insurance policies under the government of the United States (Section 2(XIX)).
- Spare parts for machineries used by cottage industries imported for exclusive end-user use or through cooperatives (Section 2(XX)).
Limits on application and timing
- Section 3 provides that the Act’s margin provisions do not apply to the liquidation of drafts drawn under letters of credit, or to contractual obligations calling for payment of foreign exchange issued, approved and outstanding as of the date this Act takes effect, including extensions under the same terms and conditions.
- Section 3 further exempts the repayment of loans contracted by the government of the Philippines with foreign governments and/or private banks from operation of the Act.
- Section 3 also exempts the importation of machineries and equipment by provinces, cities or municipalities for exclusive use in operating public utilities fully owned and maintained by them.
- Section 10 states the Act takes effect upon approval and remains in force until December 31, 1964.
Importer undertakings before FX sale
- Section 4 requires no foreign exchange sale to an importer unless the importer executes in writing before the corresponding license is issued:
- A commitment that the importer will declare the true purchase price and true and accurate landed cost of the imported commodities or merchandise; and
- A commitment that the importer will not fix prices over the landed costs of the imported commodities or merchandise in an unreasonable amount, or in violation of any existing law or regulation.
Where proceeds go
- Section 5 provides that proceeds resulting from operations under Section 1 accrue to the Central Bank of the Philippines.
- The proceeds are governed by Section 41 of Republic Act No. 265.
Prohibition on alienation of government dollars
- Section 6 makes it unlawful for any person who has obtained dollars for his benefits from any agency or instrumentality of the government, through application filed by him, to sell, transfer, assign, convey, or otherwise alienate the same or any interest thereon to any other person.
Rulemaking power of the Monetary Board
- Section 7 requires the Monetary Board of the Central Bank of the Philippines to prescribe and promulgate rules and regulations necessary to carry out the provisions of the Act.
Criminal penalties and consequences
- Section 8 makes it unlawful for any person violating any provision of the Act or any rules or regulations issued under it.
- Upon conviction, the offender is subject to a fine of not exceeding PHP 20,000 or imprisonment of not exceeding two years, or both.
- Section 8 provides a corporate rule: if the offender is a corporation, association or partnership, the penalty shall be imposed upon the president, directors, managers, managing partners, as the case may be, and/or the person charged with administration thereof.
- Section 8 provides an alien rule: if the offender is an alien, he is additionally deported without further deportation proceedings, in addition to the penalties prescribed.
- Section 8 mandates an additional administrative consequence: forfeiture of the right thereafter to purchase any foreign exchange.
Separability, duration, and effectivity
- Section 9 provides that if any provision or section of the Act or its application is held invalid, the remaining provisions and their applications to other persons or circumstances are unaffected.
- Section 10 provides that the Act takes effect upon approval and remains in force until December 31, 1964.
Issuance details
- Republic Act No. 2609 is titled “AN ACT TO AUTHORIZE THE CENTRAL BANK OF THE PHILIPPINES TO ESTABLISH A MARGIN OVER BANKS' SELLING RATES OF FOREIGN EXCHANGE.”
- Republic Act No. 2609 was approved on July 16, 1959.
- Republic Act No. 2609 is effective upon approval and expires on December 31, 1964 under Section 10.