Further Amendment of Joint Order 1-91, Implementing the Comprehensive Import Supervision Scheme (CISS)

April 6, 1993 CBP MEMORANDUM TO : All Commercial Banks and All Concerned SUBJECT : Further Amendment of Joint Order 1-91, Implementing the Comprehensive Import Supervision Scheme (CISS) Pursuant to Resolution No. 278 dated April 01, 1993 the Monetary Board further amended paragraph 3, sub-paragraph (1) of Joint Order 1-91 implementing the CISS so as to exempt from SGS inspection the importation of other raw materials and supplies by garment exporters subject to certain conditions. For your reference and guidance, attached herewith is a copy of said amendment, duly signed by the Secretary of Finance, Secretary of Trade and Industry and the Governor of the Central Bank. This supersedes SB Memorandum to All Banks and All Concerned dated March 22, 1993. Please be guided accordingly. (SGD.) EDGARDO P. ZIALCITA Officer-in-Charge AMENDMENT TO JOINT ORDER NO. 1-91 Pursuant to Memorandum Order No. 391 dated 2 September 1991, paragraph 3 subparagraph 1 (approved on March 15, 1993) of Joint Order No. 1-91 implementing the Comprehensive Imports Supervision Scheme is hereby amended to read as follows: "1. importations of pre-cut fabrics and related accessories for processing into finished garment and textile products for export and importations of raw materials and related supplies and accessories by firms which have been engaged in the garment and textile export for the last five (5) year, subject, however, to the following conditions: (1) that the firm has demonstrated regular export sales of at least US$500,000 per annum; (2) that the firm and its principal stockholders and officers have not violated any rules and regulations of the GTEB, CB and BOC governing import/export operations during this five year period nor have any pending case whether administrative or judicial regarding the conduct of importation of its raw material; (3) that the firm must not be delinquent in the liquidation of imported raw materials: (4) that the raw materials and supplies are directly used in the manufacture of the products to be exported; (5) that the firm will commit to computerize its operations with due consideration of its size and scope, along the lines to be set by the Bureau of Customs especially in the matter of accounting and liquidation of its raw material imports; (6) that the firm must show at substantial asset base commensurate to its level of operations as indicted by the (1) ownership or long-term lease of manufacturing facility; and (b) ownership or long-term lease of the land and the building on which the factory is operating; and (7) that the firm must present an exemption certificate issued by the Bureau of Customs, after a favorable recommendation by the Garments and Textile Export Board." Approved, this 1st day of April 1993, Manila. (SGD.) RAMON R. DEL ROSARIO, JR. Secretary Department of Finance (SGD.) RIZALINO S. NAVARRO (SGD.) JOSE L. CUISIA, JR. Secretary Governor Department of Trade & Industry Central Bank of the Philippines No date supplied CBP MEMORANDUM TO ALL BANKS AND OTHER FINANCIAL INTERMEDIATE PERFORMING TRUST, OTHER FIDUCIARY BUSINESS, AND INVESTMENT MANAGEMENT ACTIVITIES The Monetary Board, in its Resolution No. 342 dated 23 April 1993, approved the following amendments to the Rules and Regulations on Trust, Other Fiduciary Business and Investment Management Activities: SECTION 1. Subsection 404.1 is hereby amended so that Item 1 thereof shall read as follows: LLphil "SUBSEC. 404.1 Pre-requisites for Engaging in Trust and Other Fiduciary Business. A trust corporation, bank or investment house, before it may engage in trust and other fiduciary business, shall comply with the following requirements. 1. The applicant has COMBINED CAPITAL ACCOUNTS of at least P250 million. A bank or an investment house previously authorized to perform and is actually engaged in trust and other fiduciary business whose COMBINED CAPITAL ACCOUNTS ARE LESS THAN P250 million shall BE GIVEN A THREE-YEAR PERIOD FROM (effectivity date of this Memorandum) TO MEET THE MINIMUM AMOUNT. In case an institution fails to comply with this requirement, the Monetary Board may require the institution to desist from accepting new trust and other fiduciary accounts and from renewing expiring trust and other fiduciary contracts; FOR DOMESTIC FINANCIAL INSTITUTION, "COMBINED CAPITAL ACCOUNTS" FOR PURPOSES OF THIS SUBSECTION SHALL MEAN THE TOTAL OF THE UNIMPAIRED PAID-IN CAPITAL, EARNED SURPLUS AND UNDIVIDED PROFITS, NET OF DEFERRED INCOME TAX, AND SUCH UNBOOKED VALUATION RESERVES AND OTHER CAPITAL ADJUSTMENTS AS MAY BE REQUIRED BY THE CENTRAL BANK; AND EXCLUDING ANY APPRAISAL SURPLUS OR APPRECIATION CREDIT AS A RESULT OF APPRECIATION OR AN INCREASE IN BOOK VALUE OF ASSETS. FOR BRANCHES OF FOREIGN BANKS, "COMBINED CAPITAL ACCOUNT" SHALL MEAN THE TOTAL OF THE ASSIGNED CAPITAL, IF ANY, AND NET DUE TO HEAD OFFICE ACCOUNT WHICH SHALL INCLUDE ALL NET AMOUNTS DUE TO OTHER BRANCHES OUTSIDE THE PHILIPPINES ACCOUNT, NET OF DEFERRED INCOME TAX AND SUCH VALUATION RESERVES AND OTHER CAPITAL ADJUSTMENTS AS MAY BE REQUIRED BY THE CENTRAL BANK;" SECTION 2. Subsection 406.1 is hereby amended so that Item 1 thereof shall include an additional fourth (4th) paragraph which shall read as follows: "SUBSEC. 406.1 Organization . An institution authorized to engage in trust an other fiduciary business pursuant to Subsection 404.1 shall include in its by-laws, provisions on the organization plan or structure of the department, office or unit which shall conduct such business. The by-laws shall also include provisions on the creation of a trust committee; the appointment of a trust officer and other subordinate officers; and a clear definition of their duties and responsibilities as well as their line and staff function within the organization which shall be in accordance with the following guidelines: 1. Trust and other fiduciary business of an institution shall be carried out through a trust department which shall be organizationally, operationally, administratively and functionally separate and distinct from the other departments and/or businesses of the institution. An institution, which is also engaged in investment management activities, shall conduct the same only through its trust department and the responsibilities of the board of directors, trust committee and trust officer shall be construed to include the proper administration and management of investment management activities. No institution shall undertake any of the trust and other fiduciary business and whenever applicable, investment management activities outside the direct control, authority and management of the trust department or through any department or office which, is involved in the other businesses of the institution, such as the Treasury, Funds Management or any similar department, otherwise, any such business shall be considered part of the institution's real liabilities. THE INSTITUTION PROPER AND THE TRUST DEPARTMENT MAY SHARE THE FOLLOWING ACTIVITIES: A) ELECTRONIC DATA PROCESSING; B) CREDIT INVESTIGATION; C) COLLATERAL APPRAISAL; AND D) MESSENGERIAL, JANITORIAL AND SECURITY SERVICES." SECTION 3. Subsection 406.2 is hereby amended to read as follows: "SUBSEC. 406.2 Composition of Trust Committee . The Trust Committee shall be composed of AT LEAST five (5) members INCLUDING the president, the trust officer and directors who are appointed by the board of directors on a regular rotation basis and who are not officers of the BANK/institution PROPER. No member of the audit committee, if the institution has any, shall be concurrently designated as a member of the trust committee; PROVIDED, THAT IN THE CASE OF A TRUTH COMMITTEE COMPOSED OF MORE THAN FIVE (5) MEMBERS, THE APPOINTMENT THEREIN OF AN OPERATING OFFICER MAY BE ALLOWED ONLY IF THE REQUIRED BALANCE IN THE MEMBERSHIP OF AT LEAST THREE (3) MEMBERS OF THE BOARD OF EVERY OPERATING OFFICER SHALL BE MAINTAINED; PROVIDED FURTHER, THAT THE PHILIPPINE BRANCH OF A FOREIGN BANK MAY APPOINT ITS RESIDENT MANAGER OR CHIEF EXECUTIVE OFFICER IN LIEU OF THE PRESIDENT WHILE THE POSITIONS ALLOTTED FOR MEMBERS OF THE BOARD MAY BE FILLED UP BY THE AREA MANAGER AND/OR OFFICERS/REPRESENTATIVES FROM THE HEAD OFFICE WHO ARE NOT INVOLVED IN AUDIT-RELATED ACTIVITIES. FOR PURPOSES OF THIS SUBSECTION, THE TERM OFFICER SHALL INCLUDE THE PRESIDENT, EXECUTIVE VICE PRESIDENT, VICE PRESIDENT, GENERAL MANAGER, CORPORATE SECRETARY, TREASURER AND OTHERS MENTIONED AS OFFICERS OF THE INSTITUTION, OR THOSE WHOSE DUTIES AS SUCH ARE DEFINED IN THE BY-LAWS, OR ARE GENERALLY KNOWN TO BE OFFICERS OF THE INSTITUTION (OR ANY OF ITS BRANCHES AND OFFICES OTHER THAN THE HEAD OFFICE) EITHER THROUGH ANNOUNCEMENT, REPRESENTATION, PUBLICATION OR ANY KIND OF COMMUNICATION MADE BY THE INSTITUTION. The board of directors shall duly note in the minutes the committee members and designate the chairman who shall be one of the directors referred to in item "a" above." SECTION 4. Subsection 409.7 is hereby amended so that Item b thereof shall make general reference to applicable SEC registration rules which were amended recently: "SUBSEC. 409.7 Other Applicable Regulations on Loans and Investments . The loans and investments of trust and other fiduciary accounts shall be subject to existing laws, rules and regulations for banks and investment houses that shall include but need not be limited to the following: b. Provisions of Section 4(e) of the "New Rules on Registration of Short Term Commercial Papers", AS AMENDED and Section 7(f) of the "New Rules on the Long Term Commercial Papers", AS AMENDED issued by the Securities and Exchange Commission, referred to by Subsections 1289.6, 2289.6 and 4289 of the Manual" dctai These amendments shall take effect immediately. For the Monetary Board: (Sgd.) JOSE L. CUISIA, JR. Governor