CBP Memorandum

December 5, 1958 CBP MEMORANDUM TO : All Authorized Agents For the information and guidance of all Authorized Agents, the following answers to queries relating to blocked pesos of nonresidents which are required to be deposited in special blocked fiduciary accounts as a pre-condition to remittability, under the provisions of Central Bank Circular No. 90 dated October 22, 1958, are transcribed below: LLphi "1. Q. Whether or not peso accounts or credits in the books of accounts of residents in favor of nonresidents which are not deposited in special blocked fiduciary accounts under the provisions of Central Bank Circular No. 90 prior to December 15, 1958, may be invested in the Philippines without further licensing but with no right of remittance of capital or earnings thereof. A. Nonresident peso accounts or credits in the books of accounts of residents not deposited in special blocked fiduciary accounts under the provisions of Central Bank Circular No. 90 may be invested in the Philippines without further licensing but with no right of remittance, directly or indirectly, of capital or earnings. However, the funds involved shall not be used or invested in behalf of or for the account of another nonresident, or for any purpose in which peso funds belonging to residents may not be used under existing regulations. "2. Q. Whether or not a nonresident depositor in a special blocked fiduciary account, who is willing to forego all remittability and the privileges accorded to blocked peso funds, can withdraw in part or in whole for payment to a resident individual, resident legal entity, nonresident transient or to his or her ownself, from the blocked peso funds without the prior approval of the Exchange Control Department. A. A nonresident depositor in a special blocked fiduciary account who is willing to forego all remittability rights and the privileges accorded to blocked peso funds, can withdraw in whole or in part for payment to a resident individual or resident legal entity, except that such payment shall not be used to settle a debt, liability or obligation of a nonresident to the resident individual or legal entity which require payment in foreign exchange acceptable to the Central Bank under existing regulations. Payment may not be made to a nonresident transient, although it may be made to the depositor himself if he should come to the Philippines. "3. Q. Whether or not a nonresident who owns blocked funds deposited in a special blocked fiduciary account in a commercial bank, who withdraws the funds from the special blocked fiduciary account with the understanding that he waives all remittability privileges, may be permitted to deposit the same funds in another account in the same or another bank on a resident basis. A. Blocked funds withdrawn by a nonresident from a special blocked fiduciary account with the understanding that all remittability privileges are waived, may be redeposited in the same or another bank in another account to be operated on a resident basis but credits to the resident account shall not be used to settle liabilities which are properly chargeable to the blocked fiduciary account. "4. Q. Whether or not proceeds of sale of properties of nonresidents, including Philippine domestic securities, may be allowed to be deposited in special blocked fiduciary accounts under the provisions of Central Bank Circular No. 90 and later used to buy gold under Central Bank Circular No. 73, as amended, or in any of the other permissible purposes under the same circular. A. Proceeds of sale of properties, including Philippine domestic securities belonging to nonresidents, may be deposited in a blocked fiduciary account under the provisions of Central Bank Circular No. 90, provided that the property involved was acquired in accordance with the exchange control regulations and the sale thereof was likewise in accordance with the regulations." LLphi Authorized Agents are requested to transmit the contents of this memorandum to all their clients and to give the matter as much publicity as possible. (SGD.) ANDRES V. CASTILLO Deputy Governor