CBP Memorandum

June 16, 1960 CBP MEMORANDUM TO : Authorized Agents For the information and guidance of all concerned, the following are among the types of foreign exchange remittances that are covered by the term "contractual obligations" as contemplated under paragraph 2-(c) of Central Bank Circular No. 105, as defined and clarified by the Monetary Board and the Decontrol Program Committee: 1) Insurance Premia (both life and non-life) We interpret the insurance policies involved as limited to dollar policies, since peso policies do not fall under the category of obligations calling for the payment of foreign exchange. Specifically, life insurance policies expressed in dollars or other foreign currency, as already authorized by the Monetary Board under M.B. Res. No. 673 dated May 10, 1960, may be licensed at the preferential rate. This rule would exclude life insurance policies of former nonresidents who became residents of the Philippines after December 9, 1949, premiums on which may only be licensed at the free market rate. In respect to non-life policies which, as a rule, cover a period of one year only, the premiums (on special types of risks, like large industrial plants, vessels and aircraft) corresponding to the period covered by the approved insurance contracts, may be licensed at the preferential rate. 2) Reinsurance Premia (both life and non-life) This refers to reinsurance contracts approved by the Central Bank prior to April 25, 1960, as well as reinsurance contracts which may be approved by the Central Bank after that date. LLphil 3) Salaries of technicians The regulations in force prior to April 25, 1960 limit remittances to 25% of the basic salary of the technician or foreign staff member, or $250, whichever is higher, provided that the latter amount does not exceed 50% of the basic salary; and these may now be remitted at the preferential rate. If the technician wishes to remit up to 50%, the balance may be remitted by him at the free market rate. 4) Remittances of cable, telephone and telegraph companies to connecting cable, telephone and telegraph companies abroad of traffic payouts for radiogram and telephone messages covered by an existing contract approved by the Central Bank Remittances of traffic payouts prior to April 25, 1960 were being made pursuant to exchange control regulations in force until said date. The traffic payouts which may be remitted at the preferential rate will be limited to traffic payouts arising from messages transmitted by the communications companies concerned prior to April 25, 1960. LLphil 5) Remittances in payment of installments, amortizations and interest on contracts approved by the Central Bank This would refer mainly to loans secured to pay installments on the sale to residents of shares of stock and other properties of nonresidents; as well as a few cases of purchases of capital equipment, the amortizations on which are being serviced by the Exchange Control Department. 6) Remittances by airline and shipping companies of passenger and freight revenues from ticket sales or freight contracts approved by the Central Bank This refers to ticket sales made prior to April 25, 1960 under travel licenses issued by the Exchange Control Department and to freight contracts executed prior to the said date pursuant to licenses issued by the Export Department or the Import Department or by Authorized Agent Banks under delegated authority. 7) Remittances of royalties, rentals, and service fees under contracts approved by the Central Bank This covers a variety of contracts. The service contracts approved by the Special Exchange Control Committee and passed upon by the Monetary Board regarding geological, technological and other services rendered to oil mining companies fall under this category to the extent of the unutilized appropriations previously approved by the Monetary Board for the said services. 8) Tuition fees for correspondence courses in which the remitters have been enrolled Purchase of foreign exchange at the preferential rate should be limited to the balance of the foreign exchange required to complete payment for the course in which the student was enrolled as of April 25, 1960. 9) Membership dues to professional associations abroad in which the remitters were affiliated Remittances at the preferential rate should be allowed until the end of the first phase of the decontrol program. 10) Remittances of foreign news services for the furnishing of news features and allied services Purchase of foreign exchange at the preferential rate should be allowed until the end of the first phase of the decontrol program. The Exchange Control Department will continue to receive applications for the types of remittances mentioned above, as well as for other foreign exchange remittances that qualify as contractual obligations approved by the Central Bank prior to April 25, 1960. (SGD.) AMADO R. BRIAS Special Assistant to the Governor