RA 6426 - Foreign Currency Deposit Act

REPUBLIC ACT No.
6426 shall exchange the foreign currency notes and coins into foreign
AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT currency instruments drawn on its depository banks. (As amended
SYSTEM IN THE PHILIPPINES, AND FOR OTHER PURPOSES. by PD No. 1453, June 11, 1978.)
Section 1. Title.– This act shall be known as the "Foreign Currency Depository banks which, on account of networth, resources, past
Deposit Act of the Philippines." performance, or other pertinent criteria, have been qualified by the
Section 2. Authority to deposit foreign currencies. – Any person, Monetary Board to function under an expanded foreign currency
natural or juridical, may, in accordance with the provisions of this deposit system, shall be exempt from the requirements in the
Act, deposit with such Philippine banks in good standing, as may, preceding paragraph of maintaining fifteen percent (15%) of the
upon application, be designated by the Central Bank for the purpose, cover in the form of foreign currency deposit with the Central Bank.
foreign currencies which are acceptable as part of the international Subject to prior Central Bank approval when required by Central
reserve, except those which are required by the Central Bank to be Bank regulations, said depository banks may extend foreign currency
surrendered in accordance with the provisions of Republic Act loans to any domestic enterprise, without the limitations prescribed in
Numbered two hundred sixty-five (Now Rep. Act No. 7653). the preceding paragraph regarding maturity and marketability, and such
Section 3. Authority of banks to accept foreign currency deposits. – loans shall be eligible for purposes of the 100% foreign currency cover
The banks designated by the Central Bank under Section two prescribed in the preceding paragraph. (As added by PD No. 1035.)
hereof shall have the authority: Section 5. Withdrawability and transferability of deposits. – There
(1) To accept deposits and to accept foreign currencies in shall be no restriction on the withdrawal by the depositor of his
trust Provided, That numbered accounts for recording and deposit or on the transferability of the same abroad except those
servicing of said deposits shall be allowed; arising from the contract between the depositor and the bank.
(2) To issue certificates to evidence such deposits; Section 6. Tax exemption. – All foreign currency deposits made
(3) To discount said certificates; under this Act, as amended by PD No. 1035, as well as foreign
(4) To accept said deposits as collateral for loans subject to currency deposits authorized under PD No. 1034, including interest
such rules and regulations as may be promulgated by the and all other income or earnings of such deposits, are hereby
Central Bank from time to time; and exempted from any and all taxes whatsoever irrespective of whether
(5) To pay interest in foreign currency on such deposits. or not these deposits are made by residents or nonresidents so long
Section 4. Foreign currency cover requirements. – Except as the as the deposits are eligible or allowed under aforementioned laws
Monetary Board may otherwise prescribe or allow, the depository and, in the case of nonresidents, irrespective of whether or not they
banks shall maintain at all times a one hundred percent foreign are engaged in trade or business in the Philippines. (As amended
currency cover for their liabilities, of which cover at least fifteen by PD No. 1246, prom. Nov. 21, 1977.)
percent shall be in the form of foreign currency deposit with the Section 7. Rules and regulations. – The Monetary Board of the
Central Bank, and the balance in the form of foreign currency loans Central Bank shall promulgate such rules and regulations as may be
or securities, which loans or securities shall be of short term necessary to carry out the provisions of this Act which shall take
maturities and readily marketable. Such foreign currency loans may effect after the publications in the Official Gazette and in a
include loans to domestic enterprises which are export-oriented or newspaper of national circulation for at least once a week for three
registered with the Board of Investments, subject to the limitations to consecutive weeks. In case the Central Bank promulgates new rules
be prescribed by the Monetary Board on such loans. Except as the and regulations decreasing the rights of depositors, rules and
Monetary Board may otherwise prescribe or allow, the foreign regulations at the time the deposit was made shall govern.
currency cover shall be in the same currency as that of the Section 8. Secrecy of foreign currency deposits. – All foreign
corresponding foreign currency deposit liability. The Central Bank currency deposits authorized under this Act, as amended by PD No.
may pay interest on the foreign currency deposit, and if requested 1035, as well as foreign currency deposits authorized under PD No.
RA 6426 - Foreign Currency Deposit Act | 1

1034, are hereby declared as and considered of an absolutely Section 13. Effectivity. – This Act shall take effect upon its approval.
confidential nature and, except upon the written permission of the Approved, April 4, 1974
depositor, in no instance shall foreign currency deposits be
examined, inquired or looked into by any person, government official,
bureau or office whether judicial or administrative or legislative, or
any other entity whether public or private; Provided, however, That
said foreign currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever.
(As amended by PD No. 1035, and further amended by PD No.
1246, prom. Nov. 21, 1977.)
Section 9. Deposit insurance coverage. – The deposits under this
Act shall be insured under the provisions of Republic Act No. 3591,
as amended (Philippine Deposit Insurance Corporation), as well as
its implementing rules and regulations: Provided, That insurance
payment shall be in the same currency in which the insured deposits
are denominated.
Section 10. Penal provisions. – Any willful violation of this Act or any
regulation duly promulgated by the Monetary Board pursuant hereto
shall subject the offender upon conviction to an imprisonment of not
less than one year nor more than five years or a fine of not less than
five thousand pesos nor more than twenty-five thousand pesos, or
both such fine and imprisonment at the discretion of the court.
Section 11. Separability clause. – The provisions of this Act are
hereby declared to be separable and in the event one or more of
such provisions are held unconstitutional, the validity of other
provisions shall not be affected thereby.
Section 12. Repealing clause. – All acts, executive orders, rules and
regulations, or parts thereof, which are inconsistent with any
provisions of this Act are hereby repealed, amended or modified
accordingly, without prejudice, however, to deposits made
thereunder.
Section 12-A. Amendatory enactments and regulations. – In the
event a new enactment or regulation is issued decreasing the rights
hereunder granted, such new enactment or regulation shall not apply
to foreign currency deposits already made or existing at the time of
issuance of such new enactment or regulation, but such new
enactment or regulation shall apply only to foreign currency deposits
made after its issuance. (As added by PD No. 1246, prom. Nov. 21,
1977.)
RA 6426 - Foreign Currency Deposit Act | 2

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REPUBLIC ACT No.

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