Guidelines that consolidate/clarify existing regulations on (1) the sale of foreign exchange (FX) for non-trade transactions and (2) the authority to sell FX

Annex A DEFINITION OF TERMS FOR PURPOSES OF THIS CIRCULAR, the following terms shall mean: 1. Trade transactions shall refer to export and/or import transactions. 2. Non-trade transactions shall refer to all other FX transactions not included in the definition of trade transactions. These shall include foreign currency loans and foreign investments. 3. Authorized Agent Banks (AABs) shall refer to all categories of banks (except Offshore Banking Units (OBUs) duly licensed by the Bangko Sentral ng Pilipinas. It is understood that each category of bank should function within the operational parameters defined by existing laws/regulations for the specific bank category to which they respectively belong. A rural bank or a thrift bank cannot engage in transactions which may involve opening/negotiating export or import letters of credit or such other type of banking transactions as these do not form part of the normal banking operations of banks in their category as provided under existing laws, rules and regulations (Circular-Letter dated July 17, 1992). 4. Non-Bank BSP-Supervised Entities (NBBSEs) shall refer to non-bank entities that fall under the supervisory authority of the Bangko Sentral ng Pilipinas under R.A. No. 7653 (The New Central Bank Act), R.A. No. 8791 (The General Banking Law of 2000) and other special laws. These include Non-Bank Financial Institutions Performing Quasi Banking Function (NBQBs), subsidiary/affiliate of AABs/NBQBs engaged in allied activities and trust entities. 5. Subsidiary shall refer to an entity as defined in Appendix 9 of the Manual of Regulations for Banks and Subsection 4654Q.1 of the Manual of Regulations for Non-Bank Financial Institutions. 6. Affiliate shall refer to an entity as defined in Appendix 9 of the Manual of Regulations for Banks and Subsection 4654Q.1 of the Manual of Regulations for Non-Bank Financial Institutions. 7. Forex Corporations, whether or not named as such, shall refer to entities which are subsidiaries/affiliates of Authorized Agent Banks (AABs)/Non-bank BSP- Supervised Entities (NBBSEs) whose business include buying and selling of foreign exchange.

Annex A 8. Resident shall refer to – a. an individual citizen of the Philippines residing therein; or b. an individual who is not a citizen of the Philippines but is permanently residing 1/ therein; or c. a corporation or other juridical person organized under the laws of the Philippines; or d. a branch, subsidiary, affiliate, extension office or any other unit of corporations or juridical persons which are organized under the laws of any country and operating in the Philippines. 9. Non-resident shall refer to an individual, a corporation or other juridical person not included in the definition of resident. 10. Financial Institutions shall refer to business organizations that offer a broad base of financial services or specialize in specific financial functions, products, or services, e.g. banks, investment houses, pension funds, pawnshops, credit unions, investment companies, insurance companies, securities brokers and dealers, stock exchanges, mutual funds, trust corporations, leasing companies, financing companies, credit card companies, companies engaged in foreign exchange dealership/brokerage and others that deal in money. 1/ Residents include any individual, citizen or otherwise, who has resided in the Philippines for a year or more, as defined in the 1996 IMF Balance of Payments Textbook

Annex B MINIMUM DOCUMENTATION REQUIREMENTS FOR THE SALES OF FX FOR NON-TRADE PURPOSES BY AUTHORIZED AGENT BANKS (AABs)/ NON-BANK BSP-SUPERVISED ENTITIES (NBBSEs) AND THEIR SUBSIDIARY/AFFILIATE FOREX CORPORATIONS A. Sales of Foreign Exchange for Non-trade purposes under Section 2 of Circular No. 1389 s. 1993, as amended Purposes Documents Required 1. Travel Funds (Only for Presentation of applicant’s passport, and permanent residents of the passenger ticket, copies of which shall be retained. Philippines) For travel funds over US$10,000, the following shall be additionally required: a. Copy of applicant’s/Sponsor’s Income Tax Return (ITR) duly stamped by the BIR; b. Travel authority from the applicant’s company/office/agency if he is being sponsored by said company/office/agency; and c. Invitation from foreign sponsoring institution, if applicable. 2. Educational Expenses/Student 1. Statement of enrollment or acceptance by the Maintenance school abroad; 2. School bills/statements of account covering tuition and other school fees; and 3. Applicant’s notarized certification that he is not under scholarship, or if under scholarship, a notarized certification that the amount applied for is to cover his expenses, not being covered by the scholarship. 3. Correspondence Studies AABs/NBBSEs/Forex Corp. 1. Proof of admission or enrollment in may sell foreign exchange to correspondence school; and cover tuition fees for 2. Billings from the school abroad which shall correspondence studies, which include assessment of fees and other charges shall be directly remitted to the related to the course. correspondence school. Issuance of draft may be allowed but it should be made payable to the correspondence school.

Annex B 4. Medical Expenses 1. Travel documents of patient; and 2. Certification issued by hospital abroad on the treatment to be administered to the patient including cost estimate; or statement of account with the hospital/bills of expenses from hospital/treatment center abroad, whichever is applicable. 5. Support of Dependents Abroad 1. Consular certificate or its equivalent documents to prove that the dependent is AABs may sell foreign residing abroad dated not earlier than one year exchange covering the monthly from FX application date; living allowance abroad of a 2. Certified true copy of birth certificate, marriage child not more than 21 years of contract, adoption papers, whichever is age, spouse or parent of a applicable, to prove that dependent is the wife, Philippine resident. husband, child or parent of the remitter applicant; 3. Applicant’s notarized certification that the dependent is not gainfully employed abroad; and 4. Copy of remitter’s ITR duly stamped by the BIR. 6. Emigrants’ assets 1. Proof of residence of emigrant/ beneficiary abroad; 2. Proof of ownership of the asset(s) by emigrant/beneficiary abroad; 3. In case of income from real properties, a statement of rentals/income earned; 4. In case of transfer of proceeds of capital assets, copy of deed of sale; 5. In case of capital transfer of testate and intestate inheritance and legacies: a. Copy of court order approving the partition and distribution of estate; b. Copy of the extra-judicial settlement and partition duly registered with Register of Deeds. 6. For transfer of proceeds of life insurance benefits, proof of receipt of the proceeds of the policy; 7. For remittance of proceeds of sales of personal property, copy of deed of sale; 8. In case of transfer of proceeds of sale of shares of stock, deed of sales or broker’s sales invoice; and 9. In case of retirement benefits, evidence of receipt of retirement benefits.

Annex B 7. Salary/bonus/dividend/ other 1. Employment contract/ Certification of employer benefits of foreign expatriates on the amount of compensation paid to the (including peso savings) foreign national during the validity of the contract stating whether the same had been paid in foreign exchange or in pesos, and if in foreign exchange, proof that the foreign exchange was previously sold for pesos to AABs; 2. Photocopy of the ACR and DOLE Alien Employment Permit of the foreign national; 3. Applicant’s notarized certification that the FX remitted is net of local expenses incurred or net of previous transfers abroad; and 4. If amount to be remitted comes from sources other than salaries, information regarding the sources supported by appropriate documents should be submitted. 8. Producers’ Share in Movie 1. Statement of remittable share rental; and Revenue /TV Film Rentals 2. Copy of distributorship contract. 9. Commissions on Exports due 1. Agency agreement; and Foreign Agents 2. Agent’s Statement of Account/Computation of commission in accordance with agency agreement. 10. Freight Charges on Exports/ 1. Bills/Statements of account on freight charges; Imports and 2. Copy of Bill of Lading. 11. Foreign Advertising Costs 1. Copy of advertising agreement; and 2. Original statement of accounts or bills or invoices. 12. Subscriptions to foreign Billing/Statement of Account. magazines or periodicals 13. Charters and Leases of 1. Charter or Lease of Vessels/Aircrafts or lease Vessels/Aircrafts and other agreement; and types of leases. 2. Billing/Statement of Account. 14. Membership dues and 1. Proof of membership in the foreign or registration fees to the international association; and association abroad 2. Billings for membership dues/registration fees.

Annex B 15. Port Disbursements abroad of 1. Copy of contract or agreement; and aircraft and vessels of 2. Statement of accounts/bills/invoices. Philippine registry or chartered/leased by domestic operators. 16. Mail fees /International 1. Copy of contract or agreement; and settlement of accounts for 2. Statement of account/bills/invoices. telegraph, telegram, radio, satellite and other communication facilities. 17. Salvage fees 1. Copy of contract for salvage services; and 2. Statement of accounts/bills/invoices. 18. Income taxes due to Foreign 1. Copy of DOLE-approved contract of Governments from foreign employment; and nationals 2. Copy of income tax return covering the income tax payment sought to be remitted. 19. Services / Consultancy/ 1. Copy of the pertinent agreement; and Management/ Marketing/ 2. Statement/Computation of fees due. Distributorship Fees with foreign firms or individuals 20. Retainers’ fees 1. Copy of the agreement/contract; and 2. Billings / invoices from the beneficiary. Foreign exchange payments by residents to foreign professionals acting as liaison, counsel, agent or representative abroad. 21. Insurance/Reinsurance Billings/Invoices from foreign insurer/ reinsurer Premium 22. Claims for losses and other Billings/Invoices of insurance companies/ brokers payments of insurance abroad. companies/brokers abroad 23. Net Peso Revenues of Foreign 1. Copy of the General Sales Agency Agreement Airlines/Shipping Companies or certified copy of the Bilateral Air Agreements; and 2. Statement of Net Peso Revenues (Peso Receipts less Disbursements) for the period covered by the remittance. 24. Royalty/Copyright/Franchise/ 1. Copy of Contract/Agreement; and Patent/ Licensing Fees 2. Statement/ Computation of the Royalty/ Copyright/Patent /Licensing fee.

Annex B 25. Remittance of Net Peso Certification from the Ambassador/Embassy Revenue collected by authorized officer that the Peso amount applied for embassies of foreign countries conversion to foreign currency is net of local expenses. 26.Payment of FX obligations by 1. Settlement report from international credit card Philippine credit card companies identifying the nature of various companies to international obligations; credit card companies (e.g. 2. Schedule showing summary of the foreign Visa International and currency billings received from international Mastercard International) credit card companies abroad and the including peso collection from corresponding peso collection thereof; and local credit card holders as 3.Letter of undertaking or sworn certification payment of bills received from stating that local credit card company has not non-resident merchants and purchased foreign exchange in excess of the other fees/charges. amount of their foreign currency requirement. B. Sales of FX for payment of foreign currency loans covered by Sections 22 to 31 of Circular 1389 s. 1993, as amended. Foreign Currency Loan Payments Documents should all be originals unless otherwise indicated. Banks shall indicate sales of FX, whether on spot or forward basis, on the prescribed documents. 1. Medium/ Long-term Foreign 1.a BSP registration letter and accompanying Currency Loans (with original “Schedule of Principal and Interest Payments maturities of over 1 year) on BSP-registered Foreign Credits” (Schedule RA-2); and where applicable, “Schedule of Payments for Fees & Other Charges on BSP- Registered Foreign Loan” (Schedule RA-2.1). The FX selling AAB/NBBSE/Forex Corporation shall duly fill up the originals of the appropriate schedules to record the FX sale; and 1.b Copy of billing statement from creditor. Amounts that may be purchased shall be limited to maturing amounts on scheduled due dates indicated in the registration letter. Remittance of FX purchased shall coincide with the due dates of the obligations to be serviced, unless otherwise approved by the BSP. or:

Annex B 2.a BSP letter-authority for the borrower to purchase FX to service specific loan account/s and where applicable, the “Schedule of Foreign Exchange Purchases from the Banking System”. The FX selling AAB/NBBSE/ Forex Corporation shall record the date/s and amount/s of FX sold on the original BSP letter-authority or where there is an accompanying schedule for FX purchases, on the original of such schedule; and 2.b Copy of billing statement from creditor. Amounts that may be purchased shall be limited to the unutilized balance of the letter- authority. Remittance of FX purchased shall coincide with the due dates of the obligations to be serviced, unless otherwise approved by 2. Short-term Foreign Currency the BSP. Loans (with original maturity of up to 1 year) a. Loans from offshore creditors (banks and non- 1.a BSP approval or registration letter showing banks) loan terms and borrower’s receiving copy of its report on short-term loans submitted to BSP’s International Operations Department (IOD). The FX selling AAB/NBBSE/Forex Corporation shall stamp “FX SOLD”, the date/s of sale and the amount/s involved on the original BSP approval/registration letter; and 1.b Copy of billing statement from creditor. Amounts that may be purchased shall be limited to: (a) amounts/rates indicated in the BSP approval or registration letter; or (b) the outstanding balance of the loan indicated in the report, whichever is lower. Remittance of FX purchased shall coincide with the due dates of the obligations to be serviced, unless otherwise approved by the BSP.

Annex B b. Loans from FCDUs/OBUs 1.a BSP approval or registration letter showing loan terms or certification from the lending bank on the amount outstanding. The FX selling AAB/NBBSE/Forex Corporation shall stamp “FX SOLD”, the date/s of sale and the amount/s involved on the original BSP approval/registration letter or bank certification; and 1.b Copy of billing statement from creditor. Amounts that may be purchased shall be limited to: (a) amounts/rates indicated in the BSP approval or registration letter; or (b) the outstanding balance of the loan indicated in the bank certification, whichever is lower. Remittance of FX purchased shall coincide with the due dates of the obligations to be serviced, unless otherwise approved by the BSP. Or: 2.a For loans not requiring BSP approval/ registration, promissory Note (PN) certified as true copy by the Head of the lending bank’s Loans Department and certification from the lending bank: i. on the principal amount still outstanding; ii. that the loan is eligible for servicing with FX purchased from the banking system in line with existing regulations; iii. That the loan was used to finance trade transactions (as well as pre-export costs in the case of FCDU loans of exporters) of the borrower; and iv. The date when the loan account has been reported to the appropriate BSP department/office under the prescribed forms. This may be dispensed for new loans which may not have been reported yet to BSP as of date of application to purchase FX.

Annex B The FX selling AAB/NBBSE/Forex Corporation shall stamp “FX SOLD”, the date of sale and the amount/s involved on the original certification from the lending bank; and 2.b Copy of billing statement from creditor. Amounts that may be purchased shall be limited to amounts/rates indicated in the bank certification or PN, whichever is lower. Remittance of FX purchased shall coincide with the due dates of the obligations to be serviced, unless otherwise approved by the BSP. Note: For unregistered foreign currency loans/obligations to non-resident financial institutions and FCDU loans not eligible to be serviced with FX purchased from the banking system outstanding as of October 27, 2000 but which may be serviced by Forex corporations, copies of the following documents shall be required: a. Loan agreement/promissory notes; and b. Billing statements from creditor. C. Sales of FX for capital repatriation/ remittance of dividend/profits/earnings and outward investments under Sections 32 to 44 of Circular 1389 s. 1993, as amended 1. Capital Repatriation of: a. Investment in PSE-Listed 1. If directly registered with BSP or if the securities selling/remitting bank is the registering custodian bank: a. Broker’s sales invoice; and b. Original Bangko Sentral Registration Document (BSRD). 2. If the selling/remitting bank is not the registering custodian bank: a. Broker’s sales invoice; and b. Original BSRD Letter-Advice from the registering custodian bank.

Annex B b. Direct Foreign Equity 1. Original BSRD; Investments 2. Proof of Sale or relevant documents showing the amount to be repatriated; in case of dissolution/capital reduction, proof of distribution of funds/assets such as statement of net assets for liquidation; 3. Clearance from appropriate department of the BSP-Supervision and Examination Sector (SES) for banks, or from the Insurance Commission for insurance companies, or from the Department of Energy for oil companies; 4. Detailed computation of the amount applied for in the attached format prepared by authorized officer of investee firm (Attachment 2); and 5. Pertinent audited financial statements. c. Investments in Peso 1. Original BSRD; and Government Securities, Money 2. Confirmation of Purchase (COP), Market Instruments or 90-day Confirmation of Sale (COS) or Deed of Sale, Time Deposits Matured Contract for Money Market Instruments or Matured Certificate of Time Deposit. 2. Remittance of Dividends/ 1. Original BSRD or BSRD Letter-Advice from Profits/Earnings Registering Custodian Bank (if remitting/selling bank is not the registering custodian bank for PSE-listed shares); 2. Schedule showing name/address of investor, BSRD No., gross amount of cash dividend, tax withheld and net amount (for PSE-listed shares); 3. Board Resolution covering the dividend declaration (evidenced by Corporate Secretary’s Sworn Certification, for direct equity investments or Dividend Notice, for PSE-listed shares); 4. Audited/Interim Financial Statements covering the dividend declaration period (for direct foreign equity investments); and 5. For direct foreign equity investments, clearance from BSP-SES (for banks), Insurance Commission (for insurance companies), or Department of Energy or the

Annex B National Power Corporation (for oil/natural gas/geothermal companies). 6. Detailed computation of the amount applied for in the attached format (Attachment 2). 3. Outward Investment 1. A project feasibility study, investment proposal/subscription agreement, bond/stock offering circular and such other documents showing the nature and place of the investment; 2. A written undertaking to inwardly remit and sell for pesos thru AABs the dividends/earnings or divestment proceeds from outward investments funded by FX purchased from AAB as required therein; 3. BSP approval and registration (for outward investment exceeding an aggregate of US$6million per investor per year funded by FX purchased from AABs; 4. Regardless of amount, submission of clearance: (a) from the appropriate department of the BSP-Supervision and Examination Sector (SES) for investments of banks; and (b) from the Insurance Commission for investments of insurance companies; and 5. Copy of investor’s latest Income Tax Return (ITR) duly stamped by the BIR.

Attachment 1 APPLICATION TO PURCHASE FOREIGN EXCHANGE Reference No. _______ TO: _________________________________________________ (Name of Bank/NBBSE/Subsidiary/Affiliate Forex Corporation) _________________________________________________ (Address) I/We hereby apply to purchase foreign exchange with the following details: APPLICANT: Name : _________________________________________________________ Address : _________________________________________________________ Tel. No./Fax No./E-mail Address: ______________________________________ Tax Identification No.: ______________________________________________ SSS/GSIS/Voter’s ID No./Drivers Lic. No. (For Individual) ___________________ AMOUNT APPLIED FOR (Specify foreign currency) __________________________ PURPOSE: for trade ______________________________________ for foreign investments ______________________________________ for foreign currency loans ______________________________________ for other non-trade accounts ______________________________________ BENEFICIARY (Except for travel purpose) Beneficiary’s Name: __________________________________________________ Address: ________________________________________________ ______________________________________________ ___ I hereby certify that no foreign exchange has been purchased either on spot or deliverable forward basis and/or no swap contract/s has/have been entered into covering the same underlying transaction and that the foregoing information are true and correct. ________________________________ __________________________ Date of Application Signature Over Printed Name _______________________________________________________________________ Notarization: FOR AMOUNTS IN EXCESS OF USD 5,000 SUBSCRIBED AND SWORN TO before me this _____ day of _____________________, 200__, affiant exhibiting his Community Tax Certificate No. __________ issued at _________ on ____________. NOTARY PUBLIC Doc. No. __________ Page No. __________ Book No. __________ Series No. __________

Attachment 2 COMPUTATION SHEET Name of FX Selling Bank : _________________________ Date of FX Sale: ____________ TYPE OF FOREIGN INVESTMENT TRANSACTION Remittance of Cash Dividends/Profits Repatriation of Capital Name of Investee Firm: _____________________________ _____________________________ Name of Investor: _____________________________ _____________________________ REMITTANCE OF CASH DIVIDENDS/PROFITS Record Date : __________________ Payment Date: __________________ Amount of Dividends/Share or Rate of Profits: __________________ Base Shares Dividends/Profits Total BSRD No. Registered per Share Amount (PHP) A. Gross Peso Amount Remittable ____________ B. Less: Taxes/Charges ____________ C. Net Peso Amount Remittable ____________ D. Foreign Exchange Applied for Remittance (C ÷ FX rate */) ____________ REPATRIATION OF CAPITAL Total Amount/ Outstanding Balance Amount/No. of Shares No. of Shares Before This Applied BSRD No. Registered Repatriation for Repatriation A. Total No. of Shares/Amount Applied for Repatriation _________ B. Selling Price/Share (if applicable) _________ C. Gross Peso Amount Repatriable (A x B) _________ D. Taxes/Charges _________ E. Net Peso Amount Repatriable (C - D) _________ F. Foreign Exchange Applied for Repatriation (E ÷ FX rate*/) _________ Prepared by: _______________________ ______________________ Signature over Printed Name Company Affiliation of of Authorized Representative Investor’s Representative of Applicant ______________________ Date */ To be supplied by FX Selling Bank