December 21, 1977

PRESIDENTIAL DECREE NO. 1267

CREATING A NATIONAL HOME MORTGAGE FINANCE CORPORATION,

DEFINING ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES

WHEREAS, further measures are necessary to optimize the effective use of

funds and resources committed by the Government in response to the housing
problem;

WHEREAS, there is an urgent need to effectively increase the level of

government funds committed to the housing effort by establishing a secondary
market for home mortgages which will enable home financing institutions to
optimize the leverage of funds earmarked for housing and home development;

WHEREAS, the development of a secondary mortgage market requires the

support and assistance of the Government and the private sector as well;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Republic of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order and decree:

SECTION 1. Corporate Body. — There is hereby created a body

corporate to be known as the National Home Mortgage Finance Corporation,
hereafter referred to as the "Corporation".

SECTION 2. Place of Business. — The Corporation shall have its

principal place of business in Metropolitan Manila, but may have such branches
and agencies in other places as may be necessary for the proper conduct of its
business.

SECTION 3. Capitalization. — The Corporation shall have an

authorized capital stock of Five billion five hundred million pesos
(P5,500,000,000) divided into Five million five hundred thousand (5,500,000)
shares of common stocks with a par value of One thousand pesos (P1,000) per
share, to be fully subscribed and paid by the Government of the Republic of the
Philippines.

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 There shall be a continuing annual appropriation to be remitted to the
Corporation starting from calendar year 1995, and subsequently thereafter
until the entire authorized capital stock shall have been fully paid: Provided,
however, That the National Government loan relent to the corporation in the
amount of US$76.73 Million under the World Bank Financed Housing Sector
Project is hereby converted to equity.

SECTION 4. Purpose of the Corporation. — The primary purpose of

the Corporation shall be to develop and provide for a secondary market for home
mortgages granted by public and/or private home financing institutions.

SECTION 5. Powers and Functions. — The Corporation shall

have the following powers and functions:

a. To purchase, acquire, sell, discount, refinance, or otherwise

deal in home mortgages or participations therein under such
terms and conditions as may be prescribed by the Board of
Directors of the Corporation;

b. Subject to the provisions of Section 7 hereof, to borrow funds

from domestic or foreign private or public financial institutions
as may from time to time be required for its operations, and to
issue bonds, promissory notes, debentures, and other debt
instrument in local or foreign currency; acd

c. To own, lease, purchase or otherwise acquire, sell or otherwise

dispose of, property, real or personal, as may be necessary and
appropriate for the conduct of its business;

d. To invest the funds or monies of the Corporation not invested in

mortgage loans in securities issued by the National
Government, Central Bank of the Philippines and other
government entities, including government-owned and
controlled corporations, the servicing and repayment of which
are fully guaranteed by the Republic of the Philippines;

e. To enter into and perform such contracts with any person or

entity, public or private, as may be necessary, proper or
conducive to the attainment or furtherance of the objectives and
purposes of the Corporation;

f. To adopt, alter and use a corporate seal; to sue and be sued; and
generally, to exercise all the powers of a corporation under the

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 Corporation Law which are not inconsistent herewith; and

g. To promulgate such rules and regulations and to do and perform

any and all things as may be necessary and proper to carry out
its responsibilities, powers and functions under this Decree.

SECTION 6. Medium and Long-Term Loans. — Any provisions

of law, circular or regulation to the contrary notwithstanding, banks are hereby
empowered to grant medium and long-term loans for housing and home
development with maturity periods nor exceeding thirty (30) years.

SECTION 7. Borrowing Power. — With the prior approval of the

Monetary Board and the President of the Philippines, the Corporation may borrow
from foreign public or private financial institutions such amount as may from time
to time be required for its operations, or issue bonds, promissory notes, debentures,
certificates of indebtedness, and other debt instruments in foreign currency.
Notwithstanding the provisions of any law to the contrary, the Central Bank is
hereby authorized to extend loans and advances to the Corporation under Section
88 of Republic Act No. 265, as amended, otherwise known as the Central
Bank Charter, subject to such terms and conditions as may be prescribed by the
Monetary Board.

No part of the proceeds of domestic and/or foreign borrowings shall be used

for operating expenses of the Corporation.

The bonds, promissory notes, debentures, certificates of indebtedness and

other debt instruments issued in local or foreign currency shall be at such interest
rates, maturities and other terms and conditions as the Corporation may determine.
The debt instruments may be secured by the assets of the Corporation and shall be
fully exempt, both as to principal and interest, from any and all taxes imposed by
the Government or any of its subdivision. The debt instruments shall be fully
negotiable and shall be unconditionally guaranteed both as to principal and interest
by the Government of the Republic of the Philippines, which guaranty shall be
indicated on the face thereof.

A sinking fund is hereby created for the payment of the Corporation's bonds
issued under the provisions hereof in such manner that the total contribution
thereto accrued as at such rate of interest as may be determined by the Secretary of
Finance in consultation with the Monetary Board, shall be sufficient to redeem the
bonds of maturity. The said fund shall be under custody of the Central Bank of the
Philippines which shall invest the same in such manner as the Monetary Board
may approve; shall charge all expenses of such investment to the said sinking
fund, and shall credit the same with the interest on investments and other incomes

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 belong to it. acd

A standing annual appropriation is hereby made out of any general funds in

the National Treasury in such amount as may be necessary to provide for the
sinking fund created herein and for the interest on bonds issued by the Corporation
by virtue hereof.

SECTION 8. Investment of Funds. — Funds of the Corporation not

invested in home mortgages shall be kept in cash on hand, or on deposit, or
invested in securities issued by the National Government, Central Bank of the
Philippines and other government entities including government-owned and
controlled corporations, the servicing and the repayment of which are fully
guaranteed by the Republic of the Philippines.

SECTION 9. Board of Directors. — The powers and functions of the

Corporation shall be exercised by a Board of Directors, hereinafter referred to as
the "Board", which shall be composed of the following:

a. The Secretary of Finance, who shall be the Chairman of the

Board. Whenever the Secretary of Finance is unable to attend
the meeting of the Board, he shall designate an undersecretary
as his alternate, but who shall not act as Chairman.

b. The President of the Corporation, who shall be the

Vice-Chairman.

c. The Governor of the Central Bank of the Philippines. Whenever

the Governor of the Central Bank of the Philippines is unable to
attend the meeting of the Board, he shall designate the Senior
Deputy Governor or any Deputy Governor to act as his
alternate.

d. The Chairman, National Housing Authority. Whenever the

Chairman of the National Housing Authority is unable to attend
the meeting of the Board, he shall designate the General
Manager to act as his alternate.

e. The Commissioner of the Budget. Whenever the Commissioner

of the Budget is unable to attend the meeting of the Board, he
shall designate a Deputy Commissioner to act as his alternative.

SECTION 10. Powers of the Board. — The Board shall have the
following powers:

a. To formulate policies, rules and regulations to carry out

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 effectively the functions of the Corporation under this Decree.
cdtai

b. To direct the management, operations and administration of the

Corporation.

c. To authorize such expenditures by the Corporation as are in the

interest of the effective administration and operations of the
Corporation.

d. On recommendation of the President of the Corporation, to

appoint and fix the remunerations and other emoluments of
subordinate officers and personnel of the Corporation, and to
remove or otherwise discipline such officers or employees for
cause, as provided by law: Provided, however, That positions
which are policy determining, primarily confidential, or
considered by the Board as highly technical in nature, as
determined by the President of the Philippines, shall not be
subject to the Civil Service Law and Rules.

e. To exercise such other powers as may be necessary to

accomplish the purposes for which the Corporation was
organized.

SECTION 11. Meetings. — The Board shall meet at least once every
two (2) weeks. Special meetings may be revoked by the Chairman or, in his
absence, the Vice-Chairman, to consider such subjects or matters as may be
necessary under the circumstances.

A majority of the directors shall constitute a quorum for the transaction of

corporate business.

SECTION 12. Remunerations for Attendance of Meetings. — The

members of the Board or their respective alternates, except the President of the
Corporation, shall be entitled to per diems for every meeting actually attended in
such amount as the Board may deem appropriate but not exceeding P500.00 per
meeting nor P2,000.00 in any one month. cd

SECTION 13. President. — The Chief Executive Officer of the

Corporation shall be the President who shall be appointed by the President of the
Philippines for a term of six (6) years unless sooner removed for caused or by
reason of incapacity. He must be of good moral character, of unquestionable
integrity, and responsibility, and must be of recognized competence in any of the
fields of economics, banking, finance, commerce or industry. He shall be assisted

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 by an Executive Vice President and such other officers as may be necessary for the
efficient operation of the Corporation.

SECTION 14. Powers and Duties of the President. — The President of

the Corporation shall have the following duties and responsibilities:

a. To prepare the agenda for meetings of the Board, and to submit

for the consideration of the Board policies and measures which
he believes are necessary to carry out the purposes and
objectives of the Corporation.

b. To execute and administer the policies and measures adopted

by the Board.

c. To direct and supervise the operations and internal

administration of the Corporation. He may delegate certain of
his administrative responsibilities to other executive officers of
the Corporation, subject to such rules and regulations as may be
promulgated by the Board, and to exercise such other powers as
may be vested in him by the Board.

SECTION 15. Remuneration of the President. — The salary of the

Corporation shall be fixed and determined by the Board of Directors as provided
in Section 10(d). The Board may authorize the payment of allowances and other
emoluments to the President of the Corporation. cdt

SECTION 16. Appointment of Personnel. — All other officers and

employees of the Corporation shall be appointed by the Board upon the
recommendation of the President of the Corporation. cd

SECTION 17. Auditor. — The Chairman of the Commission on Audit

shall act as the ex-officio auditor of the Corporation and, as such, is empowered to
appoint a representative who shall act as the auditor of the Corporation. He shall
also appoint the necessary personnel to assist said representative in the
performance of his duties. The Auditor of the Corporation and personnel under
him may be removed only by the Chairman of the Commission on Audit.

SECTION 18. Coordination of Policy. — The Corporation shall

coordinate its policies and regulations with those of the Central Bank of the
Philippines, National Economic and Development Authority, National Housing
Authority, and all other agencies of the Government involved in home building
and development and mortgage financing.

The Central Bank of the Philippines may exempt the Corporation from the

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 Coverage of its regulations governing quasi-banking functions.

SECTION 19. Authority of the Monetary Board. — In the furtherance

of the objectives of this Decree, and whenever prevailing conditions warrant, the
Monetary Board may direct and require banking institutions to set aside or allocate
a part of their savings and time deposits for loans to finance the purchase and/or
acquisition, construction, repair, improvement or development of houses and/or
lots used for the construction of residential houses.

SECTION 20. Tax Exemption. — Notwithstanding the provisions

of any general or special law to the contrary, the Corporation, its properties and
transactions except income shall be exempt from the payment of all taxes, duties,
fees and other charges including costs, service and filing fees, appeal bonds,
supersedeas bonds in any other court in administrative proceedings. cd i

SECTION 21. Repealing Clause. — All laws, decrees, executive

orders, rules and regulations inconsistent herewith are hereby repealed, amended
or modified accordingly.

SECTION 22. Separability Clause. — If for any reason any section or

provision of this Decree is declared to be unconstitutional or invalid, the other
provisions hereof nor affected thereby shall continue in full force and effect.

SECTION 23. This Decree shall take effect immediately.

DONE in the City of Manila, Philippines, this 21st day of December, in the
year of Our Lord, Nineteen Hundred and Seventy-Seven.

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