CERTIFIED TRANSLATION 

I, Juan E. Segarra, USCCI #06-067/translator, certify that the foregoing is a true and accurate

translation, to the best of my abilities, of the document in Spanish which I have seen.

(H.J.Res. 1107)

JOINT RESOLUTION NO. 62

JULY 1, 2011

To authorize the Secretary of the Treasury to establish, during Fiscal Year 2011-2012, a 

line of credit to incur obligations up to the amount of one hundred and sixty 

million dollars ($160,000,000.00), under the terms and conditions approved by 

the Government Development Bank for Puerto Rico, for the purpose of dealing 

with the settlement of court and administrative claims against the Government of

Puerto Rico, paying for the expenses of implementing this Joint Resolution and 

paying for financing expenses; creating the “Negotiating Committee for Claims, 

Judgments and Administrative Resolutions against the State;” authorizing the 

financing and assignment of fifteen million three hundred thousand dollars

($15,300,000.00) to the Human Resources and Occupational Development 

Council of the Department of Labor during Fiscal Year 2011-1012; establishing 

that the Government of Puerto Rico will pay, by budgetary assignments made by 

the Legislative Assembly in the operating budgets of each Fiscal Year, starting on

Fiscal Year 2012-2013 and ending on Fiscal Year 2017-2018, the obligations herein 

authorized; ordering the Director of the Office of Management and Budget to 

include in the operating budgets of the Government of Puerto Rico, submitted 

annually by the Governor of Puerto Rico to the Legislative Assembly, the amount 

agreed upon with the Government Development Bank for Puerto Rico to 

amortize the obligation authorized in Section 1 of this Joint Resolution and pay 

for interests accrued each year; and authorizing the Department of Justice, the 

Human Resources and Occupational Development Council, the Department of 

the Treasury, the Government Development Bank for Puerto Rico, and the Office 

of Management and Budget, to sign and execute the necessary settlement 

agreements for payment of the court and administrative claims and financing 

herein authorized to the Human Resources and Occupational Development 

Council in order to comply with the purposes of this Joint Resolution; and for 

other related ends.

STATEMENT OF PURPOSE

Law No. 104 enacted on June 29, 1955, as amended, known as the “Claims and 

Complaints against the State Act,” states how and under which circumstances claims 

and tort actions may be initiated against the Government. Law No. 104, supra, also 

establishes the limits on the compensable amount at $75,000 for a cause of action, and at 

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CERTIFIED TRANSLATION 

2

I, Juan E. Segarra, USCCI #06-067/translator, certify that the foregoing is a true and accurate

translation, to the best of my abilities, of the document in Spanish which I have seen.

$150,000 in case of claimant having several causes of action or several claimants. 

In relation to the limits on the amount, the Supreme Court of Puerto Rico, in

Torres v. Castillo, 111 D.P.R. 792 (1981), has decided that “[t]he State may limit its civil

liability when consenting to be sued if said limit results in a fair balance between 

private interests and the legitimate interest of the State to protect public resources and 

equal access is provided to the source of compensation.” This was reiterated in

Defendini Collazo v. E.L.A. 134 D.P.R. 28 (1993), which also validated the 

constitutionality of the limit on the compensable amount under the Claims and 

Complaints against the State Act. 

Historically, payments in respect of claims and complaints against the State were 

paid from the Budgetary Fund. Said Fund was created by Law No. 147 enacted on June

18, 1980, as amended, known as the “Organic Act of the Office of Management and 

Budget”. In particular, it establishes that, starting on Fiscal Year 95-96, the Budgetary 

Fund will be capitalized annually by an amount of at least one percent (1%) of the total 

income for the prior year, providing that it may not exceed six percent (6%) of the Joint 

Resolution of the Budget for the year on which depositing said resources in the same is 

ordered. Furthermore, the above-referenced Law provides that the Fund will be used, 

among other things, to cover assignments approved for any financial year on which the 

income available for that year is not sufficient to cover the same; to pay the public debt; 

deal with unforeseen situations in public services; to pay contracts for permanent 

improvements under construction while the assignments come into effect; and to pay 

State and Federal Court rulings.

Notwithstanding the foregoing, during the past fiscal years, as an exception, the 

resources provided in Law No. 147, supra, have not been deposited in the abovereferenced Budgetary Fund due to the serious fiscal situation inherited by our 

Administration. In the beginning of 2009, we found the Central Government and its 

Public Corporations in a precarious financial situation and on the border of getting their 

credit rating degraded to junk. The past Administration had a practice of 

overestimating income and excluding from the budget expenses essential to the 

operation of the Government. 

Said practice resulted in a cash deficiency for said Fiscal Year amounting to more 

than $3,200 million. Said projection of deficit between income and expenses did not 

contemplate, among other things, debts accrued and not paid to suppliers which 

increased said amount.

That was, in part, the disastrous economic reality that we found in January of 

2009, when we assumed the responsibility of administering Puerto Rico. With the 

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CERTIFIED TRANSLATION 

3

I, Juan E. Segarra, USCCI #06-067/translator, certify that the foregoing is a true and accurate

translation, to the best of my abilities, of the document in Spanish which I have seen.

welfare of our people as our only aim, the necessary measures were taken to achieve the 

fiscal stabilization of the government and redirect the economic development of the 

Island. We have put the house in order, saved our credit and, as a result, hundreds of 

thousands of jobs. Even though the past years have been rough, a renewed optimism is 

in the air; after almost a decade lost, the worst is over and we are entering a new era of 

hope and of welfare. 

In the specific case of payment of court and administrative claims against the

State, it is a clear example of what was previously mentioned. The past Administration 

did not adequately and punctually deal with the debt related to payment of court and 

administrative claims filed during its term. Therefore, our Administration is carrying a 

million-dollar debt in this regard.

To deal with said debt, the method of assigning resources via Joint Resolution

was used for Fiscal Year 2010-2011. So, payments in respect of claims and complaints 

against the State were made from Joint Resolution No. 68 enacted on July 2, 2010, 

allocating to the Office of Management and Budget, by special assignment, the amount 

of fifty-one million two hundred and forty-six thousand dollars ($51,246,000.00). From 

that amount, twenty-five million dollars ($25,000,000.00) were allocated to pay for 

judgments against the State and twenty-six million two hundred and forty-six thousand 

dollars ($26,246,000.00) to pay for judgments against different agencies.

We believe that a credit line financial instrument is the adequate method to pay 

for court and administrative claim settlements, since we will able to pay said claims and

will also avoid separating funds from the General Fund without an immediate use for 

them. Therefore, this Joint Resolution authorizes the Secretary of the Treasury to 

establish during Fiscal Year 2011-2012 a line of credit to incur obligations up to the 

amount of one hundred and sixty million dollars ($160,000,000.00). This has the purpose 

of reducing the Government’s exposure by settling court and administrative claims in a 

concerted and sensible manner in order to achieve the highest performance from the 

Government’s resources. In addition, charged against the line of credit herein 

authorized, an assignment guarantee is provided to the Human Resources and 

Occupational Development Council (CDORH) of the Department during Fiscal Year

2011-2012 in order to comply with its obligation of offering massive services to the 

disadvantaged workforce. Due to the recent budgetary impasse between Congress and 

the White House, it was not until May of 2011 that the Employment and Training 

Administration notified state agencies the specific budget cuts in workforce programs 

and their immediate impact on the current federal fiscal year. In Puerto Rico’s case, the 

projected cuts could reach 20 million, which would potentially compel CDORH to 

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CERTIFIED TRANSLATION 

4

I, Juan E. Segarra, USCCI #06-067/translator, certify that the foregoing is a true and accurate

translation, to the best of my abilities, of the document in Spanish which I have seen.

reduce immediately and to a minimum its operations and services to the workforce. 

Several state governments have also had to make their own assignments in order to 

deal with the recent cuts in federal assignments to these programs, among others.

THE PUERTO RICO LEGISLATIVE ASSEMBLY HEREBY DECREES:

Section 1.-The Secretary of the Treasury is authorized to establish, during fiscal 

year 2011-2012, a line of credit to incur obligations up to the amount of one hundred 

and sixty million dollars ($160,000,000.00), under the terms and conditions approved by 

the Government Development Bank for Puerto Rico. The purposes of this line of credit 

will be to pay court and administrative judgments and settle court and administrative 

claims against the Government of Puerto Rico in order to obtain the highest 

performance from the State’s resources until reaching the limit on the available amount; 

and order the Secretary of the Treasury to, charging it against the line of credit, take 

immediate steps with the Government Development Bank and deposit in the Office of 

Management and Budget the amount of fifteen million three hundred thousand dollars

($15,300,000) for the operational and service expenses of the Human Resources and 

Occupational Development Council of the Department of Labor during Fiscal Year

2011-2012. Said amount total must also be immediately transferred by the Office of 

Management and Budget to the Human Resources and Occupational Development 

Council so that the latter is able to continue offering services to the workforce without 

interruption.

Section 2.-The money stemming from the line of credit herein authorized may 

only be used to settle court and administrative claims, and pay judgments against the

Government of Puerto Rico, for the assignment of the amount of fifteen million three 

hundred thousand dollars ($15,300,000) for operational and service expenses of the 

Human Resources and Occupational Development Council of the Department of Labor

during Fiscal Year 2011-2012, pay for the expenses of implementing this Joint 

Resolution and pay for financing expenses. The money stemming from this line of 

credit may not be used to pay court claims against public corporations or 

municipalities. 

Section 3.-The “Negotiating Committee for Claims, Judgments and 

Administrative Resolutions against the State” is created, composed of a representative 

of the Government Development Bank for Puerto Rico, who will preside over the 

Committee, a representative of the Department of the Treasury, a representative of the 

Office of Management and Budget, and a representative of the Department of Justice, to 

handle negotiating procedures for the purpose of reducing the exposure of the 

Government of Puerto Rico and ensure that the line of credit authorized in this Joint 

Resolution is used in a manner which results in the highest performance of the available 

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CERTIFIED TRANSLATION 

5

I, Juan E. Segarra, USCCI #06-067/translator, certify that the foregoing is a true and accurate

translation, to the best of my abilities, of the document in Spanish which I have seen.

amounts. This Negotiating Committee for Claims, Judgments and Administrative 

Resolutions against the State will have the necessary authority to make any 

determination to carry out the end and purpose of this Joint Resolution. 

Section 4.-The Government Development Bank for Puerto Rico, the Department 

of Justice, the Department of the Treasury, and the Office of Management and Budget, 

are authorized to carry out any actions and/or execute any contracts, instruments 

and/or public and private documents that are necessary or advisable to further the 

purposes of this Joint Resolution.

Section 5.-The Government of Puerto Rico will pay, by budgetary assignments

made by the Legislative Assembly in the operating budgets of each fiscal year, starting 

on Fiscal Year 2012-2013 and ending on Fiscal Year 2017-2018, the obligations herein 

authorized. For this purpose, for Fiscal Years 2012-2013 to 2017-2018, the Director of the 

Office of Management and Budget is ordered to include in the operating budgets of the

Government of Puerto Rico, submitted annually by the Governor of Puerto Rico to the 

Legislative Assembly, the amount agreed upon with the Government Development 

Bank for Puerto Rico to amortize the obligations authorized in Section 1 of this Joint 

Resolution and pay for interests accrued each year. If, at any point, the budgetary 

assignments are not sufficient to pay for the obligations herein authorized and the

interests accrued each year, the Secretary of the Treasury will withdraw from any 

available funds in the General Fund of the Government of Puerto Rico the amounts that 

are necessary to cover the deficiency in the amount required for payment of said 

obligations and interests, and order that the amounts so withdrawn be applied to said 

payment and purpose. 

Section 6.-The provisions of this document will not contravene the duties, 

functions and obligations of the Settlements Committee of the Department of Justice

created by way of Administrative Order 94-23 of December 15, 1994, in accordance with 

the powers of the Secretary of Justice provided in Law No. 205 enacted on August 9,

2004, known as the “Organic Act of the Department of Justice;” rather, the Negotiating 

Committee for Claims, Judgments and Administrative Resolutions against the State and 

the Settlements Committee of the Department of Justice will work in close cooperation.

Section 7.-If any provision of this Joint Resolution or its application is declared 

invalid, said declaration will not affect the other provisions or application of this Law 

which may be put into effect without requiring the provisions declared invalid, and so 

in this regard the provisions of this Law are severable.

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Exhibit C Page 5 of 6
CERTIFIED TRANSLATION 

6

I, Juan E. Segarra, USCCI #06-067/translator, certify that the foregoing is a true and accurate

translation, to the best of my abilities, of the document in Spanish which I have seen.

Section 8.-This Joint Resolution will come into effect on July 1, 2011.

...................................................................

 President of the House

....................................................................

President of the Senate

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