2023 Laws of Puerto Rico › TITLE THREE - Executive (§§ 1 — 9311) › Chapter 120 - Puerto Rico Emergency Moratorium and Rehabilitation Act (§§ 9281 — 9311) › Subchapter II - Moratorium for Government Entities (§§ 9291 — 9296) › § 9291 - Declaration commencing emergency period and moratorium for any government entity; powers of the Governor

(a) Consistent with § 9288 of this title, the Legislature hereby directs the Governor to prioritize payment of essential services over covered obligations to promote the health, safety, and welfare of the residents of the Commonwealth during such covered period, as defined in this chapter, and the Governor is hereby empowered, by executive order, to declare the Bank or any government entity to be in a state of emergency and identify in such order enumerated obligations of the Bank or any government entity, as applicable, and if the executive order so provides, no payment on a covered obligation of such Bank or government entity shall be made, other than as provided in § 9292 or 9294 of this title, during the emergency period for such Bank or government entity, as applicable; Provided, however, That no principal obligation or interest obligation that constitutes public debt shall become a covered obligation by operation of this section before five (5) days prior to June 30, 2016. Except as otherwise provided in this chapter, any executive order issued under this subsection may be terminated or modified at any time by the Governor.
(b) During the emergency period for any government entity:
(1) No act shall be done, and no action or proceeding, including issuance of process, shall be commenced or continued in any court in any jurisdiction, which could result in:
(A) The recovery from, or judgment or enforcement against such government entity related to any covered obligation, or any funds, property, receivables or revenues thereof;
(B) any order, judgment, lien, set-off, right of attachment or counterclaim related to any covered obligation against such government entity, or the indebtedness or liability evidenced thereby; or
(C) the application of any funds, property, receivable or revenues of such government entity related to any covered obligation of such government entity, or the indebtedness or liability evidenced thereby;
(2) no entity or person asserting claims or other rights (including a beneficial or assignable interest), no trustee, no collateral agent, no indenture trustee, no fiscal agent, no insurer, and no financial institution that receives or holds funds from such government entity may exercise any remedy, which remedy shall include any right of acceleration or termination, right of set-off, right of attachment or counterclaim related to any covered obligation of such government entity, under any contract or applicable law as a result of:
(A) Non-payment of any obligation arising under or related to any covered obligation of such government entity;
(B) breach of any condition or covenant under or related to any covered obligation of such government entity;
(C) the accrual of any right that is conditioned upon the financial condition of, or the commencement of a restructuring, insolvency, bankruptcy, or other proceeding, or a moratorium by, such government entity, including a default or an event of default thereunder; or
(D) the presentment or approval of this chapter or any similar legislation, including moratorium legislation;
(3) no contract to which such government entity is a party may be terminated or modified, nor may any right or obligation under such contract be terminated or modified solely because of a provision in such contract conditioned on:
(A) The insolvency or financial condition of such government entity;
(B) the commencement of a restructuring, insolvency, bankruptcy, or other proceeding, or a moratorium by such government entity; or
(C) a default under a separate contract that is due to, triggered by, or as the result of the occurrence of the events or matters in clauses (2)(A), (2)(B), (2)(C), or (2)(D) of subsection (b); and
(4) notwithstanding the provisions of the preceding clauses (1), (2) and (3) of this subsection, the Governor may take any and all actions that are reasonable and necessary to preserve the Commonwealth’s ability to continue providing essential public services and may take any and all actions reasonable and necessary to protect the health, safety and welfare of the residents of the Commonwealth, including, in each case without limitation, expropriating property or rights in property interests related to a covered obligation in a constitutionally permitted manner pursuant to the Commonwealth’s power of eminent domain, provided, however, that if property is taken pursuant to this Act, just compensation or other relief may be sought in the Court of First Instance, San Juan Part notwithstanding any other provision or this section of this chapter. The provisions of the General Act of Expropriation of March 12, 1903, as amended, will apply to expropriations pursuant to this section, other than Articles 3 and 3(a), and the requirement of Article 5(a) that funds be deposited in court prior to acquiring title and possession of the property being expropriated, which provisions shall not apply to expropriations of property rights pursuant to this section, but shall continue to apply to any other expropriation.
(c) Any act found to violate subsection (b) of this section shall be void and punishable by contempt of court. Any person or entity found to violate this section may also be liable to such government entity for damages, costs, and attorneys” fees incurred by the Governor or such government entity in defending against actions taken in violation of this section, and punitive damages for intentional or knowing violations, and upon determining that there has been a violation of this section, the court may order additional appropriate remedies.
(d) If ordered by the Governor during the emergency period created by this section, the following obligations may by suspended or modified, if applicable, until the end of the covered period, without the need for further legislation:
(1) Any statutory or other obligation to appropriate money to pay or secure any covered obligation or request the inclusion of an appropriation in the Commonwealth’s proposed budget to pay or secure any covered obligation (or take any action in furtherance thereof);
(2) any statutory or other obligation to transfer money (or its equivalent) to pay or secure any covered obligation (or take any action in furtherance thereof);
(3) any statutory or other obligation to transfer money (or its equivalent), including appropriations, to or from any government entity subject to an emergency period, up to an amount equal to the aggregate debt service payable by such government entity during fiscal year 2017 (or take any action in furtherance thereof);
(4) any statutory or other obligation to setoff revenues used to pay or cover, directly or indirectly, a covered obligation that would normally be used or effected to pay or secure any covered obligation (or take any action in furtherance thereof); and/or
(5) any statutory or other obligation to ensure payment of a covered obligation as if this chapter were not enacted (or take any action in furtherance thereof);
Provided, That, to the extent that a government entity subject to an emergency period receives, from a source other than the Department of Treasury, revenues or other monies whose transfer is suspended or modified pursuant to this subsection, the Secretary of Treasury may, without the need for further legislation, require the entity that collects or holds such funds to transfer such funds to the Department of Treasury.
Provided, further, That any of these provisions shall not be applicable to the municipalities and the Municipal Revenue Collection of Puerto Rico.
(e) During the covered period, notwithstanding § 104(c) of Title 23, the Governor may reprioritize services and expenses described in § 104(c)(3) of Title 23 to higher payment priority than as listed in § 104(c) of Title 23.
(f) Nothing in this section shall be read or construed to limit the authority of any government unit or agency to commence or continue any regulatory proceeding to enforce such governmental unit’s or agency’s police or regulatory power as it relates to a covered obligation.
History —Apr. 6, 2016, No. 21, § 201; July 12, 2016, No. 68, sec. 1.14.