"Section 1. The Central Bank of the Philippines shall hereafter have custody of the funds of all sinking funds for the retirement of bonds issued by the Government of the Philippines, provinces, municipalities, and cities. It shall invest such funds either directly and through any instrumentality which it may select, but investment may be made only in securities of the Philippine Government or the Government of the United States and in such a manner as the Monetary Board may prescribe. All the expenses of such investment shall be charged to said sinking funds and the interest and other income from the investments shall be credited to them.

"Sec. 2. When such funds are invested in the bonds of the issue to which the fund pertains, said bonds may, upon the approval of the President of the Philippines, be cancelled. In reckoning the amount in the sinking fund, credit shall be taken for the face value of bonds of the issue pertaining to the fund, whether cancelled or held in the fund, and such bonds, whether cancelled or carried in the fund, shall be regarded as outstanding within the meaning of the law fixing the amount of the sinking fund."