Bonds And Other Long Term Securities.
Section 6
SEC. 6. Bonds And Other Long Term Securities.—(a) Provinces and cities are hereby authorized to issue bonds, debentures, securities, collaterals, notes and other obligations to finance self-liquidating and/or income-producing development projects pursuant to the priorities established in the development program as certified to by the National Economic and Development Authority, but in no case to exceed at any one time an aggregate amount equivalent to one-half of one per cent of the total assessed value of taxable real property within the territorial jurisdiction of the local government unit. Whenever any province or city deems it necessary to issue such bonds, debentures, securities, collaterals, notes and other obligations, the Provincial Board or Municipal Board/ City Council shall, by resolution, so declare and state the terms and condition of the bonds and the purpose for which the proposed indebtedness is to be incurred. For such resolution to be valid, it shall be passed by the affirmative vote of majority of all the Members of the local Board/Council and approved by the President of the Philippines, upon recommendation of the Secretary of Finance after consultation with the Monetary Board of the Central Bank of the Philippines and the National Economic and Development Authority. Local government bonds shall be issued under the following conditions: They shall be in registered form and transferable at the Central Bank of the Philippines; They shall not be sold at less than face value; They shall be redeemable ten years or more from the date of issue as may be determined by the Secretary of Finance before their issuance, but may be redeemed earlier by the local government upon approval by a majority of all the members of the local board or council; Before issuance of the bonds, the Secretary of Finance upon consultation with the Monetary Board of the Central Bank of the Philippines shall fix the annual rate of interest payable on the bonds, as well as the mode of payment of the interest accruals thereon; and Both the principal and interest on the bonds shall be pay able in legal tender of the Republic of the Philippines. Local government bonds issued under the authority of this Section shall be exempt from all taxes levied by the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof, which facts shall be stated upon the face of the bonds. Local government bonds shall be acceptable and received as security in any transaction with the government where such security is required. The local board or council concerned shall establish a sinking fund for the purpose of redeeming at maturity the bonds issued under this Section. The annual contributions to the sinking fund shall cover in full the principal and interest due on the bonds issued and the local board or council shall set aside in the annual budgets of the local government the corresponding appropriations therefor. The Secretary of Finance may, upon request of the local board or council, determine and fix the amount of annual contributions herein referred to. Said sinking fund shall be under the custody of the Central Bank of the Philippines which may invest the same in such manner as the Monetary Board may approve. Said sinking fund shall be charged for all expenses incurred in investing the same or portions thereof and credited with the earnings and interest income arising from such investments. The Republic of the Philippines hereby guarantee the payment by the provincial or city government of both the principal and the interest of the bonds issued by said provincial or city government by virtue of this Section, and shall pay such principal and interest in case the provincial or city government fails to do so, and there are hereby appropriated, out of the general funds in the National Treasury not otherwise appropriated, the sums necessary to make the payments guaranteed under this Section: Provided, That the sums so paid by the Republic of the Philippines shall be refunded by the provincial or city government concerned through the sanctions provided for herein.