Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 752)
Presidential Decree No. 752 governs the conduct and management of credit transactions and borrowings of provinces, cities, and municipalities in the Philippines.
Local governments may avail credit facilities and resort to borrowings only if local funds are insufficient to finance the prosecution, completion, expansion, operation, and maintenance of local infrastructures and other socio-economic developmental projects.
Provisional advances may not exceed fifteen percent of the average annual income actually realized from regular sources by the borrowing local government unit for the last three fiscal years.
The Secretary of Finance is authorized to withhold internal revenue allotments and/or specific tax allotments from the local government and direct remittance of the amount to the lending bank or institution.
Local governments may contract loans with the Philippine National Bank, Development Bank of the Philippines, Government Service Insurance System, Land Bank of the Philippines, and other national lending institutions.
Bonds must not exceed one-half of one percent of the total assessed value of taxable real property. They must be registered, transferable at the Central Bank, not sold below face value, redeemable after 10 years unless earlier redemption is approved, and subject to approval by the local board and the President of the Philippines.
The aggregate amount of financing contracts must not exceed the legal borrowing capacity of the local government as certified by the Commission on Audit.
They shall be removed from office and suffer imprisonment of up to five years.
Their corresponding budgets may be declared inoperative, and the Secretary of Finance can enforce payment by withholding internal revenue allotments or drawing against depository accounts.
Yes, two or more provinces, cities, or municipalities may jointly undertake capital improvement projects and negotiate loans accordingly, subject to the provisions of the Decree and related instructions.