Amendment to Bond Issuance Limit for Development

Republic Act No. 1000 authorizes the President of the Philippines, upon recommendation, to issue bonds in the name and behalf of the Republic of the Philippines.
Presidential Decree No. 1387 further amends Section 1 of R.A. No. 1000, as amended, by changing the authorized ceiling and the operative conditions for the bond issuance.
The authority remains tied to recommendations by the Secretary of Finance, the Monetary Board, and the National Economic and Development Authority.

Presidential Decree No. 1387 states that the nation’s economic and social development plans require massive financing from both foreign sources and domestic borrowings to provide peso counterpart funds for foreign-assisted government projects.
The decree recognizes that the existing two billion pesos ceiling for domestic borrowings is insufficient to support overall government development plans.

The President of the Philippines is authorized, upon recommendation of the Secretary of Finance, the Monetary Board, and the National Economic and Development Authority, to issue bonds in the name and in behalf of the Republic of the Philippines.
The authorized bond issuance includes lottery bonds.
The issuance may be made preferably in the Philippines, or abroad if necessary.
The total amount authorized is not exceeding five billion pesos (amending the prior two billion pesos ceiling).

The bonds must be used to finance public works and projects for economic and social development.
The projects financed must have high economic or social rates of returns and must be authorized by law.
The authorized uses expressly include expropriation of lands for subdivision and resale to individuals.
The bonds may also be used to repay or service bonded obligations of the Government incurred for such projects.

Investments in the covered projects by provinces, cities, and municipalities must be limited by the paying capacity of the concerned province, city, or municipality.
The paying capacity limitation must be certified by the Secretary of Finance.
The decree requires that the probable income from the projects be taken into consideration for such investments.

No bond issue of a covered type may be made unless eighty percentum (80%) of the immediately preceding issue of the same type has been sold.

The decree limits bond proceeds such that no more than five percentum (5%) of the bond issue shall be used to pay specified government obligations, loans and advances.
The covered obligations include those:
- Whether secured or unsecured, guaranteed by the National Government,
- Made by government-owned or controlled financial institutions other than the Central Bank,
- To government political subdivisions, offices and instrumentalities, and/or
- Loans committed by government-owned and/or controlled financial institutions other than the Central Bank that are guaranteed by the Government but cannot be met on maturity.

The bond authority operates through the amended paragraph 1, Section 1 of Republic Act No. 1000.
The President’s power to issue bonds continues to require the same structured recommendations: the Secretary of Finance, the Monetary Board, and the National Economic and Development Authority.
The decree’s operative legal effect is the substitution of the amended bonding authorization terms and the accompanying conditions within Section 1 of R.A. No. 1000, as amended.