DOJ Opinion No. 166, s. 1992

DOJ OPINION NO. 166 , s. 1992 November 26, 1992 Ms. Ma. Erly P. Erasmo Vice-President Technical Service/Guarantee and Credit Insurance Group Home Insurance and Guaranty Corporation 349 Sen. Gil J. Puyat Avenue Makati, Metro Manila M a d a m : This has reference to your request for opinion concerning the authority of the municipality to issue bonds in the light of Section 299 of the Local Government Code (LGC) of 1991. llcd You state that in line with the implementation of the LGC which provides for certain financial schemes that the local government units (LGUs) may adopt for the purpose of undertaking development projects, the Home Insurance and Guaranty Corporation (HIGC) has conceived a program called the "Municipal Financing" which is focused on generating funds for the LGUs to finance development projects; that specifically, the scheme of the program would necessitate the issuance or flotation of municipal bonds to be guaranteed by the HIGC; and that the proceeds of the bonds shall be utilized to capitalize the housing and livelihood projects of a particular municipality. You likewise state that under the aforementioned provision of the LGC, the provinces, cities and municipalities are authorized to issue bonds subject to the rules and regulations of the Central Bank (CB) and the Securities and Exchange Commission (SEC) but when you referred the proposed financing scheme to said offices, you were advised by the latter of the existence of an opinion by this Department limiting the flotation of the bonds to the provincial level, thus, giving rise to your instant request. We take it that what SEC has in mind is this Department's Opinion No. 99, s. 1991 (Copy attached) which was issued prior to the enactment of the LGC. It bears emphasis that the view expressed therein that the provinces and cities are the only political units empowered to issue bonds was based on an interpretation of Section 6 of P.D. No. 752, as amended. However, the said law was expressly repealed in its entirety by the LGC (see Section 534[c], Book IV, Title Four), thereby rendering the law of no force and effect. Consequently, the aforementioned opinion interpreting the same is no longer applicable. There is no question that municipalities have the power to issue bonds under the LGC. Section 299 thereof expressly provides: "SECTION 299. Bonds and Other Long-Term Securities . Subject to the rules and regulations of the Central Bank and the Securities and Exchange Commission, provinces, cities, and municipalities are hereby authorized to issue bonds, debentures, and securities, collaterals, notes and other obligations to finance self-liquidating, income-producing development or livelihood projects pursuant to the priorities established in the approval local development plan or the public investment program. The sanggunian concerned shall, through an ordinance approved by a majority of all its members, declare and state the terms and conditions of the bonds and the purpose for which the proposed indebtedness is to be incurred." The rule is that where the law speaks in clear and categorical language, there is no room for interpretation. There is only room for application (Cebu Portland Cement Co. vs. Municipality of Naga, Cebu, 24 SCRA 708). prcd Please be guided accordingly. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary