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FOURTEENTH CONGRESS OF THE 
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First Regular Session 
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FiAR 13 
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REPUBLIC OF THE PHILIPPINES ) 
S. No 
Introduced by Senator Antonio “Sonny” F. Trillanes IV 
EXPLANATORY NOTE 
Governors or mayors, with the approval of their local legislative bodies, in behalf of their 
localities, had been resorting to borrowings from banks or other lending institutions to 
finance certain projects with an amortization period for full .payment extending even 
beyond their terms of office. 
The practice makes their successors to office burdened with the obligation of paying the 
loans thereby already depriving the new elected officials of the needed funds to finance 
their own projects upon their assumption to office. 
It is high time that we limit the amortization period of such loans to the term of office of 
the governor or mayor and approved by members of the local legislative bodies 
contracting them so that with this limitation, the borrowing chief executive and members 
of the board or council of the locality will be more concerned and obligated to pay the 
loan they contract during their term rather than pass on the obligation of paying it to their 
successors who in the first place should not be burdened with it. 
A N ~ O ~ I O  
‘‘SONNY’ F. TRILLANES IV 
Senator 
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FOURTEENTH CONGRESS OF THE 
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First Regular Session 
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REPUBLIC OF THE PHILIPPINES ) 
8 MAh 13 ,:! ’ 3 
S E N A T E  
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S. No 2 
Introduced by Senator Antonio “Sonny” F. Trillanes IV 
AN ACT 
LIMITING TEE PERIOD OF AMORTIZATION OF LOANS CONTRACTED BY 
LOCAL GOVERNMENTS TO THE TERM OF OFFICE OF THE LOCAL 
EXECUTWES CONCERNED, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Declaration of Policy. - It is the policy of the State to recognize 
certain needs of local governments to contract loan or incur financial obligation necessary 
for their development programs. It is equally the state’s policy to ensure that the authority 
is exercised responsibly. Finally, it is the state‘s policy to provide the governors and 
mayors and their local legislative bodies the opportunity to llfill their mandates with 
funds through fresh revenues undiminished by unpaid debt or financial obligation 
incurred by their predecessors. 
SEC. 2. LoaniFinancial Obligation Amortized Before End of Term. - Any 
provision of law to the contrary notwithstanding, loans or other financial obligations 
contracted in behalf of provinces, cities or municipalities by their respective governors 
or mayors and approved by their respective legislative bodies shall be amortized and paid 
in full not later than one month before the end of the term of office of said governors or 
mayors and members of the board or council who approved the contracting of the said 
loan or of incurring the financial obligation. 
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SEC. 3. Undertaking of Governors and Mayors on Loans. - Banks, financing or 
lending institutions, local or foreign, lending 
money to provinces and cities or 
underwriting any financial obligation shall require the governor or mayor and the 
members of the legislative bodies approving the contracting of such loans or financial 
obligations to execute an undertaking that the province or city they represent shall 
amortize and pay in full the principal and interest including bank charges of the said loan 
or financial obligation not later than one (1) month before the end of the term of office of 
said governors, mayors and members of the legislative bodies approving them. 
SEC. 4. Limitation on Amortization Deemed Stipulated - All loan agreements 
and financial obligations between the local governments and the lenders shall contain a 
stipulation that the entire loan together with interest and bank charges shall be amortized 
in full not later than one (1) month before the end of 24 the term of office of the mayor, 
governor and members of the legislative bodies who approved to contract them: 
Provided, However, that even without the incorporation of the stipulations in the covering 
documents on said loan or financial agreement, the same shall be deemed incorporated 
therein. 
SEC.5. Effect of Non - Payment Upon &piration of Term. - If the loan andor 
its increment including interests is not paid in full before the end of the term of the office 
of the mayor or governor and members of the local legislative bodies who approved to 
contract the loan or incur the financial obligation, the province or city in whose behalf the 
said obligation is contracted shall be discharged from liability thereon and the unpaid 
amortization, if any, shall become the solidary liability of the said mayor or governor and 
members of the local legislative bodies who approved the contracting of said loan or 
incurring the financial obligation: Provided, However, that if the failure to amortize is 


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due to the fault or negligence of the personnel of the mayor or governor or the local 
legislative bodies duty bound to make the necessary remittance or payment, the said 
persomel shall be solidarily liable with the said officials: provided, Finally, that the 
mayor or governor or members of the local legislative bodies who approved the 
contracting of said loans who fail to settle said obligation incurred during the term for 
which they were elected shall not be eligible to run for any public office until the 
financial obligation is fully paid. 
SEC 6. Loans Covered. - This Act shall apply to all loans contracted upon the 
effectivity hereof. Loans contracted prior to the effectivity hereof shall remain the 
obligation of the province or city but the governor or mayor shall strictly comply with the 
amortization payment provided for in the loan agreement with the lending bank, lending 
or financing institution. 
SEC. 7. Repealing Clause. - All laws, decrees, executive orders and Republic 
Acts inconsistent herewith are hereby deemed repealed. 
SEC. 8. Jifle&*viz$. - This Act shall take effect upon its approval. 
Approved, 
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