SEC. 296-297 of the LOCAL GOVERNMENT CODE states that:
(a) It shall be the basic policy that any local government unit may create indebtedness, and avail of credit facilities to finance local infrastructure and other socio-economic development projects in accordance with the approved local development plan and public investment program.
(b) A local government unit may avail of credit lines from government or private banks and lending institutions for the purpose of stabilizing local finances.
On Loans, Credits, and Other Forms of Indebted ness of Local Government Units. -
(a) A local government unit may contract loans, credits, and other forms of indebtedness with any government or domestic private bank and other lending institutions to finance the construction, installation, improvement, expansion, operation, or maintenance of public facilities, infrastructure facilities, housing projects, the acquisition of real property, and the implementation of other capital investment projects, subject to such terms and conditions as may be agreed upon by the local government unit and the lender. The proceeds from such transactions shall accrue directly to the local government unit concerned.
(b) A local government unit may likewise secure from any government bank and lending institution short, medium and long-term loans and advances against security of real estate or other acceptable assets for the establishment, development, or expansion of agricultural, industrial, commercial, house financing projects, livelihood projects, and other economic enterprises.
(c) Government financial and other lending institutions are hereby authorized to grant loans, credits, and other forms of indebtedness out of their loanable funds to local government units for purposes specified above.
The above quoted provisions of the LGC is the basis for the indebtedness of the LGU of San Teodoro. Presented herein is the Statement of Debt Service of the said municipality:
