Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

587

HOUSE BILL NO.

Introduced by Representative Jaime R. Fresnedi

EXPLANATORY NOTE

This bill seeks to modernize the criteria for the creation and classification of local
government units (LGUs) to align with current economic realities and demographic trends.
These changes seek to enhance the efficiency, sustainability, and governance capacity of LGUs,
while ensuring the equitable distribution of resources.

The provisions of this bill seek to update income thresholds, population and territorial
requirements, and provide for regular updating of revenue standards without need for
legislative initiative in order to ensure that these provisions remain relevant for many years to
come. The passage of this bill will also not affect already-existing LGUs.

The current income thresholds for the creation and conversion of municipalities. cities,
and provinces are based on 1991 constant prices. These thresholds no longer reflect the current
economic environment due to inflation and services added by laws in the 33 years since the
passage of the Local Government Code. Updating these income requirements ensures that LGU
creation is based on realistic and contemporary financial benchmarks.

This bill harmonizes population and land area criteria to current demographic and
geographical realities of cities. As centers of economic growth, cities must have enough land
area and people to support development, not just for themselves but also for the surrounding
municipalities.

There are now 82 provices, 149 cities, and 1,493 municipalities in the Philippines. Each
of these local government units were created with the promise of better service delivery to their
residents. It is time that we ensure that this promise is kept for the people.

In view of the foregoing, the immediate passage of this bill is eamestly sought.

JAL NEDI
Representative
Lone District, Muntinlupa City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. _ 587

Introduced by Rep. Jaime R. Fresnedi

AN ACT
UPDATING THE REQUIREMENTS FOR THE CREATION OF LOCAL
GOVERNMENT UNITS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO.
7160, OR THE LOCAL GOVERNMENT CODE OF 1991, AS AMENDED

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 442 of Republic Act No. 7160, as amended, is hereby amended
to read as follows:

Section 442. Requisites for Creation. - (a) A municipality may be
created if it has an average annual income, as certified by the provincial
treasurer, of at least [Two million five hundred thousand]] TWENTY
MILLION pesos (P[2,500,000.00]20,000,000.00) for the last two (2)
consecutive years based on the [1991] 2024 constant prices; a population of
at least twenty-five thousand (25,000) inhabitants as certified by the National
Statistics Office; and a contiguous territory of at least fifty (50) square
kilometers as certified by the Lands Management Bureau: Provided, That the
creation thereof shall not reduce the land area, population or income of the
original municipality or municipalities at the time of said creation to less than
the minimum requirements prescribed herein. PROVIDED, FURTHER,
THAT THE INCOME REQUIREMENT CONTAINED IN THIS
SECTION SHALL BE UPDATED EVERY TWO YEARS BY THE
DEPARTMENT OF FINANCE WITHOUT NEED FOR
LEGISLATIVE ACTION.

(b) The territorial jurisdiction of a newly-created municipality shall be
properly identified by metes and bounds. [The requirement on land area shall
not apply where the municipality proposed to be created is composed of one
(1) or more islands. The territory need not be contiguous if it comprises two
(2) or more islands.]


(C)XXXXX;
(d)xxxxx

SEC, 2. Section 450 of Republic Act No. 7160, as amended, is hereby amended to read
as follows:

Section 450. Requisites for Creation. - (a) A municipality or a cluster
of barangays may be converted into a component city if it has an average annual
income, as certified by the Department of Finance, of at least [Twenty million}
TWO HUNDRED MILLION (P[20,000,000.00] 200,000,000.00) for the last
two (2) consecutive years based on [1991] 2024 constant prices, and if it has
[either of] the following requisites:

(® a contiguous territory of at least one hundred (100) square
kilometers, as certified by the Lands Management Bureau; [or]
AND

(ii) a population of not less than one hundred fifty thousand
(150,000) inhabitants, as certified by the National Statistics
Office:

Provided, That, the creation thereof shall not reduce the land area, population,
and income of the original unit or units at the time of said creation to less than
the minimum requirements prescribed herein. PROVIDED, FURTHER,
THAT THE INCOME REQUIREMENT CONTAINED IN THIS
SECTION SHALL BE UPDATED EVERY TWO YEARS BY THE
DEPARTMENT OF FINANCE WITHOUT NEED FOR
LEGISLATIVE ACTION.

(b) The territorial jurisdiction of a newly-created city shall be properly
identified by metes and bounds. [The requirement on land area shall not apply
where the city proposed to be created is composed of one (1) or more islands.
The territory need not be contiguous if it comprises two (2) or more islands. ]]

()XXxxx.
SEC. 3. Section 452 of Republic Act No. 7160, as amended, is hereby amended to read
as follows:

Section 452. Highly Urbanized Cities. - (a) Cities with a minimum
population of two hundred thousand (200,000) inhabitants as certified by the

2


National Statistics Office, and within the latest annual income of at least [Fifty
Million]] FIVE HUNDRED MILLION Pesos (P[50,000,000.00]500,000,000.00)
based on [1991] 2024 constant prices, as certified by the city treasurer, shall be
classified as highly urbanized cities[.]: PROVIDED, THAT THE INCOME
REQUIREMENT CONTAINED IN THIS SECTION SHALL BE UPDATED
EVERY TWO YEARS BY THE DEPARTMENT OF FINANCE WITHOUT
NEED FOR LEGISLATIVE ACTION.

(b)XXXXx.

SEC. 4. Section 461 of Republic Act No. 7160, as amended, is hereby amended to read
as follows:

Section 450. Requisites for Creation. - (a) A province may be created
if it has an average annual income, as certified by the Department of Finance,
of not less than [Twenty million] TWO HUNDRED MILLION pesos
(P[20,000,000.00] 200,000,000.00) based on [1991] 2024 constant prices and
[either of] the following requisites:

(i) a contiguous territory of at least two thousand (2,000) square
kilometers, as certified by the Lands Management Bureau; or

(ii) a population of not less than two hundred fifty thousand (250,000)
inhabitants as certified by the National Statistics Office:

Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said creation
to less than the minimum requirements prescribed herein. PROVIDED,
FURTHER, THAT THE INCOME REQUIREMENT CONTAINED IN
THIS SECTION SHALL BE UPDATED EVERY TWO YEARS BY THE
DEPARTMENT OF FINANCE WITHOUT NEED FOR LEGISLATIVE
ACTION.

(B)XxXXXX.

SEC. 5. Retroactive Effect. - Upon the effectivity of this Act, local government units
which do not meet the requirements in the preceding sections but whose creation or conversion
have already been signed into law shall not be affected.

SEC. 6. Implementing Rules and Regulations. ~ The Department of Finance (DOF) in
cooperation and consultation with the Department of Interior and Local Government (DILG)
and other relevant government agencies shall promulgate the rules and regulations for the
proper implementation of this Act within ninety (90) days from its effectivity.


SEC. 7. Repealing Clause. ~ All Acts, Presidential Decrees, Executive Orders and
Administrative Orders, Rules and Regulations and other such issuances or parts thereof which
are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 8. Effectivity. - This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) newspapers of general circulation.

Approved,