SIXTEENTH CONGRESS OF THE REPUBLIC 
I 
OF THE PHILIPPINES 
I 
Second Regular Session 
I 
'14 
NOV 24 P6 :15 
SENATE 
S.B. No. 2464 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
AN ACT RATIONALIZING THE INCOME REQUIREMENTS FOR THE CREATION OF A 
MUNICIPALITY. THE DECLARATION OF HIGHLY URBANIZED STATUS IN THE CASE OF 
COMPONENT CITIES AND THE CREATION OF A PROVINCE. AMENDING FOR THE 
PURPOSE SECTION 442 (al. 452 (al. 453 AND 461 (al AND (cl of REPUBLIC ACT NO. 
7160 AS AMENDED OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991 
EXPLANATORY NOTE 
For the past few years. the Philippines has experienced phenomenal economic 
growth and renewed investor trust and confidence. To sustain this progress for the next 
decade. there is a need to ensure that the growth would be supported by effective and 
streamlined policy structures and mechanisms. even in the local and provincial levels of 
government. 
One of these efforts is the amendment of the process and requirements to 
determine an urbanized city. It has been two decades since the local government code 
was enacted. and it is high time to revisit and rationalize these requirements. 
Two decades paved the way to advancement in technology, infrastructure 
development and other urbanization interventions, and economic inflation. Thus, it is 
imminent to update the income requirements in the declaration of a city as a highly 
urbanized city and the conversion of a municipality into a component city. 
The proposal seeks to increase the income requirements for a municipality to 
become a component city from two million and five hundred thousand pesos to twelve 
million and five hundred thousand pesos for the last two consecutive years; for a highly 
urbanized status, the proposal seeks to increase the income requirements from fifty 
million pesos to two hundred fifty million pesos. 
Such adjustment raises the standards of excellence among local governments 
and encourages further innovation and creativity in urbanization and development 
projects and programs. 
From being called Sick Man of Asia, the time when the Philippines will be 
described as a middle-income nation or even a developed nation is within reach. Thus, it 
is essential that everyone. even local governments need to prepare and chip in in the 
efforts of creating and enabling environment for growth and prosperity to be realized by 
every Filipino family. 
In view of the foregoing. the approval ofthis bill is earnestly sought. 
~~ 
\. 
, 
fVv'.~ 
Senator Polo Benigno "Bam 1 A. Aquino IV 


SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S.B. No. 2464 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
~rM;tl' 
{f}ItIH of lip" *,rrr'br~ 
"14 
NOV 24 P6 :15 
AN ACT RATIONALIZING THE INCOME REQUIREMENTS FOR THE CREATION OF A 
MUNICIPALITY, THE DECLARATION OF HIGHLY URBANIZED STATUS IN THE CASE OF 
COMPONENT CITIES AND THE CREATION OF A PROVINCE, AMENDING FOR THE PURPOSE 
SECTION 442 (a), 4S2 (a), 453 AND 461 (a) AND (c) OF REPUBLIC ACT NO. 7160 AS AMENDED 
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION L Section 442 (a) of Republic Act No. 7160 as amended otherwise known as 
2 
the Local Government Code of 1991 is hereby amended to read as follows: 
3 
"Section 442. Requisites for Creation. -
4 
(a) A municipality may be created if it has an average annual income, as certified 
5 
by the provincial treasurer, of at least [Two] TWELVE million five hundred thousand 
6 
pesos [(P2,500,000.00)] (12,500,000) for the last two (2) consecutive years based on the 
7 
[1991] 2000 constant prices; a population of at least twenty-five thousand (25,000) 
8 
inhabitants as certified by the National Statistics Office; and a contiguous territory of at 
9 
least fifty (50) square kilometers as certified by the Lands Management Bureau: 
10 
Provided, That the creation thereof shall not reduce the land area, population or income 
11 
of the original municipality or municipalities at the time of said creation to less than the 
12 
minimum requirements prescribed herein." 
13 
SECTION 2. Section 452 (a) of Republic Act No. 7160, as amended, is hereby amended to 
14 
read as follows: 
15 
"Section 452. Highly Urbanized Cities. 
16 
(a) Cities with a minimum population of two hundred thousand (200,000) 
17 
inhabitants as certified by the National Statistics Office, and within [the latest] A 
18 
LOCALLY-GENERATED annual income FOR THE LAST TWO (2) CONSECUTIVE YEARS of at 
19 
least TWO HUNDRED Fifty Million Pesos [(P50,000,000.00)] (250,000,000) based on 
20 
[1991] 2000 constant prices, as certified by the [city treasurer] DEPARTMENT OF 
21 
FINANCE, shall be classified as highly urbanized cities [.] : PROVIDED, THAT THE ANNUAL 
22 
AVERAGE INCOME SHALL INCLUDE THE INCOME ACCRUING TO THE GENERAL FUND, 
23 
BUT EXCLUDING THE INTERNAL REVENUE ALLOTMENT (IRA) SHARES, SPECIAL FUNDS, 
24 
TRUST FUNDS AND NON-RECURRING INCOME." 
25 
26 
XXX 
XXX 
XXX 


1 
"Section 453. Duty to Declare Highly Urbanized Status. - It shall be the duty of [the 
2 
President] CONGRESS TO PASS A JOINT RESOLUTION to declare a city as highly 
3 
urbanized within thirty (30) days after it shall have met the minimum requirements 
4 
prescribed 
in 
the immediately preceding section, 
upon 
proper 
[application] 
5 
DETERMINATION therefor [and ratification]: PROVIDED, THAT THE DECLARATION SHALL 
6 
BE RATIFIED in a plebiscite by the qualified voters [therein.] OF THE PROVINCE IN WHICH 
7 
THE CITY GEOGRAPHICALLY BELONGS" 
8 
SECTION 3. Section 461 (a) and (c) of Republic Act No. 7160, as amended, is hereby 
9 
amended to read as follows: 
10 
"Section 461. Requisites for Creation. 
11 
(a) A province may be created if it has an average LOCAllY-GENERATED annual 
12 
income FOR THE LAST TWO (2) CONSECUTIVE YEARS, as certified by the 
13 
Department of Finance, of not less than [Twenty] TWO HUNDRED million pesos 
14 
[(P20,000,000.00)j (P200,000,000.00) based on [1991] 2000 constant prices and 
15 
either of the following requisites: " 
xxx 
xxx 
xxx 
16 
"(c) The average annual LOCALLY-GENERATED income shall include the income 
17 
accruing to the general fund, exclusive of THE INTERNAL REVENUE ALLOTMENT 
18 
(IRA) SHARES, special funds, trust funds, transfers and non-recurring income." 
19 
SECTION 4. The Department of Interior and Local Government (DILG) shall issue the 
20 
necessary rules and regulations within sixty (60) days after the effectivity of this Act. 
21 
SECTION 5. All laws, acts, decrees, executive orders, rules and regulations which are 
22 
contrary to and inconsistent with any provision of this Act are hereby repealed, amended or 
23 
modified accordingly. 
24 
SECTION 6. Effectivity. -
This Act shall take effect fifteen (15) days after its complete 
25 
publication either in the Official Gazette or In at least two (2) newspapers of general circulation. 
26 
Approved,