HOUSE OF REPRESENTAT)
RECEIVED

SEVENTEENTH CONGRESS ) 30 JUN 2015
OF THE REPUBLIC OF THE PHILIPPINES ) DATE:
First Regular Session ) TINE:

BY:

HOUSE OF REPRESENTATIVES
REGISTRATION UNIT
House BilNo. 668 | BILLS AND WNOEX sAVICE

Introduced by Representative Victor A. Yap

EXPLANATORY NOTE

Republic Act No. 9009, in amending Section 450 of Republic Act No. 7160, otherwise
known as the Local Government Code, increased to One Hundred Million Pesos (P100,000,000.00)
the required average annual income for the conversion of a municipality to a component city.
Moreover, RA 9009 requires that the average annual income of a local government unit (LGU) must
be ‘locally-generated’ and excludes special funds, transfers and non-recurring income. It also
necessitates that the amount be certified by the Department of Finance in lieu of the LGU’s
Treasurer.

On the other hand, Section 452 of RA 7160 merely required an average annual income of
Fifty Million Pesos (P50,000,000.00) for the conversion of a city to a highly-urbanized one. The
amount is to be certified by the City Treasurer. Similarly, Section 461 of the same Code requires only
an average annual income of Twenty Million Pesos (P20,000,000.00) for the creation of a province.

Resultantly, we are confronted with a situation where the threshold amounts of average
annual incomes required for the conversion and/or creation of various LGUs vary wildly and
irrationally.

‘This bill seeks to rationalize the income requirements for the conversion or declaration of
the various kinds of local government units for consistency among the relevant provisions in the
Local Government Code with respect to the subject. Furthermore, the measure provides for the
exclusion of the Internal Revenue Allotment (IRA) from the contemplation of the average annual
income in order to conform with the qualification that the income must be locally-generated and to
further promote self-sufficiency on the part of the LGUs to be converted or created.

Likewise, the requirement for a presidential proclamation of a city’s status as a highly
urbanized one is dispensed with in the bill and instead requires an act of Congress for the
conversion of city to HUCs. To further democratize the process, the bill expands the constituency
to be consulted in the plebiscite ratifying the declaration from only the voters of the concerned city
to the qualified voters of the province in which the city is a component of.

ik
VICTOR
Representative, 24 District of Tarlac


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SEVENTEENTH CONGRESS
OF THE REPUBLIC OF THE PHILIPPINES }
First Regular Session )

HOUSE OF REPRESENTATIVES

_b68

House Bill No.

Introduced by Representative Victor A. Yap

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 SECTIONS 442 (a), 452 (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:

SECTION 1. Section 442 (a) of Republic Act No. 7160, as amended, otherwise known as
the “Local Government Code of 1991”, 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] TWELVE million five hundred thousand pesos
[(P2,500,000.00)] (P12,500,000.00) for the last two (2) consecutive years based on the
[1991] 2013 constant prices; a population of at least twenty-five thousand (25,000)
inhabitants as certified by the National Statistics Office; and a contiguous tetritory 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.

‘xx!

SECTION 2. Sections 452 (a) and 453 of the Local Government Code of 1991, as

amended, are hereby amended to read as follows:

“SEC. 452. Highly Urbanized Cities. —

(@) Cities with a minimum population of two hundred thousand (200,000) inhabitants, as
certified by the National Statistics Office, and with [the latest] A LOCALLY-
GENERATED annual income FOR THE LAST TWO (2) CONSECUTIVE
YEARS of at least TWO HUNDRED fifty million pesos [(P50,000,000.00)]
(P250,000,000.00) based on [1991] 2000 constant prices, as certified by the [city
treasurer] DEPARTMENT OF FINANCE, shall be classified as highly urbanized


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cities[.]: PROVIDED, THAT THE ANNUAL AVERAGE INCOME SHALL
INCLUDE THE INCOME ACCRUING TO THE GENERAL FUND, BUT
EXCLUDING THE INTERNAL REVENUE ALLOTMENT (IRA) SHARES,
SPECIAL FUNDS, TRUST FUNDS AND NON-RECURRING INCOME.
“xxx.”
“SEC. 453. Duty to Declare Highly Urbanized Status. — It shall be the duty of [the
President] CONGRESS TO PASS A JOINT RESOLUTION to declare a city as highly
urbanized within thirty (30) days after it shall have met the minimum requirements
ptesctibed in the immediately preceding section, upon proper [application]
DETERMINATION therefore [and  satification]: PROVIDED, THAT THE
DECLARATION SHALL BE RATIFIED in a plebiscite by the qualified voters [therein]
OF THE PROVINCE IN WHICH THE CITY GEOGRAPHICALLY BELONGS.”

SECTION 3. Section 461 (a) and (©) of the Local Government Code of 1991, as amended,

is hereby amended to read as follows:

“SEC. 461. Requisites for Creation. ~

(@) A province may be created if it has an average LOCALLY-GENERATED annual income
FOR THE LAST TWO (2) CONSECUTIVE YEARS, as certified by the Department of
Finance, of not less than [Twenty] TWO HUNDRED million pesos [(P20,000,000.00)]
(P200,000,000.00) based on THE [1991] YEAR 2000 constant prices and either of the
following requisites:
“xx

“(© The average annual LOCALLY-GENERATED income shall include the income accruing
to the general fund, exclusive of THE INTERNAL REVENUE ALLOTMENT (IRA)

SHARES, special funds, trust funds, transfers, and non-recurring income.”

SECTION. 4. The Department of the Interior and Local Government (DILG) shall issue

the necessary rules and regulations within sixty (60) days after the effectivity of this Act.

SECTION. 5. All laws, decrees, executive orders, rules and regulations which are

inconsistent with this Act are hereby repealed, amended, or modified accordingly.

SECTION. 6. This Act shall take effect fifteen (15) days after its publication in the Official

Gazette or in a newspaper of general circulation.

Approved,