Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No2702_

Introduced by: REPRESENTATIVE MARISOL C. PANOTES

EXPLANATORY NOTE

Under the original provision of Republic Act No. 7160 of the Local Government Code of
1991 as amended, specifically Section 450, the income requirement for the conversion of a
municipality or cluster of barangays into a component city was fixed at an average annual income
for two (2) consecutive years of Twenty Million Pesos, including the Internal Revenue Allotment
(IRA) shares, and all other incomes. However, with the implementation of Republic Act No. 9009
2001. which effectively amended the aforementioned provision of the Code, the income
requirement was not only significantly increased to One Hundred Million Pesos
(P100,000,000.00) but also limited to locally generated incomes only thereby excluding the IRA
shares and other incomes

Ironically, the income requirements for the creation of provinces and highly urbanized
cities are very much lower than in creating component cities. Sections 452 and 461 of the Local
Government Code of 1991 only require an average annual income for two (2) consecutive years
of Fifty Million Pesos (P50,000,000.00) and Twenty Million Pesos (P20,000,000.00) for the
creation of a highly urbanized city and province respectively. which even include the IRA shares
and all other incomes

Under this situation, the capital towns, which have been considered as the face or
reflection of provinces. are placed in a very disadvantaged position thereby hindering their
progress and prosperity to the detriment of their constituents

This bill therefore, seeks to exempt from the income requirement the capital town of a
province without a city by further amending Section 450 of Republic Act No. 7160, as amended,
otherwise known as the Local Government Code of 1991. This will somehow cure an absurd
situation where the creation of a lower level local government unit like a component city under
the amendatory law. is burdened with a higher income requirement than in creating a higher level
local government unit, like highly urbanized cities and provinces

The foregoing reasons warrant the immediate approval of this important legislative
measure.

MARIMOL C. PANOTES
Representative
Second District, Camarines Norte


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No, 2702

Introduced by: REPRESENTATIVE MARISOL C. PANOTES

AN ACT
EXEMPTING FROM THE INCOME REQUIREMENT THE CAPITAL TOWN
OF A PROVINCE WITHOUT A CITY, FURTHER AMENDING FOR THE
PURPOSE SECTION 450 OF REPUBLIC ACT No. 7160, AS AMENDED BY
REPUBLIC ACT No. 9009, OTHERWISE KNOWN AS THE LOCAL
GOVERNMENT CODE OF 1991

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

SECTION I. Section 450 of Republic Act No. 7160 as amended by Republic Act
No. 9009, otherwise known as the Local Government Code of 1991 is hereby further
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 a
locally generated average annual income, as certified by the Department
of Finance, of at least One hundred million pesos (P100,000,000.00), for
the last two (2) consecutive years based on 2000 constant prices, and if it
has either of the following requisites:

(i) a contiguous territory of at least one hundred (100) square
kilometers, as certified by the Land Management Bureau; or

(ii) a population of not less than one hundred fifty thousand
(150,000) inhabitants, as certified by the [National Statistics Office]
PHILIPPINE STATISTICS AUTHORITY (PSA).

THE INCOME REQUIREMENT PRESCRIBED HEREIN
SHALL NOT APPLY TO THE CAPITAL TOWN OF A PROVINCE
WITHOUT A CITY

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


(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.

(c) The average annual income shall include the income accruing
to the general fund, exclusive of special funds, transfers, and non-
recurring income.”

SEC. 3. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation

Approved,