SIXTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES
Pirst Regular Session )

HOUSE OF REPRESENLATIVES
House Bil No 2901.

EXPLANATORY NOTE

Republic Act No. 9009, in amending Section 450 of Republic Act No. 7160, otherwise
known as the Local Government Code, has 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 qualified that the average annual income of the local
government unit (LGU) concerned must be ‘locally-generated’ and excludes special funds, transfers
and non-recurring incomes. It also required that the amount be certified by the Department of
Finance in lieu of the LGU’s Treasurer based on 2000 constant prices,

On the other hand, Section 452 of RA 7160 merely required an average annual income of
Fifty Million Pesos (P 50,000,000.00) for the conversion of a city to a highly-urbani
amount is to be certified by the City Treasurer based on 1991 constant prices. Similarly, Section 461
of the same Code requires only an average anaual income of Twenty Million Pesos (P 20,000,000.00)
for the creation of a province.

‘one, The

Hence, we are confronted with a situation where the threshold amounts of average annual
incomes required for the conversion and/or creation of vatious LGUs vary inrationally and may lead
to awkward conditions. For example, while P100 million is required for the creation of a city, only
P50 million is needed for its conversion to a highly-urbanized city, notwithstanding that the latter is
of a higher developmental category.

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. And 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,

a. coféancco

First District of Tarlac

Representathus District of Tarlac


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SIXTEENTH CONGRESS

)
OF THE REPUBLIC OF THE PHILIPPINES )

First Regular Session

HOUSE OF REPRESENTATIVES
5
House Bill No.2 904

Introduced by Representatives Enrique M. Cojuangco and Susan A. Yap

AN ACT
RATIONALIZING THE INCOME REQUIREMENTS AND OTHER
REQUISITES FOR THE DECLARATION OF HIGHLY URBANIZED
STATUS IN THE CASE OF COMPONENT CITIES AND FOR THE
CREATION OF A PROVINCE, AMENDING FOR THE PURPOSE
SECTIONS 452, 453 AND 461 OF REPUBLIC ACT NO. 7160,
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF

1991, AND FOR OTHER PURPOSES

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

SECTION 1. Section 452 of Republic Act No. 7160, as amended, otherwise known as

the Local Government Code of 1991, is hereby amended to read as follows:

SE

STION 452 Highly Urbanized Cities -

a) Cities with a minimum population of two hundred thousand (200,00) inhabitants,

as certified by the National Statistics Office, and with [ the latest | AN

AVERAGE LOCALLY-GENERATED annual income FOR THE LAST

TWO (2) YEARS of [at least] NOT LESS THAN TWO HUNDRED Fifty

Million Pesos (P 250,000,000.00) [(P50,000,000.00)] based on [1991] 2000

constant ptices, as certified by the [city treasurer] DEPARTMENT OF

FINANCE, shall be classified as highly urbanized 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,
RECURRING INCOME.

TRUST FUNDS,

AND NON-


1 SECTION 2. Section 453 of Republic Act No. 7160, as amended, is hereby amended to

2 read as follows:

3 SECTION 453 Duty to Declare Highly Urbanized Status ~ Tt shall be the duty of the
4 [President] CONGRESS to pass a joint resolution declaring a city as highly

5 urbanized within thirty (30) days after it shall have met the minimum requirements

6 prescribed in the immediately preceding section, upon proper [application]

7 DETERMINATION therefor [and]: PROVIDED, THAT THE

8 DECLARATION BE RATIFIED [ratification] in a plebiscite by the qualified

9 voters [therein] OF THE PROVINCE IN WHICH THE CITY IS A

10 COMPONENT OF.

a SECTION 3. Section 461 of Republic Act No. 7160, as amended, is hereby amended to

12 read as follows:

B SECTION 461, Reguisites for Creation,
14 a) A province may be created if it has an average annual LOCALLY-

15 GENERATED income FOR THE LAST TWO (2) CONSECUTIVE

16 YEARS, as certified by the Department of Finance, of not less than [Twenty]

7 TWO HUNDRED Million Pesos (P 200,000,000.00) [P 20,000,00] based on

18 [1991] 2000 constant prices and either of the following requisites:

19 xxx

20 (©) The average annual LOCALLY-GENERATED income shall include the

2 income accruing to the general fund, exclusive of THE INTERNAL

2 REVENUE ALLOTMENT (IRA) SHARES, special funds, trust funds,

23 transfers, and non-recusting income.

24 SECTION 4. Implementing Rules and Regulations ~ Within sixty (60) days from the

25 effectivity of this Act, the Department of Interior and Local Government shall promulgate the
26 implementing rules and regulations necessary for its effective implementation.
27 SECTION 5. Separability Clause. - If any provision of this Act, ot any patt thereof, is

28 declared unconstitutional, the same shall not affect the validity and effectivity of the othet portions.


SECTION 6. Repealing Clause. - All laws, executive orders, presidential dectees,

proclamations, rules, regulations, issuances and enactments of pasts thereof inconsistent with this

Act ate hereby repealed or modified accordingly.

SECTION 7. Effectivity. - This Act shall take effect fifteen (15) days from its complete
publication in the Official Gazette of in a newspaper of general circulation in the Philippines,

whichever comes earlier,

Approved,