EIGHTEENTH CONGRESS OF THE REPUBLIC } 
OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
Senate Bill No. 255
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’19 
JUL-8 P2:08
Introduced by SENATOR LACSON
RECEiVT j  li'.:
AN ACT
EXEMPTING FROM THE POPULATION AND LAND AREA 
REQUIREMENTS THE CONVERSION OF A MUNICIPALITY INTO A 
COMPONENT CITY IF IT HAS A LOCALLY GENERATED AVERAGE 
ANNUAL INCOME OF AT LEAST TWO HUNDRED FIFTY MILLION 
PESOS (P250,000,000.00) AND ADOPTING IRA PORTABILITY FOR 
EVERY SUBSEQUENT CONVERSION OF A MUNICIPALITY INTO A 
CITY, AMENDING FOR SUCH PURPOSE SECTION 450 OF REPUBLIC 
ACT NO. 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE OF 1991
EXPLANATORY NOTE
This bill was originally the consolidated bill filed during the Second 
Regular Session of the Seventeenth Congress. It was approved on third reading by 
the House of representatives and transmitted to the Senate. In the Senate, the 
Committee on Local Government chaired by Senator Juan Edgardo M. Angara 
submitted a counterpart measure docketed as Senate Bill No. 1842 as contained 
under Committee Report No. 396 with this representation, Antonio F. Trillanes, 
Juan Edgardo M. Angara, Richard J. Gordon, Juan Miguel F. Zubiri as authors 
thereof Said bill was pending on second reading when the Seventeenth Congress 
adjourned last June 7, 2019.
The primordial reason for converting a municipality or cluster of barangays 
into a city is to ensure its economic viability (Lotasa v Commission on Elections, 
G.R. No. 154829, December 10, 2003). As a general rule, the creation of a local 
government unit or its conversion from one level into another shall be based on 
verifiable indicators or viability and projected capacity to provide services, 
specifically income, population and land area (Section 7, R.A. No. 7160, Local 
Government Code of 1991).
Among the three, there is no doubt that the income requirement is the most 
controlling. In recognition of such fact, the Code sets forth the following criterion: 
Income -  It must be sufficient, based on acceptable standards, to provide for all 
essential facilities and services and special functions commensurate with the size 
of its population, as expected of the local government unit concerned (Section 
7(a), supra).
With regard to the population requirement, the Code merely provides, to


wit: Population -  It shall be determined as the total number of inhabitants, within 
the territorial jurisdiction of the local government unit concerned (Section 7(b), 
supra).
And lastly, with regards to the land area, the Code merely requires that the 
same be contiguous; property identified by metes and bounds; and more 
importantly, must be sufficient to provide for such basic services and facilities to 
meet the requirements of its populace (Section 7(c), supra).
As our law stands today, before a municipality or cluster of barangays 
could be converted into a component city, it must have an annual income of at 
least One Hundred Million Pesos (PI00,000,000.00) and a territory of at least one 
hundred (100) square kilometers or a population of not less than one hundred fifty 
thousand (150,000) (See. 450, R.A. No. 7160, Local Government Code, as 
amended by R.A. 9006).
However, there are some municipalities which, though not compliant with 
the population and income requirement, have nevertheless demonstrated 
unquestionable capacity to provide essential government facilities, social services 
to its inhabitants, comparable or even superior to that of existing cities.
As we all know, living in a city has its corresponding economic advantage. 
Thus, it would be utterly unfair to the inhabitants of municipalities to forever 
foreclose their right to the benefits of cityhood simply because such 
municipalities’ land area and population is less than that required under the Local 
Government Code.
While there is no hard and fast rule to determine the optimum populace or 
land area for a city, applying the principles of political law for the creation of a 
sovereign state, the population must be numerous enough and able to procreate in 
order to ensure perpetuation of the political entity. With regards to its land area, 
the same must be large enough to be able to sufficiently provide for its people.
Noteworthy are the small states, specifically; Monaco, a tiny state along the 
French Riviera which has an area of just 0.7 square miles (1.81 sq. km.) and a 
population of just 32,000. The island state ofNaura, became independent in 1968, 
and has an area of just 8.5 square miles (22 sq. km.) and a population of just
13.000. Tuvalu, formerly known as Ellice Islands, gained its independence in 
1978, and has an area of just 9 square miles (23.3 sq. km.) and a population of
12.000. San Marino, located at Mt. Titano in north central Italy, which has an area 
of just 24 square miles (62.13 sq. km.) and a population of just 29,000.
If the above political entities have attained their status as an independent 
state despite its small population and land area, all the more reason for 
municipalities which have time and again demonstrated their capacity to thrive 
despite their small population and land area to be allowed to upgrade its status to 
that of a city.
To allay the fear of the league of cities that said conversion will adversely 
affect the IRA share of their members, this bill introduces the concept of IRA 
Portability allowing these municipalities to bring their current IRA with them after 
their conversion. With existing cities retaining their present share in the IRA


shares, with a minimal decrease due to the corresponding increase in the IRAs of 
the converted municipalities, the adverse effects of the numerous conversions of 
municipalities qualified under this bill’s proposed exemption will be avoided.
Further, to emphasize, this proposed bill provides just an exception to the 
general rule. The general rule remains -  that for creation of or conversion into a 
city, a municipality must have an income of at least PI00,000,000.00 and 2i land 
area of at least 100 square kilometers of population of at least 150,000. The 
exception is that, if the municipality generates a local income of at least double 
than that of the general rule, that is. Two Hundred Fifty Million Pesos 
(P250,000,000.00), then it is qualified to be converted into a city without regard to 
the size of its land area or population.
In view thereof, support and approval of this measure is earnestly sought
PANF,
M. LACSON 
nator


EIGHTEENTH CONGRESS OF THE REPUBLIC } 
OF THE PHILIPPINES 
}
First Regular Session 
}
''- ii 
of t;*f 
o-r-y
S E N A T E  
Senate Bill No. 255
*19 
JUL-8 P2-.08
RLCCiVliJ J t :
Introduced by SENATOR LACSON
AN ACT
EXEMPTING FROM THE POPULATION AND LAND AREA 
REQUIREMENTS THE CONVERSION OF A MUNICIPALITY INTO A 
COMPONENT CITY IF IT HAS A LOCALLY GENERATED AVERAGE 
ANNUAL INCOME OF AT LEAST TWO HUNDRED FIFTY MILLION 
PESOS (P250,000,000.00) AND ADOPTING IRA PORTABILITY FOR 
EVERY SUBSEQUENT CONVERSION OF A MUNICIPALITY INTO A 
CITY, AMENDING FOR SUCH PURPOSE SECTION 450 OF REPUBLIC 
ACT NO. 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE OF 1991
Be it enacted by the Senate and House of Representatives in Congress 
assembled:
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SECTION 1. Section 450 of Republic Act No. 7160 as amended, otherwise 
known as the Local Government Code of 1991, as amended by Republic Act No. 
9009, is hereby further amended to read as follows:
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“ SEC. 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 (PI00,000,000.00) for the 
last two (2) consecutive years based on [2000] 2012 constant prices, and if 
it has either of the following requisites:
(i) Contiguous territory of at least one hundred (100) square 
kilometers, as certified by the Lands 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).
“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.
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“A MUNICIPALITY OR A CLUSTER OF BARANGAYS 
WITH A LOCALLY 
GENERATED AVERAGE ANNUAL 
INCOME, AS CERTIFIED BY THE DEPARTMENT OF 
FINANCE, OF AT LEAST TWO HUNDRED FIFTY MILLION 
PESOS 
(P250,000,000.00) 
FOR 
THE 
LAST 
TWO 
(2) 
CONSECUTIVE YEARS BASED ON 2012 CONSTANT 
PRICES 
MAY 
ALSO 
BE 
CONVERTED 
INTO 
A 
COMPONENT CITY IF IT HAS EITHER A POPULATION 
OF NOT LESS THAN ONE HUNDERED THOUSAND 
(100,000) INHABITANTS AS CERTIFIED BY THE PSA OR A 
CONTIGUOUS TERRITORY OF AT LEAST ONE HUNDRED 
(100) SQUARE KILOMETERS, AS CERTIFIED BY THE 
LAND 
MANAGEMENT 
BUREAU: 
PROVIDED 
THAT,
THREE (3) YEARS AFTER THE EFFECTIVITY OF THIS 
ACT AND EVERY THREE (3) YEARS THEREAFTER, THE 
THRESHOLD 
AMOUNT OF TWO 
HUNDRED 
FIFTY 
MILLION PESOS (P250,000,000.00) SHALL BE INCREASED 
BY FIVE PERCENT (5%). PROVIDED, FURTHER, THAT 
THE 
NEWLY 
CONVERTED 
CITIES 
FROM 
THE 
ENACTMENT OF THIS ACT SHALL BRING THEIR IRA 
SHARE AS MUNICIPALITIES TO THE IRA SHARE OF 
CITIES TO MINIMIZE THE EFFECT OF CONVERSION.”
(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.
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(c) The average annual income shall include the income accruing to the 
general fund, exclusive of specific funds, transfers, and non-recurring 
income.
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SEC. 2. Separability Clause - If any provision of this Act shall be declared 
invalid or unconstitutional, the remaining part or provisions not otherwise affected 
shall remain in force.
SEC. 3. Repealing Clause - Any law, decreed, ordinance, administrative 
circulars not consistent with any provision of this Act is hereby amended, repealed 
or modified accordingly.
SEC. 4. Effectivity - This Act shall take effect fifteen (15) days after its 
complete publication in the Official Gazette or in at least two (2) newspapers of 
general circulation.
Approved,