14'h Congress of the Republic) 
1' Regular Session 
) 
of the Philippines 
) 
R2 :02 
7 
Explanatory Note 
Considering the relative proliferation of proposals to create local 
government units, the proposed amendments embodied in this bill provide for 
strict criteria for the creation and conversion of local government units. 
Under this bill, a city seeking conversion into a highly urbanized city is 
required to have an average of at least 80% real property tax collection efficiency 
for the three years preceding the current calendar year, with the latest locally 
generated annual income of at least Two Hundred Fifty Million Pesos 
(P250,000,000.00) 
based on 1998 constant prices, as certified by the 
Department of Finance. 
A province, on the other hand, may be created if it has a locally generated 
average annual income, as certified by the Department of Finance, of not less 
than Two Hundred Million Pesos (P200,000,000.00) 
based on 1998 constant 
prices, and an average real property tax collection efficiency, of at least, eighty 
percent (80%) during the three years preceding the current calendar year. 
These requirements were purposely done as a deterrent to the wholesale 
conversion and creation of local government units, thus, stricter measures must 
be instituted. 
Approval of this bill is therefore, earnestly requested. . 


14'h Congress of the Republic) 
of the Philippines 
) 
1' Regular Session 
) 
AN ACT AMENDING SECTIONS 452 AND 461 OF REPUBLIC ACT 
7160, 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 452 of RA 7160 is hereby amended and shall read as 
follows: 
Section 452 - Highly Urbanized Cities. - (a) Cities with a minimum 
population of two hundred thousand (200,000) inhabitants, as certified by 
the National Statistics Office, and with the latest LOCALLY GENERATED 
annual income of at least (Fifty Million Pesos (P50,000,000.00)) TWO 
HUNDRED FIFTY MILLION PESOS (PZ50,000,000.00) based on (1 991) 
1998 constant prices, as certified by the (city treasurer) DEPARTMENT 
OF FINANCE, 
AND 
AN 
AVERAGE 
REAL 
PROPERTY TAX 
COLLECTION EFFICIENCY OF, AT LEAST, EIGHTY PERCENT (80%) 
FOR THE THREE YEARS PRECEDING THE CURRENT CALENDAR 
YEAR, shall be classified as highly urbanized cities. 
(b) x x x 
(c) x x x 
SECTION 2. Section 461 of RA 7160 is hereby amended and shall read as 
follows: 
Section 461. Requisites for Creation. - (a) A province may be 
created if it has (an) A LOCALLY GENERATED average annual income, 
as certified by the Department of Finance, of not less than (twenty million 
pesos 
(P20,000,000.00)) 
TWO 
HUNDRED 
MILLION 
PESOS 
(P200,000,000.00) based on (1991) 1998 constant prices; AN AVERAGE 
REAL PROPERTY TAX COLLECTION EFFICIENCY, OF AT LEAST, 
EIGHTY PERCENT (80%) DURING THE THREE YEARS PRECEDING 
THE CURRENT CALENDAR YEAR, and it has the following requisites: 
(i) contiguous territory of at least two thousand (2,000) square 
kilometers, as certified by the Lands Management Bureau; or (ii) 
population of not less than two hundred fifty thousand (250,000) 
inhabitants as certified by the National (Census and) Statistics Office. 
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. 


SECTION 13. All laws, decrees, executive orders, proclamations, rules and 
regulations, or parts thereof inconsistent herewith are hereby repealed or 
modified accordingly. 
SECTION 14. Separability Clause. - If any provision of this Act is held invalid or 
unconstitutional, the other provisions not affected hereby shall remain valid and 
subsisting. 
SECTION 15. This Act shall take effect fifteen (15) days after its publication in at 
least two (2) national newspapers of general circulation. 
Approved,