Republic of the Philippines
HOUSE OF REPRESENTATIVES

FIFTEENTH CONGRESS
Second Regular Session

COMMITTEE REPORT Ne

Submitted by the Committee on Local Government on
Re: House Bill No._ Se Og

Recommending its approval in substitution of House Bill No. 4990

Sponsors: Representatives George P. Amaiz, Rufus B, Rodriguez, Roy M. Loyola and
Erineo S. Maliksi

Mr. Speaker:

The Committee on Local Government to which was referred House Bill No, 4990
introduced by Representatives Rufus B. Rodriguez, Roy M. Loyola and Erineo S
Maliksi, entitled

“AN ACT
AMENDING SECTION 450 OF REPUBLIC ACT NO. 7160, OTHERWISE
KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991, AS AMENDED,
ALLOWING THE CONVERSION OF A MUNICIPALITY INTO A
COMPONENT CITY IF IT HAS ANNUAL AVERAGE ANNUAL INCOME OF
AT LEAST TWO HUNDRED MILLION PESOS (P200,000,000.00) WITHOUT
REGARD TO ITS LAND AREA AND POPULATION.” ts

has considered the same and recommends that the attached House Bill No,
entitled:

“AN ACT
EXEMPTING FROM THE POPULATION AND LAND AREA REQUIREMENTS
THE CONVERSION OF A MUNICIPALITY INTO 4 COMPONENT CITY IF IT
HAS A LOCALLY GENERATED AVERAGE ANNUAL INCOME OF AT LEAST
TWO HUNDRED MILLION PESOS (P200,000,000.00), AMENDING FOR THE
PURPOSE SECTION 450 OF REPUBLIC ACT NO. 7160, AS AMENDED,
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991”

be approved in substitution of House Bill No. 4990 with Representatives Rufus B
Rodriguez, Roy M. Loyola and Erineo S. Maliksi as authors thereof.


Committee on Local Government

THE HONORABLE SPEAKER
HOUSE OF REPRESENTATIVES


Cor awe

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
Second Regular Sessi

HOUSE BILL No.

Introduced by: REPRESENTATIVES RUFUS B. RODRIGUEZ, ROY M.
LOYOLA AND ERINEO S, MALIKSI

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 MILLION PESOS (P200,000,000.00), AMENDING FOR THE
PURPOSE SECTION 450 OF REPUBLIC ACT NO. 7160, AS AMENDED,
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 1. Section 450 of Republic Act No. 7160 as amended by Republic Act
No. 9009, otherwise known as the Local Govemment 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:

(@ a contiguous territory of at least one hundred (100) square

kilometers, as certified by the Land Management Bureau, or


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(ii) a population of not Jess than one hundred fifty thousand
(150,000) inhabitants, as certified by the National Statistics Office

THE POPULATION AND LAND AREA REQUIREMENTS
PRESCRIBED HEREIN SHALL NOT APPLY IF A MUNICIPALITY
HAS A LOCALLY GENERATED AVERAGE ANNUAL INCOME, AS
CERTIFIED BY THE DEPARTMENT OF FINANCE, OF AT LEAST
TWO HUNDRED MILLION PESOS (P200,000,000.00) FOR THE LAST.
TWO (2) CONSECUTIVE YEARS BASED ON 2010 CONSTANT
PRICES AND HAS EITHER THE POPULATION OR LAND AREA.
REQUIREMENT PRESCRIBED FOR THE CREATION OF A
MUNICIPALITY UNDER SECTION 442 OF THIS CODE.

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 any

newspaper of general circulation.

Approved,


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

Fifteenth Congress
Second Regular Session

House BillNo.__ 4995

Introduced by Rep. Rufus B. Rodriguez, Rep. Roy M. Loyola and Rep. Erineo S. Maliksi

EXPLANATORY NOTE

‘The primordial reason for converting a municipality or cluster of barangays into a city

is to ensure its economic viability (Latasa vs. Commission on Elections, G.R. No. 154829,
December 10, 2003).

As-a general rule, the creation of a local government unit o its
conversion from one level into another shall be based on veriighle indigators or viability ang
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: tnedme ~
It must be sufficient, based on acceptable, standards, to provide for all essential government
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).

a
With regards to the population requirement, the Code merely provides: 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).
7

And lastly, with regards to the land area, the Code merely requires that the same be
contiguous; properly 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 (P100,0000,000.00) and a territory of at least one hundred (100) square
kilometers or a population of not less-than one hundred fifty thousand (150,000) (Sec. 450,
R.A. No. 7160, Local Government Code, as amended by R.A: 9006).

However, there are some municipalities which, despite of its small land area or
population, have nevertheless demonstrated ils unquestionable capacity to provide

essential government facilities, social services to its inhabitants, comparable or even
superior to existing cities.

As we alll know, living in a city has its corresponding economic advantage. Thus, it
would be utterly unfair to the inhabitants of such municipalities to forever foreclose their
right to the benefits of cityhood, simply because their municipalities’ land area or population

is less than one hundred (100) square kilometers or one hundred fifty thousand (160,000),
respectively.

While there is no hard and fast rule to determine the optimum populace or and area
for a city, however, applying the gyihcjples of political law for creation of a sovereign state,
the population must be numerous enough and able to procreate jir/ 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 of Naura, became independent in 1968, and has an area of just
8.5 square miles (22 sq. km.) and a population of just 13,000. Tulavu, formerly known as
the 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 on 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 its status as an independent state despite
its small population and land area, with more reason, municipalities which have time and
again demonstrated their capacity to thrive despite their small population and land area
should be allowed to upgrade its status to.that of a city.


Just like a any other law, there is a general rule and there is an exception. For
purposes of this Sif, the generet nule remains, that for creation of or conversion into a city, 2
minicipality must have an income of et feast P100,000,000.00 and a land area of-at least
100 square Kliometers or population of at least 150,000. The exception is that, if the
municipality gensrates a local income of at least doubie than that of the general rule, that is,
fwo hundred milion pesos (P200,000,000.00), then it is qualified to be converted into a city
\without regard to the size of its land area or population.

in view

'20f, support and approval of this measure is earnestly sought.

OY M. LOYOLA

: vaya


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Fifteenth Congress
Second Regular Session

House Bill No/__ 4999

Introduced by Rep. Rufus B. Rodriguez, Rep. Roy M. Loyola and Rep. Erineo S. Maliksi

AN ACT AMENDING SECTION 450 OF REPUBLIC ACT NO. 7160,
OTHERWISE KNOWN AS THE LOGAL GOVERNMENT CODE OF 1991,
AS AMENDED, ALLOWING THE CONVERSION OF A MUNICIPALITY
INTO A COMPONENT CITY IF HAS AN ANNUAL AVERAGE INCOME
OF AT LEAST TWO HUNDRED MILLION PESOS(P200,000,000)
WITHOUT REGARD TO ITS LAND AREA AND POPULATION.

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

SECTION 1. Sec. 450 of Republic Act No. 7160, otherwise known as the Local

Government Code of 1991, as amended by Republic Act No 9009, is hereby further amended
to read as follows:

"Sec. 450. Requisites fot 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:

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

(i) —_@ population of not less than one hundred fifty thousand (150,000)
inhabitants, as certified by the National Statistics Office.


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.

PROVIDED, THE FOREGOING NOTWITHSTANDING, A MUNICIPALITY MAY BE
CONVERTED INTO A COMPONENT CITY IF IT HAS A LOCALLY GENERATED
INCOME, AS CERTIFIED BY THE DEPARTMENT OF FINANCE, OF AT LEAST TWO
HUNDRED MILLION PESOS (P200,000,000.00) FOR THE LAST TWO (2)

CONSECUTIVE YEARS BASED ON 2000 CONSTANT PRICES, WITHOUT REGARD
ITS LAND AREA AND POPULATION.

(b) The territorial jurisdiction of 4 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.

SECTION 2. If any provision of this Act shall be declared invalid or unconstitutional, the
remaining part or provisions not otherwise affected shall remain in force.

SECTION 3. Any law, decree, ordinance, administrative circulars not consistent with
any provision of this Act is hereby amended, repealed or modified accordingly.

SECTION 4. 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,


FACT SHEET

House Bill No, 4990
(As approved by the Committee on January 23, 2011 )

EXEMPTING FROM THE POPULATION REQUIREMENTS THE CONVERSION OF A
MUNICIPALITY INTO A COMPONENT CITY IF IT HAS A LOCALLY GENERATED
AVERAGE INCOME OF AT LEAST TWO HUNDRED MILLION PESOS (P200,000.00),
AMENDING FOR THE PURPOSE SECTION 450 OF REPUBLIC ACT NO. 7160 AS
AMENDED

Introduced by: Reps. Rufus B. Rodriguez, Roy M. Loyola, and Erineo S. Maliksi

Committee Referral: Local Government
Committee Chairperson: Rep. George P. Arnaiz

OBJECTIVES:

«To provide a mechanism for high income municipalities to be elevated to the
status of a component city;

«To ensure that municipalities and cities are capable of providing social services to
the inhabitants;

KEY PROVISIONS:

«Amends Section 450 of Republic Act No. 7160, by allowing the conversion of a
municipality into a component city if has an average income of at least Two
Hundred Million Pesos (P200,000.00) without regard to its land area and
population,

RELATED LAW:

* Section 450 of Republic Act No. 7160, otherwise known as The Local
Government Code of 1991, as amended By Republic Act No. 9009