LEAGUE OF CITIES CASE

Feb. 15, 2011 Cityhood laws are declared Constitutional

The requirement of Sec. 450 of the LGC, for a municipality to become a component city is average annual
income of P20 million for the last 2 years, as certified by the Dept. of Finance. RA 9009 was later enacted
by Congress raising the requirement to P100 million.

Before the enactment of Senate Bill No. 2157, which later became (RA 9009), 57 bills were filed for
conversion aiming to convert different municipalities into component cities, 33 of which was successfully
converted.

During the deliberations for the enactment of RA 9009, Congress was aware of the pendency of the
remaining 24 bills and 16 of which are the (Cityhood laws).

The said Cityhood laws have an exemption clause, which exempts them from application of RA 9009.

Eventually RA 9009 was enacted.

i. Does the 16 Cityhood laws violate the requirement that in converting municipalities into cities it must
be within the criteria established in the LGC?

ANSWER: NO.

i. Article X, Section 10 provides

Section 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or
its boundary substantially altered, except in accordance with the criteria established in the local
government code and subject to approval by a majority of the votes cast in a plebiscite in the political
units directly affected. [1987 Constitution]

Without doubt, the LGC is a creation of Congress through its law-making powers. Congress has the
power to alter or modify it as it did when it enacted R.A. No. 9009. Such power of amendment of laws
was again exercised when Congress enacted the Cityhood Laws. When Congress enacted the LGC in
1991, it provided for quantifiable indicators of economic viability for the creation of local government
unitsincome, population, and land area. Congress deemed it fit to modify the income requirement
with respect to the conversion of municipalities into component cities when it enacted R.A. No. 9009,
imposing an amount of P100 million, computed only from locally-generated sources. However,
Congress deemed it wiser to exempt respondent municipalities from such a belatedly imposed
modified income requirement in order to uphold its higher calling of putting flesh and blood to the
very intent and thrust of the LGC, which is countryside development and autonomy, especially
accounting for these municipalities as engines for economic growth in their respective provinces.
Undeniably, R.A. No. 9009 amended the LGC. But it is also true that, in effect, the Cityhood Laws
amended R.A. No. 9009 through the exemption clauses found therein. Since the Cityhood Laws
explicitly exempted the concerned municipalities from the amendatory R.A. No. 9009, such Cityhood
Laws are, therefore, also amendments to the LGC itself. For this reason, we reverse the November 18,
2008 Decision and the August 24, 2010 Resolution on their strained and stringent view that the
Cityhood Laws, particularly their exemption clauses, are not found in the LGC. [G.R. No. 176951,
February 15, 2011, LEAGUE OF CITIES OF THE PHILIPPINES (LCP), vs. Commission on Elections]

ii. Does the Cityhood Laws violate the equal protection clause of the Constitution?

ANSWER: NO.

Upon more profound reflection and deliberation, we declare that there was valid classification, and
the Cityhood Laws do not violate the equal protection clause.

As this Court has ruled, the equal protection clause of the 1987 Constitution permits a valid
classification, provided that it: (1) rests on substantial distinctions; (2) is germane to the purpose of
the law; (3) is not limited to existing conditions only; and (4) applies equally to all members of the
same class.12[G.R. No. 176951, February 15, 2011, LEAGUE OF CITIES OF THE PHILIPPINES (LCP), vs.
Commission on Elections]

Verily, the determination of the existence of substantial distinction with respect to respondent
municipalities does not simply lie on the mere pendency of their cityhood bills during the 11th
Congress. This Court sees the bigger picture. The existence of substantial distinction with respect to
respondent municipalities covered by the Cityhood Laws is measured by the purpose of the law, not
by R.A. No. 9009, but by the very purpose of the LGC, as provided in its Section 2 (a), thus

SECTION 2. Declaration of Policy.(a) It is hereby declared the policy of the State that the territorial
and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant communities and make them more effective
partners in the attainment of national goals. Toward this end, the State shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers, authority,
responsibilities and resources. The process of decentralization shall proceed from the National
Government to the local government units.

Indeed, substantial distinction lies in the capacity and viability of respondent municipalities to become
component cities of their respective provinces. Congress, by enacting the Cityhood Laws, recognized
this capacity and viability of respondent municipalities to become the States partners in accelerating
economic growth and development in the provincial regions, which is the very thrust of the LGC,
manifested by the pendency of their cityhood bills during the 11th Congress and their relentless
pursuit for cityhood up to the present. Truly, the urgent need to become a component city arose way
back in the 11th Congress, and such condition continues to exist. [G.R. No. 176951, February 15, 2011,
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), vs. Commission on Elections]
From the foregoing, the justness in the act of Congress in enacting the Cityhood Laws becomes
obvious, especially considering that 33 municipalities were converted into component cities almost
immediately prior to the enactment of R.A. No. 9009. In the enactment of the Cityhood Laws,
Congress merely took the 16 municipalities covered thereby from the disadvantaged position brought
about by the abrupt increase in the income requirement of R.A. No. 9009, acknowledging the
privilege that they have already given to those newly-converted component cities, which prior to
the enactment of R.A. No. 9009, were undeniably in the same footing or class as the respondent
municipalities. Congress merely recognized the capacity and readiness of respondent municipalities to
become component cities of their respective provinces. [G.R. No. 176951, February 15, 2011, LEAGUE
OF CITIES OF THE PHILIPPINES (LCP), vs. Commission on Elections]

iii. Does the Cityhood Laws reduce the just share in the national taxes, under Sec. 6, Art. X of the
Constitution, which the other municipalities are entitled?

ANSWER: NO.

Petitioners in these cases complain about the purported reduction of their just share in the IRA. To
be sure, petitioners are entitled to a just share, not a specific amount. But the feared reduction
proved to be false when, after the implementation of the Cityhood Laws, their respective shares
increased, not decreased. [G.R. No. 176951, February 15, 2011, LEAGUE OF CITIES OF THE PHILIPPINES
(LCP), vs. Commission on Elections]

What these petitioner cities were stating as a reduction of their respective IRA shares was based on a
computation of what they would receive if respondent municipalities were not to become component
cities at all. Of course, that would mean a bigger amount to which they have staked their claim. After
considering these, it all boils down to money and how much more they would receive if respondent
municipalities remain as municipalities and not share in the 23% fixed IRA from the national
government for cities. [G.R. No. 176951, February 15, 2011, LEAGUE OF CITIES OF THE PHILIPPINES
(LCP), vs. Commission on Elections]

iv. Should the P100 million requirement come from purely locally-generated income?

ANSWER: NO

iii. SENATOR PIMENTEL. The internal revenue share should never have been included. That was not the
intention when we first crafted the Local Government Code. The financial capacity was supposed to be
demonstrated by the municipality wishing to become a city by its own effort, meaning to say, it should
not rely on the internal revenue share that comes from the government. Unfortunately, I think what
happened in past conversions of municipalities into cities was, the Department of Budget and
Management, along with the Department of Finance, had included the internal revenue share as a
part of the municipality, demonstration that they are now financially capable and can measure up to
the requirement of the Local Government Code of having a revenue of at least P20 million.

SENATOR SOTTO. I am glad that the sponsor, Mr. President, has spread that into the Record because
otherwise, if he did not mention the Department of Finance and the Department of Budget and
Management, then I would have been blamed for the misinterpretation. But anyway, the gentleman is
correct. That was the interpretation given to us during the hearings.

So now, from P20 million, we make it P100 million from locally generated income as far as population
is concerned.