LEAGUE OF CITIES ON RECONSIDERATION (G.R. NO.

176591) DEC 2009

FACTS:

During the 11th Congress, fifty-seven (57) cityhood bills were filed before the House of Representatives. Of the fifty-seven (57), thirty-three (33)
eventually became laws. The twenty-four (24) other bills were not acted upon.

Later developments saw the introduction in the Senate of Senate Bill (S. Bill) No. 2157 to amend Sec. 450 of Republic Act No. (RA) 7160, otherwise
known as the Local Government Code (LGC) of 1991. The proposed amendment sought to increase the income requirement to qualify for
conversion into a city from PhP 20 million average annual income to PhP 100 million locally generated income.

In March 2001, S. Bill No. 2157 was signed into law as RA 9009 to take effect on June 30, 2001. As thus amended by RA 9009, Sec. 450 of the LGC of
1991 now provides that: "[a] municipality x x x may be converted into a component city if it has a [certified] locally generated average annual income x x x of at
least [PhP 100 million] for the last two (2) consecutive years based on 2000 constant prices."

After the effectivity of RA 9009, the Lower House of the 12th Congress adopted in July 2001 House (H.) Joint Resolution No. 29 which, as its title
indicated, SOUGHT TO EXEMPT FROM THE INCOME REQUIREMENT PRESCRIBED IN RA 9009 THE 24 MUNICIPALITIES WHOSE CONVERSIONS INTO
CITIES WERE NOT ACTED UPON DURING THE PREVIOUS CONGRESS. The 12th Congress ended without the Senate approving H. Joint Resolution
No. 29.

Then came the 13th Congress (July 2004 to June 2007), which saw the House of Representatives re-adopting H. Joint Resolution No. 29 as H. Joint
Resolution No. 1 and forwarding it to the Senate for approval.

The Senate, however, again failed to approve the joint resolution. During the Senate session held on November 6, 2006, Senator Aquilino Pimentel,
Jr. suggested the filing by the House of Representatives of individual bills to pave the way for the municipalities to become cities and then
forwarding them to the Senate for proper action.

Heeding the advice, sixteen (16) municipalities filed, through their respective sponsors, individual cityhood bills. Common to all 16 measures was a
provision exempting the municipality covered from the PhP 100 million income requirement.

As of June 7, 2007, both Houses of Congress had approved the individual cityhood bills, all of which eventually lapsed into law on various dates.
Each cityhood law directs the COMELEC, within thirty (30) days from its approval, to hold a plebiscite to determine whether the voters approve of
the conversion.

The petitioners bemoan that the conversion of the municipalities into cities will reduce the share of existing cities in the Internal Revenue
Allotment (IRA), since more cities will partake of the internal revenue set aside for all cities under Sec. 285 of the LGC of 1991.

ISSUES:

Whether or not the cityhood laws violate the following:

a. Sec. 10. Art. X of the Constitution
b. equal protection clause.

RULING:

By constitutional design and as a matter of long-established principle, the power to create political subdivisions or LGUs is essentially
legislative in character. But even without any constitutional grant, Congress can, by law, create, divide, merge, or altogether abolish or
alter the boundaries of a province, city, or municipality. We said as much in the fairly recent case, Sema v. CIMELEC.29 The 1987
Constitution, under its Art. X, Sec. 10, nonetheless provides for the creation of LGUs, thus:

Section 10. No province, city, municipality, or barangay shall 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. (Emphasis supplied.)

As may be noted, the afore-quoted provision specifically provides for the creation of political subdivisions "in accordance with the criteria
established in the local government code," subject to the approval of the voters in the unit concerned. The criteria referred to are the verifiable
indicators of viability, i.e., area, population, and income, now set forth in Sec. 450 of the LGC of 1991, as amended by RA 9009.

The supposedly infringed Art. X, Sec. 10 is not a new constitutional provision. Save for the use of the term "barrio" in lieu of "barangay," "may be"
instead of "shall," the change of the phrase "unit or units" to "political unit" and the addition of the modifier "directly" to the word "affected," the
aforesaid provision is a substantial reproduction of Art. XI, Sec. 3 of the 1973 Constitution, which reads:
 Section 3. No province, city, municipality, or barrio 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 unit or
units affected. (Emphasis supplied.)

It bears notice, however, that the "code" similarly referred to in the 1973 and 1987 Constitutions is clearly but a law Congress enacted. This is
consistent with the aforementioned plenary power of Congress to create political units. Necessarily, since Congress wields the vast poser of
creating political subdivisions, surely it can exercise the lesser authority of requiring a set of criteria, standards, or ascertainable indicators of
viability for their creation. Thus, the only conceivable reason why the Constitution employs the clause "in accordance with the criteria established
in the local government code" is to lay stress that it is Congress alone, and no other, which can impose the criteria.

Section 10 [Art. X of the 1987 Constitution], which is a legacy from the 1973 Constitution, goes further than the doctrine in the Pelaez case. It not
only makes creation, division, merger, abolition or substantial alteration of boundaries of provinces, cities, municipalities x x x subject to "criteria
established in the local government code, "thereby declaring these actions properly legislative, but it also makes creation, division, merger,
abolition or substantial alteration of boundaries "subject to approval by a majority of the votes cast in a plebiscite in the political units directly
affected." x x x (Emphasis added.)

Consistent with its plenary legislative power on the matter, Congress can, via either a consolidated set of laws or a much simpler, single-subject
enactment, impose the said verifiable criteria of viability. These criteria need not be embodied in the local government code, albeit this code is the
ideal repository to ensure, as much as possible, the element of uniformity. Congress can even, after making a codification, enact an amendatory
law, adding to the existing layers of indicators earlier codified, just as efficaciously as it may reduce the same. In this case, the amendatory RA 9009
upped the already codified income requirement from PhP 20 million to PhP 100 million.

As it were, Congress, through the medium of the cityhood laws, validly decreased the income criterion vis-à-vis the respondent LGUs, but without
necessarily being unreasonably discriminatory by reverting to the PhP 20 million threshold what it earlier raised to PhP 100 million. The legislative
intent not to subject respondent LGUs to the more stringent requirements of RA 9009 finds expression in the following uniform provision of the
cityhood laws:

Exemption from Republic Act No. 9009. – The City of x x x shall be exempted from the income requirement prescribed under Republic Act
No. 9009.

Looking at the circumstances behind the enactment of the laws subject of contention, the Court finds that the LGC-amending RA 9009, no less,
intended the LGUs covered by the cityhood laws to be exempt from the PhP 100 million income criterion. In other words, the cityhood laws, which
merely carried out the intent of RA 9009, adhered, in the final analysis, to the "criteria established in the Local Government Code," pursuant to Sec.
10, Art. X of the 1987 Constitution.

Among the criteria established in the LGC pursuant to Sec.10, Art. X of the 1987 Constitution are those detailed in Sec. 450 of the LGC of 1991
under the heading "Requisites for Creation." RA 9009 in turn amended said Sec. 450 by further increasing the income requirement to PhP 100
million, thus:

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:

xxxx

(c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-
recurring income. (Emphasis supplied.)

The rationale behind the enactment of RA 9009 to amend Sec. 450 of the LGC of 1991 can reasonably be deduced from Senator Pimentel’s
sponsorship speech on S. Bill No. 2157. Of particular significance is his statement regarding the basis for the proposed increase from PhP 20 million
to PhP 100 million in the income requirement for municipalities wanting to be converted into cities.

Congress to be sure knew, when RA 9009 was being deliberated upon, of the pendency of several bills on cityhood, wherein the applying
municipalities were qualified under the then obtaining PhP 20 million-income threshold. These included respondent LGUs. Thus, equally
noteworthy is the ensuing excerpts from the floor exchange between then Senate President Franklin Drilon and Senator Pimentel indicates the
following complementary legislative intentions: (1) the then pending cityhood bills would be outside the pale of the minimum income
requirement of PhP 100 million that S. Bill No. 2159 proposes; and (2) RA 9009 would not have any retroactive effect insofar as the cityhood bills
are concerned.

This brings us to the challenge to the constitutionality of cityhood laws on equal protection grounds.
The equal protection guarantee is embraced in the broader and elastic concept of due process, every unfair discrimination being an offense against
the requirements of justice and fair play. It has nonetheless come as a separate clause in Sec. 1, Art. III of the Constitution to provide for a more
specific protection against any undue discrimination or antagonism from government. Arbitrariness in general may be assailed on the basis of the
due process clause. But if a particular challenged act partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the
equal protection clause.49 This constitutional protection extends to all persons, natural or artificial, within the territorial jurisdiction. Artificial
persons, as the respondent LGUs herein, are, however, entitled to protection only insofar as their property is concerned.

In the proceedings at bar, petitioner LCP and the intervenors cannot plausibly invoke the equal protection clause, precisely because no deprivation
of property results by virtue of the enactment of the cityhood laws. The LCP’s claim that the IRA of its member-cities will be substantially reduced
on account of the conversion into cities of the respondent LGUs would not suffice to bring it within the ambit of the constitutional guarantee.
Indeed, it is presumptuous on the part of the LCP member-cities to already stake a claim on the IRA, as if it were their property, as the IRA is yet to
be allocated. For the same reason, the municipalities that are not covered by the uniform exemption clause in the cityhood laws cannot validly
invoke constitutional protection. For, at this point, the conversion of a municipality into a city will only affect its status as a political unit, but not
its property as such.

As a matter of settled legal principle, the fundamental right of equal protection does not require absolute equality. It is enough that all persons or
things similarly situated should be treated alike, both as to rights or privileges conferred and responsibilities or obligations imposed. The equal
protection clause does not preclude the state from recognizing and acting upon factual differences between individuals and classes. It recognizes
that inherent in the right to legislate is the right to classify, necessarily implying that the equality guaranteed is not violated by a legislation based
on reasonable classification. Classification, to be reasonable, must (1) rest on substantial distinctions; (2) be germane to the purpose of the law;
(3) not be limited to existing conditions only; and (4) apply equally to all members of the same class. The Court finds that all these requisites have
been met by the laws challenged as arbitrary and discriminatory under the equal protection clause.

As things stand, the favorable treatment accorded the sixteen (16) municipalities by the cityhood laws rests on substantial distinction. Indeed,
respondent LGUs, which are subjected only to the erstwhile PhP 20 million income criterion instead of the stringent income requirement
prescribed in RA 9009, are substantially different from other municipalities desirous to be cities. Looking back, we note that respondent LGUs had
pending cityhood bills before the passage of RA 9009. There lies part of the tipping difference. And years before the enactment of the amendatory
RA 9009, respondents LGUs had already met the income criterion exacted for cityhood under the LGC of 1991. Due to extraneous circumstances,
however, the bills for their conversion remained unacted upon by Congress.

The classification is also germane to the purpose of the law. The exemption of respondent LGUs/municipalities from the PhP 100 million income
requirement was meant to reduce the inequality occasioned by the passage of the amendatory RA 9009. From another perspective, the
exemption was unquestionably designed to insure that fairness and justice would be accorded respondent LGUs. Let it be noted that what were
then the cityhood bills covering respondent LGUs were part and parcel of the original 57 conversion bills filed in the 11th Congress, 33 of those
became laws before the adjournment of that Congress. The then bills of the challenged cityhood laws were not acted upon due, inter alia, to the
impeachment of then President Estrada, the related jueteng scandal investigations conducted before, and the EDSA events that followed the
aborted impeachment.

As such, both respondent LGUs and the 33 other former municipalities are under like circumstances and conditions. There is, thus, no rhyme or
reason why an exemption from the PhP 100 million requirement cannot be given to respondent LGUs. Indeed, to deny respondent
LGUs/municipalities the same rights and privileges accorded to the 33 other municipalities when, at the outset they were similarly situated, is
tantamount to denying the former the protective mantle of the equal protection clause.

To be more precise, the legislative intent underlying the enactment of RA 9009 to exclude would-be-cities from the PhP 100 million criterion
would hold sway, as long as the corresponding cityhood bill has been filed before the effectivity of RA 9009 and the concerned municipality
qualifies for conversion into a city under the original version of Sec. 450 of the LGC of 1991.

The common exemption clause in the cityhood laws is an application of the non-retroactive effect of RA 9009 on the cityhood bills. It is not a
declaration of certain rights, but a mere declaration of prior qualification and/or compliance with the non-retroactive effect of RA 9009.

Lastly and in connection with the third requisite, the uniform exemption clause would apply to municipalities that had pending cityhood bills before
the passage of RA 9009 and were compliant with then Sec. 450 of the LGC of 1991, which prescribed an income requirement of PhP 20 million.

A final consideration. The existence of the cities consequent to the approval of the creating, but challenged, cityhood laws in the plebiscites held in
the affected LGUs is now an operative fact. The operative fact doctrine provides another reason for upholding the constitutionality of the cityhood
laws in question.

In view of the foregoing discussion, the Court ought to abandon as it hereby abandons and sets aside the Decision of November 18, 2008 subject
of reconsideration.

And to stress the obvious, the cityhood laws are presumed constitutional. Petitioners have not overturned the presumptive constitutionality of
the laws in question.