Facts:

The case involves petitioners Senator Heherson T. Alvarez, Senator Jose D. Lina, Jr., Mr. Nicasio B. Bautista, Mr. Jesus P. Gonzaga, Mr. Solomon D. Maylem, Leonora C. Medina, Casiano S. Alipon, who filed a Petition for Prohibition against various government officials including Hon. Teofisto T. Guingona, Jr., Executive Secretary, and others from the municipality of Santiago. The legal matter arose from the passage of Republic Act No. 7720, signed into law on May 5, 1994, which converted the Municipality of Santiago, Isabela into an Independent Component City. Petitioners challenged the constitutional validity of this Act, asserting it violated Section 24, Article VI of the 1987 Constitution by not originating exclusively in the House of Representatives. Furthermore, they contended that Santiago did not meet the required average annual income of ₱20,000,000 as mandated by Section 450 of the Local Government Code of 1991 for conversion into a city.

The legislative journey of House

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Facts:

Legislative Process and Enactment of RA No. 7720

• HB No. 8817, entitled “An Act Converting the Municipality of Santiago into an Independent Component City to be known as the City of Santiago,” was filed in the House of Representatives on April 18, 1993, with Representative Antonio Abaya as its principal author, and several other representatives as co-sponsors.
• The bill was referred to the House Committee on Local Government and the House Committee on Appropriations, which conducted numerous public hearings (May 19, June 1, November 28, and December 1, 1993).
• The House committee issued a favorable report with amendments on December 9, 1993. Subsequently, the bill passed on Second Reading on December 13, 1993, and on Third Reading on December 17, 1993.
• HB No. 8817 was transmitted to the Senate on January 28, 1994, where a counterpart, Senate Bill No. 1243, had been filed on May 19, 1993, by Senator Vicente Sotto III.
• The Senate Committee on Local Government conducted public hearings on SB No. 1243 on February 23, 1994, and passed Committee Report No. 378 recommending approval of HB No. 8817 without amendment on March 1, 1994.
• On March 22, 1994, the House approved the Senate’s proposed amendments, and the enrolled bill was submitted to the President on April 12, 1994.
• President’s approval on May 5, 1994, transformed the bill into Republic Act No. 7720, and a plebiscite held on July 13, 1994, resulted in a majority vote in favor of converting Santiago into a city.

Income Qualification Requirement and Computation Dispute

• For a municipality to convert into a component city, it must have an average annual income of at least Twenty Million Pesos (P20,000,000.00) for two consecutive years based on 1991 constant prices, as stipulated in Section 450 of the Local Government Code of 1991.
• Petitioners computed Santiago’s average income by excluding the Internal Revenue Allotments (IRAs), arriving at an average of roughly P13,109,960.47, which they argued was insufficient to meet the requirement.
• Conversely, the Bureau of Local Government Finance, via a certification from the Department of Finance, computed an average annual income of P20,974,581.97 for Santiago, by including the IRAs.
• Petitioners contended that IRAs are not genuinely income but mere transfers or budgetary aid from the national government, subject to fluctuations based on factors such as population and land area.

Constitutional and Procedural Allegations

• Petitioners challenged RA No. 7720 on two primary grounds:
• The computation of Santiago’s income included IRAs, which they argue should not be considered as part of income due to their non-recurring and fluctuating nature.
• The legislative process allegedly violated Section 24, Article VI of the 1987 Constitution, which mandates that bills of local application originate exclusively in the House of Representatives, contending that the Senate’s filing of SB No. 1243 compromised this requirement.
• The controversy thus centered on both fiscal eligibility for cityhood and adherence to constitutional principles regarding the origination of local bills.

Underlying Legal and Fiscal Considerations

• The legal framework for local government conversion is rooted in principles of autonomy and decentralization, ensuring local government units possess adequate resources to manage their affairs.
• The inclusion of IRAs in income calculations is supported by their regular and automatic accrual as part of the local government’s general fund, which is fundamental for budgeting and operational purposes.
• The legislative process detailed in the case underscores the cooperative yet distinct roles of the House and Senate in enacting laws, particularly those affecting local government units.

Issue:

Inclusion of Internal Revenue Allotments (IRAs) in the Income Computation for City Conversion

• Should the IRAs be included as part of a local government unit’s income when computing the average annual income necessary for conversion into a component city?
• Is it proper to treat IRAs as recurring income given that petitioners argue they are transfers or non-recurring budgetary aids rather than genuine sources of income?

Constitutional Validity of the Legislative Process

• Did RA No. 7720 originate exclusively in the House of Representatives as required by Section 24, Article VI of the 1987 Constitution, despite the Senate’s involvement via SB No. 1243?
• Does the Senate’s action in filing a substitute bill prior to receipt of the House-borne bill violate the Constitution’s mandate regarding the origination of bills of local application?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)