Higher Income Conversion Option and Escalating Threshold
- A municipality or barangay cluster with an income of at least P400 million for the last two consecutive years based on 2012 constant prices, certified by the Department of Finance, may also convert if it meets either the population or land area requisite.
- The threshold amount of P400 million increases by 5% every three years, starting three years after the Act’s effectivity.
Territorial Jurisdiction and Land Area Flexibility
- The territorial jurisdiction of a newly created city must be defined by metes and bounds.
- The land area requirement does not apply if the proposed city consists of one or more islands.
- Territory need not be contiguous if it comprises two or more islands.
Income Definition for Conversion
- The average annual income refers to income accruing to the general fund.
- Excludes specific funds, transfers, and non-recurring income to ensure stable revenue measurement.
Post-conversion Fiscal Provisions
- Newly converted cities shall retain their municipal allotment from national taxes but adjusted to the city allotment for three years post-conversion.
- This portability aims to minimize adverse financial effects of conversion.
Rulemaking and Regulatory Oversight
- The Department of the Interior and Local Government, Department of Finance, and Department of Budget and Management are mandated to issue implementing rules and regulations within 90 days of the Act’s effectivity.
Legal Provisions on Validity and Repeal
- The separability clause ensures that if any provision of the Act is declared invalid or unconstitutional, other provisions remain effective.
- Conflicting laws, decrees, ordinances, or administrative circulars are amended, repealed, or modified to conform with this Act.
Effectivity of the Act
- The Act takes effect 15 days after its complete publication either in the Official Gazette or at least two newspapers of general circulation.