One-Year Moratorium on City Conversion

The Memorandum Circular expressly anchors municipal-to-city conversion on Section 7, 449, and 450 of Republic Act No. 7160 (the Local Government Code of 1991).
Section 7, 449, and 450 of Republic Act No. 7160 are identified as the statutory basis that allows a municipality to be converted into a city if it meets required criteria.

The Memorandum Circular directs that conversion to a higher level of local government should be conditioned on a clear manifestation of economic growth and social transformation.
Conversion should be evaluated in light of the general health of the local economy, employment opportunities, and the availability and access to basic urban services and facilities.
Conversion should consider adequate and well-maintained physical infrastructure and utilities, including power and water and telecommunication services.
Conversion should take into account development factors such as suitable spaces and sites for business and accessibility to other urban and growth centers.

Conversion should seriously consider opportunities for socio-economic and commercial development, including the growth of service-sector production and employment.
Conversion should consider banking, financial, and investment centers, private sector investments, and public spending.
Conversion should consider expansion of physical infrastructure and higher forms of transportation systems, including vehicular and pedestrian traffic engineering and management.
Conversion should consider the rise of commercial business districts and other built-up areas, and improvements in social, entertainment, and cultural amenities.

Conversion should consider the locality’s inherent opportunities for addressing potential environmental impact and other urbanization concerns.
Conversion should ensure that residents possess a minimum level of political awareness and participation in decision-making that leads to the grant of city status.

Section 1 enjoins all municipal mayors and other municipal officials to observe a moratorium on initiating conversion to cities.
The moratorium period is one (1) year.
The moratorium runs from the date of effectivity of the Memorandum Circular.

Section 2 instructs the Secretaries of the Interior and Local Government, Finance, and Budget and Management to constitute themselves into a Policy Group.
The Policy Group is tasked to study the pertinent provisions of law and public policy relative to the conversion of municipalities into cities.
The Policy Group must submit recommendations within one (1) year from the date of issuance of the Memorandum Circular.

Section 3 provides that the Memorandum Circular takes effect immediately, making the one-year moratorium operative upon effectivity.
The administrative instruction for policy study and recommendation is governed by the one (1) year submission timeframe under Section 2.