Alvarez v Guingona Jan. 31, 1996 Hermosisima, Jr.

J Petition for prohibition with prayer for temporary restraining order and preliminary prohibitory injunction TOPIC: Nature and Status; Municipal Corporation, Local Government, Define Local Government Interchangeable with municipal corporations For recits: Petitioners assail the validity of RA 7720 because it allegedly did not originate in the HOR and it has not met the minimum average annual income required in the LGC to be converted to a component city. Petitioners argue that the IRAs should be excluded from the computation of the income of the municipality because they are merely transfers/budgetary aid from the national govt. In discussing the merits of such contention, the court said that an LGU is a political subdivision of State constituted by law and possessed of substantial control over its own affairs. Although autonomous, it is not intended to be an imperium in imperio. An LGU is autonomous in the sense that it is given more powers, authority, resources, and responsibilities. Power is thereby decentralized, thereby giving the LGU more leeway to develop in its own pace and discretion, and using its own resources. For purposes of budgeting the IRAs are considered income. Income is defined in the LGC as all revenues and receipts collected or received forming the gross accretions of funds of the local government unit. Besides, Dept Finance Order 3593 defined ANNUAL INCOME as including the IRAs, hence, the contention of the petitioners is without merit. FACTS: RA 7720 is entitled An Act Converting the Municipality of Santiago, Isabela into an Independent Component City to be known as the City of Santiago Petitioners assail its validity because the Act did not originate exclusively in the HoR as mandated in Art. 6, Sec. 24 of the Consti1 the Municipality of Santiago has not met the minimum average annual income required under Sec. 450, LGC in order to be converted to a component city.

its first public hearing on the House Bill. A little after month the HB was submitted to the Senate, the Senate Committee on Local Government conducted public hearings on SB. It submitted a Committee report (378) with the recommendation that it be approved without amendment since HB was on all fours with the SB. Alvarez indicated his approval by signing the report. This was passed on the 2nd and approved on the 3rd reading. The HOR, upon being apprised of the action of the Senate, approved the amendments proposed by the Senate. The Bill was eventually signed into RA 7720 by the President, and when a plebiscite of the act was held, a great majority of the registered voters of Santiago voted in favor of the conversion of Santiago into a city.

ISSUES AND REASONING: 1. Should the IRAs (Internal Revenue Allotments) be included in the computation of the average annual income of a municipality for the purpose of its conversion into an independent component city? (YES, they form part of the income of Local Govt units) Petitioners said: In computing the annual income, the IRAs should be excluded because they are merely transfers and/or budgetary aid from the national government and that they fluctuate, increase or decrease, depending on factors like population, land and equal sharing. If the annual income were computed in such way, the annual income arrived at would only be P13,109,560.47, way below the P20M requirement. Court said that the petitioner is WRONG because IRAs are part of the income of the LGUs. A Local Government Unit is a political subdivision of the State which is constituted by law and possessed of substantial control over its own affairs. o Remaining to be an intra sovereign subdivision of one sovereign nation, but not intended, however, to be an imperium in imperio, the LGU is autonomous in the sense that it is given more powers, authority, responsibilities and resources. o Power is thereby deconcentrated, enabling especially the peripheral local government units to develop not only at their own pace and discretion but also with their own resources and assets. For purposes of budgeting, the IRAs and share in the national wealth utilization proceeds are considered items of income. o Income is defined in the LGC as all revenues and receipts collected or received forming the gross accretions of funds of the local government unit. IRAs are income because they form part of the gross accretion of the funds of the local government unit. They regularly and automatically accrue to the local treasury without need of any further action on the part of the local government unit. For a municipality to be converted to a component city, it must have an average annual income of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991 constant prices. The income must be duly certified by the Dept of Finance.

Chronicle of the metamorphosis of HB 8817 into RA 7720: April 18, 1993: The HB was filed in the HOR with Antonio Abaya as principal author with 4 other sponsors. This bill was referred to the House Committee on Local Government and the House Committee on Appropriations 4 Public hearings were conducted by the House Committee, and it submitted to the house a favorable report, with amendments. The House bill was passed on the 2nd reading and was approved on the 3rd reading, then it was transmitted to the Senate. Meanwhile, a counterpart of the House Bill, SB 1243, with the same title, was introduced by Senator Vicente Sotto III as principal sponsor. This was just after the HOR had conducted

Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

Dept of Finance certified the income and computed the same by adding IRAs in its computation.

more sensitive to local needs since they are elected from their districts. Every law enjoys the presumption of constitutionality. For RA 7720 to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution, not merely a doubtful and equivocal one; in other words, the grounds for nullity must be clear and beyond reasonable doubt. Petitioners have failed to overcome the presumption.

Sec. 450 (c), LGC provides that: the average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income." IRAs are a regular, recurring item of income. There is no basis to classify it as a special fund/transfer because IRAs have a technical definition in the LGC, which makes it distinct from special funds/transfers.

Petition DISMISSED.

Besides, Dept Finance Order 3593 defined ANNUAL INCOME to be revenues and receipts realized by provinces, cities and municipalities from regular sources of the Local General Fund including the internal revenue allotment and other shares provided for in Sections 284, 290 and 291 of the Code, but exclusive of non-recurring receipts, such as other national aids, grants, financial assistance, loan proceeds, sales of fixed assets, and similar others" o Because this interpretation is given by an admin agency tasked with interpreting and applying statute, it should be respected unless contrary with the Consti, the governing statute, or other laws.

2. Considering that the senate passed its own version of the house bill, can RA 7720 be said to have originated in the HOR? (YES, Petitioners say: RA7720 did not originate in the HOR because a Senate Bill of the same import was passed in the Senate. Court said: Although the bill of local application like HB 8817 should originate exclusively in the HOR, RA 7720 still originated in the HOR. It cannot be denied the HB was filed in the HOR before the SB was filed in the Senate. o The filing of SB was thus precursive not only of the said Act in question but also of SB No. 1243. o HB No. 8817 was the bill that initiated the legislative process that culminated in the enactment of RA 7720. There was no violation of the Consti. Petitioners acknowledge that the HB was approved on the 3rd reading and duly transmitted to the Senate. A little less than a month after, the Senate conducted public hearings on the SB. o Clearly the Senate held in abeyance any action on SB No. 1243 until it received HB No. 8817, already approved on the Third Reading, from the House of Representatives. The filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, does not contravene the constitutional requirement, for as long as the Senate does not act thereupon until it receives the House bill.

Also, this issue was already addressed in the case of [Tolentino v Secretary of Finance]: o what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills authorizing an increase of the public debt, private bills and bills of local application must come from the HOR on the theory that the members of the HOR are