Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

118303 January 31, 1996

SENATOR HEHERSON T. AL ARE!, SENATOR JOSE ". L#NA, JR., MR. N#CAS#O B. BAUT#STA, MR. JESUS P. GON!AGA, MR. SOLOMON ". MA$LEM, LEONORA C. ME"#NA, CAS#ANO S. AL#PON, petitioners, vs. HON. TEO%#STO T. GU#NGONA, JR., &n '&( )a*a)&+y a( E,-)u+&.- S-)r-+ary, HON. RA%AEL ALUNAN, &n '&( )a*a)&+y a( S-)r-+ary o/ Lo)a0 Go.-rn1-n+, HON. SAL A"OR ENR#2UE!, &n '&( )a*a)&+y a( S-)r-+ary o/ Bu34-+, THE COMM#SS#ON ON AU"#T, HON. JOSE M#RAN"A, &n '&( )a*a)&+y a( Mun&)&*a0 Mayor o/ San+&a4o an3 HON. CHAR#TO MANU%A$, HON. #CTOR#NO M#RAN"A, JR., HON. ARTEM#O AL ARE!, HON. "AN#LO ERGARA, HON. PETER "E JESUS, HON. NEL#A NAT# #"A", HON. CELSO CALEON an3 HON. ABEL MUSNG#, &n +'-&r )a*a)&+y a( SANGGUN#ANG BA$AN MEMBERS, MR. RO"R#GO L. SANTOS, &n '&( )a*a)&+y a( Mun&)&*a0 Tr-a(ur-r, an3 ATT$. AL%RE"O S. "#R#GE, &n '&( )a*a)&+y a( Mun&)&*a0 A31&n&(+ra+or, respondents. "EC#S#ON HERMOS#S#MA, JR., J.5 Of main concern to the petitioners is whether Republic Act No. 7720, ust recentl! passed b! "on#ress and si#ned b! the President into law, is constitutionall! infirm. $ndeed, in this Petition for Prohibition with pra!er for %emporar! Restrainin# Order and Preliminar! Prohibitor! $n unction, petitioners assail the validit! of Republic Act No. 7720, entitled, &An Act "onvertin# the Municipalit! of 'antia#o, $sabela into an $ndependent "omponent "it! to be (nown as the "it! of 'antia#o,& mainl! because the Act alle#edl! did not ori#inate e)clusivel! in the *ouse of Representatives as mandated b! 'ection 2+, Article ,$ of the -./7 "onstitution. Also, petitioners claim that the Municipalit! of 'antia#o has not met the minimum avera#e annual income re0uired under 'ection +10 of the 2ocal 3overnment "ode of -..- in order to be converted into a component cit!. 4ndisputed is the followin# chronicle of the metamorphosis of *ouse 5ill No. //-7 into Republic Act No. 77206 On April -/, -..7, *5 No. //-7, entitled &An Act "onvertin# the Municipalit! of 'antia#o into an $ndependent "omponent "it! to be (nown as the "it! of 'antia#o,& was filed in the *ouse of Representatives with Representative Antonio Aba!a as principal author. Other sponsors included Representatives "iriaco Alfelor, Rodolfo Albano, 'antia#o Respicio and 8austino 9!. %he bill was referred to the *ouse "ommittee on 2ocal 3overnment and the *ouse "ommittee on Appropriations on Ma! 1, -..7. On Ma! -., -..7, :une -, -..7, November 2/, -..7, and 9ecember -, -..7, public hearin#s on *5 No. //-7 were conducted b! the *ouse "ommittee on 2ocal 3overnment. %he committee submitted to the *ouse a favorable report, with amendments, on 9ecember ., -..7. On 9ecember -7, -..7, *5 No. //-7 was passed b! the *ouse of Representatives on 'econd Readin# and was approved on %hird Readin# on 9ecember -7, -..7. On :anuar! 2/, -..+, *5 No. //-7 was transmitted to the 'enate. Meanwhile, a counterpart of *5 No. //-7, 'enate 5ill No. -2+7, entitled, &An Act "onvertin# the Municipalit! of 'antia#o into an $ndependent "omponent "it! to be ;nown as the "it! of 'antia#o,& was filed in the 'enate. $t was introduced b! 'enator ,icente 'otto $$$, as principal sponsor, on Ma! -., -..7. %his was ust after the *ouse of Representatives had conducted its first public hearin# on *5 No. //-7. On 8ebruar! 27, -..+, or a little less than a month after *5 No. //-7 was transmitted to the 'enate, the 'enate "ommittee on 2ocal 3overnment conducted public hearin#s on '5 No. -2+7. On March -, -..+, the said committee submitted "ommittee Report No. 77/ on *5 No. //-7, with the recommendation that it be approved without amendment, ta(in# into consideration the realit! that *.5. No. //-7 was on all fours with '5 No. -2+7. 'enator *eherson %. Alvare<, one of the herein petitioners, indicated his approval thereto b! si#nin# said report as member of the "ommittee on 2ocal 3overnment. On March 7, -..+, "ommittee Report No. 77/ was passed b! the 'enate on 'econd Readin# and was approved on %hird Readin# on March -+, -..+. On March 22, -..+, the *ouse of Representatives, upon bein# apprised of the action of the 'enate, approved the amendments proposed b! the 'enate.

%he enrolled bill, submitted to the President on April -2, -..+, was si#ned b! the "hief =)ecutive on Ma! 1, -..+ as Republic Act No. 7720. >hen a plebiscite on the Act was held on :ul! -7, -..+, a #reat ma orit! of the re#istered voters of 'antia#o voted in favor of the conversion of 'antia#o into a cit!. T'- 6u-(+&on a( +o +'- .a0&3&+y o/ R-*u70&) A)+ No. 8890 '&n4-( on +'- /o00o:&n4 +:&n &((u-( 6 ?$@ >hether or not the $nternal Revenue Allotments ?$RAs@ are to be included in the computation of the avera#e annual income of a municipalit! for purposes of its conversion into an independent component cit!, and ?$$@ >hether or not, considerin# that the 'enate passed '5 No. -2+7, its own version of *5 No. //-7, Republic Act No. 7720 can be said to have ori#inated in the *ouse of Representatives. $ %he annual income of a local #overnment unit includes the $RAs Petitioners claim that 'antia#o could not 0ualif! into a component cit! because its avera#e annual income for the last two ?2@ consecutive !ears based on -..- constant prices falls below the re0uired annual income of %went! Million Pesos ?P20,000,000.00@ for its conversion into a cit!, petitioners havin# computed 'antia#oAs avera#e annual income in the followin# manner6

%otal income ?at -..- constant prices@ for -..-

P 20,77.,017.07

%otal income ?at -..- constant prices@ for -..2 %otal income for -..- and -..2

P 2-,170,-0B./7 P +-,.+.,-B7..+

Minus6 $RAs for -..- and -..2 P -1,770,0+7.00

%otal income for -..- and -..2 Avera#e Annual $ncome

P 2B,2-.,-20..+ P -7,-0.,1B0.+7 CCCCCCCCCCCCCCC

5! dividin# the total income of 'antia#o for calendar !ears -..- and -..2, after deductin# the $RAs, the avera#e annual income arrived at would onl! be P-7,-0.,1B0.+7 based on the -..- constant prices. %hus, petitioners claim that 'antia#oAs income is far below the aforesaid %went! Million Pesos avera#e annual income re0uirement. %he certification issued b! the 5ureau of 2ocal 3overnment 8inance of the 9epartment of 8inance, which indicates 'antia#oAs avera#e annual income to be P20,.7+,1/-..7, is alle#edl! not accurate as the $nternal Revenue Allotments were not e)cluded from the computation. Petitioners asseverate that the $RAs are not actuall! income but transfers andDor bud#etar! aid from the national #overnment and that the! fluctuate, increase or decrease, dependin# on factors li(e population, land and e0ual sharin#. $n this re#ard, we hold that petitioners asseverations are untenable because $nternal Revenue Allotments form part of the income of 2ocal 3overnment 4nits. $t is true that for a municipalit! to be converted into a component cit!, it must, amon# others, have an avera#e annual income of at least %went! Million Pesos for the last two ?2@ consecutive !ears based on -..- constant prices. - 'uch income must be dul! certified b! the 9epartment of 8inance. Resolution of the controvers! re#ardin# compliance b! the Municipalit! of 'antia#o with the aforecited income re0uirement hin#es on a correlative and conte)tual e)plication of the meanin# of internal revenue allotments ?$RAs@ vis-a-vis the notion of income of a local #overnment unit and the principles of local autonom! and decentrali<ation underl!in# the institutionali<ation and intensified empowerment of the local #overnment s!stem. A 2ocal 3overnment 4nit is a political subdivision of the 'tate which is constituted b! law and possessed of substantial control over its own affairs.7 Remainin# to be an intra soverei#n subdivision of one soverei#n nation, but not intended, however, to be an imperium in imperio,+ the local #overnment unit is autonomous in the sense that it is #iven more powers, authorit!, responsibilities

and resources.1 Power which used to be hi#hl! centrali<ed in Manila, is thereb! deconcentrated, enablin# especiall! the peripheral local #overnment units to develop not onl! at their own pace and discretion but also with their own resources and assets. %he practical side to development throu#h a decentrali<ed local #overnment s!stem certainl! concerns the matter of financial resources. >ith its broadened powers and increased responsibilities, a local #overnment unit must now operate on a much wider scale. More e)tensive operations, in turn, entail more e)penses. 4nderstandabl!, the vestin# of dut!, responsibilit! and accountabilit! in ever! local #overnment unit is accompanied with a provision for reasonabl! ade0uate resources to dischar#e its powers and effectivel! carr! out its functions. 7 Availment of such resources is effectuated throu#h the vestin# in ever! local #overnment unit of ?-@ the ri#ht to create and broaden its own source of revenueE ?2@ the right to be allocated a just share in national taxes, such share being in the form of internal revenue allotments (IRAs) E and ?7@ the ri#ht to be #iven its e0uitable share in the proceeds of the utili<ation and development of the national wealth, if an!, within its territorial boundaries. / %he funds #enerated from local ta)es, $RAs and national wealth utili<ation proceeds accrue to the #eneral fund of the local #overnment and are used to finance its operations sub ect to specified modes of spendin# the same as provided for in the 2ocal 3overnment "ode and its implementin# rules and re#ulations. 8or instance, not less than twent! percent ?20F@ of the $RAs must be set aside for local development pro ects.. As such, for purposes of bud#et preparation, which bud#et should reflect the estimates of the income of the local #overnment unit, amon# others, the $RAs and the share in the national wealth utili<ation proceeds are considered items of income. %his is as it should be, since income is defined in the 2ocal 3overnment "ode to be all revenues and receipts collected or received formin# the #ross accretions of funds of the local #overnment unit. -0 %he $RAs are items of income because the! form part of the #ross accretion of the funds of the local #overnment unit. %he $RAs re#ularl! and automaticall! accrue to the local treasur! without need of an! further action on the part of the local #overnment unit.-- %he! thus constitute income which the local #overnment can invariabl! rel! upon as the source of much needed funds. 8or purposes of convertin# the Municipalit! of 'antia#o into a cit!, the 9epartment of 8inance certified, amon# others, that the municipalit! had an avera#e annual income of at least %went! Million Pesos for the last two ?2@ consecutive !ears based on -..constant prices. %his, the 9epartment of 8inance did after includin# the $RAs in its computation of said avera#e annual income. 8urthermore, 'ection +10 ?c@ of the 2ocal 3overnment "ode provides that &the avera#e annual income shall include the income accruin# to the #eneral fund, e)clusive of special funds, transfers, and nonGrecurrin# income.& %o reiterate, $RAs are a re#ular, recurrin# item of incomeE nil is there a basis, too, to classif! the same as a special fund or transfer, since $RAs have a technical definition and meanin# all its own as used in the 2ocal 3overnment "ode that une0uivocall! ma(es it distinct from special funds or transfers referred to when the "ode spea(s of &fundin# support from the national #overnment, its instrumentalities and #overnmentGownedGorGcontrolled corporations&. -2 %hus, 9epartment of 8inance Order No. 71G.7 -7 correctl! encapsuli<es the full import of the above dis0uisition when it defined ANN4A2 $N"OM= to be &revenues and receipts reali<ed b! provinces, cities and municipalities from re#ular sources of the 2ocal 3eneral 8und including the internal revenue allotment and other shares provided for in 'ections 2/+, 2.0 and 2.- of the "ode, but e)clusive of nonGrecurrin# receipts, such as other national aids, #rants, financial assistance, loan proceeds, sales of fi)ed assets, and similar others& ?=mphasis ours@.-+ 'uch order, constitutin# e)ecutive or contemporaneous construction of a statute b! an administrative a#enc! char#ed with the tas( of interpretin# and appl!in# the same, is entitled to full respect and should be accorded #reat wei#ht b! the courts, unless such construction is clearl! shown to be in sharp conflict with the "onstitution, the #overnin# statute, or other laws.-1 $$ $n the enactment of RA No. 7720, there was compliance with 'ection 2+, Article ,$ of the -./7 "onstitution Althou#h a bill of local application li(e *5 No. //-7 should, b! constitutional prescription, -B ori#inate e)clusivel! in the *ouse of Representatives, the claim of petitioners that Republic Act No. 7720 did not ori#inate e)clusivel! in the *ouse of Representatives because a bill of the same import, '5 No. -2+7, was passed in the 'enate, is untenable because it cannot be denied that *5 No. //-7 was filed in the *ouse of Representatives first before '5 No. -2+7 was filed in the 'enate. Petitioners themselves cannot disavow their own admission that *5 No. //-7 was filed on April -/, -..7 while '5 No. -2+7 was filed on Ma! -., -..7. %he filin# of *5 No. //-7 was thus precursive not onl! of the said Act in 0uestion but also of '5 No. -2+7. %hus, *5 No. //-7, was the bill that initiated the le#islative process that culminated in the enactment of Republic Act No. 7720. No violation of 'ection 2+, Article ,$, of the -./7 "onstitution is perceptible under the circumstances attendin# the instant controvers!. 8urthermore, petitioners themselves ac(nowled#e that *5 No. //-7 was alread! approved on %hird Readin# and dul! transmitted to the 'enate when the 'enate "ommittee on 2ocal 3overnment conducted its public hearin# on *5 No. //-7. *5 No. //-7 was approved on the %hird Readin# on 9ecember -7, -..7 and transmitted to the 'enate on :anuar! 2/, -..+E a little less than a month thereafter, or on 8ebruar! 27, -..+, the 'enate "ommittee on 2ocal 3overnment conducted public hearin#s on '5 No. -2+7. "learl!, the 'enate held in abe!ance an! action on '5 No. -2+7 until it received *5 No. //-7, alread! approved on the %hird Readin#, from the *ouse of Representatives. %he filin# in the 'enate of a substitute bill in anticipation of its receipt of the bill from the *ouse, does not contravene the constitutional re0uirement that a bill of local application should ori#inate in the *ouse of Representatives, for as lon# as the 'enate does not act thereupon until it receives the *ouse bill.

>e have alread! addressed this issue in the case of Tolentino vs. Secretar of !inance.-7 %here, on the matter of the =)panded ,alue Added %a) ?=,A%@ 2aw, which, as a revenue bill, is nonetheless constitutionall! re0uired to ori#inate e)clusivel! in the *ouse of Representatives, we e)plained6 . . . %o be#in with, it is not the law H but the revenue bill H which is re0uired b! the "onstitution to &ori#inate e)clusivel!& in the *ouse of Representatives. $t is important to emphasi<e this, because a bill ori#inatin# in the *ouse ma! under#o such e)tensive chan#es in the 'enate that the result ma! be a rewritin# of the whole. . . . as a result of the 'enate action, a distinct bill ma! be produced. %o insist that a revenue statute H and not onl! the bill which initiated the le#islative process culminatin# in the enactment of the law H must substantiall! be the same as the *ouse bill would be to den! the 'enateAs power not onl! to &concur with amendments& but also to &propose amendments.& $t would be to violate the coe0ualit! of le#islative power of the two houses of "on#ress and in fact ma(e the *ouse superior to the 'enate. ))) ))) )))

$t is insisted, however, that '. No. -B70 was passed not in substitution of *. No. ---.7 but of another 'enate bill ?'. No. --2.@ earlier filed and that what the 'enate did was merel! to &ta(e I*. No. ---.7J into consideration& in enactin# '. No. -B70. %here is reall! no difference between the 'enate preservin# *. No. ---.7 up to the enactin# clause and then writin# its own version followin# the enactin# clause ?which, it would seem petitioners admit is an amendment b! substitution@, and, on the other hand, separatel! presentin# a bill of its own on the same sub ect matter. $n either case the result are two bills on the same sub ect. $ndeed, what the "onstitution simpl! means is that the initiative for filin# revenue, tariff, or ta) bills, bills authori<in# an increase of the public debt, private bills and bills of local application must come from the *ouse of Representatives on the theor! that, elected as the! are from the districts, the members of the *ouse can be e)pected to be more sensitive to the local needs and problems. On the other hand, the senators, who are elected at lar#e, are e)pected to approach the same problems from the national perspective. 5oth views are thereb! made to bear on the enactment of such laws. Nor does the "onstitution prohibit the filin# in the 'enate of a substitute bill in anticipation of its receipt of the bill from the *ouse, so lon# as action b! the 'enate as a bod! is withheld pendin# receipt of the *ouse bill. . . . -/ $$$ =ver! law, includin# RA No. 7720, has in its favor the presumption of constitutionalit! $t is a wellGentrenched urisprudential rule that on the side of ever! law lies the presumption of constitutionalit!. -. "onse0uentl!, for RA No. 7720 to be nullified, it must be shown that there is a clear and une0uivocal breach of the "onstitution, not merel! a doubtful and e0uivocal oneE in other words, the #rounds for nullit! must be clear and be!ond reasonable doubt. 20 %hose who petition this court to declare a law to be unconstitutional must clearl! and full! establish the basis that will ustif! such a declarationE otherwise, their petition must fail. %a(in# into consideration the ustification of our stand on the immediatel! precedin# #round raised b! petitioners to challen#e the constitutionalit! of RA No. 7720, the "ourt stands on the holdin# that petitioners have failed to overcome the presumption. %he dismissal of this petition is, therefore, inevitable. >*=R=8OR=, the instant petition is 9$'M$''=9 for lac( of merit with costs a#ainst petitioners. 'O OR9=R=9.