When Lamitan City celebrated its first anniversary as a city last June 2008, local officials and residents held a one-week program.  During the celebration, the city government also inaugurated P74 million worth of infrastructure projects, which included a P30-million wet and dry markets and P48 million new transport terminal and air-conditioned hostel.

“The celebration was festive,” the city’s legal counsel Quirino Esguerra Jr., told abs-cbnNews.com/Newsbreak.

Local officials of Lamitan interviewed by abs-cbnNews.com/Newsbreak said the conversion has spurred development in their city. City councilor Juan Puri Jr. told us in a previous interview that the city government was able to implement more infrastructure projects because of more funds from the national government that came along with their cityhood status.

Lamitan’s mayor, Roderick Furigay Jr., told abs-cbnNews.com/Newsbreak in November that their share on the tax collection of the national government or the internal revenue allotment (IRA) leaped from P80 million to more than P200 million.

Five months later, however, the optimism and promises of cityhood faded away when the Supreme Court declared the conversion of Lamitan City—along with 15 other cities—as unconstitutional.

The 16 cities, whose cityhood bills were voided by the Supreme Court last month, are now the ones facing the possibility of losing huge amounts of IRA allocations.

“We were disheartened,” Furigay told us in an interview a few days after Lamitan’s cityhood bill was struck down by the High Tibunal. Furigay said that if their city would be reverted to municipality, it would be losing huge amount of funds for their projects.

Unconstitutional

Voting 6-5, the Supreme Court on November voided 16 bills converting 16 towns into cities for failing to meet the criteria set by the Local Government Code.

The 16 cities that were nullified by the Supreme Court decision penned by Associate Justice Antonio Carpio included three cities in Luzon, eight in the Visayas, and six in Mindanao.

The cities that were nullified for failing to meet requirements of the LGC are as follows:  Batac in Ilocos Norte, Tabuk in Kalinga; Tayabas in Quezon; Baybay in Leyte; Catbalogan in Samar; Borongan in Eastern Samar; Guihulngan in Negros Oriental; Bogo, Naga and Carcar in Cebu; Tandag in Surigao del Sur; Cabadbaran in Agusan del Norte; El Salvador in Misamis Oriental; Mati in Davao Oriental; Bayugan in Agusan del Sur; and, Lamitan in Basilan.

According to Section 450 of the LGC, a municipality or cluster of barangays can be converted into city if it has an average annual income of at least P20 million and any of the following: a population of at least 150,000 inhabitants or a contiguous territory of 100 square kilometers.

Republic Act 9009, however, amended this provision and raised the minimum income requirement to P100 million. The High Tribunal said in its decision that the 16 towns violated RA 9009 because their respective cityhood laws contain provisions that sought exemption from the minimum income requirement.

“The creation of local government units must follow the criteria established in the Local Government Code and not in any other law...The Constitution requires Congress to stipulate in the Local Government Code all the criteria necessary for the creation of a city, including the conversion of a municipality into a city. Congress cannot write such criteria in any other law, like the Cityhood Laws,” the SC decision reads.

Wanted: SC final ruling

Former budget Secretary Emilia Boncodin told abs-cbnNews.com/Newsbreak that this means that the 16 cities will still receive their city-rate IRAs since the case is still pending with the SC. Boncodin added that SC ruling will serve as the basis of the Department of Budget and Management in determining the shares of the 16 cities in the IRA.

“They have to wait for a final ruling,” Boncodin told abs-cbnNews.com/Newsbreak.

Meanwhile, Surigao City Mayor Alfonso Casurra told abs-cbnNews.com said that the LCP can file a manifestation in the Supreme Court directing the Department of Budget and Management to release only the municipality-rate IRA of the 16 cities. Casurra said that the DBM will only release the complete city-rate IRA if the SC decides in favor of the 16 cities.

Trenas, meanwhile, confirmed that Casurra’s proposal is a “legal position” that they are planning to do.

IRA share

The Supreme Court decision was in response to a petition filed by the League of Cities of the Philippines (LCP). The LCP argued that the conversion of these 16 cities have eaten up the collective IRA of the existing cities.

Member cities of the 120-member of LCP experienced huge losses in their expected IRA. Benhur Abalos, president of the LCP, had said that the increase in IRA share of the cities dropped by an average of P40 million after the creation of 16 new cities. The effects on some cities, however, are worse. Puerto Princesa, for instance, lost P144.4 million of IRA as result of the conversion of 16 towns while the expected IRA of Davao was reduced from P263.5 million to P69 million.

A study by the Department of Interior and Local Government showed that the IRA of a municipality converted into a city is usually tripled while old cities lost one-third of their IRA when a new city is created.

Iloilo City Mayor and LCP national president Jerry Trenas said that the cities have been getting less IRA per capita due to the conversion of towns to cities during the past years.

“The IRA share of cities per capita has been going down compared to the shares of the municipalities and provinces,” Trenas told abs-cbnNews.com, adding that the number of cities has doubled since the Local Government Code was enacted.

The SC decision, therefore, was welcomed by LCP-member cities and some of them have been expecting that they would be able to get bigger IRA share as a result of the ruling. However, the mayors of the 16 cities have filed a motion for reconsideration at the High Court.

Reversal of fortune

If the Supreme Court will decide—with finality—in favor of the LCP, the old cities will receive higher expected IRA increases since .the 16 cities will be reverted to municipality status and, eventually, will receive municipality-rate IRA, which is lower than their city-rate allocations.

Lamitan City’s IRA, for instance, will go down from P235 million to P77 million, said the city counsel Esguerra. Local officials of the three Cebu cities—Naga, Bogo and Carcar—included  in the 16 cities nullified by the Supreme Court estimate that each of them would use as much as P120 million.

Naga City Mayor Jesse Robredo told abs-cbnNews.com/Newsbreak that this will have serious implications in the finances of the 16 cities. He added that some of the 16 cities already have their own city trial courts and city school divisions and have hired additional staff for their offices.

“They will be making huge adjustments,” Robredo said. “It’s easier to get richer than to get poorer.”

Esguerra said that a decision favoring the LCP could stall the programs in their area like the 29 ongoing infrastructure projects and the scholarship program for 300 students. He added that they are also worried because they just obtain a P50 million loan from the Land Bank of the Philippines to finance the building of a public market and hired more tan 300 additional workers.

“If we will be downgraded to municipality, how can we pay these obligations?” Esguerra told us.

Boncodin, meanwhile, said that if the 16 cities lose their case, they do not have a choice but to modify and make adjustments on their budget. (abs-cbnNEWS.com/Newsbreak)

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