Alvarez v. Guingona

G.R. No. 118303 (January 31, 1996)

Supreme Court upheld Santiago's cityhood, citing valid income calculations and legislative process.

Facts:

The case revolves around the constitutionality of Republic Act No. 7720, which converted the Municipality of Santiago, Isabela into an Independent Component City. The petitioners, consisting of several senators and local officials, challenged the validity of the Act on two primary grounds: (1) that it did not originate exclusively in the House of Representatives as required by Section 24, Article VI of the 1987 Constitution, and (2) that the Municipality of Santiago did not meet the minimum average annual income requirement of Twenty Million Pesos (₱20,000,000.00) as stipulated in Section 450 of the Local Government Code of 1991.

The legislative history of the Act began with House Bill No. 8817, filed on April 18, 1993, which aimed to convert Santiago into a city. This bill underwent several public hearings and was eventually passed by the House of Representatives. Concurrently, Senate Bill No. 1243 was filed in the Senate on May 19, 1993, proposing the same conversion. The Senate conducted its hearings after the House had already passed its version of the bill. Ultimately, both bills were reconciled, and the resulting legislation was signed into law by the President on May 5, 1994, following a plebiscite in which the majority of Santiago's registered voters approved the conversion.

The petitioners contended that the average annual income of Santiago, when calculated without including Internal Revenue Allotments (IRAs), fell below the required threshold. They argued that IRAs should not be considered as part of the municipality's income since they are transfers from the national government and not actual revenue generated by the local government.

Legal Issues:

  1. Should Internal Revenue Allotments (IRAs) be included in the computation of a municipality's average annual income for the purpose of its conversion into a city?
  2. Did Republic Act No. 7720 originate exclusively in the House of Representatives as mandated by the Constitution?

Arguments:

Petitioners' Arguments:

  • The average annual income of Santiago, when calculated without IRAs, is below the required ₱20,000,000.00, thus disqualifying it from cityhood.
  • IRAs are not actual income but rather transfers from the national government, and should not be included in the income computation.
  • Republic Act No. 7720 did not originate in the House of Representatives since a similar bill was passed in the Senate.

Respondents' Arguments:

  • The inclusion of IRAs in the income computation is valid, as they are regular and recurring sources of revenue for local government units.
  • The Department of Finance certified that Santiago's average annual income met the required threshold, including IRAs in its calculation.
  • House Bill No. 8817 was filed first and initiated the legislative process, thus fulfilling the constitutional requirement for bills of local application to originate in the House.

Court's Decision and Legal Reasoning:

The Supreme Court dismissed the petition for lack of merit, affirming the constitutionality of Republic Act No. 7720. The Court held that:

  1. Inclusion of IRAs: The Court ruled that IRAs are indeed part of the income of local government units. It emphasized that income, as defined in the Local Government Code, includes all revenues and receipts forming the gross accretions of funds. The Court noted that IRAs are regular and recurring, automatically accruing to the local treasury, and thus should be included in the income computation for cityhood qualification.

  2. Origin of the Bill: The Court found that House Bill No. 8817 originated in the House of Representatives, as it was filed before Senate Bill No. 1243. The legislative process was initiated in the House, and the Senate's actions did not violate the constitutional requirement since the Senate did not act on its bill until after receiving the House's version.

  3. Presumption of Constitutionality: The Court reiterated the principle that all laws carry a presumption of constitutionality. The petitioners failed to provide clear and unequivocal evidence of a constitutional breach, which is necessary to declare a law unconstitutional.

Significant Legal Principles Established:

  • Internal Revenue Allotments (IRAs) are considered part of the income of local government units for the purpose of determining eligibility for cityhood.
  • The requirement for bills of local application to originate in the House of Representatives is satisfied if the House bill is filed before any Senate counterpart, regardless of subsequent legislative actions.
  • The presumption of constitutionality applies to all laws, requiring challengers to provide clear evidence of unconstitutionality.