16 Cityhood Laws Constitutional (2011 update)

During the 11^th Congress, 57 bills seeking the conversion of municipalities into component cities were filed before the House of Representatives. However, Congress acted only on 33 bills. It did not act on bills converting 24 other municipalities into cities. During the 12^th Congress, R.A. No. 9009 became effective revising Section 450 of the Local Government Code. It increased the income requirement to qualify for conversion into a city from P20 million annual income to P100 million locally-generated income. In the 13^th Congress, 16 of the 24 municipalities filed, through their respective sponsors, individual cityhood bills. Each of the cityhood bills contained a common provision exempting the particular municipality from the 100 million income requirement imposed by R.A. No. 9009. Are the cityhood laws converting 16 municipalities into cities constitutional?

SUGGESTED ANSWER:

November 18, 2008 Ruling

No. The SC (voting 6-5) ruled that the exemptions in the City Laws is unconstitutional because sec. 10, Art. X of the Constitution requires that such exemption must be written into the LGC and not into any other laws. “The Cityhood Laws violate sec. 6, Art. X of the Constitution because they prevent a fair and just distribution of the national taxes to local government units.” “The criteria, as prescribed in sec. 450 of the LGC, must be strictly followed because such criteria prescribed by law, are material in determining the “just share” of local government units (LGUs) in national taxes.” (League of Cities of the Philippines v. Comelec GR No. 176951, November 18, 2008)

March 31, 2009 Ruling

No. The SC denied the first Motion for Reconsideration. 7-5 vote.

April 28, 2009 Ruling

No. The SC En Banc, by a split vote (6-6), denied a second motion for reconsideration.

December 21, 2009 Ruling

Yes. The SC (voting 6-4) reversed its November 18, 2008 decision and declared as constitutional the Cityhood Laws or Republic Acts (RAs) converting 16 municipalities into cities. It said that based on Congress’ deliberations and clear legislative intent was that the then pending cityhood bills would be outside the pale of the minimum income requirement of PhP100 million that Senate Bill No. 2159 proposes; and RA 9009 would not have any retroactive effect insofar as the cityhood bills are concerned. The conversion of a municipality into a city will only affect its status as a political unit, but not its property as such, it added. The Court held that the favorable treatment accorded the sixteen municipalities by the cityhood laws rests on substantial distinction.
The Court stressed that respondent LGUs were qualified cityhood applicants before the enactment of RA 9009. To impose on them the much higher income requirement after what they have gone through would appear to be indeed unfair. “Thus, the imperatives of fairness dictate that they should be given a legal remedy by which they should be allowed to prove that they have all the necessary qualifications for city status using the criteria set forth under the LGC of 1991 prior to its amendment by RA 9009. (GR No. 176951, League of Cities of the Philippines v. COMELEC; GR No. 177499, League of Cities of the Philippines v. COMELEC; GR No. 178056, League of Cities of the Philippines v. COMELEC, December 21, 2009) NOTE: The November 18, 2008 ruling already became final and executory and was recorded in the SC’s Book of Entries of Judgments on May 21, 2009.)

August 24, 2010 Ruling

No. The SC (voting 7-6) granted the motions for reconsideration of the League of Cities of the Philippines (LCP), et al. and reinstated its November 18, 2008 decision declaring unconstitutional the Cityhood Laws or Republic Acts (RAs) converting 16 municipalities into cities. “Undeniably, the 6-6 vote did not overrule the prior majority en banc Decision of 18 November 2008, as well as the prior majority en banc Resolution of 31 March 2009 denying reconsideration. The tie-vote on the second motion for reconsideration is not the same as a tie-vote on the main decision where there is no prior decision,” the Court said. In the latest resolution, the Court reiterated its November 18, 2008 ruling that the Cityhood Laws violate sec. 10, Art. X of the Constitution which expressly provides that “no city…shall be created…except in accordance with the criteria established in the local government code.” It stressed that while all the criteria for the creation of cities must be embodied exclusively in the Local Government Code, the assailed Cityhood Laws provided an exemption from the increased income requirement for the creation of cities under sec. 450 of the LGC. “The unconstitutionality of the Cityhood Laws lies in the fact that Congress provided an exemption contrary to the express language of the Constitution….Congress exceeded and abused its law-making power, rendering the challenged Cityhood Laws void for being violative of the Constitution,” the Court held.

The Court further held that “limiting the exemption only to the 16 municipalities violates the requirement that the classification must apply to all similarly situated. Municipalities with the same income as the 16 respondent municipalities cannot convert into cities, while the 16 respondent municipalities can. Clearly, as worded the exemption provision found in the Cityhood Laws, even if it were written in Section 450 of the Local Government Code, would still be unconstitutional for violation of the equal protection clause.” (GR No. 176951, League of Cities of the Philippines v. Comelec; GR No. 177499, League of Cities of the Philippines v. Comelec; GR No. 178056, League of Cities of the Philippines v. Comelec, August 24, 2010)

February 15, 2011 Ruling

Yes, the laws are constitutional. The February 15, 2011 resolution is the fourth ruling since the High Court first resolved the Cityhood case in 2008.

April 12, 2011Ruling

Yes! It’s final. The 16 Cityhood Laws are constitutional. “We should not ever lose sight of the fact that the 16 cities covered by the Cityhood Laws not only had conversion bills pending during the 11th Congress, but have also complied with the requirements of the [Local Government Code] LGC prescribed prior to its amendment by RA No. 9009. Congress undeniably gave these cities all the considerations that justice and fair play demanded. Hence, this Court should do no less by stamping its imprimatur to the clear and unmistakable legislative intent and by duly recognizing the certain collective wisdom of Congress,” the SC said.

The Court stressed that Congress clearly intended that the local government units covered by the Cityhood Laws be exempted from the coverage of RA 9009, which imposes a higher income requirement of PhP100 million for the creation of cities.

“The Court reiterated that while RA 9009 was being deliberated upon, the Congress was well aware of the pendency of conversion bills of several municipalities, including those covered by the Cityhood Laws. It pointed out that RA 9009 took effect on June 30, 2001, when the 12th Congress was incipient. By reason of the clear legislative intent to exempt the municipalities covered by the conversion bills pending during the 11th Congress, the House of Representatives adopted Joint Resolution No. 29 entitled Joint Resolution to Exempt Certain Municipalities Embodied in Bills Filed in Congress before June 30, 2001 from the coverage of Republic Act No. 9009. However, the Senate failed to act on the said Joint Resolution. Even so, the House readopted Joint Resolution No. 29 as Joint Resolution No. 1 during the 12th Congress, and forwarded the same for approval to the Senate, which again failed to prove it. Eventually, the conversion bills of respondents were individually filed in the Lower House and fellesters.blogspot.com were all unanimously and favorably voted upon. When forwarded to the Senate, the bills were also unanimously approved. The acts of both Chambers of Congress show that the exemption clauses ultimately incorporated in the Cityhood Laws are but the express articulations of the clear legislative intent to exempt the respondents, without exception, from the coverage of RA No. 9009. Thereby, RA 9009, and, by necessity, the LCG, were amended, not by repeal but by way of the express exemptions being embodied in the exemption clauses.”(http://sc.judiciary.gov.ph/news/courtnews%20flash/2011/04/04141101.php)

The Court held that the imposition of the income requirement of P100 million from local sources under RA 9009 was arbitrary. “While the Constitution mandates that the creation of local government units must comply with the criteria laid down in the LGC, it cannot be justified to insist that the Constitution must have to yield to every amendment to the LGC despite such amendment imminently producing effects contrary to the original thrusts of the LGC to promote autonomy, decentralization, countryside development, and the concomitant national growth.” (GR No. 176951, League of City of the Philippines v. COMELEC; GR No. 177499, League of City of the Philippines v. COMELEC: GR No. 178056, League of City of the Philippines v. COMELEC, April 12, 2011)

Click here for the complete list of Cityhood laws declared constitutional

Aowa vs. DTI

G.R. No. 189655, April 13, 2011

FACTS:

The DTI-NCR records show at least 273 administrative complaints against Aowa Electronics Philippines, Inc. from the year 2001 to 2007. The facts narrated in the consumer complaints consistently contain a common thread that a target costumer is approached by Aowa’s representative usually in the mall and inform the former that he/she has won a gift or a “give-away.” Aowa’s representatives then verbally reveal that the said gift can only be claimed upon purchase of additional products. An initial gift is also offered to target customer and upon acceptance, the customer is invited to Aowa’s store or outlet. It is that point that the customer is informed that he/she is qualified for a raffle draw or contest entitling him to additional gift. In the same manner, the additional gift can be received only upon purchase of additional products. In the course of enticing the target customer to purchase additional products, they are physically surrounded (a.k.a ganging up) by Aowa’s representatives. The purchase of additional products is not disclosed during the initial stage of the sales pitch. The revelation is done only when the customer is already being surrounded by Aowa’s representatives.

As a result, DTI-NCR filed a Formal Charge against Aowa before the DTI-NCR Adjudication Officer for violation Articles 50 and 52 of the Consumer Act of the Philippines praying that a cease and desist order be issued and administrative fines be imposed.

The Adjudication Officer held that DTI-NCR had sufficiently established prima facie evidence against Aowa for violation of the Consumer Act and its Implementing Rules and Regulations. Furthermore, the Adjudication Officer highlighted that Aowa failed to secure any Sales Promotion Permit. Thus, a Decision was made declaring Aowa liable for Deceptive, Unfair and Unconscionable Sales act or Practices.

Aowa appealed the Adjudication Officer’s Decision before the Appeals Committee (OLA). On August 26, 2008, the Appeals Committee sustained the Decision and held that the schemes and techniques employed by Aowa were fraudulent.

Feeling aggrieved, Aowa elevated the Decision of the Appeals Committee to the Court of Appeals (CA) under Rule 65 of the Rules of Civil Procedure. However, on June 23, 2009, the CA affirmed the findings of the Appeals Committee.

Still unsatisfied, Aowa finally elevated the case before the Supreme Court by filing a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure seeking the reversal of the CA Decision. Briefly stated, Aowa raised among others the following errors before the high tribunal:

1. There is no sufficient basis in the Formal Charge against Aowa since the charge is merely based on consumer complaints which have all been amicably settled.

2. The CA erred when it affirmed the harsh and excessive Decision of DTI notwithstanding the fact that the Formal Charge is not supported by any concrete, sufficient and convincing evidence.

3. The complaints against Aowa pertain to cases in the NCR, hence, there was no basis for DTI to presume that the allege offenses are likewise practice in other places in the country.

4. Aowa also argued that like other companies, sales personnel employed enthusiasm and overzealousness in sales talk to convince potential customers which cannot and should not be considered as deceit.

ISSUE:

Whether or not the CA committed any reversible error in affirming the findings and ruling of the Adjudication Officer and the DTI Appeals Committee.

HELD:

In sustaining the CA Decision, the Supreme Court held that “it is indubitable that the DTI is tasked to protect the consumers against deceptive, unfair and unconscionable sales, acts or practices as defined in Article 50 and 52 of the Consumer Act.” It cannot be gainsaid that the DTI acted on the basis of about 273 consumer complaints against Aowa, averring a common and viral scheme in carrying out its business to the prejudice of comsumers. Complaints- filed by consumers not only within NCR but also in the provinces- continued to be filed even after the formal charge and the issuance of PMO.

In giving due respect to factual findings of DTI, the Supreme Court held: “By reason of the special knowledge and expertise of DTI over matters falling under its jurisdiction, it is in better position to pass judgment on the issues, and its findings of fact in that regard, especially when confirmed by the CA, are generally accorded with respect, if not finality, by this Court. Furthermore, Aowa failed to refute DTI’s finding that it did not secure any permit for its alleged promotional sale.”

“In these trying times when fly-by-night establishments and syndicates proliferate all over the country, lurking and waiting to prey on innocent consumers , and ganging up on them like a pack of wolves with their sugar-coated sales talk false fellester.blogspot.com representations disguised as “overzealous marketing strategies,” it is the mandated duty of the government, through its various agencies like the DTI, to be wary and ready to protect each and every consumer. To allow or to even tolerate the marketing schemes such as these, under the pretext of promotional sales in contravention of the law and its existing rules and regulations, would result in consumers being robbed in broad daylight of their hard earned money. This Court shall not countenance theses pernicious acts at the expense of the consumers”. (Case Digest by Atty. Fel Lester Brillantes)

Cities Again!

In League of City of the Philippines v. COMELEC (GR No. 176951 April 12, 2011), the SC declared that the following Citihood Laws are Constitutional:

1. R.A. No. 9389 (Baybay City in Leyte)
2. R.A. No.9390 (Bogo City in Cebu)
3. R.A. No.9391 (Catbalogan City in Samar)
4. R.A. No.9392 (Tandag City in Surigao del Sur)
5. R.A. No.9393 (Lamitan City in Basilan)
6. R.A. No.9394 (Borongan City in Samar)
7. R.A. No.9398 (Tayabas City in Quezon)
8. R.A. No.9404 (Tabuk City in Kalinga)
9. R.A. No.9405 (Bayugan City in Agusan del Sur)
10.R.A. No.9407 (Batac City in Ilocos Norte)
11.R.A. No.9408 (Mati City in Davao Oriental)
12.R.A. No.9409 (Guihulngan City in Negros Oriental)
13.R.A. No.9434 (Cabadbaran City in Agusan del Norte)
14.R.A. No.9435 (El Salvador City in Misamis Oriental)
15.R.A. No.9436 (Carcar City in Cebu)
16.R.A. No.9491 (Naga City in Cebu)

Click here for the case digest.

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click here for the full text of the SC Decision.