Alvarez v. Guingona
REITERATIONFacts
The Antecedents: Petitioners assailed the constitutionality of Republic Act No. 7720, which converted the Municipality of Santiago, Isabela into an independent component city. The primary grounds for the challenge were: (a) that the Act did not originate exclusively in the House of Representatives as mandated by Section 24, Article VI of the 1987 Constitution, and (b) that the Municipality of Santiago had not met the minimum average annual income requirement under Section 450 of the Local Government Code of 1991. Procedural History: The case was filed as a Petition for Prohibition with a prayer for Temporary Restraining Order and Preliminary Prohibitory Injunction before the Supreme Court. The Petition: Petitioners argued that the average annual income of Santiago, when excluding Internal Revenue Allotments (IRAs), fell below the P20,000,000.00 threshold. They also contended that the passage of Senate Bill No. 1243, a counterpart bill, violated the constitutional mandate that bills of local application must originate exclusively in the House of Representatives.
Issue(s)
Whether Internal Revenue Allotments (IRAs) should be included in the computation of the average annual income of a municipality for its conversion into an independent component city. Whether Republic Act No. 7720 originated exclusively in the House of Representatives as required by Section 24, Article VI of the 1987 Constitution, considering the Senate passed Senate Bill No. 1243.
Ruling
The petition is DISMISSED for lack of merit.
Ratio Decidendi
On the inclusion of Internal Revenue Allotments (IRAs) in the computation of average annual income: The Court held that Internal Revenue Allotments (IRAs) form part of the income of Local Government Units (LGUs). The Local Government Code defines income as all revenues and receipts collected or received forming the gross accretions of funds of the LGU. IRAs regularly and automatically accrue to the local treasury without need of further action by the LGU, thus constituting a reliable source of funds. Department of Finance Order No. 35-93, which defines annual income to include IRAs, was given great weight as a contemporaneous construction of the statute. Therefore, the average annual income of Santiago, including IRAs, met the P20,000,000.00 requirement. On the origin of the bill and compliance with Section 24, Article VI of the 1987 Constitution: The Court ruled that Republic Act No. 7720 did not violate the constitutional mandate. House Bill No. 8817 was filed in the House of Representatives before Senate Bill No. 1243 was filed in the Senate. The Senate's action of filing a counterpart bill or even a substitute bill in anticipation of receiving the House bill does not contravene the Constitution, as long as the Senate withholds action as a body until it receives the bill from the House. In this case, the Senate held in abeyance action on SB No. 1243 until it received HB No. 8817. The Court reiterated the principle that it is the bill initiating the legislative process that must originate in the House, not necessarily the final law, allowing for amendments and substitutions by the Senate.
Main Doctrine
Internal Revenue Allotments (IRAs) are considered part of the income of Local Government Units for purposes of determining compliance with the average annual income requirement for conversion into a city. Furthermore, a bill of local application originating in the House of Representatives may be substituted or amended by the Senate, provided that the Senate withholds action until it receives the House bill, without violating Section 24, Article VI of the Constitution.