FACTS:

In this case, several petitions were filed by the League of Cities of the Philippines, City of Iloilo, City of Calbayog, and Jerry P. Treñas, challenging the constitutionality of the Cityhood Laws. These laws directed the Commission on Elections (COMELEC) to conduct plebiscites to determine whether the voters in each respondent municipality approved of their conversion into cities.

The petitioners argued that the Cityhood Laws violated Section 10, Article X of the Constitution and the equal protection clause. They contended that the conversion of municipalities into cities would reduce the share of existing cities in the Internal Revenue Allotment.

The petitions were filed after Congress enacted RA 9009, which increased the annual income requirement for the conversion of a municipality into a city. The House of Representatives adopted Joint Resolution No. 29 seeking to exempt municipalities whose cityhood bills were not approved in the 11th Congress from the income requirement, but it was not approved by the Senate.

Subsequently, during the 13th Congress, 16 out of the 24 municipalities filed individual cityhood bills containing a provision exempting them from the income requirement. These bills became law without the President's signature.

The Court granted the petitions, ruling that the Cityhood Laws violated Sections 6 and 10 of Article X of the Constitution and were therefore unconstitutional. The Court held that the income requirement in RA 9009 should not be applied retroactively because it took effect in 2001, while the cityhood bills became law more than five years later.

Furthermore, the Court held that the criteria for creating a city should be prescribed by Congress in the Local Government Code, not in any other law. The Court found that the Cityhood Laws prevented a fair distribution of national taxes to local government units in violation of Section 6 of Article X of the Constitution.

The Court also ruled that the intent of the earlier Congresses to exempt certain municipalities from the income requirement was not written into the Local Government Code. Additionally, even if the exemption in the Cityhood Laws was written in the Local Government Code, it would still be unconstitutional for violating the equal protection clause.

Preliminary matters in the case included the court's recognition that prohibition is the proper action for testing the constitutionality of laws administered by the COMELEC. The petitioners were granted legal standing due to their interest in the issues and the potential harm they would suffer if the Cityhood Laws were declared constitutional.

ISSUES:

1. Whether the Cityhood Laws violated Section 10, Article X of the Constitution by exempting respondent municipalities from the increased income requirement in the Local Government Code.

2. Whether the Cityhood Laws violated Section 6, Article X of the Constitution by preventing the fair and just distribution of the Internal Revenue Allotment.

3. Whether the deliberations during the 11th Congress on unapproved cityhood bills have legal significance in interpreting bills enacted into law in the 13th or subsequent Congresses.

4. Whether the exemption provision in the Cityhood Laws violates the equal protection clause.

5. Whether the classification criterion of having a pending cityhood bill in the 11th Congress is valid under the equal protection clause.

6. Whether the fact of pendency of a cityhood bill in the 11th Congress limits the exemption to a specific condition existing at the time of passage of RA 9009.

7. Whether the exemption provision in the Cityhood Laws violates the requirement that a valid classification must not be limited to existing conditions only.

8. Whether the exemption provision in the Cityhood Laws violates the requirement that the classification must apply to all similarly situated.

RULING:

1. The Cityhood Laws violated Section 10, Article X of the Constitution by exempting respondent municipalities from the increased income requirement in the Local Government Code.

2. The Cityhood Laws violated Section 6, Article X of the Constitution by preventing the fair and just distribution of the Internal Revenue Allotment.

3. The deliberations during the 11th Congress on unapproved cityhood bills have no legal significance in interpreting bills enacted into law in the 13th or subsequent Congresses. Unapproved bills filed in one Congress become functus officio upon adjournment of that Congress and must be re-filed anew in order to be taken up in the next Congress.

4. The exemption provision in the Cityhood Laws violates the equal protection clause. The provision lacks classification standards or guidelines differentiating the exempted municipalities from those that are not exempted. It does not satisfy the requirement of a valid classification under the equal protection clause.

5. The classification criterion of having a pending cityhood bill in the 11th Congress is not valid under the equal protection clause. The mere pendency of a cityhood bill in the 11th Congress does not have a material difference to distinguish one municipality from another for the purpose of the income requirement. It is not rationally related to the purpose of preventing fiscally non-viable municipalities from converting into cities.

6. The Court declared the Cityhood Laws unconstitutional. The exemption provision in the Cityhood Laws, which gives a unique advantage to the 16 municipalities based on an arbitrary date of filing their cityhood bills in the 11th Congress, violates the equal protection clause. This exemption provision restricts the exemption to a specific condition existing at the time of passage of RA 9009, which will never happen again. The Court held that a valid classification must not be limited to existing conditions only. Furthermore, the exemption provision does not apply to all similarly situated municipalities, as municipalities with the same income as the 16 respondent municipalities cannot convert into cities.

PRINCIPLES:

• The criteria prescribed in the Local Government Code govern exclusively the creation of a city, and any derogation or deviation from these criteria violates Section 10, Article X of the Constitution.

• Uniform and non-discriminatory criteria for the creation of local government units are essential to implement a fair and equitable distribution of national taxes, as mandated by Section 6, Article X of the Constitution.

• Courts determine the intent of the law from the literal language of the law, and if the language of the law is plain, clear, and unambiguous, courts simply apply the law according to its express terms.

• Any exemption from the criteria for the creation of a city must be written in the Local Government Code and not in any other law, in compliance with the requirements of Section 10, Article X of the Constitution.

• The creation, organization, and regulation of private corporations must be prescribed by Congress in a general law, except for government-owned or controlled corporations which may be created or established by special charters, as provided by Section 16, Article XII of the Constitution.

• Unapproved bills filed in one Congress become functus officio upon adjournment of that Congress and must be re-filed anew in order to be taken up in the next Congress.

• Exemption provisions in laws must contain valid classification standards or guidelines to satisfy the equal protection clause.

• The equal protection clause permits a valid classification based on substantial distinctions, germane to the purpose of the law, not limited to existing conditions only, and applicable to all similarly situated.

• A valid classification must not be limited to existing conditions only.

• The equal protection clause requires that the classification must apply to all similarly situated.