On July 24, 2006, congress approved R.A. 9405, an act converting the Municipality of Bayugan into a component city to be known as the City of Bayugan. But in 2008, the Supreme Court of the Philippines declared the law unconstitutional. The court ruled that Bayugan, along with the other fifteen (15) cities covered by the law did not meet the requirements for cityhood.

More than a year later, on December 22, 2009, acting favorable on the appeal of the sixteen affected cities, the Supreme Court reversed its earlier ruling. It seemed that the passage of the amendatory law regarding the criteria for cityhood as set by Congress specifically exempting a particular political subdivision therefrom was constitutional. The court further ruled that congress, in enacting the exempting law, effectively decreased the already codified indicators. As such, the cityhood status of Bayugan, and the rest of the fifteen local government units was restored.

But again on August 24, 2010, in a 16-page resolution, the Supreme Court reinstated its November 18, 2008 decision striking down the constitutionality of Republic Act 9405. Voting 7-6, with two justices abstaining, the SC reinstated its decision declaring RA 9405 as unconstitutional.

However, in another twist of fate for Bayugan, the Supreme Court once again upheld for the 3rd time and final time the constitutionality of RA 9405 on February 17, 2011, thereby finalizing the cityhood of Bayugan and the other fifteen LGUs affected by the law. On July 3, 2011, the Supreme Court ordered its Clerk of Court to issue an entry of judgment on the cityhood case, sealing with finality the constitutionality of the law.