SC: LGU's IRA should be based on 100% of national income

NEWS BY ABS-CBN: The Supreme Court (SC) has affirmed its earlier ruling declaring that local government units (LGUs) are entitled to its Internal Revenue Allotments (IRAs) on the basis of all national taxes and not just from national internal revenue taxes.

In a press conference on Wednesday here in Baguio City, SC Spokesperson Brian Keith Hosaka said the SC en banc voted 8-3 to deny the motion for reconsideration filed by the Office of the Solicitor General (OSG) which claimed that the Court erred in expanding the basis of the IRA of LGUs.

The SC in July 2018 voted 10-3 in favor of former Batangas Rep. and now Batangas Gov. Hermilando Mandanas’ petition that questioned the government’s wrong computation and alleged misappropriation of IRA funds for LGUs.

In a decision penned by now-Chief Justice Lucas Bersamin, the SC held that the IRA of LGUs under the Local Government Code (Republic Act 7160) is understood to be based on the collections of all national taxes.

It declared unconstitutional and deleted the phrase “internal revenue” in section 284 and other sections of the Local Government Code, because under the Constitution, LGUs are entitled to other national taxes, such as collections by the Bureau of Customs.

“It is clear from the foregoing clarification that the exclusion of other national taxes like customs duties from the base for determining the just share of the LGUs contravened the express constitutional edict in Section 6, Article X the 1987 Constitution,” the decision read.
The high court, however, sided with the Solicitor General and denied the motion for reconsideration filed by then-Bataan Rep. Enrique Garcia, Jr.

Garcia had asked the SC to award to the LGUs all arrears resulting from the application of the expanded basis in computing the IRAs.

Mandanas had claimed that from 1992 to 2012, unreleased IRA for LGUs had reached P500 billion.

Sticking to its ruling, the Court applied the “operative fact” doctrine which sustains the effects of a law until it is nullified. This means LGUs can no longer collect on arrears prior to the voiding of a portion of the Local Government Code.

The high court clarified that the adjusted amounts of IRAs of LGUs are deemed effective only after the finality of its ruling, which means, the adjusted amounts will be given to LGUs starting with the 2022 budget cycle.

SOURCE: Mike Navallo, ABS-CBN News (2019). SC affirms ruling that gives LGUs their IRAs based on all national taxes. Posted at Apr 10 2019 08:19 PM.