Gov. Velasco requests Duterte to implement SC decision on LGU share in national taxes asap

“It would be for everyone’s best interest if the national government will no longer delay its implementation by FY 2022, as suggested by your economic team.”

This was the statement of the newly-elected president of the League of Provinces of the Philippines (LPP) and Marinduque Gov. Presbitero J. Velasco, Jr. when he humbly made an appeal to President Rodrigo Roa Duterte to order the concerned agencies to already comply with Sec. 6, Article X of the 1987 Constitution as ordered by the Supreme Court. Velasco urged Malacanang to automatically release the LGUs’ just share in all national taxes beginning July 1, 2019 and thereafter when the SC’s final decision had already lapsed into finality.

The appeal to the president came in the heels of the 10 April 2019 decision of the Supreme Court in the twin cases filed by Gov. Hermilando Mandanas and the late Bataan Rep. Enrique Garcia in 2012 against former Executive Secretary Paquito Ochoa and other members of the economic team of then Pres. Noynoy Aquino questioning the manner on which the share of the LGUs in the national taxes is computed.

This IRA issue was discussed with DILG Sec. Ano during the recently-held orientation for newly-elected Governors held recently by the Local Government Academy where a consensus was reached amongst the 61 Governors who attended the LPP’s 1st General Assembly meeting last July 11 to seek the President’s help.

In his recent letter, Gov. Velasco sought President Duterte’s “prudent intercession with regard to the implementation of the recent Resolution of the Supreme Court on G.R. Nos. 199802 and 208488.”

Velasco, who was one of the Supreme Court Justices who ruled in favor of the LGUs, stressed that “the final decision of the Supreme Court has already denied all the grounds raised by the Office of the Solicitor General (OSG) in its motion for reconsideration, including its “suggestion” to implement the same beginning FY 2022.” He added that “with this jurisprudential declaration, the said Decision instantaneously becomes part of the law of the land which cannot be deferred to a later time pursuant to Chapter I, Articles 7 and 8 of R.A. No. 386, or the New Civil Code.”

The president’s economic team has suggested to implement the decision of the Supreme Court in the Mandanas case in 2022 in view of its financial implications to the national coffers. However, “LGUs need the additional resources now under your administration, more so with the implementation of the Universal Health Care as well as with your other priority programs,” Gov. Velasco cited in his letter.

“As far as the Provinces are concerned, we are four-square behind your administration, Mr. President”, said Velasco. He added that the Governors are open to discuss with the President and his economic team various options such as direct downloads of ALGU and other NGA funds whose services have already been devolved to LGUs, or even via a deferred payment scheme either through bond flotation or monetization, in lieu of an outright payment to LGUs. He underscored that both national and local governments share the common objective is to ensure compliance with the Constitutional provision guaranteeing the just share of LGUs in all national taxes without necessarily disrupting the fiscal and deficit targets of the country and thereby maintain macroeconomic stability.

In seeking for the immediate implementation of the Supreme Court decision, Gov. Velasco underlined the fact that “LGUs have already graciously conceded to the non-payment of the P1.5 Trillion IRA shortfalls covering the past 28 years,” referring to the period beginning 1992, when the Code was first implemented after its passage in 10 October 1991.

In light of the latest decision of the Supreme Court, the LGUs’ internal revenue allotment (IRA) will now be called the ‘National Tax Allotment’ or NTA, in keeping with Sec. 6, Article X of the 1987 Constitution which states that “local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.”

The Supreme Court, in ruling favorably on the petition that LGUs are entitled to a share in national taxes declared unconstitutional the use of the phrase ‘internal revenue’ in Sec. 284 of R.A. 7160, or the Local Government Code. In doing so, it amended Sec. 284 to now read as: ‘Section 284. Allotment of Taxes. – Local government units shall have a share in the national taxes based on the collection of the third fiscal year preceding the current fiscal year.’

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