SC orders release of LGU ‘just share’ in nat’l taxes

The Supreme Court (SC) has ordered the automatic release “without need of further action of the just shares of the local govern-

ment units (LGUs) in the national taxes through their respective provincial, city, municipal or barangay treasurers on a quarterly basis but not beyond five days from end of each quarter."

This directive was contained in a decision which ruled that the “just share” of LGUs should be “based on all national taxes and not only on national internal revenue taxes.”

Covered by the SC’s directive are the Department of Finance (DOF), Department of Budget and Management (DBM), the National Treasurer, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

But the SC said the decision is prospective in application which means that the LGUs’ prayer for the payment of arrears in their “just share” in national taxes was dismissed.

The SC decision included six more tax sources for the LGUs. These are the tariff and customs duties collected by the BOC, value-added taxes and all national taxes collected in the Autonomous Region in Muslim Mindanao, national taxes collected from mining, excise taxes collected from tobacco products, national taxes collected under Section 283 of National Internal Revenue Code and franchise taxes under Republic Act Nos. 6631 and 6632 (Horse Racing Laws).

The decision meant the LGUs would receive bigger internal revenue allotments (IRAS) from the national budget.

All national taxes

The copy of the decision was released late yesterday afternoon by the SC’s public information office (PIO).

Written by Justice Lucas P. Bersamin, the decision stated: "The 1987 Constitution is forthright and unequivocal in ordering that the just share of the LGUs in the national taxes shall be automatically released to them... Hence the just share of the LGUs in the national taxes shall be released to them without need of yearly appropriations."

Early this month, the High Court voting 10-3 ruled that the basis for the ‘just share’ of local government units under Section 6, Article X of the 1987 Constitution as being based on all national taxes and not only national internal revenue taxes, as provided in Section 284 of the Local Government Code.”

With the ruling, the SC granted partially the petition filed by Batangas Gov. Hermilando Mandanas who challenged the government’s allocation of IRA to LGUs and sought the immediate release of 1500 billion from customs collections.

Mandanas told the SC that the IRAs of LGUs have been withheld since 1992 in violation of Section 6, Article X of the Constitution which mandates an automatic release of the LGUs’ “just share” in national taxes.

He said the government’s compliance with the mandate of the Constitution is a prime requisite for the LGUs to efficiently and expediently serve their constituents through the delivery of basic services.

Under the National Internal Revenue Code (NIRC), the national internal revenue taxes include “income taxes; estate and donor’s taxes; value-added tax; other percentage taxes; excise taxes; documentary stamp taxes; and such other taxes as are hereafter may be imposed and collected by the BIR.”

The law that created the LGUs (RA 7160) provides that provincial, city and municipal governments must receive 40 percent of the total national internal revenue taxes collected by the government.

The Constitution under Section 6, Article X, on the other hand, provides that the LGUs “shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.”