THE government will honor a Supreme Court ruling to expand payments to local governments from national government revenue starting 2022, rebuffing a request by governors to implement the new payment scheme earlier.
The President’s spokesman, Salvador S. Panelo, said in a statement that the expanded payments of the Internal Revenue Allotment (IRA) — the local governments’ share of national government revenue — will need to wait until the next government takes office.
“Due to the various commitments of the President to the people, such as the implementation of programs designed to combat criminality and corruption, as well as activities of the national government to promote human development and poverty reduction, to name a few, it was agreed that the adjustment of the IRA may not be feasibly effected during this Administration,” he said.
“Otherwise, there will be an unmanageable fiscal deficit, while securing loans will be more expensive to the nation as the citizenry will be paying for higher rates,” he added.
Mr. Panelo said Finance Secretary Carlos G. Dominguez III had raised the possibility of the early implementation of the Supreme Court’s Mandanas vs. Ochoa ruling prior to 2022.
In Mandanas vs. Ochoa, the court ruled that under the Local Government Code, which took effect in 1991, local government units (LGUs) are entitled to a share of the national government’s revenue, but also found that the national government has from the start been excluding Customs revenue from IRA computations. It ordered the national government to correct its computation method and make up the arrears from 1992 to 2012.
In a phone message, Mr. Dominguez said he raised the matter at the Cabinet meeting Wednesday “because of a request from the governors’ organization.”
In July, the League of Provinces of the Philippines (LPP) said “it would be in everyone’s interest if the national government does not delay its implementation to FY 2022.”
The group urged the Palace to “automatically release” the LGUs’ “just share” in all national taxes beginning July 1, 2019 and thereafter.
Mr. Panelo added in his statement: “In any event, this postponement until fiscal year 2022 of the adjustment of the IRA of local government units is in accordance with the ruling by the High Court that the expanded basis for calculating the share of local government units in the national taxes will be prospectively effective starting from the 2022 budget cycle pursuant to the doctrine of operative fact.”
On July 3, 2018, the court ruled that the “just share” of LGUs should be based on all national taxes, and not only in the national internal revenue taxes.
This stemmed from the petition filed by former Batangas governor Hermilando I. Mandanas in January 2012, when he was a member of the House of Representatives for the second district of Batangas.
In the petition, he claimed that LGUs are owed around P500 billion, covering underpayments of the IRA between 1992 and 2012, because Customs revenue was left out of the computation. — Arjay L. Balinbin