BAGUIO CITY, Philippines — The government has until 2022 to release the shares of local government units (LGUs) from all national taxes, after the Supreme Court affirmed its 2018 decision that they are entitled to internal revenue allotments (IRA) that include shares from customs duties and other excise taxes.
Voting 8-3, the SC justices sitting en banc denied the motion for reconsideration filed by the government, which argued that the court’s decision on July 3, 2018, erroneously expanded the basis for computing the IRA.
The court also dismissed a petition filed by the camp of the late Bataan Rep. Enrique Garcia, which sought a partial reconsideration of the decision, arguing that “all arrears since 1992 resulting from the application of the expanded basis in computing the IRAs, should be given to the local governments.”
Garcia was one of the officials who questioned the government’s interpretation of the IRA. He died in 2016 and had been represented by his son, Bataan Rep. Jose Enrique Garcia III. But the 2018 court ruling said the IRA that included taxes would apply prospectively.
Automatic release
“Section 6, Article X of the 1987 Constitution commands that the just share of [local governments] in national taxes shall be automatically released to them,” the court said in its 2018 decision.
But the IRA represents local government shares from “national internal revenue taxes,” which means that “Congress has actually departed from the letter of the 1987 Constitution,” the court had ruled.
It said national taxes should include tariff and duties collected by the Bureau of Customs, as well as shares from “the exploitation and development of national wealth.”
“In denying the motions for reconsideration, the SC ruled that the adjusted amounts for the IRA was deemed effective only after the finality of the judgment,” said lawyer Brian Hosaka, the court spokesperson.
“There’s a three-year period for which the government would have to collect and compute all these taxes. The adjusted amount can be distributed by 2022,” Hosaka said.