LGUs’ share from Special Accounts

The League of Provinces of the Philippines (LPP) passed its General Assembly or GA Resolution No. 2018-008 strongly urging the Development Budget and Coordinating Committee (DBCC), through the Coordinating Committee on Decentralization or CCD to void the assailed DBCC Resolution 2003-02 because it is non-compliant to existing laws.

Said DBCC Resolution, entitled “Defining the Revenue Base of the IRA” particularly item No 2 (c) and (e) thereof, excluded from the computation of the revenue base of the IRA the following revenues representing the special accounts earmarked by special laws, to wit:

c. Taxes when a portion has already been earmarked by law for designated LGUs, such as (i) mining taxes under RA 7160; (ii) franchise taxes under RA 6631 and 6632, as amended by RA 8407 and 7953, respectively; (iii) VAT collections under RA 7643, as amended by RA 8424; (iv) gross income taxes paid by businesses and enterprises within the special economic zones under RA 7227 and 7916, as amended by RA 8748; (v) excise tax on locally manufactures Virginia tobacco under RA 7171; (vi) tax collections from Northern Mini Hydro Corp, and Hydro Electric Development Corp. under RA 7156; (vii) internal revenue taxes collected within the Autonomous Region of Muslim Mindanao under RA 6734 as amended by RA 9054; xxx e. All other collections of similar nature”. (UNDERSCORING SUPPLIED)

If we look at PD 1741, which amended PD 141, it provided for the basis for the deductions of these special accounts, to wit:

“Section 2. Magnitude of Assistance.  A maximum of twenty per cent (20%) of national internal revenue taxes shall be available for national assistance to local government units: Provided, That the national revenue used as basis in computation SHALL EXCLUDE  RECEIPTS ACCRUING TO SPECIAL OR FIDUCIARY FUNDS AND TO SPECIAL ACCOUNTS IN THE GENERAL FUND, amounts authorized by law to be used by the collecting agency, and amounts recorded as income of the General Fund but which are charged appropriations in the General or other Appropriations Laws.”  (UNDERSCORING SUPPLIED)

It is clear that these inoperative laws have been amended by existing laws (RA Nos. 7160 and 8424, the exclusion of these special accounts was specifically repealed by the 1991 Local Government Code in the Repealing Clause, to wit:

“Section 534. Repealing Clause. -xxx (c) xxx Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; . xxx . are hereby repealed and rendered of no force and effect.”


For FYs 1995-2017, total deductions of these special accounts already reached a total of P585 Billion. Hence, the uncollected 40% share of LGUs from these internal revenues is P234 Billion. Until there is a clear ruling of the Supreme Court on the Mandanas similar case on the non-inclusion of internal revenues collected by the Bureau of Customs from VAT and excise taxes on imported goods, the League is earnestly requesting DBCC to merely rectify this prospectively, effective FY 2019. The CCD Policy Dialogue Group headed by Usec. Austere Panadero expressed its full support and endorsement to the DBCC.

About the Author
Sandra Tablan Paredes is presently the Executive Director of the League of Provinces of the Philippines (LPP) since October, 2016 although she previously served LPP as Director from 1997 to 2004 Sandy helped organize ULAP in 1998 with former Governor Joey Lina and advocated for the LGUs' rightful IRA share, among other league advocacies, programs and projects to help local officials ensure local and fiscal autonomy and good governance. Recently served as concurrent interim Executive Director of ULAP from Jan-March 31, 2017. You can email her at This email address is being protected from spambots. You need JavaScript enabled to view it.
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