But moving forward, SANA sa SONA ni Pangulong Duterte, he can announce that beginning 2019, he will instruct the BIR to certify the correct IRA level due LGUs based on strict implementation of existing laws.

The Bureau of Internal Revenue (BIR) has been the agency tasked to determine how much were allotted to LGUs. The LGUs’ revenue share was a given. The national government computes and LGUs are just at the receiving end. Just like a parent to a child, “here’s your allowance, spend it wisely!” No questions asked.

Although there are laws on how to legally determine the LGUs’ revenue share, there was no formal mechanism for LGUs to validate it prior to BIR’s submission to DBM in the NEP under ‘automatic appropriation’, notwithstanding its “automatic release” provision guaranteed by the 1987 Constitution.

There have been several fora, meetings and congressional hearings where we have steadfastly raising our valid concerns regarding the accurateness of BIR’s IRA determination since 1992 based on the NET general fund contrary to what Congress provided in the law, which should be based on the “total internal revenues actually realized, as certified by BIR”. Usually, the legal arguments we raise through League Resolutions are “duly noted” by the concerned authorities yet it falls on deaf ears and remains unresolved to this date unless local officials file a case in Court as a last resort.

Since 1992 up to now, BIR’s duly-certified revenue base does not include the internal revenues collected by the BOC, despite clear and unequivocal provisions as stated under Sec. 12 and 21 of RA 8424 which states that the BOC is a deputized agent of the BIR and that VAT and excise taxes are internal revenues, respectively. It also excludes special accounts and the COA share in the revenue base as per DBCC Resolution 2003-02 which is based on an inoperative law, PD 1441 as amended by PD 17412, which were expressly repealed under Sec. 5343 of RA 7160. It was then Senators Guingona4 and Pimentel who raised this issue on the importance of the revenue base that Congress intentionally included these special accounts in its determination for the IRA.

As a result, LGUs are actually getting an average of only 31% and not the full 40% guaranteed share. The IRA Shortfalls now reach over P1.2 Trillion. For 2019, IRA as computed by BIR is at P575.5B (30.31% level) when the Constitutionally-mandated fiscal space for LGUs’ IRA should be at P759.5B (at 40%) or a shortfall of P184B if uncorrected.

Since 2012, we have been earnestly waiting for the Supreme Court to finally decide on the Mandanas case filed on the non-inclusion of the BOC’s internal revenue collections in the revenue base. But in good faith, government can already prospectively direct BIR to include this in FY 2019 (Mandanas vs. Romulo, GR 1527745).

We remain hopeful because we firmly believe that President Duterte, a former Mayor himself, has the political will to finally correct the mistakes of previous administrations. Minana na lang kasi ng Duterte administration itong lumang IRA formula adopted by BIR since the time of Marcos up to the Aquino administration.

But moving forward, SANA sa SONA ni Pangulong Duterte, hopefully he can announce that beginning 2019, he will instruct the BIR to certify the correct IRA level due LGUs based on strict implementation of existing laws6. Before, IRA was just our share. Today, IRA shall truly be the LGUs’ Just share to prepare LGUs under a federal government! This will be Duterte’s legacy, one of many, but one that will rally the LGUs to support the approval of the proposed federal constitution in the impending plebiscite.

1PD 144, dtd March 3, 1978, entitled: ‘Revising the present system of national internal revenue allotments to local governnments’. “Sec. 1: Twenty per centum of the collections from national internal revenue taxes NOT OTHERWISE ACCRUING TO SPECIAL FUNDS AND SPECIAL ACCOUNTS IN THE GENERAL FUND shall accrue to local governments to be computed on the basis of the collections of the third fiscal year preceding the current fiscal year.” (underscoring supplied)

2 PD 1741, 1978, Amending PD 144, ”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)

3 RA 7160, Section 534. Repealing Clause. - (c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2) of Republic Act No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; x x x are hereby repealed and rendered of no force and effect.”

4Senate’s Official Transcript on RA 7160, floor deliberations on Nov. 27, 1987 “Senator Guingona: “In Section 144, first paragraph, there is mention about special funds and special accounts. Does the distinguished Sponsor have any listing or computation as far as special funds and special accounts are concerned? The reason for this question is that this may be one way of lessening the share of the local government units because special funds and special accounts can be treated or declared as such by the Department of Finance. So, I would hope that there be a clarification as to the extent and magnitude of special funds and special accounts.” Senator Pimentel: “The observation of the Majority Floor Leader is accurate, Mr. President. We need some specific guidelines to insure that special funds and special accounts are not arbitrarily created or established by the National Government. And, therefore, we will try to make this provision more specific along that line. (underscoring supplied)

5 GR 152774: (Mandans vs. Romulo), The Supreme Court ruled: “Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein, which are fixed in the Local Government Code of 1991, are matters of general and substantive law. To permit Congress to undertake these amendments through the GAAs, as the respondents contend, would be to give Congress the unbridled authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year. This, the Court cannot sanction. It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001, the GAAs of 2002 and 2003 do not contain provisos similar to the herein assailed provisos. In other words, the GAAs of 2002 and 2003 have not earmarked any amount of the IRA for the LGSEF. Congress had perhaps seen fit to discontinue the practice as it recognizes its infirmity. Nonetheless, as earlier mentioned, this Court has deemed it necessary to make a definitive ruling on the matter in order to prevent its recurrence in future appropriations laws and that the principles enunciated herein would serve to guide the bench, bar and public.” (underscoring supplied)

6 Sec. 284 of RA 7160, dtd 1991, “Allotment of Internal Revenue Taxes. - Local government units shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year, x x x” and ARTICLE 378 of AO 270, IRR of LGCode, “Allotment of Internal Revenue Taxes. — The total annual internal revenue allotments (IRAs) due the LGUs shall be determined on the basis of collections from national internal revenue taxes actually realized as certified by the BIR during the third fiscal year preceding the current fiscal year



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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