In both Constitutional provisions, there is no mention of the exclusion of special accounts from the determination of the internal revenue base for the IRA.

In a DILG Legal Opinion on the DBCC Resolution 2003-02, it cited Article VI on the Legislative Department, Sec. 29 (3)6 as basis for the special accounts to be set aside for paid out for such purpose. 
This Constitutional provision, however, must be taken into context vis-à-vis Article X on Local Governments, Sec. 6 7 which guarantees the automatic release of the just share of LGUs. In both Constitutional provisions, there is no mention of the exclusion of special accounts from the determination of the internal revenue base for the IRA. 

The fact that it was placed under the Legislative Department, it was meant to be a benchmark for Congress to set it aside from the allocation of the net general fund of the national government.  The IRA is an exception to this as it is not part of the general fund in lieu of the Constitutional guarantee on its automatic release and automatic appropriation in the budget, as clearly provided for under Sec. 283 of RA 8424. 8

In SC GR 144256, it ruled:  “While automatic release implies that the just share of the local governments determined by law should be released to them as a matter of course, the GAA provisions, on the other hand, withhold its release pending an event which is not even certain of occurring. To rule that the term automatic release contemplates such conditional release would be to strip the term automatic of all meaning.” 

This ruling is applicable to the special accounts.  The unexpended balance of these special funds will revert to the general fund, hence, it is not even certain of occurring or being consumed.  Former Sen. Guingona also pointed out during its floor deliberations on the LGCode in 1987 that the exclusion of the special funds in PDs 144 and 1741 is “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”.  Hence, Congress expressly repealed these PDs in Sec. 534 of RA 7160.

The right thing to do, therefore, is for the Leagues to “PURSE-sue” the LGUs’ rightful 40% IRA share together prospectively for FY 2019 or 2020.  There will always be strength in unity.

Hopefully thereafter, an even higher share from national revenues under a Federal government, where the make-up of the Purse will be inverted, i.e. instead of the 40% IRA share of LGUs  from the total internal revenue collections actually realized, as certified by BIR, based on the 3rd year preceding the current fiscal year, which translates to only 14% share of the total GAA in FY 2019, we can clamor for a 60% share for LGUs based on all national revenues (tax and non-tax) of the preceding fiscal year.   Indeed, we shall “PURSEvere” and “PURSEist” to say the least!

6 1987 Constitution, Article VI, Legislative Department, Sec. 29 (3) “All money collected on any tax levied for a special purpose shall be treated as a special fund and paid out for such purpose only. If the purpose for which a special fund was created has been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the Government.”
7  1987 Constitution, Article X: Local Governments, Sec. 6.  Local Government Units shall have a just share, as determined by law, in the national taxes  which shall be automatically released to them.  SC RULING GR G.R. No. 152774; May 24, 2004 (MANDANAS VS ROMULO)
“Where the law, the Constitution in this case, is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed.”
RA 8424, “Title XI, Allotment of the Internal Revenue, Chapter 1: DISPOSITION AND ALLOTMENT OF NATIONAL INTERNAL REVENUE IN GENERAL. “SEC. 283. Disposition of National Internal Revenue. -  National Internal revenue collected and not applied as herein above provided or otherwise specially disposed of by law shall accrue to the National Treasury and shall be available for the general purposes of the Government, with the exception of the amounts set apart by way of allotment  as provided for under RA No. 7160, otherwise known as the Local Government Code of 1991. “

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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