2019 is indeed the reckoning year for the implementation of the SC decision promulgated this year and the FY 2019 NEP should be modified to comply with the magistrate’s ruling.
It was really a big let-down for all LGUs to know that the Mandanas’ Mandamus for an IRA payback was recently denied by the Supreme Court. Although it ruled favorably for the petitions filed by Governors Mandanas and Garcia, the Court ordered the prospective application of the correct determination of the revenue base from all national taxes and consequently the right computation of the IRA.
There is a special provision in the GAAs that “any valid adjustments, changes, modifications, or alterations in any of the factors affecting the computation of IRA that occurred or happened, including final and executory court decisions made effective during the current fiscal year, shall only be considered and implemented by the DBM in the subsequent fiscal year.” Hence, 2019 is indeed the reckoning year for the implementation of the SC decision promulgated this year and the FY 2019 NEP should be modified to comply with the magistrate’s ruling.
Truly there was grave abuse of discretion and lack of authority on the part of the DBCC to have erroneously implemented Sec. 284 of the LGCode. Granting it was valid then, LGUs still did not get its full 40% IRA share from the national internal revenue taxes. DBCC failed to interpret this provision in conjunction with the national internal revenue tax code, particularly Section 21 of RA 8424 which already provided the legal definition of what constitutes internal revenue taxes.
As it is, even if the IRA is computed against national taxes, the difference is really not that substantial since VAT, excise taxes and DST collections of the BOC as part of “internal revenues” comprise about 85% of all its national tax collections annually. It is then logical that the IRA payback could have been ordered if the decision was based on the non-implementation of valid existing laws instead of basing it on the theory that Sec. 284 was nullified and declared unconstitutional. Moreover, the proposed repayment will be in a staggered basis. Hence, it will not severely affect the government’s current fiscal position. Assuming the IRA payback was granted, our people could have expected more quality services from its local officials.
At the time when Mandanas filed his petition with a mandamus or an appeal to compel Respondents to pay the LGUs their uncollected IRA shares from the BOC, the shortfall then amounted to about P438 Billion. Since it took seven years before the decision was promulgated, the IRA shortfall has now tripled to almost P1.5 Trillion. This includes the uncollected IRA share of LGUs from the illegal deductions of the special funds and special accounts, the COA share, and the DBM deductions of the cost of devolved personal services in the amount of P6.476Billion annually from the BIR-certified total IRA.
If DBM will endorse the filing of a motion for reconsideration even with the non-repayment of the IRA shortfalls, then it will only cause the delay of the implementation of the SC’s decision by another year. This, however, will not be consistent with the good intention of the Duterte administration to truly give more resources to the LGUs through the proposed shift to a federal form of government.
(To be continued…)