The Supreme Court has denied the SOLGEN’s Motion for reconsideration and has issued its ‘Entry of Final Judgment’ stating therein that its July 3, 2018 en banc decision has already “lapsed into finality” on June 10, 2019. The Court also denied the LGUs’ claim for payment on the “IRA arrears” for the period 1991 to June 10, 2019.
Since my last article here in The Lobbyist, I have tried to expound on the legal arguments of the Leagues with regard to LGUs’ just share. It took a while before I could go back to writing again as the IRA case was on-going with the Courts. But now, the Supreme Court ruling on the Mandanas v. Ochoa (G.R. 199802) and Garcia v. Ochoa (G.R. 208488) is final and executory! The LGUs’ “Internal Revenue Allotment” or IRA is now to be referred to as “National Tax Allotment” or NTA. Our new advocacy campaign is now #NTAasNa! #NTAmaNa! and #NTAgalanLang! Filed in 2012, it took 7 years before this landmark decision has become ripe for implementation.
The “legal” issue has been resolved with finality! The Supreme Court has denied the SOLGEN’s Motion for reconsideration and has issued its ‘Entry of Final Judgment’ stating therein that its July 3, 2018 en banc decision has already “lapsed into finality” on June 10, 2019. The Court also denied the LGUs’ claim for payment on the “IRA arrears” for the period 1991 to June 10, 2019. But starting June 11, 2019, the LGUs share should already increase based on all national taxes, computed against the BIR and BOC revenues “collected” three years preceding. So, for FY 2019, the NTA adjustments should be based on the 2016 revenues already “collected” by BIR and BOC, and for FYF 2020, it should be based on the 2017 revenues “collected”. DBM suggests that the 2019 revenues “still to be collected” shall be the basis of the NTA to be paid in 2022. But this is not what is provided in Sec. 284 of the Code. The basis should be revenues that already have been “collected” three years prior. DBM’s interpretation of the decision implies that there will be a moratorium for 2020 to 2021 and that the LGUs’ IRA will still be computed on a status quo basis. But where will DBM base its IRA computation? The phrase “internal revenue” in Section 284 of the LGCode has already been deleted, as if it is “NOT WRITTEN” effective June 10, 2019. The SC’s interpretation of the Constitution is binding! Articles 7 and 8 of the Civil Code (R.A> 386) provides that SC Jurisprudence is already part of the law of the land! There is no deferment of the deletion of said phrase, as the DBM seems to suggest.
DOF Secretary Dominguez says that this “legal” issue became a “fiscal” problem and is now a “political” decision on the part of the President. Should the President decide to accede to the clamor of LGUs to pay the NTA adjustments on the IRA, the economic managers warned that there might be the risk of an unmanageable public sector deficit”. But the Governors and Mayors jointly recommended that there is a win-win solution to this impasse that will enable the Government to both comply with the Constitutional mandate and implement the SC’s decision without risking a fiscal crisis. And this is for the National Government to issue a Letter of Guarantee to the LGUs recognizing this Constitutional obligation to pay the LGUs, albeit prospectively through a deferred payment scheme.
It will now be up to the LGUs to use said legal instrument as a collateral either to take out a loan with government accredited banks or to opt for an NTA monetization similar to the IRA Monetization program implemented by former President Gloria Macapagal Arroyo in 2005 where the NG paid the LGUs’ IRA shortfalls through a deferred payment scheme for 7 years. The Governors presented this proposal, as unanimously approved by ULAP and its member leagues, to Senator Bong Go for consideration of the President.
President Rodrigo Duterte stated during the national board meeting of the League of Cities (LCP) held last September 27, 2019 in Davao City that he is “open to this ‘Monetization’ proposal initiated by the Leagues.1 This will now be the topic of the discussion with President Duterte and key local officials led by LPP President Gov. Velasco and LCP Mayor Leonardia with Senator Bong Go on October 11 in Malacanang.
### (to be continued…)