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Customs to share earnings with LGUs

Lead petitioner Batangas Governor Hermilando Mandanas (right) with former Senator Aquilino Pimentel Jr., author of the Local Government Code and primary lawyer in the IRA backpay petition that the Supreme Court recently favored.

At long last, after years of court battle in the Supreme Court, local governments in the provinces including Negros Oriental’s cities and towns, will soon regularly receive their just share from the earnings of the notorious flagship agency the Bureau of Customs on top of the traditional Internal Revenue Allotments (IRA). The biggest obstacle will be the office of the President which is reported to be the traditional recipient of this old multi million bonanza.

The lead petitioner in this game-changer case is the chairman of all Regional Development Councils in Luzon, Gov Hermilando Mandanas of Batangas.

Thus Congress is urged by LGUs to propose the passage of a resolution requesting the Department of Budget and Management (DBM) to urgently implement the SC decision.

The Supreme Court announced on July 4 its decision that the “just share” of LGUs must be computed and sourced from all national taxes and not just from the national internal revenue taxes.

“Implementing the ruling of the Supreme Court will enable the LGUs to efficiently and expediently serve the Filipino people and hasten the delivery of much needed and long delayed basic services,” petitioner Gov. Mandanas said. With this, the 2019 proposed budget of P640.6 billion allotment to local govenrments LGUs will increase by about 50% due to the inclusion of the Bureau of Customs collection of national taxes, including tariffs and custom duties.

“This is the real meaning of bottom-up budgeting and inclusive development. With increased funds, the real needs of the community will be attended by the community. Shifting money from the national government to the local government will mean devolved services can now be really funded, and this will also reduce underspending and corruption,” Mandanas added.

Among the basic services and facilities that the LGUs can now provide without being at the mercy of the national government are repairs of barangay roads, building of health centers and hospitals, provision of CCTVs for crime prevention, tourism facilities, and their own ambulances.


Aside from the estimated P300 billion increase in the 2019 budget, LGUs have yet to receive P1.5 trillion representing IRA backpay from 1992, he said.

Mandanas recognized that the national government will not be able to pay this amount in full unless they borrow, but said “that (borrowing) need not be done if they recast the existing budget. If they take out the amount from the general budget and give it as IRA, there will be no increase in the total budget and no borrowing involved,” In 2012, Mandanas, who was representative of the 2nd district of Batangas, went to the High Court to question the government’s wrong computation and misappropriation of IRA funds for LGUs.


In his 23-page petition, Mandanas argued that Section 284 on Allotment of Internal Revenue Taxes of Republic Act 7160 (Local Government Code) clearly defines “just share” regarding the IRA while Section 21 of RA 8424 (National Internal Revenue Code) enumerates the sources of revenue as income taxes, estate and donor’s taxes, value-added tax, other percentage taxes, excise taxes, documentary stamp taxes, and such other taxes imposed and collected by the Bureau of Internal Revenue.


The national government is now urged to recast the 2019 national budget that Malacañang endorsed to Congress to implement the recent Supreme Court ruling on the computation of the Internal Revenue Allotment (IRA) for local government units (LGUs).

During the time of President Gloria Macapagal-Arroyo, Mandanas had won a petition and was able to have some P60 billion in IRA to local governments released. (related story on page 2 down/ –Rappler.com,)