2. What is the Mandanas Ruling?
The Supreme Court in G.R. No. 199802, July 3,
2018 entitled, “Congressman Hermilando I.
Mandanas; Mayor Efren B. Diona, et al., Petitioners
vs. Executive Secretary Paquito N. Ochoa, Jr.;
Secretary Cesar Purisima, Department of Finance;
Secretary Florencio H. Abad, Department of Budget
and Management; et al., Respondents”, and
3. What is the Mandanas Ruling?
G.R. No. 2088488, July 3, 2018 entitled, “Honorable
Enrique T. Garcia, Jr., In His Personal And Official
Capacity As Representative of the 2nd District of the
Province of Bataan, Petitioner vs. Honorable Paquito N.
Ochoa, Jr., Executive Secretary; Honorable Cesar V.
Purisima, Secretary, Department of Finance; Honorable
Florencio H. Abad, Secretary, Department of Budget and
Management, et al., Respondents.
4. The petitioners in both these petitions challenged
the manner in which the just share in the national
taxes of the local government units (LGUs) has
been computed.
For Mandanas, et al., their petition is in the nature
of a special civil action for certiorari, prohibition,
and mandamus assailing the manner the General
Appropriations Act (GAA) for FY 2012 computed the
IRA for the LGUs.
5. Mandanas, et al. alleged that certain collections of
NIRTs (National Internal Revenue Taxes) by the
Bureau of Customs (BOC) – specifically: excise
taxes, value-added taxes (VATs) and documentary
stamp taxes (DSTs) – have not been included in the
base amounts for the computation of the IRA.
Petitioners further claimed the release of the
additional amount of P 60,750, 000, 000.00 to the
LGUs as their IRA for FY 2012
6. A staggering amount of unpaid IRA from FY 1992 up
to FY 2011 totalling to P 438, 103, 906, 675. 73 is
being demanded by the petitioners.
For petitioner Congressman Enrique Garcia in G.R.
208488, it is one of a petition for issuance of a writ
of mandamus – that is to compel the respondents to
compute the just share of the LGUs on the basis of
all national taxes.
7. Garcia insists on the literal reading of Section 6,
Article X of the 1987 Consitution. He avers that the
insertion by the Congress of the words internal
revenue in the phrase national taxes found in
Section 284 of the Local Government Code of 1991
caused the diminution of the base for determining
the just share of the LGUs and that it is
unconstitutional.
8. Both petitions are similar in nature in that they both
seek a recomputation of the base of the IRA to
include all national taxes and not merely internal
revenue taxes.
9. The Supreme Court’s Decision.
The Court agreed with Garcia on his allegation that
Congress committed indiscretion. Congress, according to
the Court, had infringed on the Constitutional provision
that the LGU’s just share must include all national taxes
and not only from the national internal revenue.
10. The Supreme Court further stated that the phrase
“national internal revenue taxes” in Section 284 of
the Local Government Code of 1991 is more
restrictive than the term “national taxes” written
in Section 6, Article X of the 1987 Philippine
Constitution.
It went on to state that “Congress has actually
departed from the letter of the 1987 Constitution
stating that national taxes should be the base from
which the just share of the LGU comes.
11. Congress had also curtailed the guarantee of fiscal
autonomy in favour of the LGUs under the 1987
Constitution.
National internal revenue taxes are those
enumerated in the National Internal Revenue Code
(NIRC). These are: income tax; estate and donor’s
taxes; VAT; other percentage taxes; excise taxes;
documentary stamp taxes; and such other taxes as
are or hereafter may be imposed and collected by
the Bureau of Internal Revenue.
12. Section 284 has effectively deprived the LGUs from
deriving their just share from other national taxes,
like customs duties.
The intent of the people in respect to Section 6
(Article X of the 1987 Constitution) is really that
the base for the reckoning the just share of the
LGUs should include all national taxes.
13. To read Section 6 differently as requiring that the
just share of LGUs in the national taxes shall be
determined by law is tantamount to the
unauthorized revision of the Constitution.
14. In recapitulation, the national taxes to be
included in the base for computing the just share
the LGUs shall henceforth be, but shall not be
limited to, the following:
1. The NIRTs enumerated in Section 21 of the
NIRC, as amended, to be inclusive of the VATs,
excise taxes, and DSTs collected by the BIR and
the BOC, and their deputized agents;
15. 2. Tariff and customs duties collected by the BOC;
3. 50% of the VATs collected in the ARMM, and 30%
of all other national taxes collected in the ARMM;
the remaining 50% of the VATs and 70% of the
collections of the other national taxes in the ARMM
shall be the exclusive share of the ARMM pursuant to
Section 9 and Section 15 of R.A. No. 9054;
16. 4. 60% of the national taxes collected from the
exploitation and development of the national
wealth; the remaining 40% will exclusively accrue to
the host LGUs pursuant to Section 290 of the LGC;
5. 85% of the excise taxes collected from locally
manufactured Virginia and other tobacco products;
the remaining 15% shall accrue to the special
purpose funds pursuant created in R.A. No. 7171
and R.A. No. 7227;
17. 6. The entire 50% of the national taxes collected
under Section 106, Section 108 and Section 116 of
the NIRC in excess of the increase in collections for
the immediately preceding year; and
7. 5% of the franchise taxes in favor of the national
government paid by franchise holders in accordance
with Section 6 of R.A. No. 6631 and Section 8 of
R.A. No. 6632.
18. The effect of the Court’s declaration through the
decision of the unconstitutionality of Section 284 of
the LGC and its related laws as far as they limited
the source of the just share of the LGUs to the
NIRTs is prospective. It cannot be otherwise.
This supports the decision of the Court not to grant
the payment of arrears to the LGUs (from 1992-
2011).
19. The 1987 Constitution is forthright and unequivocal
in ordering that the just share of the LGUs in the
national taxes shall be automatically released to
them. With Congress having established the just
share through the LGC, it seems to be beyond
debate that the inclusion of the just share of the
LGUs in the annual GAAs is unnecessary, if not
superfluous. Hence, the just share of the LGUs in
the national taxes shall be released to them without
need of yearly appropriation.