In a decision written by Justice Romeo Callejo Sr., the High Court said that while the issue involved past IRAs, it decided to resolve the issue to avoid any further infringement into the autonomy of the LGUs guaranteed under the Local Government Code of 1991.
With its ruling, the High Court granted the petition of three- term Gov. Hermilando Mandanas of Batangas, now a congressman-elect representing the province’s second district.
The High Court said that the IRAs of the local government units cannot be increased or decreased by any law, specifically the GAAs, since the share of local governments in the national funds has been fixed by the Local Government Code of 1991.
"To permit Congress to undertake these amendments through the GAAs would be to give Congress the unbridled authority to unduly infringe the fiscal autonomy of the LGUs and thus put the same in jeopardy every year. This, the court cannot sanction," it said.
Mandanas assailed the provisions in the 1999, 2000 and 2001 GAAs that uniformly earmarked for each corresponding year the amount of P5 billion of the IRA for the Local Government Service Equalization Fund (LGSEF).
The release of the LGSEF was subjected to the rules and regulations by the Oversight Committee on Devolution created by Executive Order No. 48 during the term of former President Joseph Estrada.
The oversight committee was authorized to come out with the mechanisms for the equitable allocation and distribution of the funds to the LGUs that would be incorporated in the annual GAA.
Citing Section 6, Article X of the Constitution, the High Court said that "local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them."
Under Executive Order No. 48, the entire process involving the distribution and release of the LGSEF "is constitutionally impermissible, since the LGUs are placed at the mercy of the oversight committee," the High Court said.
It pointed out that the distribution and release of the IRAs should not be subject to the vagaries of the implementing rules and regulations, including the guidelines and mechanics unilaterally prescribed by the oversight committee.
"Indeed the oversight committee exercising discretion, even control, over the distribution and release of a portion of the IRA, the LGSEF, is an anathema to and subversive of the principle of local autonomy as embodied in the Constitution."
Mandanas petition upheld
The Supreme Court has ruled that the withholding of Internal Revenue Allotment (IRA), although in accordance with the General Appropriations Act, is unconstitutional.
The Supreme Court decided in favor of three-term Batangas Gov. Hermilando Mandanas, now the Congressman-elect from the 2nd District of Batangas, that the entire IRA should be released automatically, without need for any other action, to the LGUs in accordance with the formula set by the Local Government Code.
The case was filed against Executive Secretary Alberto Romulo, Department of Budget and Management Secretary Emilia Boncodin and Local Government Secretary Jose Lina Jr. for withholding P7.5 billion of IRA and disbursing it later as Local Government Service Equalization Fund (LGSEF).
The Supreme Court decision covered the GAA of 1999, 2000 and 2001, of which P7.5 billion was disbursed by the national government under President Gloria Macapagal Arroyo.
The Supreme Court noted that before Mandanas filed the case, Arroyo, the Local Government Oversight Committee chaired by Romulo and the other plaintiffs were informed of the unconstitutionality of what they were going to do.
Although funds have already been disbursed, the Supreme Court did not consider the case moot and academic, as contended by the plaintiffs, because of the importance of the Local Government Code being a substantive law, and local autonomy as a basic principle in the Constitution.
