Mayors welcome higher IRA by 2022 due to SC ruling on Mandanas case

The League of Municipalities of the Philippines (LMP) Catanduanes Chapter recently expressed with the impending implementation of the Supreme Court’s ruling on the Mandanas case that would increase the local government units’ Internal Revenue Allocations nationwide to more than P1 trillion in 2022.

LMP Catanduanes Chapter President and San Andres Mayor Peter C. Cua told the Tribune that the local chief executives have been waiting for the favorable development for some time now.

It may be recalled that in summer of 2020, the Supreme Court (SC) affirmed with finality its ruling increasing the internal revenue allotment (IRA) of LGUs.

The original decision issued in July 2019 expanded the IRA allotment for LGUs to include tax collections of other agencies apart from the Bureau of Internal Revenue (BIR), such as the tariff and duties collected by the Bureau of Customs, 50 percent of value-added tax, 30 percent of national taxes collected in the Autonomous Region in Muslim Mindanao, 60 percent of national taxes collected from the exploitation and development of national wealth, 85 percent of excise tax from tobacco products and a portion of franchise tax under Republic Acts 6631 and 6632 (Horse Racing Laws), among others.

In partially granting the petition of Batangas Gov. Hermilando Mandanas in questioning the IRA allocation process, the SC agreed that under Section 284 of Republic Act 7160, provincial, city and municipal governments should receive 40 percent of total national internal revenue taxes collected by the national government.

At present, LGU’s IRA comes from 40 percent of national internal revenue taxes collected by the BIR.

The High Court also rejected the petitioner’s plea for retroactive application of the increase of IRA for LGUs beginning 1992 when the Local Government Code (LGC).

The additional IRA, however, comes with new responsibilities, as the LGUs will have to prepare for the transfer to their offices of additional devolved functions, services and facilities

In National Budget Memorandum No. 138 dated last Jan. 6, 2021, the Department of Budget and Management (DBM) issued its National Budget Call for FY 2022 but with a caveat for LGUs which will be receiving a “substantial increase” in IRAs beginning next year.

“They are therefore expected to be responsible for the funding and delivery of the activities which have been devolved to them under Republic Act 7160, the Local Government Code of 1991 and other subsequent laws,” DBM Secretary Wendel Avisado stressed.

Covered by the full devolution is the Local Infrastructures Services of the Department of Public Works and Highways (DPWH), which will concentrate on the construction and maintenance of national roads and bridges.

Pursuant to the SC ruling, provincial government will be responsible for provincial roads and bridges, inter-municipal waterworks, drainage and sewerage, flood control and reclamation projects.

Municipalities will cover municipal roads and bridges, small water impounding projects and similar projects, rainwater collectors and water supply systems, seawalls, dikes, drainage and sewerage, flood control, as well as facilities related to general hygiene and sanitation.

On the other hand, barangays will be responsible for the maintenance of barangay roads and bridges and water supply systems; infrastructure facilities such as multi-purpose hall, multi-purpose pavement, plaza, sports center, and other similar facilities.

DPWH Catanduanes District Engineer Gil Augustus A. Balmadrid, however, clarified that while local infra projects have been removed from the department, it will continue to implement the so-called Convergence  Projects such as the construction of new school buildings together with the Department of Education (DepEd) and the construction of roads and bridges leading to tourism sites in partnership with the Department of Tourism (DOT).

From the Department of Justice (DOJ), the maintenance of Katarungang Pambarangay will now be the responsibility of the barangays while the Department of Labor and Employment (DOLE) will devolve its informations services, including job placement information systems, to municipal governments.

The Department of Social Welfare and Development (DSWD), the Office of the Presidential Adviser on the Peace Process (OPAPP) and the National Youth Commission (NYC) will also devolve functions to the LGUs.

Beginning 2022, provinces will handle social welfare services including programs for rebel returnees, relief operations and population development services while barangays will be responsible for social welfare services such as the maintenance of day care centers.

Aside from livelihood and pro-poor projects, municipalities will be responsible for social welfare services including child and youth programs; family and community programs; welfare programs for women, elderly and persons with disabilities; and, community-based rehabilitation programs for vagrants, beggars, street children, and juvenile delinquents.

The devolution of certain functions and services from national agencies to the LGUs will drastically reduce their budgets for 2022.

Under the 2020 General Appropriation Act, the DPWH had an approved budget of P580 billion and was allocated the lion’s share in this year’s budget with P694.8 billion. It’s infra budget for 2022 will be much less, department officials say, with the removal of local infrastructure projects which have been devolved to the LGUs.

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