Republic Of The Philippines SUPREME COURT

Manila

10\3 ~UG 28

EN BANC

HONORABLE ENRIQUE T. GARCIA JR, in his personal and official capacity as Representative of the 2 nd District of the Province <Df

Bataan, Petitioner,

- versus-

HONORABLE FRANCISCO N. OCHOA, Executive Secreta~y,

HONORABLE CESAR V. PURISIMA, Secretary, Department of Finanae, HONORABLE FLORENCIO H. ABAO, Secretary, Department of Budget and Management, HONORABLE KIM S. JACINTO­HENARES, Commissioner, Bureau of Interna l Revenue, ahd HONORABLE ROZZANO RUFINO

B. BlAZON, Commissioner, Bureau of Customs,

Respondents.

X--------- ------------ - --X

PETITION

G. R. NO. Z08488

To: Declare As Unconstitutional Section 284 of R.A. 7160 and For: MANDAMUS

Petitioner, by and for himself, to this Honorable Court most respectfu lly manifest:

PRELIMINARY STATEMENT

As enshrined in the <Ionstitution, the territorial and political subdivisions of the Republic of the Philippines, consisting of the provinces, cities, municipalities and barangays (collectively referred to as local

2

government units or lgus) have been accorded the right to enjoy local autonomy.

To flesh out this mandate of the Constitution1, Congress enacted

Republic Act No. 7160, otherwise known as the local Government Code of 1991 (LGC) which declares, as a matter of State policy, that the lgus "shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals.2

n

In order to give the lgus the needed resources for them to fulfill their role as effective partners of the national government, the Constitution expressly provides in Section 6, Article X thereof, that lgus "shall have a just share, as determined by Ia"'! in the national taxes which shall be automatically released to them. "

Unfortunately, in fleshing out this particular mandate, i.e., that the lgus shall have a just share in the national taxes, Congress committed a grievous error when it determined in Section 284 of the LGC that the share of the lgus shall be a fixed percentage of the national internal revenue taxes instead of the national taxes as ordained by the Constitution.

As a direct consequence of such error, the national government has consistently failed to fully and faithfully comply with the said provision of the Constitution.

NATURE OF THE PETITION

This is an original action which seeks to declare as unconstitutional Section 284 of the LGC insofar as it contravenes the letter and intent of the Constitution to give the lgus their just share in the national taxes. As such, it presents a purely legal issue which entails the proper legal interpretation of constitutional and statutorylprovisions.3

Petitioner likewise seeks from this Honorable Court the issuance of a writ of mandamus, pursuant to Section 3 of Rule 65, commanding the national government, through the Respondents, to fully and faithfully perform its duty to give the lgus their just share in the national taxes as mandated in Section 6, Article X of the 1987 Constitution.

1 Province of Batangas v. Hon. Alberto Romulo, G.R. NO. 152774, May 27, 2004 2 Section 2 (a), Book I, Local Government Code 3 Province of Batangas, ibid

3

Congress committed a clearly unconstit ut ional act when it changed the basis in determining the share of the lgus f rom "national taxes" to "national internal revenue taxes."

Section 6, Article X of the Cohstitution reads:

"Local government units shall have a just share, as I

determined by law, in the national taxes which shall be automatically released to them."

On the other hand, Section 284 of the LGC states : I

"Local government1 units shall have a share in the national internal revenue' taxes based on the collection of the third fiscal year preceqing the current fiscal year xxx." (highlighting supplied).

As will be shown in this Petition, Respondents unlawfully neglect the performance of their duty to give the lgus their just share in t he nat ional taxes which they are specifica lly enjoined by the Constitution, resulting from their office, to do and perform on a year-to-year basis.

There is no appeal, or anyl plain, speedy and adequate remedy in the ordinary course of law that is available to the Petitioner other t han this Petition.

THE PARTIES

PETITIONER ENRIQUE T. GARCIA JR, is an incumbent member of the House of Representatives represent ing the 2 nd Congressional District of the Province of Bataan which is composed of t he municipalities of Pilar, Bagac, Orion, Limay, and Mariveles, and the City of Balanga, with office address at the Bat asan Complex, Quezon

1 City, and residential addresses at 84 Juan

Lu na Street, San Lorenzo Village, Makati City and Rotary Avenue, Balanga City, Bataan;

RESPONDENT FRANCISCO N. OCHOA, is impleaded in his official capacity as the Executive Secretary and who may be served w ith notices and other court processes at his office at the Malacanang Pa lace in Manila;

RESPONDENT CESAR V. PURISIMA, is impleaded in his official capacity as the Secretary of t he Department of Finance and who may be served with notices and other court processes at his office at the DOF Building, BSP Complex, Roxas Boulevard, Manila;

4

RESPONDENT FLORENCIO H~ ABAD, is impleaded in his official capacity as the Secretary of the Department of Budget and Management and who may be served with notices and other court processes at his office at the Malacanang Palace, Manila;

RESPONDENT KIM S. JACINTO-HENARES, is impleaded in her official capacity as the Commissioner of the Bureau of Internal Revenue and who may be served with notices and I other court processes at her office at the BIR National Office Building in Quezon City.

RESPONDENT ROZZANO RUFINO B. BlAZON, is impleaded in his official capacity as the Commissioner of the Bureau of Customs and who may be served with notices and other court processes at his office at the OCOM Building, BOC, Port Area, Manila.

TIMELINESS OF THE PETITION

Since the petition assails the past, present, and continuing, failure of the Respondents to fully and fa ithfully comply with the pertinent provision of the Constitution on the shares of lgus in the national taxes, the period of sixty (60) days specified in Sec~ion 4 for the filing of petitions pursuant to Rule 65 of the 1997 Rules of Civil Procedure does not apply.

THE RELEVANT ANTECEDENTS

Starting in the year 1995, and every year thereafter, the lgus have been receiving their IRA from the national government. The amount of the IRA being distributed to the jgus was then generally believed to be in accordance with the Constitution and the law.

Petitioner believed otherwise. In his capacity as three-term Governor of the Province of Bataan, from 2004 to 2013, and presently as the Congressman-elect of the 2"d District of Bataan, Petitioner took it upon himself to conduct a diligent and thorough study of the correctness of the IRA that the national governm~nt is giving the lgus.

Based on his study, Petitioner arrived at the conclusion that the national government has committed, and is continuing to commit, a glaring, material error in the interpretation and/or implementation of the provision of the Constitution on the matter which has resulted to a huge shortfall in the IRA of the provinces, cities, municipalities and barangays.

Initial ly, on the assumption that Section 284 of the LGC is valid and constitutional, Petitioner had thought that the error consisted only of the

5

unauthorized: (a) deductions from the internal revenue taxes; and, (b) non­inclusion of VAT and excise taxes collected by the Bureau of Customs, in the computation of the IRA.

In his letter dated 14 January 2011, addressed to His Excellency Benigno S. Aquino Ill, President of the Republic of the Philippines, he pointed out that in three (3) years alone, namely, 2009, 2010 and 2011, there is a resulting shortfall in the IRA distributed to the lgus in the aggregate amount of P233.1 billion on account of the said error. Unfortunately, no reply has been received.

Attached hereto as Annex "A," is a copy of the said letter with its attachments.

Petitioner has also brought this problem officially to the attention of the Speaker of the House, the Senate President, and other key government officials but to no avail.

Attached hereto as Annexes "B," "C," and "D," are copies of the letters sent to the Senate President and Speaker of the House, the then President Gloria Macapagai-Arroyo, and the Chairpersons of the Senate and House Bicameral Panels, respectively.

Thereafter, Petitioner evertually came to realize that Section 284 of the LGC itself is constitutionally infirm and as a consequence, the lgus have been receiving even far less IRA than what he originally thought and far less than what the Constitution authorizes.

His efforts to seek relief from the national government having been met with inaction, Petitioner is

1 here humbly seeking the intervention of the

Honorable Court, through this petition, hoping that the promise to the lgus of a genuine and meaningful local autonomy would be finally realized.

The Honorable Court has so intervened in at least three (3) instances in the past.

In the case of ~'Aquilino Pimentel, Jr., vs. Honorable Alexander Aguirre, et al,"4 the Supreme Court declared as unconstitutional a move of the national government to withhold ten (10%) percent of the IRA; it was deemed contrary to a basic feature of local fiscal autonomy which is the automatic release of the shares of lgus in the national internal revenue and "effectively encroaches on the fiscal autonomy of local governments."

4 G. R. No. 132988, July 19, 2000

6

In the subsequent case of ''Province of Batangas vs. Han. Alberto G. Romulo,~ et af/15 it was held that Congress cannot amend the LGC provisions on IRA through the General Appropriations Act (GAA). The Honorable Court went on to state that to permit Congress to increase or decrease the IRA of the lgus or modify their percentage sharing therein, which are fixed in the LGC, would be to give Congress the unbridled authority to unduly infringe the fiscal autonomy of the lgus.

In the case of "ACORD,~ et a/ vs. Han. Rona/do Zamora, et al/15 the Honorable Court declared that A~icle X, Section 6 of the Constitution binds the legislative just as much as the executive branch of the government.

THE ISSUES TO BE RESOLVED I

Considering the foregoing premises, the Petitioner respectfully submits the following as the issues to be resolved in this petition:

1. Is Section 284 of the LGC, which limits the basis for the computation of IRA to national internal revenue taxes, constitutional?

2. Does the law allow deductions from the national tax collections for purposes of computing the IRA of the LGUs?

3. Should not the collectioms of the Bureau of Customs be included in the computation of the IRA of the LGUs?

~RGUMENTS

The insertion of the words, "internal revenue," in Section 284 of the LGC is patently unconstitutional.

There should be no question at all that the term, " national taxes," is not the same as, "national internal revenue taxes." The former is broader in scope and greater in volume because the latter is but one of its components.

All the taxes that are beiAg collected by the national government, of whatever kind or nature and from whatever source, are included in, and form part of, the national taxes. They include the collections by the BIR of all internal revenue taxes, as well as the collections by the BOC of customs duties, VAT and excise taxes on imported goods.

5 G. R. No. 152774, May 27, 2004 6 G. R. No. 144256, June 8, 2005

7

National internal revenue tpxes, on the other hand, are limited to those that are deemed to be so under Section 21 of the National Internal Revenue Code (NIRC). They are t~us restricted to the collections of internal revenue taxes by the BIR, and collections by the BOC of VAT and excise taxes on imported goods which are declared by law to be internal revenue taxes.

Necessarily excluded from national internal revenue taxes are the customs duties being collected by the BOC.

The mandate of the Constitution is for the lgus to have a just share in the national taxes. Congress, however, changed it by decreeing that lgus shall have a share in the national internal revenue taxes. In doing so, Congress has unduly restricted the lgus' share and entitlement in clear contravention of the constitutiopal mandate.

The law does not allow any deduction from the tax collettions for purposes of computing the IRA of the lgus.

Assuming that Section 284 of the LGC is valid and constitutional, the national government is also in error in its implementation.

The said Section simply ~tates that lgus "shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year."

As can be seen, the law makes no mention of any exclusion or deduction from the national internal revenue collections for purposes of computing the IRA. As written, anything that is collected as national internal revenue tax should form part of the collection for purposes of the computation of the IRA.

In the aforementioned letter to the President, the Petitioner showed competent proof of numerous deductions from the internal revenue collection before the IRA was computed and distributed to the lgus.

Based on the computation of the share of lgus which is being published in the official websites of the national government/ the internal revenue tax collections arel being subjected by the BIR to several deductions before coming up with what it refers to as " basic income." The share of the lgus is then computed based on the said basic income.

7 See attachments to Annex "A"

8

It is the Petitioner's most respectful submission that this practice is contrary to the clear provisions of Section 284 of the LGC because the mandate is to give the lgus a percentage share of the national internal revenue taxes and not just a perc,entage share of the "basic income."

The table below shows how the IRA for the base years 2009, 2010

and 2011, had been arrived at.

{In Millions)

A B c D E F G

1 2009 2010 2011 INTERNAL REVENUE TAX

2 COLLECTION 653,126.24 713,604.29 778,580.80

3 less

4 Non-cash Collection 11,095.31 II 13,893.65 16,625.85

5 PAGCOR Qualifying Fees 16.11 8.60 Miscellaneous Income (Community II

6 Tax, Others) 45.57

7 Refund 200.00

8 Rewards 46.00

9 10 less Special Funds/Special Accounts

Autonomous Region Muslim 11 Mindanao (RA 9054) 621.68 736.44 701.94

12 Mining Taxes (RA 7160) 449.92 525.10 501.83

13 Franchise Tax (RA 6631, RA 6632) 49.10 35.32 0.96 VAT Various Municipalities (RA

14 7643) 9,216.02 1,001.96 390.66

15 ECOZONE (RA 7227) 347.62 385.62 317.48 Excise Tax on locally Manufactured

16 Virginia Tobacco (RA 7171) 2,926.18 23,103.98 27,239.22 Incremental Revenue from Burley

17 and Native Tobacco (RA 8240) 6,067.34 11,836.90

18 COA Share Dec. 24(3) of PO 1445 3,140.5~ 3,339.23 3,604.83

19 Total Internal Revenue Deductions ' 28,154.08 49,097.24 61,219.68 NET INTERNAl REVENUE I

20 COllECTIONS (after deductions) 624,972.17 713,604.29 n8,5B0.8o

21 0.40 0.40 0.40

22 Amount for Distribution 249,988.87 285,441.72 311,432.32

23 24 IRA Distribution

25 Provinces 23% 57,497.44 65,651.59 71,629.43

26 Cities 23% 57,497.44 65,651.59 71,629.43

27 Municipalities 34% 84,996.21 97,050.18 105,886.99

28 Barangays 20" 49,997.77 57,088.34 62,286.46

29 249,988.87 285,441.72 311,432.32

9

From the foregoing, it can be seen that payments and remittances to various recipients were deducted from the internal revenue taxes purportedly on the basis of the different provisions of law, to wit:

1. Autonomous Region of Muslim Mindanao, RA 9054; 2. Share of lgus in mining taxes, RA 7160; 3. Share of lgus in franchise taxes, RA 6631, RA 6632; 4. VAT of various municipalities, RA 7643; 5. ECOZONE, RA 7227; 6. Excise tax on Locally Manufactured Virginia Tobacco, RA 7171; 7. Incremental Revenue from Burley and Native Tobacco, RA 8240; 8. COA share, PD 1445.

It should be pointed out hat the various laws being cited merely authorize the payments and remittances to the named recipients but the same laws have not given the national government the authority to deduct the payments from the internal revenue collections for purposes of the computation of the IRA.

For instance, while the share of the lgus in VAT revenue is provided in Republic Act No. 7643, there js nothing in the said law which remotely suggests that such share shall be deducted from the national internal revenue collections before computing the IRA.

On the other hand, Republic Act No. 7171 allows provinces which produce Virginia tobacco to have a share in the excise taxes on the locally manufactured Virginia-type cigarettes equivalent to fifteen {15%) percent thereof. However, there is not hing likewise in the said law which states that it shall constitute a deduction from the internal revenue taxes for purposes of the IRA computatioh .

To hold otherwise would be tantamount to a declaration that Republic Act Nos. 9054, 6631, 6632, 7643, 7227, 7171, 8240, as well as PD 1445, constitute amendments to Section 284 of Republic Act No. 7160.

On same assumption that Section 284 of the LGC is valid and constitutional, VAT and excise taxes being collected by the Bureau of Customs (BOC) on imported goods should also be incl~ded in the national internal revenue tax collections for purposes of computing thb IRA of the LGUs.

10

Under Section 21 of the National Internal Revenue Code (NIRC}, "the following taxes, fees and charges are deemed to be national internal revenue taxes:

a) Income tax; b) Estate and donor's taxes; c) Value-added tax; d) Other percentage taxes; e) Excise taxes; f) Documentary stamp taxes; and, g) Such other taxes as are or hereafter may be imposed and collected

by the Bureau of Internal Revenue. " (Highlighting supplied)

To state the obvious, based on the foregoing provision of the law, there should be no doubt that va lue-added tax (VAT) and excise taxes which are collected on goods, whether loca lly manufactured or imported, form part of the national interna

11 revenue taxes.

The provision on VAT on importation of goods is embodied in Section 107 of the NIRC, as amended, which pertinently states:

"There shall be lev(ed, assessed and collected on every importation of goods a Jalue-added tax equivalent to twelve percent (12%} based on t~e total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer pri(J)r to the release of such goods from customs custody xxx. " I

Under Section 12 of the L IRC, "the Commissioner of Customs and his subordinates with respect to ~~e collection of national internal revenue taxes on imported goods," are constituted as agents of the Commissioner of the BIR.

On the other hand, Section 129 of the NIRC has the following provision on excise taxes:

"Excise taxes apply to goods manufactured or produced in the Philippines for dorpestic sales or consumption or for any other disposition and to things imported. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV." (H ighlighting supplied)

For unknown reasons, 't'hich, in any event is contrary to law, the BIR does not include the collection of the BOC on imported goods in the

1

2

3

4

5

6

11

national internal revenue taxes th,ereby contributing to the huge shortfall in the computation of the IRA.

For the base years, 2009, 2010 and 2011, the following table shows the material data which illustrate Petitioner's contentions of the unauthorized deductions and exclusions:

(1) The BIR collections whtch did not include the VAT and excise tax collections of the BOC (column B);

(2) The amounts of the VAT and excise tax collections of the BOC

(columns C, D);

{3) The net amounts of collections on which the 40% IRA shares were

erroneously based (column F);

(4) The resulting IRA (column G);

(5) The amounts unlawfully deducted from the revenue collections

(column H);

(6) The internal revenue tax and IRA as rectified (columns I, J); and,

(7) The amount of shortfall and percentage (columns K, L).

(In Millions)

A B c D E F G H I J K

Revenue Collections IRA

BOC IRA Should be IRA per

Deduc Over/

Base cal NET GAA Total Short

SIR tvenue tions IRA Year Year

rGAA Revenue

VAT Excise

(Fx40%) {8-F} (B+C+D) {lx40%) (G-J)

2006 652,733 118,869 10,759 2009 624,9n 249,989 27,761 782,361 312,944 (62,956)

2007 713,596 129,125 13,389 2010 664,507 265,803 49,089 856,110 342,444 (76,641)

2008 778,581 156,330 15,509 2011 717,362 286,945 61,219 950,420 380,168 (93,223)

TOTAL I 802,737 1,035,556 (232,820)

CONCLUSION AND PRAYER

In a paper written for the Local Government Center, College of Public

Administration of the University of the Philippines and Ford Foundation

Philippines, the central role played by the local governments in any

l

" (K/ G)

25%

29%

32%

29%

12

democratizing polity has been 6uly recognized. "For one, being in the

frontline, they are being regarderi by many citizens as the government. If

local governments fail and are unresponsive to the basic needs of the

people then government to thj.se people is a failure, regardless of the

grandiose plans and visions (the ryational government) has. "

One key aspect in the devolution process envisioned by the LGC is the transfer to the lgus of the responsibility for the delivery of basic services which include health~ agricu lture, environment and natural resources, social services and public works funded by local funds.

To enable the loca l governments to perform their role as effective partners in national progress and development, the Constitution has provided the wherewithal: (1) broadened taxing power; and, (2) a just share in the national taxes.

It is thus in the interest of the nationa l government, the country and its people that the salutary aim and vision of the Constitution to sufficiently empower local governments should not be brought to naught.

As it is, it is bad enough that the law that has been passed is not in accordance with the letter and 'intent of the Constitution; what is worse is that the same law is not even being properly implemented.

This Honorable Court's exhortation in " Batangas vs. Romulo," should be worth repeating: 110Ur natiohal officials should not only comply with the constitutional provisions on loeb! autonomy but should also appreciate the spirit and liberty upon which these provisions are based. "

With this petition, it is 1oped that the national government would, once and for all, acknowledge that it has not been fully and faithfully performing its duty under the Gonstitution.

It is for this purpose th~t Petitioner is invoking the pronouncement reiterated by this Honorable Court in the aforecited case of 11ACORD vs. Han. Ronalda Zamora, et al:"

"Where the Jaw, the Constitution in this case, is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed. "

13

What is deplorable in this case is the immensity of the IRA shortfall as shown in Annex "E/' which in Region Ill alone for the years 2009 to 2014 totals P87.36 billion.

WHEREFORE, considering the foregoing, it is most respectfully prayed that judgment be rendered declfring the insertion of the words, "internal revenue" in Section 284 of the ~GC as unconstitutional, and ordering the deletion of the said words fro~ the same Section of the law in order to make it conform to the letter a~d intent of the Constitution, which should hence read as follows:

aLocal governmen units shall have a share in the NATIONAL {INTERNAL REVENUE] TAXES based on the collection of the third fiscal year preceding the current fiscal year as follows:

(a) On the first yeor {1995} of the effectivity of this Code, thirty percent {30%};

(b) On the second year (1996}, thirty-five percent {35%); and

(c) and starting on the third year (1997} and thereafter, forty percent (40%}.

X X X11

Petitioner likewise prays for the issuance of a writ of mandamus commanding the national government, through the above-named Respondents, to fully and faithfully perform its duty to give the more than 80 provinces, 143 cities, 1,491 municipalities, and 42,028 barangays their just share as mandated in SectiOn 6, Article X of the 1987 Constitution and in accordance with Section 284 of the LGC as so rectified by this Honorable Court.

Specifically, it is prayed that the Respondents be commanded to:

(a) Compute the IRA of the lgus on the basis of the national tax collections, to include II the tax collections of the BIR and the BOC;

(b) Desist from deducting from the national tax collections any tax, item or amount that is not authorized by law to be deducted for the purpose of computing the IRA;

14

(c) Submit a detailed computation of the IRA from 1995 to 2014 and determine therefrom the IRA shortfall; and,

(d) Distribute the IRA shortf~ll to the lgus.

I

Petitioner likewise prays for such other relief as may be just and equitable.

Balanga City, Bataan, for Manila, August 27, 2013.

Petitione 84 Juan Luna Street San Lorenzo Vi llage Makati City (02)-810-0934 and Rotary Avenue Barangay Tenejero Sitio Bo. Campo, Ba langa City (047)-237-2543 {0917)-832-1441

15

VERIFICATION AND CERTIFICATION

OF NON-FORUM SHOPPING

I I, ENRIQUE T. GARCIA JR, of legal age, Filipino and resident of Balanga

City, Bataan, under oath, hereby depose and state that:

1.

2.

3.

4.

I am the Petitioner ilil the instant Petition for Mandamus;

I have caused the breparation of the foregoing Petition for Mandamus and hereby attest that the allegations of facts contained therein are true and correct of my own knowledge or based on authen~ic documents;

I hereby cert ify thaJ I have not commenced any other action or proceeding involving the same issues in the Supreme Court, Court of Appeals or different divisions thereof, or in any other tribunal or agency; and

Should I hereafter l ~arn that a similar action or proceeding has been filed or is pehding before the Supreme Court, Court of Appeals or differen

1t divisions thereof, or any other tribunal or

agency, I undertake to promptly inform this Honorable Supreme Court and other tribunal or agency thereof within five (S) days from n'otice or knowledge.

Done this 27th day of August, 2013 in Balanga City, Bataan.

Affiant

Subscribed and sworn to before me this 27th day of August, 2013 at Balanga City, Bataan, affiant exhibiting to me his Philippine Passport No. EB0228176 issued on 18 May 12010 at DFA Manila and valid until 17 May 2015, a competent evidence of identity required under the 2004 Rules on Notarial Practice.

Doc. No. Vtrf Page No. '12 Book No. 1f Series of 2013.

16

Copy furnished:

Hon. FRANCISCO N. OCHOA

Respondent Executive Secretary Malacaiia ng Pa lace, Manila

Hon. CESAR V. PURISIMA

Respondent Department of Finance DOF Bui lding, BSP Complex Roxas Boulevard, Manila

Hon. FLORENCIO H. ABAD

Respondent Secretary Department of Budget and Management Malacanang Palace, Mani la

Hon. KIM S. JACINTO-HENARES

Respondent Commissioner Bureau of Internal Revenue BIR National Office Build ing Quezon City

Hon. ROZZANO RUFINO B. BlAZON

Respondent Commissioner Bureau of Customs OCOM Bui lding, BOC, Port Area Manila

EXPLANATION

In compliance with Ru ll 13 of the 1997 Ru les of Civi l Procedure, petit ioner respectfully manife! ts that fi ling and service of the foregoing petition were done by registered mail, personal service not being practicable due to distance, time and persona l constraints.

Republic of the Philippines ) Province of Bataan ) S.S.

City of Balanga )

AFFIDAVIT OF SERVICE

I, LADYBELLE S. SANTOS, of legal age, an employee of the Provincial Lega l Office, Provincial Government of Bataan, with office address at Provincial Capitol Compound, Balanga City, Bataan, after having been duly sworn to in accordance with law hJreby depose and say that:

This day, 27 August 2013, I delivered copies of the PETITION in the case of HONORABLE ENRIQUE T. GARCIA JR vs. HONORABLE FRANCISCO

N. OCHOA, ET Al., by registered mail, with instruction to the postmaster to return the mail within ten (10) days if undelivered and with the corresponding registry receipts, to the following:

REGISTRY RECEIPT

p · HON. FRANCISCO N. OCHOA Respondent Executive Secretary

Malacaf'iang Palace, Manila

·~~ag.,~o~ 4/ gq

HON. CESAR V. PURISIMA Respondent Department of Finance DOF Building, SSP Complex Roxas Boulevard, Manila

HON. FLORENCIO H. ABAD

Respondent Secretary

Department of Budget and Management Malacaiiang Palace, Manila

HON. KIM S. JACINTO-HENARES Respondent

Commissioner

Bureau of Internal Revenue SIR National Office Building Quezon City

Po don Q ~~ 20 ----Pn&serve th~~tfor?ererJnce In case o f Inq uiry . .

~

. , PostmasterrTeller

REGISTRY RECEIPT

PostmasterrTe lle r

L/!9c<

Preserve this receipt for reference In case of Inq uiry

PostmesterrTelter

HON. ROZZANO RUFINO B. BlAZON Respondent Commissioner Bureau of Customs OCOM Building, BOC, Port Area

Manila

REGISTRY RECEIPT

. ~~~:r.··•.un1N~.--~"¢ ..... PostD~ f~~ b' i) ~· ~ :\! ~\1 ~

i ''k i. N 'l' • ""~r~- 11Jg"l Lett~r/Pac sg.. o. · " ,_..,... ~ci- k-f ...:/

.4 ' ' 20 Pos\Eid on' ""?. ,7 zn 1 ~ ----PreJ~~~~AYitlifor rerererice In case of Inquiry

rl ~~

~ ,. Postmasterfreller

AFFIANT FURTHER SAYETH NAUGHT.

27 August 2013, Balanga CiJ, Bataan.

~ LADYBELLE S. SANTOS

Affiant

SUBSCRIBED AND SWORN tp before me this 27th day of August 2013 at Balanga City, Bataan, affiant expibiting to me her Social Security System 10 No. 0225135734.

Doc. No. l(..r!:: PageNo. q;,. Book No. ---=..1t _ _, Series of 2013.

I . A TTY. JU! . T ~~~-!;~!.ARIA

NOT PUBUC UNTIL DECEMBE?. J'l. 2014 NC-311-12 PTR NO. ~45185~,11 !/13 BALAN6A {.;. , 1

JBP ND. 837854 1/31l3~BATAAN ROLL NO. 38430

Republic o[ the Philippines Province of Bataan

OFFlCE OF THE PROVINCIAL GOVERNOR Bataan Pr~,·incial Capito]

January 14, 2011

H.E. BENIGNO C. AQUINO m President of the Republic of the Philippines Malacailang, Manila

Dear President Aquino:

Greetings!

The undersigned wishes to seek your intervention and assistance as regards the long standing problem where the 40% annual Intemal Revenue Allot:D;lent (IRA) given to local government units is always short, this year (2 0 11) by as high as P93 .3 billion or thirty two and a half percent (32.5%).

And to show its real maJnitude, the IRA's allocated in three (3) years alone {2009, 2010 ruld 2011) are short by an aggregate amount of P233.1 billion or nyenty nine percent (29%) as shown below:

I

Internal Revenue Allotment (in Billions of Pesos)

GAA Amount Over/ (Short) Should Be Per GAA Amount Percent

2009 3 13.1 250.0 (63.1) 25.2% 2010 342.4 265 .8 (76.6) 28.8% 2011 380.2 286.9 (93.3) 32.5% Total 1,035.7 802.7 1233. 1) 29.0 %

The detailed computations of the IRA's in the said period (as shown in Annex "A" to "F") were short for two reasons.

I

IT A GUY 0 D A G 8 AT A AN TUNGO SA MAUNLAD NA PAMAYANAN Capitol Batanga Cny, eataan. Philipp1nes ·Tel Nos. {63) 477914789/ 2r·7642/237-7643 • Telefax (63) 47 237-2413 lwww.b at aani+M@

2

Firstly, d eductions were ¥lade on the gross collections of intemal revenue taxes in computing the 40o/o IRA, when such deductions are clearly not provided for in Section 284 of the Local Government Code (LGC). Said section merely states that the 40o/o "share in the national internal revenue taxes" shall be "based on the collection of the third fiscal year preceding the current fiscal year."

Secondly, collections of excise taxes and Value Added Tax (VAT) by the Bureau of Customs (BOC) on the importation of goods, were not added to the gross cpllection of intemal revenue taxes before computing the 40o/o IRA, f.rhen they are indisputably intemal revenue taxes. In this case, therefore, BOC merely acts as the collecting agent of BIR. As a m~tter of fact, in the case of VAT, the amounts collected by BOC are used as input credits or deductions to the output VAT subsequently collected by the BIR from manufacturers, distributors, whblesalers and retailers.

As early as December 9, 4008, the undersigned has formally brought this problem to the attention of the Speaker of the House, the Senate President and even former President Arroyo, but to no avail.

Unfortunately, the mistal!e was not corrected in the 2009 GAA, and was repeated in the 2010 and 201 1 GAA to the detriment of the LOU's, a great majority of which are in dire need of funds.

This representation will qeatly appreciate it if His Excellency can give him some time to s~t and discuss ways wherein His Excellency can assist in rectifying this grave injustice and inequity to LOU's.

Maraming Salamat at Ma l hay po Kayo!

Very truly yours,

I E~.JAT G·-­nnque .

I A.n:nex A I 2009 2010 2011 Total

Amount IRA Amount IRA Amount IRA IRA Net 624,972.17 40% 249,988.87 664,506.95 40% 265,802.78 717,361.60 40% 286,944.64 802,736.29 Add Back:

IR Deductions 28,154.08 49,097.34 61,219.20 '

BOC Collections i

VAT 118,869.00 129,125.00 156,330.00 Spec (Excise) 10,759.00 13,389.00 15,509.00

Total 782,754.24 40% 313,101.70 856,118.29 40% 342,447.32 950,419.80 40% 380,167.92 1,035,716.93

Over/(Short) (157, 782.08) {63,112.83) (191,611.34) (76,644.54) (233,058.20) {93,223.28) (232,980.65} Percentage 25.2% 28.8% 32.5% 29.0%

REVISED .COMPUTATION OF THE SHARE OF LOCAL GOVERNMENT UNTT I UND.ER THE LOCAl GO RNMENT CODE .....___.....=~-___,--'

CALENDAR YEA~ 2009

BASE YEAR 2~06

INTERNAL REV;NUE TAX COLLECTION (Anne.A-2)

Less: Non-Cash Collection (Anrex A -4)

PAGCOR Qualifying Fees (A(meA A-2) Miscallaneous Income (Community Tax. Others) (Anr~e~: A-21

11 ,095.310,421 .58 16,108,700.00 45,570,197.02

200,000,000.00 45.998,265.41

Refund (Annex A·2J Rewards (AnfHtJI A·2J

Less: Special Fund~/Specl~l Accounts:

Decree/Law

Autonomcus Region of Muslim ·Mindanao (Anne.J A-.SJ Internal Revenue Collection 151,105,966.47

470,569.209.68 Tax Remlllanca Advice (TRA)

Mining Taxes (Annex A-3)

40% Share of LGUs

FRANCHISE t~nelf A..:JJ City of Makall

Municlpanty of Carmona, Cavlte

VAT- Various MunlclpaiiUes (Annex A..JJ

ECOZONE (Ann&A~ . Clark Special Economic Zone Subic Bay Freeport Zone

Excise TalC on Locally Manufactured VIrginia Tobacco (Annttx A-6}

A. COA Share Dec.24(3) of PO 1445 Nel General Fund · Ra1e: 112 of 1 o/o COAShare

8 . NET GENERAL FUND Less: COA Shere

Rate of LGUs BASIC, INCOME

Amount for Distribution: Provinces Cities Municipalilles Barangays

RA 7160

RA 6632, as am nded by RA 7953

RA 6631 . as am~nded by RA 6407 I

RA 7643

RA 7227

RA 7171

23% 23% 34% 20%

p

••

653,126.242.520.29

11,402,987.584.01 641,723,254,936.28

621,675,176.15

449.916,438.16

29,451 ,261.90

.. 19,653,218.00

9,216.021 ,578.95

161 ,401,316.11 166,220,587.64

2,926,184,571.44 13,610,524.148.37

p 628,112,730,787.91

p

p

628.112,730,787.91 0.005

3, 140,563,653.9<

628,112,730,787.91 3.140,563,653.94

624,972.,167.133.98 0.40 .

57,497,439,376.33 51,497,439,376.33 . 84,996,214;730.22 49,997 ,n3,370.73

249,968,866,853.69

I ~ E.VEL YN • UZMAN

07129/08 Chief, Rev A unting Oiv•slon .r ___..

Note: Spedaf Funds/Accounts - TOOOA. collection "~). -

Lege11d: -- - The reflected amount was based on the pro-rated share or Jocall grown Vlrginla tear tobacco In lhe production or cigarei!Bs packed In 20'.&. n

computation was based on 1he ruling Issued by former Deputy·crommir.sioner Jose Mario Bunag da~d Au~ust 6, 20CM. Pend1ng the nnal res< of lhe Issues raised by the Congressmen from the Virglnkl leaf growing provinces on the oorrecl comp~tauon of the shar~ base, Ulis amount 1

prflvisionaUy taken up, subjecllo future adjustments. ~ • No incremental revenue from lhe lmplementaUon of Rei)Ubtlc Ar~-QpafiRUpe Lt.Qe~ yet been computed pending the

legallnterprelatlon of the lerm •incremental revenue· and lh&t!fP!-I{IGl..a.wiP fi r iG~o future adjustments upon rece1pt of the o;Mnion fr

BIR'•L•o•<G<~o D AUG 1 ~ 2008~\ ~

Yl ; - ·, _, \nncx C ) "

REVISED COMPUTATlON OF THE SHARE OF LOCAL GOVERNMENT UNIT UNDER THE LOCAL GOVE~NMENT CODE

CALENDAR YEAR 2010

Collections for Nallonat/Reglonal Offices (Allne.c A· II Less: PAGCOR • Q~.~allfyfng l;ees CoUectlon (ArlMlt A·1b)

Total Internal Revenue TaK CollecUon Less Non-Cash Col.ectlon (TalC Subsidies) ~ A·T•J

BASE YEAR 2007

Autonomous Region of Muslim MIJldanao (ARMM) (Mnu A·~ fax Rem1t1ance AdVICe (TRAj

Revenue Collection OHrce (RCOJ

RA 7160

Value-Aaoed Tax (VAT) In lteu of FranchiSe TalC (Annu .&.JJ L City of Makatl RA 6632.

as amended RA 7953

Murudpall1y or Carmona, Cavlle

VAT (Vanous MunlopallUes} (~ A.JI·

Ecozone IAnMx A.JJ Clanc SpeCial EconomiC ZOne Sublc Speoal Economic Zone

Exose Tax on Locally Manufactured V1rg1nia Tobacco tAMIIlC A..JJ

Incremental Revenue from 8ur1ey and Natwe Tobacco (~ .&..J)

Arrears • 7 years inslallmenl

Net General Fund

Net General Fund Less: COA Sllare (Net General Fund K 1/2 of 1%) (Annex BJ

Basic Income ' Rale'"(RA 7160 -local Government Code) LGUs Share

J-31~ GSB NRB

Distribution of LGUa Share: ProVInces Cities Mumclpalllles Barangays

Nore· Speoal FtJnds/Accounts- 1000-t. colleciJOn

RA6631 , as amended by

RA 81107

RA 7643

RA72V

RA 7171

RA 8240

23% 23% 34% 20°4

p

!"

578.719,840.65

157 812,4166.62

17,416,611 15

17.0041420.25

193,853,522.81 191.7611541.33

61 ,134,639,215.49 61 .134,639.215.49 90,372.944 .927.25 53.160,555.839 55 265.~02, 779,197-78

p 7.13.604.291.676 37 8,597 105 00

713,595,69~ ,671 .37 13,893,663.966 48

699,702,030,604.69

736,532,309 27

525,102,553 19

35,321.031 AO

1.001 .962.159 55

385.615,064 14

23.103.9n.4r oa

6 ,067.341.12't.36 31,855.851.715.99

P =...::i6.:.67,;:•.;;,841;.;6i:1..,1;.;.7.-8;,;,8,;,BB;,o·.;:90"==

667,846,178,888.90 3,339.230,894 44

664,506,947 .99'1 ,46 0.40

p _...;2;;6,;;,;5·:;,8;,;02;,:,·,;.77;.;9;;:.,1;.;,9;.;,7.:.;· 7,;;;6_

By: ____ CTRL No. __

COMPUTATION OF THE SHARE OF LOCAL GOVERNMENT UNIT UNDER THE LOCAL GOVERNMENT CODE

CALENDAR YEAR 2011

BASE YEAR 20081

~nal Revenue Ta;( Collection fAnne~eA-11 ;s: Noo-Cash Collection (TalC Subsidies) (Anne• A·IBI

Autonomous Reg1on of Muslim Mindanao (ARMM) IAAAaT A·2J

Tax Remittance Adv1ce (TRA) Revenue Collecuon Office (RCO)

Mining Tax tAnrrax A.JJ

Value-Added Tax (VAT) 1n lieu of Franchise Tax (Anna .. .4-31

C1ty of Make II

Munlopallty of Carmona. Cavite

VAT (Various Muniopalities) (Annex A.JJ

Ecozone (AnnaJt A-31

0J3rk Speoal Economic Zone Sub1c Speoal Economtc Zone

Exose Tax. on locally Manufactured Vngtnia Tobacco (AM~ A-31

Incremental Revenue from Burley and Nallve Tobacco (AnMK A·31

a) Arrears • 7 years installment b) CY 2008

Net General Fund

Net Genera l Fund less. ~OA Share (Net General Fund x 1/2 of 1%) Bas•c Income Rate (RA 7160 - Local Governmenl Code) LGUs Share

J-31 NRS--../

Dl&trlbution of LGUs Share: Provinces Cllles Mun•ctpalitles Barangays

Note Speoal Funds/Accounts · rOO% collectton

OecteeJLaw

RA 9054

RA 7160

RA 6632. as amended by

RA 7953

RA 6631 . as amended b

RA 8407

RA 7543

RA 7227

RA 7171

RA 8240

23% 23% 34% 20%

. . . .

p 493.565.183 43 208.379.020.50

(80.490.68

115.795.747 58 . 201,685.044.01

6.067.341,127.36 5,769.559.217.93

p 65.997.267.019.68 65,997,267.019.66 97.561 .1n.333 44 57.388.927.843.20

p 286,944,639,215.99

Chter. Revenue

..

-, • I --·~ -r- • ·--·--- -

p ns.sao.796.120 24 16.625,853.413.62

761 .954 .942.706.62

701.944.203.93

501,832.269 34

460.4190.68

390.657.766 85

317 480.791 59

27 239.216.628.00

11,836.900.345.29 40.988.512.515 68

p =~7~20;;,;;.9;;6~6=,4·3=0·=19=0=. 9=4=

720 .966.430,190.94 3,604,832 150.95

717.361.598,039.98 0 40

p =~2,;;;,;86;,!,,9;;.;44~,6~3=9·::::;.21=5=-9=9=

. .

NATIONAL GOVERNMENT FISCAL PEHFORM ~NCE, 2003-2008 In billion pesos ·

I •

AC

PAATICULAR.l ' 1003 2~- 200! REVENUES

. 626.6 &99J '195.'

T.axR~nv~ 537.4 598.C 685.: :t~;Utf.~~~118(;riue: :.

~ '"' .. .. t • ·-·.. . • • 7\ .'4~~=. '• .'• '~w~ •• • .:• :,i ~,-.~ 1

•l ' I

~":' .i "B' t'W.~trtfls • !•• ..... . •"iQ6.i· , ''iij:· ., -;p .t..U.' ~ "'·' ·- . . .. ~ .

. '-. ' ..! ,; Othet 0 ffices , 5...9' 1·'-· 8.•

Non-Tax Revenues 88.1 lOl .: 110.~

ST-clncome 56.7 61\ • . .. 70.1

Fees & Charges U .G 1~ .( 19J

Privatization 0.6 O.t 2 .•

Gtllnts . .. 1.2

. o.: o.:

EXPENDrTURES 855.9 89U. 942J SURPLUS/(DEFICTT} · (~.3) (194.0 {146.8

Sovrce: f?epartment of Fhanct

I

B0C CASH COLLECTION .· . (ln~onP~)

DEgiMJ!ER . V~lUANCE JAN .. DEC VARIANCE . . . · •' . . . . ' ' % . . 7007 2006 Am2unt - ~ . 1&22 .. 2006 . ~J,DOUnt -··TOTAl: 17,389 17,124 2F

I.S% 209,439 198,161' 11,278. 5.:7%' 39,'-09 .s6,861 1.347 4. 1~

o:9t. Noll' toe'cM\I"Ca 6.203 4,710 I 93 :n.~

· · T'EF 414 . 1,9.51 (l ) .-n.~ 16.l24 Us.l 6.511>' 61.1'~ . .

. 68,533 (1~608) -2.35% \-port Duties 4,610 7,469 (2,859) -38.3% . 66~25 . . .

NonOii 3',457 .- 6,042 (2,585) -42.8% 56,471 . 57,442 (971) -1.7% ~

Oil 1.153 . 1.426 .. (2!74) .:19.2% 10,454 J1,09t . (637) -5.7%

Crude on 831 1.149 (3~8} -27.7% ·7,255 8,004 .. (749) -9.4%

Oil ProductS 322 m . . ~5 .. t6.1% 3,199 3,087 ~12 3.6%

1m~ort'l'u lZ-;779. 9,65.,.:; .3.1!!4 32.36% 142,514 129,62$ : li,886 9.9% VAT 11.~ 8,838 2,~~ 29.7% 129.125' 118,869 10,256 8.6~

Spec (Excise) 1.313 817· . 4 60.8% . 13.389 . 10,759 2.630' 24.4~

IX Credit Applied' 45. . 501 (456) -91.0% 3,009 3.301 (292) -8,8ifC Goy•t Accounts I Det. , Payt. 6~2 542 ' 131 . 24.1%- 16,786 12,287 4,499 36.69f

--= .. -= -.: -- '

Bureau of Customs . . , < .: ~::_:·-Collections by Type of Tax · - , · ·.: ·

. . (Ill Billion Pesos) :,._ .-:·.,':.::: · • • r ' • : .• ,.~!~'.·

~ Jan-Dec _L Deviation ~ - - - 1 2009~ 2008 I Amount-·j_ % --1

To tnt j 220.878 I 260 248 I ·39.370 I · 15 1 o/o

Duttes : 69 063 j_a8.40~ ~ -19 346 j 21 9%

Vat

Cxctse

: I

133 898 I 156.330 1 . 22.432

17.917

'r

I l 15.509 J

2.409 L_ i

Source of d.Jrs BDC D!SIIicrs Report

200,000 180,000 160,000 140,000

120,000 100,000

80,000 60,000 40 ,000 20,000

0

Bureau of Customs Collection by Source

(In Million Pesos)

Crude

• 2009

II 2ooa

Petro Products Non-Oil

-14 .3% J 15 5% l

I l

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

s~~-~ ~--Annex .F I Collections oy Type of Tax

(In Million Pesos)

• 2009

• 2008

... - oaues Exc~

:· . . . - . . : ~. ~·· "f.' :· •• • • • •

•.•. . . ·-. -. . - ..

1 ,,_ ~ - • ., • •

·...,, ; •or;', ', ;

TOICJI

Non oil

I Crude

PP.tro Products .___ --

·: Bureau· .of Customs. _ CQUiu:tiD.·n~ by Source .

· · · · :·-. : -{In Biillon Pesos) .. _ -.

I Deviation - ·-- -- - ,- -- ~ - --·

2009-4- -~_90~ ~ Alll O~Inl _I_ % _ _ ,

a11 -0 .o

220 878 260.248 -39 370 I 15 1% I

I 164 727 189 714 ·24 987 13.2% • !

19 U20 34 584 . • 14 /(j4 : _ _:42 70, "I 36 331 35 950 I

03~ 1 ~_L- ~ 1% -

Sozuce of dora: BOC Districts R~t

HON. JUAN PONCE ENRILE Senate President Senate of the Philippines G.S.I.S. Building, Financial Center Roxas Blvd., Pasay City

HON. PROSPERO C. NOGRALES Speaker of the House House of Representatives Constitution Hills, Quezon City

D ear Mr. Senate President and Mr. Speak

Greetings!

December 9, 2008

This pertains to the Proposed GenEFal Appropriations Act for the Year 2009. Based on the deliberations of the Governr:th.ent' s budget, the allocations made for the Internal Revenue Allotment (IRA) of all local government units for 2009 in the total amount of P250 billion, more or less, do not include the national internal revenue taxes collected by the Bureau of Customs from rrhportation of goods in 2006. These national internal revenue taxes pertain to the Value added Tax (VAT) and specific/ excise taxes totalling P129.6 billion collected from the said importation of goods in 2006. Forty percent ( 40%) of this amount (P51. 9 billion~ should be added to the 2009 IRA of local government units, increasing the total from

1

250 billion to P301.9 billion.

Under Section 284 of RA 7160 or the f-ocal Government Code of 1991, the IRA of local government units is equivalent to Forty Percent (40%) of the national internal revenue tax collections of the third fiscal y~ar (2006) preceding the current fiscal year (2009). However, the computation of IRA as, contained in the proposed budget for 2009 ,P (P250 billion) was b. ased solely on the collel tions of the Bureau of Internal Revenue in 4 2006 and excluded the VAT and specific excise taxes on Importation of Goods as collected by the Bureau of Customs in the same year (2006) in the amount of P129.6 billion. Consequently, the local government units in the country would be deprived of

I

IT A GUY 0 D AN G BAT A Afr' TUNGO SA MAUNLAD NA PAMAYANAN

Capitol. City of Bafanga, Bataan, Philippines • Tel. Nos. (63) 47 237J058/237-3488 f 791-2632 I www.bataani![.lJAfll] Telefax (63) 47 237-2413 E-mail: pgo@bataan.gov.ph

around P51.9 billion (40% of P129.6 billion) in the computation of the IRA for 2009, if this is not corrected in the 2009 GAA.

The national internal revenue taxes which serve as the basis for computing the IRA as provided in Section 284 of the Local Government Code, include among others, the VAT and specific/ excise taxes collected by the National Government under Section 21 of National Internal Revenue Code, as a;mended. Sections 105 and 107, with respect to the VAT on importation of goods, and Sections 129 and 131, with respect to the specific/ excise tax, of the National Internal Revenue Code, as amended, provide the collection of these taxes .from importations.

Being national inte1nal revenue tapces, it follows therefore that the VAT and specific/ excise taxes on importations thatl are collected by the Bureau of Customs on behalf of the Bureau of Internal Revenue spould be included in the computation of the IRA for the local government units.

1

Failure to include these collections from importations of goods in the computation of ffiA is a violation of the lifperative right of local goverrunent units to the 40% share of the national taxes. This is a violation not only of the provisions of the Local Government Code, the jurisprudenc~ promulgated by the Supreme Court on the matter, but more importantly of the Constitution, particularly Art. X, Sec. 6 thereof (see Pimentel vs. Aguirre, 336 SCRA 201, Alvarez vs. Guingona, 252 SCRA 695, The Province of Batangas Vs. Romulo, G.R. No. 152774, 27 May 2004, and Alternative Center for Organizational Reforms and Development, Jnc.(ACORD) vs. Zamora, G.R. No. 144256, 8 June 2005).

In view of the foregoing, the undersigned respectfully requests that adjustments/realignments be made to irtcrease to P301.9 billion the IRA of local government units in the Proposed General !Appropriations Act for the Year 2009 taking into consideration the VAT and specific( excise taxes collected by the Bureau of Customs on importation of goods. Otherwre, we shall be constrained to seek judicial relief for this purpose.

Thank you very much.

Very truly yours,

~ . .,., ~Q-c~""'· ENRJQUE T. GAR JR

2

.... \

cc: HON . EDGARDO J. ANGARA Chahman, Committee on Finance Senate of the Philippines

HON. JUNIE E. OJA i Chairman, Committee on Appropr· tions House of Representatives

3

I Republic of J e Philip_pines .ANN.

Provine~ Bataan

~FFIC~ -~~.:r I GOVERNO~

H. E. GLORIA MACAP AGAL-ARROYO President of the Republic of the Philippines Malacafiang, Manila

Dear Madam President:

Greetin~l-

December 12, 2008

The undersigned wishes to seek yo I intervention and assistance in regard to the adjustrp.ent of the Intemal Revenue Allotm;ent (IRA) of local government units in the country as contained in the Proposed General Appropriations Act for the Year 2009 in accordance with the provisions of the Local Government Code (Section 284).

The und~gned has previously cJed the attention of the Senate President, Hon. Juan Ponce Enrile and the Speaker of tt' e House of Representatives, Hon. Prospera C. Nograles, through a letter dated Decemb 9, 2008, on the non-inclusion of the Value Added Tax (VAT) and specific/ excise tax collected by the Bureau of Customs on importation of goods in 2006 totalling P129. billion, more or less, for the computation of the said IRA for 2009. A copy of the said 1 tter is hereto attached for Her Excellency's reference.

Bemg national internal revenue taxes forty percent (40%) or P51.9 billion of the said VAT and specific/ excise taxes collected~on importations collected by the Bureau of Customs on behalf of the Bureau of Internal Revenue should be added to the 2009 IRA for the local government units. Thus, this sh

1 uld increase the said 2009 IRA for the local

government units from P250 billion to P301. 9l billion.

We sincerely hope that Her Excellenc~ can assist us on this matter for the benefit f

I T A G U Y 0 D A N G B A T A A J TUN GO SA MAUN,LAD NA PAMAYANAN

Capitol, City of Balanga, Ba1aan, Philippines * Tel. Nos. (63) 47 237-~058 /237-3488/791-2632 I www.bataanl¢iidD Telefax (63} 47 237-2413 E-mail: pgo@bataan.gov.ph

of all the local government units in the country which are presently facing financial d:ifficul ties.

cc:

Thank you very much.

HON. ROLANDO G. ANDAYA Secretary :.9£ Budget and Managemertt

HON:MARGARITO B. TEVES Secretary Department of Finance

Very truly yours,

--

/

J

I . -J>" . R ~- tth Phil' . AHNfX \)

. Pr vince of Bataan !::: ~ i. ~ ep .· 1c o · e 1ppmes $~-~· .'1';.

OFFICE OF THE GOVERNOR ~ I

HON. EDGARDO J. ANGARA Olairman, Senate Bicameral Panel Proposed 2009 GAA

HON. JUNIE E. CUA Olairman, House Bicameral Pane~ Proposed 2009 GAA

Your H onors:

December 15, 2008

t~~"~r Cc:fv

This pertains to the Inte al Revenue Allotment ("IRA") of all local government units ("LGUs") in the total amount of P249,988,867 thousand as approved in both the House and Senate versions of the 2009 GAA.

May we point out that sJd· amount, does not include the forty percent {40%) share of LGUs from the jValue-added Tax ("VAT11

) and specific/excise taxes collected by the Bureau of tustorns CBOC") from importation of goods in 2006. Based on the BOC gross cquection of these taxes totaling P129 ,628 million, forty percent ( 40%) thereof or P51,851 million should be added to the 2009 IRA of LGUs, .ina·easing the total m.PJ from P249,988,867 thousand to P301,839,867 thousand.

As mentioned, the-computhtion of IRA of P249,988,867 thousand, as shown in Annexes "111 and "2" hereof is based solely on the 2006 collections of the Bureau of Internal Revenue ("BIR"). As clearly shown in Annex "3" hereof~ the total 2006. collections of BOC o~ P198.2 billion is on top of the P652.7 bil~on collected by the BIR. The same ~ex also shows that out of the P198.2 billion collected by BOC on importation of goods, P129,628 million is from VAT (P118,869 million) and specific/ excise tax (Pl0,759 million).

This is clearly provided under Section 284 of RA 7160 or the Local Government Code of 1991, which states that the IRA of local government units is equivalent to Forty Percent (401 ) of the national internal revenue tax collections of the third fiscal year (2006) preceding the current fiscal year (2009).

The national internal rev:pue taxes which serve as the basis for computing the IRA as provided in Section 284 of the Local Government Code include anwng f others, the VAT and specific/ e~cisP. taxes collected by the National Governn1ent a under Section 21 of National In; ental Revenue Code, as amended. Sections 105

. . ITAGUYOIJ ANG BATJI!AN TUNGOSAMAUNLADNAPAMAYA~

C.•lt-el, Clt]o af h t.aa .. ·--. PlalllpJifae• • TeL HaL (6..11 4 7 :U7·1051 t 2 l 7..UII 1 791-2612 talatDJ< 16J ) 47 U 7-l4U a-na ... ..... , ....... , ... ~ Jwww.bataa

..

1

I and 107, with respect to the VATI on importation of goods, and Sections 129 and 131, with respect to the specifid/ excise tax, of the National Internal Revenue Code, as ~ended, provide the collection of these taxes from importations.

Being national internal re enue taxes, it follows therefore that the VAT and specific/ excise taxe~ on im~ortations that are collected by the Bureau .of Customs on behalf oi the BureauJ of Internal Revenue should be included in the computation of the IRA for the lo~al government units.

Failure to include these collections from importations of goods in the computation of IRA is a violation of the imperative right of local government units to the 40% share of the national taxes. This is a violation not only of the provisions of the Local Government Code, the jurisprudence promulgated by the Supreme Court on the matter, but more importantly of the Constitution, particularly Art. X, Sec. 6 thereof 1see Pimentel vs. Aguirre, 336 SCRA 201, Alvarez vs. Guingona, 252 SCRA 695, The Province of Batangas Vs. Romulo, G.R. No. 152774, 27 May 2004, and Altemative Center for Organizational Reforms and Development, Inc.(ACORD) vs. Z~mora, G.R. No. 144256,8 June 2005).

In view of the foregoing, ~e undersigned respectfully requests that the Bicameral Conference Committee increase the IRA from ?249,988,867 thousand to P301,839,867 thousanq of LG s in the approved Bicam Report on the 2009 GAA, . taking into consideration the VAT and specific/ excise taxes collected by the BOC on importation of goods. Otherwise, all the LGUs would be unjustly deprived of the additional P51,851 million due them as provided for by law. In this ev~t, we would be left with no other option but to seek judicial relief.

Thank you very much.

Very truly yours,

cc: · HON. JUAN PONCE ENRIT--E Senate President

I

Senate of the Philippines G.S.LS. Building, Financial Genter Roxas_ Blvd., Pasay City

HON. PROSPERO C. NOGRALES Speaker of the House I House of Representatives Constitution Hills, Quezon City

HONORABLE MEMBERS of the Senate and House Bicam Conference

2

I T~LE1 I

INTERNAL ~EVENUE ALLOCATION TO LOCAL GOVERNMENT UNITS YEAR 2009

INTERNAL REVENUE TAX COLLECT1<9N (2006) LESS: .PAGCOR Qualifying Fees

Miscellaneous Income Refund Rewards Internal Revenue Collection ARMM

BIR Tax Rev.enue :

LESS: Non- Ca~h Collections Tax Remittance Advice ARM.M. Mining Taxes {40% share LGUs) Franchise (Makati City)' Franchise (Carmona, Cavite)

. VAT (Various Municipalities) ' Clark Speci~l Economic Zone Subic Bay Freeport Zone Excise Tax (Virginia Tobacco)

Net General Fund

· A. yOA Share Net General Fund Rate: 112 of 1 o/o COAShare·

B. Net General Fund Less:. GOA Share

.I

p

16,108,700.00' 45,570,197.02

200,000,000.00 . 45,998,265.41 151 ,105,966.47

p

11,095,310,421.58 470,569,209.68 449,916,438.18

29,451 ,261 .90 19.653,218.00

9,216,021,578.95 181.401,316.11

0 166,220,587.64 2,,926,184,571.44

. p

653,126,242,520.29

458,783,128.90 652,667,459,391.39

24,554,728,603.48 628,112,730,787.91

628,112,730,787.91 0.005

0

p 3,140,563,653.94

. Adju~ted lf'\temal Revenue Tax Collection (Yr 2006) Rate of LGVs

628,112,730,787.91 3,140,563,653:94

624,972,167,133.97 0.40

IRA (YR 2009)

Amount for .Qistribution Province:s Cities Municipalities Ba~ngay~ ·

Additional From Customs

23% 23% 34% 20%

p 249,988,866,853.59

57,497,439,376.33 57,497 ,439;376.33

. 84,996,214,730.22 49 ,997,773,370.72

249,988,866,853.59

,, Jf

/ .

.·

I •

1-

·.

- - ---- ·-·---------- ---·-- - · ...

fl.t:V/SED COMPUTAilON.OF TH~ S RE OF LOCAL GOVERNMENT UNIT . UJomER THE t.OCAL GOVEFUIMENT CODE

· . CALENDAR tft:AR 20011 · e~e YEAR 20.06

p

..

..... 1'1 ,.41);9!7",584.01 • . .

641,729,204,930.2~

•• ..4

pttCTeollpw

Atstorio~oua Region ot-Muallm' MirldanaO·(A~-4-5) . . lrrtQma~r.veoue cOII$ctlo~ .t ·. ·

. . 'Tax RetnlttQnoe·Advlbo (fRAl 15~,105,96av47 ~70,M0,209.68

Mining laxe5.fA.Iulex .ili; .:t6% Sh'er.e 'of l-G~

'FRANCHIS~ c.-w-iWr . . .. l9ib"Of M~ · :.

. ·. \

.... .

·.

VA,''f ~.y;;t1p"·l\~oo;dpal!U~JQ (An!JM.~ •

<eCOZONE· i~ .4-3) • • ClafX.SpeOial Economic Zona·

I Sub~ ~Y F~~zo~ .

...... . . .. "' . · .. ·,: . Excl$1tTaX on' ~~1)'-:M~ufactJJI'QC : :v.if~lniB·LObild:O (A:V..X~J . .... .. . . .

. ..·. . .: , r ·.,. A:.·.to~·Sbarene~(3}bf:~D 1414; · · ;Nz!t'Geooral FU1'1d:· : . ·

• : .'fiala: '112"Df·1~V . 'l c6A·ShatQ ., · .. . •·

.e:·NET.GENERAI..:RIND L.aa~~·COA ~hati. ...

·~ofLGUs : •BASICC1NCEJME

. Amoim~ for Ol4lfibl.l~on: ·ProVinces. . ;.t;~Uu . : Mllnl~palll_le$ : · ·earaog~a ·

RA 7160

~ 6832.lemended by RA TS53

-AA 0531, ... an\endacJ.by .. .. ·AAWIT

. · ....

. I. '

..

.....

. ~3~

2!1i 34. 20.

. .· ... 41l;'9f6;438.1 ~ ·.

.. ··' .} :'1~~65312.18.00 ;

·. · . - ·: ·s,ii~;~.us ·· ... . · . .. • • .1 : · .; ". • . ...

~ . ·.· Rl1 .. 0(316.11 . -· ·. . 1Se;tzd:S87,64 . I . . '

:

·,:· · ... · ·:>' · .. ·. . .. . .. · . . ~-... .''2,926';1&$j571.44 .· i.

· . · 1a;ft.1.0:§24c48.a7 .. .• ·; • ·:·,·.·. :.!·

P J .'62S,~~Dttirr.91 . .. . .. .

... ·'' . .. . p

.aJ4o,eaa.esa.e•-·"

6.2B;:I12;no;787.91 . · . ..,,,~~1$;3.863.9+ .

. 6ft9~167;133.gs · . • . ~ ·.•. ·• • ... 0.40 ..

'P. 24S;988 j886;8Sl.S9 I ' . ~ ..

.'P

.... ... ~~~7J4i9;376.33· .. : •. 57 ,497,.f-39,3v6:33 · · •

. 84.Q96.2~730-ll,\

·.

0712W06

. ., . . . _. ~9jSib7i77.3,~70.t3·.

ct~'(it:F~· .. ';2:·.~~-~"u' : .· ~-:. . ~ - · .· .

• • #. . .. . .. .

. ..

•I

. Note: Sp~SJ Fzmpsl~nta- 100" coll.afon

. . .:L~ . . . . . I' . .- . : : ... .. :: ·: . : .. ·. · ~- • 1M rtn.aed ~vias bue.1 on .the- PrtKit.d ahare ol k!;:dy grown Mrglnt.lbf wooo In th• pt~ afeloar11ll~ ~·ln;le'l. ~

• compu~ wu bcHed 011 Ute ruling tuuld by f~ Oe~ty Comm!s;lonir .J~• MariO Bun~ d.W AUguat fi; 2004. ,endlno 1ha'ftnal ~ . of ~~~-~• 111i.od by tile COno~ ftom 1M VIIC!nla ¥ Qi'owk1a proy~ ~1M cotfiiCl~~ tho a.rww bUe', 1111s ~was

~on~D)' lllbn up, lubJ~ ID 1\JtlJl .. d)uetment.. · • P.i • • • : • • •• • · • · - blo troc:temen~l ~· ttorn \he lmplemNrtallon vt ~pu~ ~lia}~ OJ.J~~OIH &rtQo~on ~ bt, computectperntiog fhe omc:VI

:::d,.kon,.o.meotON,..~indffi, AUG I :::,,,~.~"~-.'-'»

.. .. .

.. ·.

t.r 2~' t· r.i7..¥-¥~X ./ t • . . . . 1 . -

.NATIONAL GOVl!RNMENT FISCAL PEFlFORM \NCE~ 2003-2008 In-billion pesos · . · . ·1 · ~ · · .

.. I I A4

PARTICULARJ - ·· l~ 200'· 200!

REVENUES . 626,6 699J 795.' I

Tax Reven1,1es 537.4 59~.( 685.:

::~~#~~-;rea~~.~~~e~~u;;: :. . ~ . . . ... .. . . . ; \ .'42S~(. ·,:.·A(&Sw : • , • •• , .:~ 'l

·:; ··~i ~~ .. , ..

~y ·~ ·lf~~$st&~~ . : .. I :•

. . "' ·· . . . ms :· •"iQG.i· r~:'iw~ •••• • ,... j

~ .. ·.: .1,~ -.. Other Offices ,.$~9· 7.~. 8.·

· Non-T3x Revenues . ' 88\1 101.~ . .110.! BTf Income

. ·sGt7 64 • . ·I 70J

Fees & Charges t8l6 19.£ 19.1

Privatization. 06 . O.t . 2.· ,. Grants ..r:~"' . 1 2' o.: o.:

EXPENDITURES 8SS.9 893.1. 942.1

SURPLUS/(DEF.IOT} · (~.~) (194.0 . (146:8 Scvrce: Deportment of Fhanct

B0C. d;\SH COLLECTION . 01n ~~lion.Peso~) . .

. . DECEMBER' . YARIANCE ·. JAN, DEC .. :vARIANCE

·-. ·:. · ~ ~01 :· ~()()() : ~ ~m?~Jit · .!'&.:

17,389 . p,U4 · . . 26~ 1,5% · ·TOTAL

· · 2(}07 ~ · · Amount . .!£

209~439 198,1=61' 11,278. . 5.'J%' .. . l9~ . . S6,S62 2.347. . 4.1,;

l

\ : !· .. · f. I .

. 1 .

I

o.Vot. NowMCIJ.C\110 •·. 'I'EF

. . \.: ... p·ort Duties

NonOii · ·Oil

· . Crude Oil

. ·orr Products

~or~'l'ax

VAT Spec (Excise)

lX Credit ,Applied·. · Gov't Accounts l Det Payt.

6.'20) , ,,710 1,493 . . :H.7'l& 414 . 1,9S1 .. ~l.S#) .·'7!.9$

163l4 9.654 .6.570:· 68.1$ .

4,,61.0' 7,469 (2,859) ...38.3% . ·66,925 68,533 . . (f)608) -2.35% . . . .· .

3A57 .· 6,042 (2,585). -42.8% ·56,471 . 5J-.¥?- dn.l) -1.7%

,: ·1,426 \

:19.2% .. n,o91: ('637) : .'.).1%

: . 1,153 .. ({:74) 10,454

831 '· 1.149 (318) . -27.7% ·7.255 .s:oo4 ... : ·(749) -9.4%

322 ' 277 .. ·45. · .. r6.1% 3J99 .· 3,087 . nz 3.6% .. '

1Z,779 . .. 9~65.i; ·JJ24 32.36.% 142,5i4 ' .129,~2$ : :12,886 .- 9.9%

... 11.;~6 8,838 2.61:7 . 29.7% 129,125' 118,8.69 . 10,256 8.6~

1.31.3 817·. . 491 60.8% .. 13,389 . 10,759 2.'630' .'24:4% .

45 . .. 501 (456) . . . -91.0% 3,009 3,301 (292) -8.89f . ..

'6{2 ' 542 ' ' 13·1 24-~% .. 16,786 12,281 .4:.499 . 36.69{ .

COMPARISON OF ALLOCATION TO LOCAL GOVERNMENT UNITS, 2011-2013

(In Million Pesos)

PARTICULARS

REGION: Ill

AURORA

Province

Municipalities

Barangays

Sub-total

BATAAN

Province

Municipalities

Balanga City

Baran gays

Sub-total

BULACAN

_ Province

Municipalities

Malolos City

Meycauyan City

San Jose del Mo

Barangays

Sub-total

NUEVA ECIJA

Province

Municipalities

Cabanatuan City

Gapan City

Mu"oz City

Palayan City

San Jose City

Barangays

Sub-total

nte City

2011

460.35

547.38

155.60

1,163.33

610.64

790.57

274.40

373.56

2,049.17

_ _1.,.731_77

2,252.85

394.11

346.41

629.51

1,338.20

6,698.85

1,395.19

1,947.71

540.44

316.40

289.07

217.61

350.50

1,156.94

6,213.86

IRA Given per GAA

2012 2013 2014

438.68 487.43 550.70

530.50 591 .27 668.02

148.18 166.16 187.73

1,117.36 1,244.86 1,406.45

582.42 641 .34 724.59

767.84 845.60 955.36

236.09 261 .67 295.64

355.22 393.95 445.09

1,941.57 2,142.56 2,420.68

1,656. . .84- 1,82-1.47 --2,0§7;-91

2,189.91 2,413.90 2,727.24

347.97 385.41 435.44

305.89 333.24 376.50

561 .83 618.89 699.23

1,271 .37 1,410.35 1,593.42

6,333.81 6,983.26 7,889.73

1,329.44 1,485.69 1,678.54

1,891 .11 2,112.19 2,386.36

471 .72 524.28 592.33

272.03 299.72 338.63

247.12 274.24 309.84

184.57 207.33 234.24

302.17 336.41 380.08

1 '100.64 1,234.55 1,394.80

5,798.80 6,474.41 7,314.82 -----

Page 1 of 2

. ~

ANNEX t; ---Should be One Time Adj

2011 2012 2013 2014 '09 to '14

39.26% 32.24% 37.14% 37.48% 170.05%

644.29 582.77 668.46 757.09 1,487.18

781 .55 706.92 810.87 918.37 1,804.00

219.63 198.66 227.87 258.08 506.96

1,645.48 1,488.35 1.707.20 1,933.54 3,798.13

847.74 766.78 879.53 996.14 1,956. 76

1,117.73 1,010.99 1,159.65 1,313.40 2,579.97

345.88 312.85 358.85 406.43 798.37

520.73 471 .00 540.26 611 .89 1,201.96

2,832.08 2,561 .63 2,938.30 3,327.87 6,537.07

- 2,407.65 - 27-17-7.74 . -2-;497.96 . -2,829:14 5,557.40

3,190.74 2,886.04 3,310.41 3,749.32 7,364.94

509.44 460.79 528.55 598.63 1,175.91

440.48 398.42 457.00 517.60 1,016. 73

818.06 739.94 848.74 961 .27 1,888.27

1,864.23 1,686.20 1,934.15 2,190.58 4,303.05

9,230.60 8,349.13 9,576.81 10,846.54 21,306.30

1,963.81 1,776.28 2,037.47 2,307.60 4,532.92

2,791 .93 2,525.32 2,896.65 3,280.70 6,444.41

693.00 626.83 719.00 814.32 1,599.61

396.18 358.34 411 .03 465.53 914.46

362.50 327.88 376.09 425.96 836.72

274.05 247.88 284.33 322.03 632.57

444.67 402.21 461 .35 522.52 1,026.41

1,631.85 1,476.02 1,693.06 1,917.53 3,766.68

8,558.00 7,740.76 8,878.98 10,056.19 19,753.77

COMPARISON OF ALLOCATION TO LOCAL GOVERNMENT UNITS, 2011-2013 (In Million Pesos)

PARTICULARS

PAMPANGA

Province

Municipalities

Angeles City

San Fernando City

Baran gays

Sub-total

TARLAC

Province

Municipalities

Tarlac City

Barangays

Sub-total

ZAMBALES

Province

Municipalities

Olongapo City

Barangays

Sub-total

TOTAL REGION Ill

201 1

1,253.49 1,922.41

491.37 437.78

1,110.92 5,215.97

960.65 1,300.13

590.05 733.68

3,584.51

-646.87 929.52 467.06 402.85

2,446.30 27,371 .99

IRA Given per GAA

2012 2013 2014

1,195.26 1,329.65 1,502.25 1,868.82 2,078.93 2,348.79

438.09 479.81 542.09 387.87 434.50 490.90

1,055.70 1,182.03 1,335.46 4,945.74 5,504.92 6,219.49

915.86 1,000.57 1,130.45 1,262.92 1,382.43 1,561 .88

517.44 563.89 637.09 697.85 765.93 865.35

3,394.07 3,712.82 4,194.76

617.31 690.06 779.63 901 .83 1,01 4.62 1 '146.32 409.97 437.51 494.30 383.05 427.78 483.31

2,312.16 2,569.97 2,903.57 25,843.51 28,632.80 32,349.50

Page 2 of 2

S hould be One Time Adj 2011 2012 2013 2014 '09 to '14

39.26% 32.24% 37.14% 37.48% 170.05%

1,757.56 1,589.72 1,823.48 2,065.24 4,056.83

2,747.97 2,485.55 2,851 .04 3,229.04 6,342.93

634.22 573.66 658.01 745.25 1,463.93

574.33 519.48 595.87 674.87 1,325.68

1,562.43 1,413.23 1,621 .03 1,835.95 3,606.44

7,276.51 6,581 .64 7,549.42 8,550.35 16,795.81

1,322.57 1,196.27 1,372.18 1,554.11 3,052.79

1,827.32 1,652.82 1,895.86 2,147.22 4,217.87

745.36 674.18 773.32 875.85 1,720.46

1,012.42 915.74 1,050.39 1,189.66 2,336.89

4,907.68 4,439.02 5,091 .75 5,766.83 11 ,328.01

912.13 825.03 946.35 1.071 .82 2,105.41

1,341 .14 1,213.07 1,391.45 1,575.93 3,095.66

578.31 523.08 600.00 679.55 1,334.87

565.45 511 .45 586.66 664.44 1,305. 18

3,397.03 3,072.64 3,524.45 3,991 .73 7,841.12

37,847.37 34,233.16 39_!266.90 44 ,473.05 87,360.21 -------