Local governments are entitled to a huge windfall, worth P500 billion from foregone shares from the Bureau of Customs (BoC), after the Supreme Court (SC) ruled that local government units (LGU) should get their “just share” from all national taxes.

“The Court, voting 10-3, interpreted the basis for the ‘just share’ of local government units under Section 6, Article X of the 1987 Constitution as based on all national taxes and not only national internal revenue taxes, as provided in Section 284 of the Local Government Code,” the SC said in a brief statement.

Section 284 of Republic Act 7160 or the Local Government Code states provincial, city and municipal governments must receive 40 percent of the total national internal revenue taxes collected by the central government.

LGU are now also entitled to have a share from franchise fees and Customs duties in their Internal Revenue Allotments (IRA) as a result of the SC ruling.

Every year, the national government passes the General Appropriations Act (GAA), which provides for the IRA for that same year. In the 2018 GAA, the total IRA reached P522.7 billion.

The SC, in a 10-3 vote, partially granted the petition of Batangas Gov. Hermilando Mandanas seeking to compel the national government to comply with the provision of Section 6, Article X of the Constitution that mandated the LGU “just share” in the national taxes.

The SC ruling was in reference to a petition Mandanas filed with the SC for certiorari, mandamus and prohibition on the P60.75 billion appropriations for capital outlays taken off the IRA in the 2012 budget under former President Aquino.

Mandanas said the amount was equivalent to the IRA for the LGU in accordance with law that has been misappropriated by the government in the 2012 GAA.

“If the unconstitutional release of the P60.75 billion is not restrained by the Supreme Court, then again the misuse of local funds for national projects will go unabated,” he said.