Case Summary (G.R. No. 199802)
Petitioners’ Claims
Mandanas, et al. contend Customs-collected VAT, excise, and documentary stamp taxes constitute NIRTs and were excluded from IRA computations, thus withholding ₱60.75 billion for FY 2012 and ₱438.1 billion for 1992–2011. Garcia argues Section 284’s insertion of “internal revenue” improperly narrows “national taxes” in Art. X, Sec. 6, breaches the Constitution, and that special law exclusions and Customs collections must be included.
Respondents’ Defense
The OSG asserts Congress may lawfully limit the IRA base to NIRTs as defined in NIRC Sec. 21; Customs collections are not BIR-certified NIRTs; special laws earmark certain taxes for other uses (e.g., ARMM, mineral excise, tobacco excise, bases conversion, racing franchises, COA audit fees) and properly exclude them; and mandamus cannot compel appropriations or release of funds in violation of separation of powers.
Issues
- Whether mandamus is a proper remedy to challenge IRA computations and compel their release
- Whether Section 284 of the LGC is unconstitutional for narrowing “national taxes” to NIRTs in contravention of Art. X, Sec. 6 of the Constitution
- Whether the existing IRA shares accord with the constitutional mandate for a just share of national taxes
- Whether petitioners are entitled to the reliefs sought, including inclusion of Customs collections and special tax exemptions
Mandamus Remedy
Mandamus issues only to enforce a ministerial duty. Determining the IRA base and appropriating funds are discretionary legislative functions. A petition for mandamus cannot compel Congress or the DBM to appropriate or release funds contrary to statute or appropriations law. Garcia’s petition was treated in part as one for certiorari to review allegations of grave abuse of discretion by Congress, which the Court may entertain under its power to correct grave abuse of discretion by any government branch.
Congressional Discretion in Determining the IRA Base
Article X, Section 6, vests Congress with full discretion to determine “just share, as determined by law, in the national taxes” to LGUs. Section 284 of the LGC exemplifies this by fixing percentages (30%, 35%, 40%) of NIRTs. The Constitution imposes no requirement that Customs duties or other national taxes be included; Congress may lawfully define the base subject only to constitutional limits (justness and automatic release).
Interpretation of “National Taxes”
Art. X, Sec. 6 does not define “national taxes” but empowers Congress to determine the just share. Section 284’s reference to “national internal revenue taxes,” taken with AO 270’s certification requirement and the DBCC Resolution, furnished a clear statutory scheme. No constitutional text or legislative history unequivocally compels inclusion of Customs-collected taxes in the IRA base.
Authority to Exclude Special Tax Proceeds
Congress enacted special sharing schemes for certain tax proceeds:
• ARMM (R.A. 9054)—50% of VAT, 70% of other taxes remain with ARMM; 50% of VAT, 30% of other taxes go to LGUs under LGC
• Mineral excise (NIRC Sec. 287 & LGC Sec. 290)—40% host LGU; 60% general IRA
• Tobacco excise (R.A. 7171 & 8240; NIRC Secs. 288–289)—15% to tobacco-producing provinces; remainder splits for health and local development under R.A. 10351
• Bases conversion (R.A. 7227/9400)—non-tax proceeds dedicated to bases conversion, social and housing programs, and National Treasury
• Racing franchise taxes (R.A. 6631/6632)—5% to host LGU; remainder to national charity and disease-funds
• Incremental VAT sharing (R.A. 7643)—20% of incremental VAT excess to LGUs; remainder national
• COA audit fee (P.D. 1445 & NIRC Sec. 284)—½ of 1% of NIRTs for COA audit services
These special-purpose shares are consistent with Art. VI, Sec. 29(3) (special fund requirement) and Art. X, Sec. 7 (equitable share in national wealth). None undermines the LGC’s statutory discretion.
Automatic Release of the IRA
Art. X, Sec. 6 mandates automatic release to LGUs. Section 286 of the LGC operationalizes this, directing quarterly release to treasurers within five days of each quarter’s end, without further action. This automatic release provision, however, presupposes a corresponding annual appropriation in the General Appropriations Act; absent such appropriation, no funds may be released out of the Treasury (Art. VI, Sec. 29[1]).
Application of Operative-Fact Doctrine
Though Section 284’s exclusive reference to NIRTs may arguably narrow Art. X, Sec. 6, retroactive application of a contrary interpretatio
Case Syllabus (G.R. No. 199802)
Constitutional and Statutory Framework
- 1987 Constitution mandates decentralization and local autonomy (Art. X, Sec. 2–7).
- Article X, Section 5 empowers LGUs to create revenue sources with guidelines “as the Congress may provide.”
- Article X, Section 6 guarantees LGUs “a just share, as determined by law, in the national taxes which shall be automatically released to them.”
- Article X, Section 7 entitles LGUs to an equitable share in the proceeds from national wealth development.
- Republic Act No. 7160 (Local Government Code of 1991) implements these mandates, especially:
• Section 284 fixing LGUs’ share of national internal revenue taxes at 30% (year 1), 35% (year 2) and 40% (year 3 onwards).
• Sections 285–286 providing the formula for allocation among provinces, cities, municipalities and barangays and requiring quarterly release “without need of any further action.” - Implementing Rules (A.O. 270) and DBCC Res. 2003-02 define IRA base on certified BIR cash collections reconciled with the Bureau of the Treasury.
Factual Background and Consolidation
- G.R. No. 199802 (Mandanas et al.) challenges the FY 2012 General Appropriations Act’s (GAA) exclusion of P60.75 billion—VAT, excise taxes and DSTs collected by the Bureau of Customs—from the IRA base.
- Mandanas alleges P438.1 billion in unpaid IRA for FY 1992–2011; seeks mandamus/certiorari to compel release of full LGU shares.
- G.R. No. 208488 (Garcia) separately assails Section 284, arguing that “national taxes” must include all taxes, not only internal revenue taxes, and objects to various deductions under special laws.
- Cases consolidated on October 22, 2013; Garcia substituted in 2016 upon death of original petitioner.
Petitioners’ Contentions
- Congress wrongfully limited the IRA base to “national internal revenue taxes” instead of “national taxes” as per the Constitution.
- The VAT, excise taxes and DSTs collected by the Bureau of Customs are national internal revenue taxes under Section 21 of the National Internal Revenue Code (NIRC) and must be included.
- Various tax shares and special funds (e.g., ARMM allocations, mining taxes, tobacco excise shares, franchise taxes for race tracks, military base proceeds) were unlawfully excluded from the IRA base.
- They pray for issuance of mandamus to compel full computation on all national taxes and payment of alleged shortfalls.
Respondents’ Position
- Congress has plenary disc