Mandanas, et. al vs. Executive Secretary et. al
G.R. No. 199802, July 03, 2018
Garcia vs. Executive Secretary et. al
G.R. No. 208488, July 3, 2018
Ponente; BERSAMIN, J.:
Mandanas et. al and Garcia both filed a case against Executive Secretary et. al challenging the manner in which the just share in the national taxes of the local government units (LGUs) has been computed.
The 1987 Constitution continued to push towards decentralization of government and local autonomy. Republic Act 7160 also known as the Local Government Code of 1991 further strengthened the local autonomy and fiscal capability of Local Government Units (LGUs).
Local autonomy has two facets, the administrative and the fiscal. Fiscal autonomy means that local governments have the power to create their own sources of revenue in addition to their equitable share in the national taxes released by the National Government, as well as the power to allocate their resources in accordance with their own priorities. Such autonomy is as indispensable to the viability of the policy of decentralization as the other.
The Internal Revenue Allotment (IRA) is the basis of the share of LGUs from the national taxes. The IRA is determined on the basis of the actual collections of the National Internal Revenue Taxes (NIRTs) as certified by the Bureau of Internal Revenue (BIR).
Below are details of the petitions of Mandanas, et. al and Garcia.
|G.R. No. 199802 (Mandanas, et al.)||G.R. No. 208488 (Congressman Enrique Garcia, Jr.)|
|a special civil action for certiorari, prohibition and mandamus assailing the manner the General Appropriations Act (GAA) for FY 2012 computed the IRA for the LGUs||seeks the writ of mandamus to compel the respondents thereat to compute the just share of the LGUs on the basis of all national taxes|
|– allege herein that certain collections of NIRTs by the Bureau of Customs (BOC) – specifically: excise taxes, value added taxes (VATs) and documentary stamp taxes (DSTs) – have not been included in the base amounts for the computation of the IRA; |
– that such taxes, albeit collected by the BOC, should form part of the base from which the IRA should be computed because they constituted NIRTs;
– that, consequently, the release of the additional amount of P60,750,000,000.00 to the LGUs as their IRA for FY 2012 should be ordered; and
– that for the same reason the LGUs should also be released their unpaid IRA for FY 1992 to FY 2011, inclusive, totaling P438,103,906,675.73.
|– insists on a literal reading of Section 6, Article X of the 1987 Constitution. |
– that the insertion by Congress of the words internal revenue in the phrase national taxes found in Section 284 of the LGC caused the diminution of the base for determining the just share of the LGUs, and should be declared unconstitutional;
– that, moreover, the exclusion of certain taxes and accounts pursuant to or in accordance with special laws was similarly constitutionally untenable;
– that the VATs and excise taxes collected by the BOC should be included in the computation of the IRA; and – that the respondents should compute the IRA on the basis of all national tax collections, and thereafter distribute any shortfall to the LGUs.
|The cases were consolidated on October 22, 2013|
In response to the petitions, the several respondents, represented by the Office of the Solicitor General (OSG), urged the dismissal of the petitions upon procedural and substantive considerations.
Below are the answers of the OSG.
|Response of the Office of the Solicitor General (OSG)|
|urged the dismissal of the petitions upon procedural and substantive considerations|
|Procedural considerations||Substantive considerations|
|1. mandamus does not lie in order to achieve the reliefs sought because Congress may not be compelled to appropriate the sums allegedly illegally withheld for to do so will violate the doctrine of separation of powers; and,|
2. mandamus does not also lie to compel the DBM to release the amounts to the LGUs because such disbursements will be contrary to the purposes specified in the GAA;
– that Garcia has no clear legal right to sustain his suit for mandamus;
– that the filing of Garcia’s suit violates the doctrine of hierarchy of courts; and
– that Garcia’s petition seeks declaratory relief but the Court cannot grant such relief in the exercise of its original jurisdiction.
|– Article 284 of the LGC is consistent with the mandate of Section 6, Article X of the 1987 Constitution to the effect that the LGUs shall have a just share in the national taxes; |
– that the determination of the just share is within the discretion of Congress; that the limitation under the LGC of the basis for the just share in the NIRTs was within the powers granted to Congress by the 1987 Constitution;
– that the LGUs have been receiving their just share in the national taxes based on the correct base amount;
– that Congress has the authority to exclude certain taxes from the base amount in computing the IRA;
– that there is a distinction between the VATs, excise taxes and DSTs collected by the BIR, on one hand, and the VATs, excise taxes and DSTs collected by the BOC, on the other, thereby warranting their different treatment; and
– that Development Budget Coordination Committee (DBCC) Resolution No. 2003-02 dated September 4, 2003 has limited the base amount for the computation of the IRA to the “cash collections based on the BIR data as reconciled with the Bureau of Treasury;” and that the collection of such national taxes by the BOC should be excluded.
|General Issue: Whether or not the exclusion of certain national taxes from the base amount for the computation of the just share of the LGUs in the national taxes is constitutional|
|I. Whether or not mandamus is the proper vehicle to assail the constitutionality of the relevant provisions of the GAA and the LGC;|
II. Whether or not Section 284 of the LGC is unconstitutional for being repugnant to Section 6, Article X of the 1987 Constitution;
III. Whether or not the existing shares given to the LGUs by virtue of the GAA is consistent with the constitutional mandate to give LGUs a “just share” to national taxes following Article X, Section 6 of the 1987 Constitution;
IV. Whether or not the petitioners are entitled to the reliefs prayed for.
RULING / HELD
|Ruling of the Court (Mandanas-Garcia Case)|
|1. Mandamus is an improper remedy||– The writ of mandamus may not issue to compel an official to do anything that is not his duty to do, or that is his duty not to do, or to obtain for the petitioner anything to which he is not entitled by law.|
– Congress cannot be compelled by writ of mandamus.
– The discretion of Congress thereon, being exclusive, is not subject to external direction; otherwise, the delicate balance underlying our system of government may be unduly disturbed
|2. Municipal corporations and their relationship with Congress||– Municipal governments are only agents of the national government. |
– Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature.
– This basic relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy.
– The LGC provided a norm of interpretation in favor of the LGUs in its Section 5(a), to wit: (a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned; [Bold underscoring supplied for emphasis]
|3. The extent of local autonomy in the Philippines||– The 1987 Constitution limits Congress’ control over the LGUs by ordaining in Section 25 of its Article II that: “The State shall ensure the autonomy of local governments.”|
– Certain limitations are and can be imposed by Congress in all the forms of decentralization, for local autonomy, whether as to power or as to administration, is not absolute. The LGUs remain to be the tenants of the will of Congress subject to the guarantees that the Constitution itself imposes.
|4. Section 284 of the LGC deviates from the plain language of Section 6 of Article X of the 1987 Constitution||– Section 6, Article X the 1987 Constitution textually commands the allocation to the LGUs of a just share in the national taxes|
– Section 6, when parsed, embodies three mandates, namely: (1) the LGUs shall have a just share in the national taxes; (2) the just share shall be determined by law; and (3) the just share shall be automatically released to the LGUs.
– LGC Section 284. Allotment of Internal Revenue Taxes. – Local government 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
– Section 6 mentions national taxes as the source of the just share of the LGUs while Section 284 ordains that the share of the LGUs be taken from national internal revenue taxes instead.
– Garcia contends that Congress has exceeded its constitutional boundary by limiting to the NIRTs the base from which to compute the just share of the LGUs.
– The Court agree with Garcia’s contention.
– Section 284 has effectively deprived the LGUs from deriving their just share from other national taxes, like the customs duties.
– Strictly speaking, customs duties are also taxes because they are exactions whose proceeds become public funds.
– The exclusion of other national taxes like customs duties from the base for determining the just share of the LGUs contravened the express constitutional edict in Section 6, Article X the 1987 Constitution.
– To read Section 6 differently as requiring that the just share of LGUs in the national taxes shall be determined by law is tantamount to the unauthorized revision of the 1987 Constitution.
|5. Congress can validly exclude taxes that will constitute the base amount for the computation of the IRA only if a Constitutional provision allows such exclusion||– Section 284 does not authorize any exclusion or deduction from the collections of the NIRTs for purposes of the computation of the allocations to the LGUs.|
– Anent the share of the affected LGUs in the proceeds of the sale and conversion of the former military bases pursuant to R.A. No. 7227, the exclusion is warranted for the reason that such proceeds do not come from a tax, fee or exaction imposed on the sale and conversion.
|6. Entitlement to the reliefs sought||– The petitioners’ prayer for the payment of the arrears of the LGUs’ just share on the theory that the computation of the base amount had been unconstitutional all along cannot be granted|
– doctrine of operative fact
* recognizes the existence of the law or executive act prior to the determination of its unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or disregarded. * nullifies the void law or executive act but sustains its effects. It provides an exception to the general rule that a void or unconstitutional law produces no effect
* applies only to cases where extraordinary circumstances exist, and only when the extraordinary circumstances have met the stringent conditions that will permit its application
* the effect is prospective
|7. Automatic release of the LGUs’ just share in the National Taxes||– Section 6, Article X of the 1987 Constitution commands that the just share of the LGUs in national taxes shall be automatically released to them. |
– The term automatic connotes something mechanical, spontaneous and perfunctory
– The LGUs are not required to perform any act or thing in order to receive their just share in the national taxes
– Automatic release without need of appropriation
|1. DECLARES the phrase “internal revenue” appearing in Section 284 of Republic Act No. 7160 (Local Government Code) UNCONSTITUTIONAL, and DELETES the phrase from Section 284.|
|2. ORDERS the SECRETARY OF THE DEPARTMENT OF FINANCE; the SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT; the COMMISSIONER OF INTERNAL REVENUE; the COMMISSIONER OF CUSTOMS; and the NATIONAL TREASURER to include ALL COLLECTIONS OF NATIONAL TAXES in the computation of the base of the just share of the Local Government Units according to the ratio provided in the now-modified Section 284 of Republic Act No. 7160 (Local Government Code) except those accruing to special purpose funds and special allotments for the utilization and development of the national wealth.|
|3. DECLARES that: |
(a) The apportionment of the 25% of the franchise taxes collected from the Manila Jockey Club and Philippine Racing Club, Inc. – that is, five percent (5%) to the National Government; five percent (5%) to the host municipality or city; seven percent (7%) to the Philippine Charity Sweepstakes Office; six percent (6%) to the Anti-Tuberculosis Society; and two percent (2%) to the White Cross pursuant to Section 6 of Republic Act No. 6631 and Section 8 of Republic Act No. 6632 – is VALID;
(b) Section 8 and Section 12 of Republic Act No. 7227 are VALID; and, ACCORDINGLY, the proceeds from the sale of the former military bases converted to alienable lands thereunder are EXCLUDED from the computation of the national tax allocations of the Local Government Units; and
(c) Section 24(3) of Presidential Decree No. 1445, in relation to Section 284 of the National Internal Revenue Code, apportioning one-half of one percent (1/2 of 1%) of national tax collections as the auditing fee of the Commission on Audit is VALID;
|4. DIRECTS the Bureau of Internal Revenue and the Bureau of Customs and their deputized collecting agents to certify all national tax collections, pursuant to Article 378 of the Implementing Rules and Regulations of R.A. No. 7160|
|5. DISMISSES the claims of the Local Government Units for the settlement by the National Government of arrears in the just share on the ground that this decision shall have PROSPECTIVE APPLICATION|
|6. COMMANDS the AUTOMATIC RELEASE WITHOUT NEED OF FURTHER ACTION|
SEPARATE / DISSENTING OPINIONS
|Separate Opinion – Velasco, Jr., J.|
|Voted to partially grant the petitions|
|Concur with the following dispositions: |
1. The phrase “internal revenue” appearing in Section 284 of RA 7160 is declared UNCONSTITUTIONAL and is hereby DELETED.
2. Respondents are hereby DIRECTED to include all forms of national tax collections, other than those accruing to special purpose funds and special allotments for the utilization and development of national wealth, in the subsequent computations for the base amount of just share the Local Government Units are entitled to.
3. In addition, the Court further DECLARES that:
a. The apportionment of specified incremental taxes is VALID and shall be observed;
b. Sections 8 and 12 of RA 7227 are hereby declared VALID. The proceeds from the sale of military bases converted to alienable lands thereunder are EXCLUDED from the computation of the national tax allocations of the Local Government Units since these are sales proceeds, not tax collections;
c. The one-half of one percent (1/2%) of national tax collections as the auditing fee of the Commission on Audit under Section 24(3) of Presidential Decree No. 1445 shall not be deducted prior to the computation of the forty percent (40%) share of the Local Government Units in the national taxes; and
d. Other special purpose funds are likewise EXCLUDED from the computation of the national tax allotment base.
4. The Bureau of Internal Revenue and Bureau of Customs are hereby ORDERED to certify to the Department of Budget and Management all their collections and remittances of National Taxes;
5. PROSPECTIVE APPLICATION from finality of this decision in view of the operative fact doctrine. Denied petitioners’ claims of arrears from the national government for the unlawful exclusions from the base amount.
6. The national tax allotments of the Local Government Units shall AUTOMATICALLY and DIRECTLY be released, without need of any further action
|Dissenting Opinion – Leonen, J.|
|Voted to Dismiss the Petitions|
|1. There was no unlawful neglect on the part of public respondents, particularly the Commissioner of Internal Revenue, in the computation of the internal revenue allotment. Moreover, the act being requested of them is not their ministerial duty; hence, mandamus does not lie and the Petitions must be dismissed.|
2. The deductions to the Bureau of Internal Revenue’s collections made pursuant to special laws were proper.
3. The Court should exercise deference to the interpretation of Congress and of the President of what constitutes the “just share” of the local government units.
4. Congress has full discretion to determine the “just share” of the local government units, in which authority necessarily includes the power to fix the revenue base, or to define what are included in this base, and the rate for the computation of the internal revenue allotment. Absent any clear and unequivocal breach of the Constitution, this Court should proceed with restraint when a legislative act is challenged in deference to a co-equal branch of the Government.
5. The “automatic release” in Section 286 of the Local Government Code as “without need for a yearly appropriation” is contrary to the Constitution. A statute cannot amend the Constitutional requirement.
6. The release of the local government units’ share without an appropriation substantially amends the Constitution. It also gives local governments a level of fiscal autonomy not enjoyed even by constitutional bodies like the Supreme Court, the Constitutional Commissions, and the Ombudsman. It bypasses Congress as mandated by the Constitution. “Without appropriation” also substantially alters the relationship of the President to local governments, effectively diminishing, if not removing, supervision as mandated by the Constitution.
|Separate Opinion – Caguioa, J.|
|Voted to Dismiss the Petitions|
|Submit that J. Leonen’s liberal approach should be upheld. |
1. Posits that if any reasonable basis may be conceived which supports the statute, it will be upheld, and the challenger must negate all possible bases; that the courts are not concerned with the wisdom, justice, policy, or expediency of a statute; and that a liberal interpretation of the constitution in favor of the constitutionality of legislation should be adopted. Before a law is declared unconstitutional, there must be a clear and unequivocal showing that what the Constitution prohibits, the statute permits. In other words, laws shall not be declared invalid unless the conflict with the Constitution is clear beyond reasonable doubt.
2. Constitution gave Congress the absolute authority and discretion to determine the LGUs’ “just share” — which include both the classes of national taxes and the percentages thereof.
3. Appropriation is not a judicial function, Congress, which holds the power of the purse, is in the best position to determine the “just share” of the LGUs based on their needs and circumstances
4. Agree with the ponencia’s position that the operative fact doctrine should apply to this case. The doctrine nullifies the effects of an unconstitutional law or an executive act by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences that cannot always be ignored. Petitioners cannot claim deficiency IRA from previous fiscal years as these funds may have already been used for government projects, the undoing of which would not only be physically impossible but also impractical and burdensome for the Government.
|Dissenting Opinion – Reyes, Jr. J.|
|Voted to Dismiss the petitions|
|1. The national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it. despite the shift towards local autonomy, the National Government, through Congress, retains control over LGUs—albeit, in a lesser degree.|
2. The plain text of Section 6, Article X of the 1987 Constitution requires Congress to provide LGUs with a just share in the national taxes, which should be automatically released to them. Nowhere in this provision does the Constitution specify the taxes that should be included in the just share of LGUs. Neither does the Constitution mandate the inclusion of all national taxes in the computation of the IRA or in any other share granted to LGUs.
3. Congress has the authority to determine the exact percentage share of the LGUs, Congress may likewise determine the basis of this share and include some or all of the national taxes for a given period of time. Congress possesses the power of the purse.
4. The determination of Congress as to the base amount for the computation of the IRA is a policy question of policy best left to its wisdom. The Court may neither bind the hands of Congress nor supplant its wisdom.
Full Case Texts can be viewed at: https://www.chanrobles.com/cralaw/2018julydecisions.php?id=530