A scofflaw on the IRA

E·N·Q·U·I·R·Y
DEMAREE J.B. RAVAL

A scofflaw on the IRA
Sunday, 09 22, 2002

Budget Secretary Emilia Boncodin admitted that Malacañang will not slash the internal revenue allotment (IRA) but will only defer its release (page 6, Tribune, Sept. 13, 2002).

The admission is supposed to look like an earnest effort from Malacañang to mollify, or even stem the tide of outrage expected to swamp Malacañang from local government units (LGUs); but it still comes as bad news, but worse for Malacañang.

This exactly is the problem: The government cannot defer the release of the IRA, because both the Constitution (Section 6, Article X) and Local Government Code (Section 286) mandate the automatic release of the shares of the LGUs in the national internal revenue. Boncodin knows this injunction personally and fully well, having been a respondent in the case of Pimentel Jr. vs Aguirre, 336 SCRA 201, where the Supreme Court declared as unconstitutional an administrative order withholding the release of 10 percent of the IRA to LGUs.

A deferment of 20 percent of the IRA makes the government’s position even worse now. Surely, when the matter is taken to court, the SC will not find it difficult to rule as it did before: that the government was wrong then; and it could not be right this time.

Should there be any attempt at deferment, Boncodin would do well to consult this clear and unequivocal provision in Section 286.a of the Local Government Code: “The share of each local government unit shall be released, without need of any further action… directly to the provincial, city, municipal or barangay treasurer… and which shall not be subject to any lien or holdback that may be imposed by the national government.”

Under the questioned administrative order in the Pimentel, Jr. Case, 10 percent of the IRA was to be withheld “pending the assessment and evaluation… of the emerging fiscal situation.” The Supreme Court was very clear when it ruled, thus: “Such withholding clearly contravenes the Constitution and the law. Although temporary, it is equivalent to a held back or withheld, often temporarily.” Hence, the “temporary” nature of the retention by the national government does not matter. Any retention is prohibited.”

To hold back something means to retain something in one’s keeping. And when one retains something in his keep, however temporary, is he not deferring – putting off deliberately to a future time – its release? So, what is going on at the Department of Budget and Management – obfuscating circumlocution? The usual government doublespeak? Or the usual combination of both?

Boncodin’s announcement that the government will not be declaring an “unmanageable budget deficit” compounds the problem. An “unmanageable budget deficit” is exactly what the government should offer as the justification for a reduction or deferment of the release of the IRA, but if the government is not even willing to make this admission against its interest, then there is no way it can validly institute the necessary adjustment in the IRA.

The implementing Rules of the Local Government Code precisely requires this declaration of an unmanageable public sector deficit, as basis for a recommendation by the Finance, Budget and Local Government secretaries to the President and consultations with the presiding officers of both houses of Congress. The way it looks now, Boncodin will have to get her syntax together, admit there is a problem, and be bold enough to take the initial step toward a validation of the government’s intention to slash or defer payment of the IRA.

The implementing rules further require that the adjustments to the IRA can be made only after effecting a corresponding reduction of the national government expenditures. This may be hard to comply with, if we are to believe that the Neda has splurged P276 million on food and drinks, and while utterly unnecessary foreign travels continue to set the pattern for government spending. Against this wanton fiscal abuse, the government will have to level somehow with the people, the LGUs particularly. The government should show it is reducing its expenditures to justify the reduction of its obligation to remit to the LGUs their IRA. After all, the national coffers a really running dry. What then is keeping the government from admitting the country is now scraping the bottom of the barrel, and that it is trying hard to conserve – if it could – the precious contents of that almost empty container, and so that we all now must share in the burden?

Fiscal autonomy of the LGUs as mandated by the Local Government Code is strengthened by the automatic release to them of the IRA, without any precondition. When the government defers the release, or pushes the LGUs to obtain loans from Landbank or DBP to fill in the gap for funding of their development projects otherwise expected to be funded out of the IRA, then the government is undermining and tampering with the autonomy. Basic services and development programs should not be deferred. They cannot wait. The government must release the IRA without any precondition.

To one’s amazement, the reported acquiescence of the LGU heads to the deferment is unbelievable. Nor does it make sense. Who is the LGU chief executive in his right senses who will volunteer a deferment or, worse, consent to a cut in his IRA?

Ilocos Norte Gov. Bongbong Marcos hit the nail right on the head when he said it is both “impossible and illogical” to accept that the chief executive of a local government unit would be willing to surrender the 20-percent share that is supposed to go to development projects only to foist on his LGU a debt from which it will never be able to get out of. Who then is the idiot who is willing to borrow money, pay the principal, and interest, and costs, and commissions, when he could very well invoke the Constitution, the Local Government Code and the Pimentel, Jr. Case in demanding his IRA in full so that he could use it outright for his development projects? If such an idiot exists, he should have his head examined, if not outright broken.

Governor Marcos would do well to follow up his skepticism by going to the SC on a petition for mandamus, to compel the government to release the IRA forthwith, and thus test the government’s resolve on the matter and smoke out its real intentions in deferring the release.

In flouting the well-settled mandatory constitutional and legal injunction for fiscal autonomy of the LGUs, the government is dangerously transforming itself into a scofflaw. But then, what else is new?


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