BAGUIO, Philippines — The landmark Supreme Court ruling that ordered the release of higher share of national government revenue to local government units will take effect in 2022, the tribunal said Wednesday.
In an en banc session in Baguio, voted 8-3 to junk the motion for reconsideration of the Office of the Solicitor General and Rep. Enrique Garcia Jr. (Bataan) on its July 3, 2018 decision that expanded the internal revenue allotment of LGUs.
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It also held that the “just share” of LGUs should be computed and sourced from all national taxes and not just from internal revenue collections.
In the same ruling, the SC clarified “that the adjusted amounts of the IRAs of the LGUs is deemed effective only after the finality of the ruling of the Court,” which would start on the 2022 budget cycle.
SC Public Information Office chief Brian Hosaka said that the tribunal applied the “operative fact” doctrine in its latest decision directing the prospective application of the July 2018 ruling.
SC jurisprudence holds that under the said doctrine, “the law is recognized as unconstitutional but the effects of the unconstitutional law, prior to its declaration of nullity, may be left undisturbed as a matter of equity and fair play.”
Policymakers earlier expressed “fear” on the application of the landmark ruling for 2019 fiscal year as it could disrupt the government’s funding priorities and affect “implications” on future budgets.
Debt watchers Fitch Rating and Moody’s Investor Service also warned of the ruling’s fiscal risk.
Finance Secretary Carlos Dominguez III earlier said that the prospective application of the SC ruling would be manageable for the government as the arrearages could reach P1 trillion to P1.5 trillion if the decision is retroactively implemented. — with reports from Ian Nicolas Cigaral