Congressman Hermilando I. Mandanas, et al., v. Executive Secretary, et al.

(G.R. No. 199802, July 03, 2018)

FACTS: Mandanas, et al. allege that certain collections of National Internal Revenue Taxes (NIRTs) by the
Bureau of Customs (BOC) have not been included in the base amounts for the computation of the
Internal Revenue Allotment (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 to the LGUs as their IRA for FY 2012 should be ordered,
and that fort the same reason the LGUs should also be released their unpaid IRA for FY 2011.

Garcia, also a petitioner, seeks the writ of mandamus to compel the respondents to compute
the just share of the LGUs on the basis of all national taxes. The cases were later on consolidated. The
respondents urged the dismissal of the petitions upon procedural and substantive considerations.

ISSUE/S: 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.

RULING: No. 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 unconstitutional as it is contrary to the provision of Section
6, Article X of the 1987 Constitution.

Section 6, Article X textually commands the allocation to the LGUs of a just share in the national
taxes. On the other hand, Section 284 of the Local Government Code provides that 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 as follows: 30% on the first year of the effectivity of the code, 35%
on the second year, and 40% on the third year.

There is no issue as to what constituted the LGUs’ just share expressed in percentage of the
national taxes. Yet, 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 form national internal revenue taxes instead.

Taxes are the enforced proportional contributions exacted by the State from persons and
properties pursuant to its sovereignty in order to support the Government and to defray all the public
needs.

Strictly speaking, custom duties are also taxes because they are exactions whose proceeds
become public funds. The exclusion of other national taxes like custom duties from the base for
determining the just share of the LGUs contravened the express constitutional edict in Section 6, Article
X of the 1987 Constitution.