President Gloria Macapagal-Arroyo has ordered the release of a portion of the P17.5 billion in Internal Revenue Allotment shares of local government units earlier withheld by the national government.

In Executive Order No. 494 she signed on January 18, Arroyo directed the Department of Finance, Department of Budget and Management and Department of Interior and Local Government to take necessary steps to ensure that local government units get their respective shares from the P17.5 Billion Unprogrammed IRA in years 2000 and 2001.

Oriental Negros Gov. George Arnaiz said the DBM is now preparing the Notice of Payment Schedule to inform the LGUs of their respective shares and the schedule of payment.

He said the LGUs can either get a lump sum through monetization or get the amount in installment for seven years.

The governor said if an LGU opts to monetize its share, it can get the amount at once but must pay the interest and other charges from the trustee bank designated by the government.
The interest is between 27 and 28 percent.

If the LGU does not want to pay the interest, it can get the whole amount in seven years.

Arroyo cited the opinion of the Secretary of Justice that the Supreme Court has declared as unconstitutional the withholding of the IRA balance of P17.5 billion.
In the General Appropriation Act of 1999 to 2001 the national government has withheld about P5 billion each year from the IRA, that was set aside for the Local Government Service Equalization Fund, a brainchild of the administration of former President Joseph Estrada.

Known as the Program for Devolution and Adjustment and Equalization, LGSEP is designed to facilitate the process of enhancing the capacities of LGUs in the discharge of functions devolved to them by the national government.

The Arroyo administration continued implementing the LGSEF in the reenacted budget of 2002. Of the accumulated P20 billion withheld portion of IRA since 1999, the national government released only P2.5 billion to the LGUs leaving a balance of P17.5 billion.

The withholding, however, was declared by the SC as unconstitutional in the case filed by former Batangas Gov. Hermilando Mandanas against former Executive Secretary Alberto Romulo, Budget Secretary Emilia Boncodin and DILG Secretary Joey Lina.

It ruled that the withholding violates Republic Act 7160 or the Local Government Code of 1991.

The decision prompted the League of Governors and Union of Local Authorities of the Philippines to request Malacañang for the release of the amount.*RA

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