- Petitioner
- Province of Batangas
- Respondent
- Romulo
- Citation
- G.R. No. 152774
- Court
- Supreme Court En Banc
- Division
- En Banc
- Ponente
- Callejo, Sr., J.
- Decided
- 2004-05-27
Automatic release of the LGU IRA; conditions on it are unconstitutional
Summary
The Province of Batangas successfully challenged the constitutionality of General Appropriations Act provisos from 1999-2001 that earmarked P5 billion yearly from local government units' Internal Revenue Allotment for a Local Government Service Equalization Fund. The Supreme Court En Banc unanimously declared these provisions unconstitutional for violating the constitutional mandate that LGUs' share in national taxes shall be automatically released. The Court found that subjecting the LGSEF release to Oversight Committee approval and compliance with implementing guidelines violated local fiscal autonomy principles. The decision emphasized that the constitutional word 'shall' creates mandatory obligation for automatic release without further LGU action. The Court also ruled that appropriations laws cannot amend substantive provisions of the Local Government Code regarding percentage sharing formulas. This landmark decision strengthened constitutional protections for local autonomy and established clear limits on national government control over local government finances, reinforcing the principle that local fiscal autonomy requires automatic, unconditional release of statutory revenue shares.