MANILA — The Department of Budget and Management (DBM) clarified that the National Tax Allotment (NTA) for local government units (LGUs) is not legislated as part of the General Appropriations Act (GAA) in the same manner as appropriations for national government agencies.
In a statement, the DBM stressed that the NTA exists independently of the annual budget law, saying its legal basis is anchored in the 1987 Constitution and the Local Government Code of 1991.
Article X, Section 6 of the Constitution provides that LGUs “shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.” This mandate is implemented through Sections 284 and 286 of Local Government Code of 1991, which set the percentage formula and require the automatic release of funds.
The DBM also cited the Supreme Court’s ruling in Mandanas v. Ochoa, which clarified the scope of LGUs’ just share and affirmed that the release of the NTA is mandatory and automatic. The Court did not classify the NTA as a discretionary national expenditure nor place it under executive control, the agency said.
The DBM explained that while the NTA is reflected in annual budget documents, this does not mean it is appropriated in the same discretionary sense as funding for executive departments and agencies.
Unlike agency budgets under the GAA, the NTA is not subject to annual legislative discretion, executive veto as a program item, or performance-based conditions. It is also not subject to reduction or adjustment during budget execution, the department said.
Instead, the NTA is implemented alongside the GAA for transparency, accounting, and fiscal programming purposes. Its inclusion in the budget of expenditures and sources of financing submitted by the President to Congress ensures full disclosure of fiscal flows, accurate deficit and cash programming, and compliance with constitutional requirements governing disbursements from the National Treasury.
All national taxes are first collected by the Bureau of Internal Revenue and the Bureau of Customs and remitted to the National Treasury, in line with Article VI, Section 29(1) of the Constitution, which states that no money shall be paid out of the Treasury except pursuant to an appropriation made by law. The NTA is then computed based on the statutory formula and automatically released to LGUs.
“Recording the NTA within the national fiscal framework does not transform it into a discretionary national fund,” the DBM said, emphasizing that it remains a constitutionally mandated transfer.
The DBM also rejected claims that including the NTA in the national budget framework subjects it to executive control or weakens local autonomy.
It noted that the percentage formula for computing the NTA is fixed by law, the tax base has been defined and clarified by jurisprudence, and the release is automatic.
Citing the Supreme Court ruling in Mandanas, the DBM underscored that the Court expressly ordered the automatic release of LGUs’ just share on a quarterly basis, without need of further action, and within five days from the end of each quarter.
“Neither the Executive nor Congress exercises discretion to suspend or condition the NTA once it is determined in accordance with the formula prescribed under the Local Government Code,” the agency said.
The DBM added that presenting the NTA transparently within the national budget strengthens fiscal predictability for LGUs and supports responsible macro-fiscal management.
The DBM said it remains committed to upholding the constitutional mandate on the automatic release of LGUs’ just share, as well as to transparency and sound public financial management.
“The National Tax Allotment is not a discretionary appropriation under the General Appropriations Act. It is a constitutional obligation implemented in coordination with, but not created by, the annual budget law,” the department noted.
With a case reportedly filed on the matter, the DBM said it will address the issue through proper legal channels, with the assistance of the Office of the Solicitor General.
“We remain steadfast in upholding both local autonomy and fiscal discipline under the rule of law,” the agency said.