Bureau of Local Government Finance Opinion

May 29, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned, thru the Municipal Treasurer, to the Municipal Mayor, Baloi, Lanao del Norte, his within letter dated April 30, 1996, appealing for reconsideration on the effectivity of the implementation of the sharing of the proceeds derived from the utilization and development of the national wealth in that municipality by the National Power Corporation (NPC). The appeal was prompted by the difference in the interpretation of that Office and that of the NPC as to the effectivity of the implementation of the said sharing pursuant to Section 291 of the Local Government Code of 1991 (RA 7160). His Office believes that the effectivity date of payment of the municipality's shares in the national wealth should start in 1992 instead of 1993. However, the NPC stands otherwise, i.e., payment should be in 1993 and not in 1992. Section 291 of the Local Government Code of 1991 (RA 7160) is quoted hereunder: "SEC. 291. Share of the Local Governments from Any Government Agency or Government-Owned and -Controlled Corporation . Local government units shall have a share based on the preceding fiscal year from the proceeds derived by any government agency or government-owned or -controlled corporation engaged in the utilization and development of the national wealth based on the following formula whichever will produce a higher share for the local government unit: . . .." It is clear from the abovestated provisions of law that the share of local government units from the proceeds derived by any government-owned or controlled corporation engaged in the utilization and development of national wealth shall be based on the preceding fiscal year . Considering that the Code took effect on January 1, 1992, this Bureau holds the view that only the proceeds realized during calendar year 1992 shall begin to be subject to the sharing between the corporation and the local government unit concerned. Hence, the LGUs shares shall be remitted to them beginning only in CY 1993. The view expressed by this Bureau is based on the fact that if NPC were a taxable entity, that is subject to national internal revenue taxes, the gross receipts that if realized in CY 1991 would have been subject to such national taxes in CY 1992. This will also hold true for privately-owned and -operated corporations engaged in the development and utilization of national wealth which, pursuant to Section 291 of the Code, are likewise mandated to share the proceeds they derived from such undertaking with the LGU(s) concerned. AaEcHC On the remittance of the said shares, attention is hereby invited to Article 390 (c) of the Implementing Rules and Regulations (IRR) of the Code, implementing Section 393 of the same Code, quoted as follows: "ART. 390. Computation and Remittance of the Shares of Local Government Units . The computation and remittances of the shares of LGUs shall be in accordance with the following procedures. xxx xxx xxx (c) Share of LGUs from the proceeds derived by any government agency or GOCC engaged in the utilization and development of national wealth shall be directly remitted by such corporations to the provincial, city, municipal or barangay treasurer concerned within five (5) days after the end of each quarter. Within three (3) days from the date of remittance, the agency or GOCC concerned shall furnish the Treasurer of the Philippines with a copy of the remittance advice." On the basis of the abovecited provisions of the IRR, it is evident that NPC, the GOCC engaged in the utilization and development of national wealth, is mandated to directly remit the share of that municipality to the Municipal Treasurer within five (5) days after the end of each quarter. It is hoped that this clarifies matters. (SGD.) LORINDA M. CARLOS Executive Director