Reluctance over the Mandanas ruling

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‘It is rather weird for the national government to pour that much into Metro Manila cities which are already deemed financially capable enough to generate enough revenue to meet their needs…’

WHEN the Local Government Code of 1991 was enacted into law, members of the Philippine Congress were thinking of empowering 82 provinces,145 cities and 1,498 municipalities by devolving national government functions and funds down to the local level where elected leaders have better knowledge of what should be prioritized in their localities.

Referred to as Republic Act 7160, the law transfers control and responsibility of delivering basic services to local government units (LGU) in an apparent effort to enhance local services and efficiency in resource allocation.

The law translates to a state policy promoting autonomy primarily designed to ensure development in accordance with the local set-up, culture and potential of each and every locality.

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However, its implementation remains on a limited scale amid reluctance of the poor LGUs, which find the full devolution much of a worry mainly because of what has been deemed as a glitch – the Mandanas ruling which embarks on the manner in which devolved funds are computed.

Accordingly, the LGUs would be getting a share of the national government collection based on the internal revenue allotment (IRA) that LGUs are already receiving, meaning provinces, cities, municipalities and barangays which have been getting less stands to get half of the meager amount that they’re actually getting, while LGUs getting a lion’s share of the IRA would be getting 50% more starting 2022.

With the full-swing implementation of the devolution of power and funds, issues have been raised on whether or not it is proper to keep the existing mechanism in place.

In fact, discussions at the congressional plenary sparked debates among legislators from both sides – the pro and the anti.

But how exactly will the national government mitigate the effects of the Mandanas ruling?

The Mandanas ruling pertains to the judicial decision in Mandanas et.al. vs. Ochoa which sought clarification from the Supreme Court on the manner in which the “just share” in the national taxes of LGUs has been computed.

It has been contended that the computation of LGU share in national collections should not be limited to IRA as provided for under the Local Government Code, but should be based on the collection of national taxes.

In the 2018 ruling that was affirmed with finality in 2019, the SC declared that indeed, as surmised by the petitioners, the basis of computation of LGUs’ just share must be from “all collections of the National Taxes except those that are accruing to special purpose funds and special allotments for the utilization and development of the national wealth.”

Moving forward, the SC ruling resulted in a drastic increase in IRA. But not all seemed happy with the idea of slicing more than a trillion-peso IRA to 81 provinces, 145 cities, 1,498 municipalities and 42,029 barangays which would be taking over some functions of the national government, particularly on health, infrastructures, education, social welfare, livelihood and environment among many other concerns requiring more than what the LGUs stand to get.

Amid the issues are claims of a bias that sees more burden for the poor LGUs which could hardly defray the cost of constructing a footbridge connecting isolated barangays to the mainland.

Taking a cue from how the IRA would be deployed, poor LGUs stand to get so much less because computations would see them get 50% more based on the amount that they’ve been getting as their share from the national government collection.

Take the case of Makati City which got an IRA of around P1.8 billion — and to think, there’s not much infrastructure that the city government would be able to do in their area since everything seemed already covered — roads, bridges, school buildings, hospitals, etc.

Ironically, a 5th class municipality outside the national capital region which gets an IRA somewhere around P20 million will be receiving 50% more of what they got this year, for a total of P30 million for 2022.

But how far can P30 million go? According to engineers, it’s not even enough to construct a five-kilometer, two-lane access road for farmers.

According to economists, the imbalance in the distribution of national government collection seemed to aggravate poverty in the Philippines, even as he cited Metro Manila getting a huge chunk of funds that should have been given to poor localities — particularly 4th and 5th class municipalities outside the NCR.

It is rather weird for the national government to pour that much into Metro Manila cities which are already deemed financially capable enough to generate enough revenue to meet their needs, while depriving poor localities of getting what is required for them to cope.

The prevailing policy takes away much-needed resources from poor towns that do not have enough population to merit larger allocations, and as a result, these communities cannot advance economically and remain poor.

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The current spatial imbalance in development could qualify among the reasons why poor towns have remained poor. While some programs have been formulated to address the impasse, politics is believed to be playing a crucial role in who gets the lion’s share of the IRA.

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