NEW DSWD BICOL DIRECTOR TELLS EMOPLOYEES TO BRACE FOR MANDANAS RULING

LEGAZPI CITY---Newly-installed Bicol director of the Department of Social Welfare and Development
(DSWD) Leo L. Quintilla has asked the work force of the social services-oriented agency to brace for the
“big change” that the Mandanas ruling of the Supreme Court (SC) is set to be fully implemented in 2022.

“(DSWD) as the key player in the implementation of social welfare and development programs and
services, we should not just focus on preparing the LSWDOs (local social welfare and development
offices) in the implementation of the Mandanas Ruling but more so, let us prepare ourselves for this
very big change,” Quintilla told DSWD Bicol employees upon his assumption of office early this week.

Quitilla, a native of Iloilo City, did not elaborate.

“He (Quintilla) solemnly gave his promise to continuously uphold service and performance excellence
and to do better especially in coming up with new processes that will hasten the effective and efficient
delivery of social services to Bicolandia. Now an Oragon, he encouraged his team to work more closely
together to meet and hit targets with flying colors especially now that the implementation of the
Mandanas Ruling is forthcoming,” an official statement released to the media through DSWD-Bicol
spokesperson Marygizelle B. Mesa, said.

DSWD is one of the cabinet departments that will be grossly affected when the Mandanas ruling gears in
full-throttle by 2022.

Departments under the National Government may have to reduce their workforce when some projects
will be devolved to local government units (LGUs) starting next year, Budget Secretary Wendel E.
Avisado said.

In a webinar on Tuesday, Avisado said some agencies at the national level may have to be downsized,
merged, or even be abolished as several projects will be devolved to LGUs in 2022 to comply with the
Supreme Court (SC) ruling on the Mandanas case.

The Mandanas Doctrine clarifies that the share from the Internal Revenue Allotment (IRA) of the local
government units (LGUs) does not exclude other national taxes like customs duties. 

“The exclusion of other national taxes like customs duties from the base for determining the just share
of the LGUs contravened the express constitutional edict in Section 6, Article X of the 1987
Constitution,” the doctrine explains.

Accordingly, the national taxes to be included in the base for computing the just share of the local
government units (LGUs) shall not be limited to the following:

a) The national internal revenue taxes enumerated in Section 21 of the National Internal Revenue Code
collected by the Bureau of Internal Revenue and the Bureau of Customs;

b) Tariff and customs duties collected by the Bureau of Customs;

c) 50% of the value-added taxes collected in the Bangsamoro Autonomous Region in Muslim Mindanao,
and 30% of all other national tax collected in the Bangsamoro Autonomous Region in Muslim Mindanao;

d) 60% of the national taxes collected from the exploitation and development of the national wealth;

e) 85% of the excise taxes collected from locally manufactured Virginia-type cigarettes and other
tobacco products;

f) The entire 50% of the national taxes collected under Sections 106 (Value-Added Tax on Sale of Goods
or Properties), 108 (Value-added Tax on Sale of Services and Use or Lease of Properties) and 116 (Tax on
Persons Exempt From Value-Added Tax (VAT)) of the NIRC as provided under Section 283 (Disposition of
National Internal Revenue) of the NIRC; and

g) 5% of the 25% franchise taxes given to the National Government under Section 6 of Republic Act No.
6631 and Section 8 of Republic Act No. 6632.

DSWD Bicol, a mega region with its mega budget, targets, big number of state aid recipients, and diverse
culture and politics,

Economic managers expect the Supreme Court’s ruling on the Mandanas-Garcia petition to cost the
National Government P234.4 billion or equivalent to 0.92% of gross domestic product (GDP) once it
takes effect in 2022.

The downsizing of the government agencies is part of the Executive Branch’s plan to comply with the SC
ruling, Mr. Avisado said.

He added it could also boost the local autonomy of LGUs and help with the decentralization efforts.

What is Mandanas ruling?

ANSWER:

The Mandanas Doctrine clarifies that the share from the Internal Revenue Allotment (IRA) of the
local government units (LGUs) does not exclude other national taxes like customs duties.  The
exclusion of other national taxes like customs duties from the base for determining the just share
of the LGUs contravened the express constitutional edict in Section 6, Article X[1] of the 1987
Constitution. Accordingly, the national taxes to be included in the base for computing the just
share of the local government units (LGUs) shall not be limited to the following:

a) The national internal revenue taxes enumerated in Section 21 of the National Internal Revenue
Code collected by the Bureau of Internal Revenue and the Bureau of Customs;

b) Tariff and customs duties collected by the Bureau of Customs;

c) 50% of the value-added taxes collected in the Bangsamoro Autonomous Region in Muslim
Mindanao, and 30% of all other national tax collected in the Bangsamoro Autonomous Region in
Muslim Mindanao;

d) 60% of the national taxes collected from the exploitation and development of the national
wealth;

e) 85% of the excise taxes collected from locally manufactured Virginia-type cigarettes and other
tobacco products;

f) The entire 50% of the national taxes collected under Sections 106 (Value-Added Tax on Sale
of Goods or Properties), 108 (Value-added Tax on Sale of Services and Use or Lease of
Properties) and 116 (Tax on Persons Exempt From Value-Added Tax (VAT)) of the NIRC as
provided under Section 283 (Disposition of National Internal Revenue) of the NIRC; and

g) 5% of the 25% franchise taxes given to the National Government under Section 6 of Republic
Act No. 6631 and Section 8 of Republic Act No. 6632.

Economic managers expect the Supreme Court’s ruling on the Mandanas-Garcia petition
to cost the National Government P234.4 billion or equivalent to 0.92% of gross
domestic product (GDP) once it takes effect in 2022.

The downsizing of the government agencies is part of the Executive Branch’s plan to
comply with the SC ruling, Mr. Avisado said.

He added it could also boost the local autonomy of LGUs and help with the
decentralization efforts.

National Government may

cut workforce in 2022
February 3, 2021 | 12:31 am
ECONOMIC MANAGERS expect the Supreme Court’s ruling on the Mandanas-Garcia
petition to cost the National Government P234.4 billion or equivalent to 0.92% of gross
domestic product once it takes effect in 2022. — PHILIPPINE STAR/ MICHAEL VARCAS
DEPARTMENTS under the National Government may have to reduce their workforce
when some projects will be devolved to local government units (LGUs) starting next
year, the Budget chief said.

In a webinar on Tuesday, Budget Secretary Wendel E. Avisado said some agencies at

the national level may have to be downsized, merged, or even be abolished as several
projects will be devolved to LGUs in 2022 to comply with the Supreme Court (SC) ruling
on the Mandanas case.

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The Department of Budget and Management is currently drafting an Executive Order

(EO) detailing the devolution of certain functions of the Executive Branch to local
governments starting in 2022.

Economic managers expect the Supreme Court’s ruling on the Mandanas-Garcia petition
to cost the National Government P234.4 billion or equivalent to 0.92% of gross
domestic product (GDP) once it takes effect in 2022.
The ruling clarified that the Internal Revenue Allotment (IRA) share of LGUs should be
coming from all national taxes collected and not just from the Bureau of Internal
Revenue (BIR).

Mr. Avisado said affected agencies will have to reduce their workforce by next year
because of the limited budget for the National Government.

“We have proposed an EO on this and it has been submitted to various agencies. And
we will be presenting this to the President in light of the Mandanas decision and for the
government to look into its current workforce and what should be done, in light of the
fact that there’s not much resources going to be available at the national level next
year as before,” he said.

The downsizing of the government agencies is part of the Executive Branch’s plan to
comply with the SC ruling, Mr. Avisado said. He added it could also boost the local
autonomy of LGUs and help with the decentralization efforts.

Gov’t to transfer some

functions to LGUs
More responsibilities due to their bigger 2022 budget share

By: Ben O. de Vera - Reporter / @bendeveraINQ

Philippine Daily Inquirer / 04:10 AM February 01, 2021

Amid a protracted pandemic, President Duterte will step in to ensure that

national coffers won’t bleed as much next year by transferring more
public functions to local government units (LGUs) while they enjoy a
bigger share of tax collections starting 2022.

The Department of Budget and Management (DBM) told agencies last

week that a draft executive order (EO) currently being crafted to fully
devolve specific national government functions to LGUs would mitigate
the fiscal strain to be inflicted by the Supreme Court’s Mandanas ruling.
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The Supreme Court granted in 2018 and reaffirmed in 2019 the petitions
of Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique
Garcia Jr., under which LGUs’ IRA (Internal Revenue Allotment) would
come from 40 percent of collections of all national taxes—the Bureau of
Internal Revenue’s (BIR) tax take plus the Bureau of Customs’ (BOC)
collections of import duties and other taxes.

At present, LGU’s IRA only came from two-fifths of national internal

revenue taxes collected by the BIR.

As the high court ruling would be implemented next year, the

Development Budget Coordination Committee estimates had shown
LGUs’ 2022 IRA sourced from 2019 BIR and BOC collections would climb
by 27.61 percent to P1.083 trillion or 4.75 percent of gross domestic
product, instead of only P848.44 billion or 3.72 percent of GDP under the
current computation.

With the Mandanas ruling in full swing, the DBM estimates showed that
first-class income provinces would have an increase of about P814
million in their IRA to P4.4 billion next year; highly urbanized cities, up
by P394 million to P2.13 billion, and first-class municipalities, up by
P187.62 million to P1.01 billion.

As the bigger IRA would carve a bigger chunk from the record P5.02-
trillion national budget proposal for 2022, the DBM said the functions to
be devolved “must permanently be taken out from national agencies to
empower LGUs to assume them.”

The 2021 budget call issued by Budget Secretary Wendel Avisado in

January listed down the national government expenditures to be fully
devolved to LGUs, which included health services such as public hospitals
as well as communicable and non-communicable disease control
services.
Avisado told the Inquirer last month that amid a prolonged fight against
COVID-19, LGUs might have to take a bigger role in public health given
their also larger budgets in 2022.

‘Devolution process’
“That’s part of the devolution process, and we will input that into the
planning and budgeting process as well,” Avisado said.

The 2022 budget call document cited that Section 17 of the Local
Government Code of 1991 also allowed devolution of local infrastructure
(for education, irrigation and trade), agriculture, natural resource
management, environmental services, revenue mobilization,
telecommunications, peace and order, employment facilitation, social
welfare, transportation, tourism and housing services functions to LGUs.
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The DBM said despite the Local Government Code provisions already
devolving these functions, many national agencies continued to
implement programs and projects that LGUs should have been taking
care of since the law was enacted three decades ago.

According to the DBM, Mr. Duterte’s upcoming EO would delineate the

roles of the national and local governments; jump-start preparation of
devolution transition plans; establish a growth equalization fund “to
address the vertical and horizontal fiscal imbalance across LGUs” as well
as create an interagency committee on devolution to be headed by the
Executive Secretary to monitor and evaluate implementation by 2025.

The EO would also provide options for national government employees

who may lose their jobs once more functions get transferred to LGUs.

The DBM said full devolution would exclude LGUs still transitioning into
the newly formed Bangsamoro Autonomous Region in Muslim Mindanao.
While the national government and its agencies will lose certain
responsibilities, the DBM said it must “set national policy and service
delivery standards, and assist, oversee and monitor LGUs.”

Under the draft EO, the national government will be tasked to “formulate
and pursue a long-term institutional program for LGUs to strengthen
their capacities and capabilities to fully assume the devolved functions,”
the DBM said. INQ