NAME: SOLIS, JESSE TAN

ROLE: Class Head/ Researchers head

DECENTRALIZATION AND LOCAL GOVERNANCE

 CONCEPT AND TYPES OF DECENTRALIZATION - MR. AXCEL ORDOÑA

CONCEPT OF DECENTRALIZATION

The management styles which give positive results, existing in literature and accepted or
implemented in developed or underdeveloped countries, cannot be installed in every structure.
There is always a possibility that geographical, cultural and historical conditions in a country
shaped by disabling administrative formulas will cause decentralization to fail. This reality gave
prominence to the importance of the implementation of management techniques formulated with
the perspective of historical and cultural background for every society from time to time. Political
decentralization is the transferring of some part of the political authority of the central
government to the local governments and federal units.

This understanding, of giving partial independence in executive and legislative areas in

countries with a federal structure to local governments or switching to provincial governments, in
unitary states, seeks to find application.  It has been observed that the exercise of political
decentralization with the demands of mostly culturally non-homogeneous societies has brought
about ethnic divisions in many countries. To be successful in these cases, it means establishing a
new separate autonomous state which is semi-independent from the federal government. Thus,
implementation of political decentralization in countries with ethnic fragmentation has not been
very significant. It is clear that the most appropriate system for administrative decentralization is
in countries that have a unitary structure with multi-part ethnicity. In this situation, decision-
making bodies can be determined by elections, which provides autonomy in making decisions,
the creation of their own income sources and expenditures, the public‘s influence on policies
related to local services through direct or indirect means, the mobilization of public interests and
the organizational capacity of local governments will be increased, bringing a more effective and
productive management approach to local administration units. Thus, it will be possible to take
steps for the level of the country's development and the maximization of democratic performance.

TYPES OF DECENTRALIZATION

Political Decentralization

Political decentralization aims to give citizens or their elected representatives more power in
public decision-making. It is often associated with pluralistic politics and representative government, but
it can also support democratization by giving citizens, or their representatives, more influence in the
formulation and implementation of policies. Advocates of political decentralization assume that decisions
made with greater participation will be better informed and more relevant to diverse interests in society
than those made only by national political authorities.

Administrative Decentralization
 Administrative decentralization seeks to redistribute authority, responsibility and financial resources
for providing public services among different levels of government. It is the transfer of responsibility for
the planning, financing and management of certain public functions from the central government and its
agencies to field units of government agencies, subordinate units or levels of government, semi-
autonomous public authorities or corporations, or area-wide, regional or functional authorities.

The three major forms of administrative decentralization -- deconcentration, delegation, and devolution
-- each have different characteristics.

Deconcentration.

Deconcentration--which is often considered to be the weakest form of

decentralization and is used most frequently in unitary states-- redistributes
decision making authority and financial and management responsibilities among
different levels of the central government.

Delegation.

Delegation is a more extensive form of decentralization. Through

delegation central governments transfer responsibility for decision-making and
administration of public functions to semi-autonomous organizations not wholly
controlled by the central government, but ultimately accountable to it.

Devolution.

A third type of administrative decentralization is devolution. When

governments devolve functions, they transfer authority for decision-making,
finance, and management to quasi-autonomous units of local government with
corporate status. Devolution usually transfers responsibilities for services to
municipalities that elect their own mayors and councils, raise their own revenues,
and have independent authority to make investment decisions.

Fiscal Decentralization

Financial responsibility is a core component of decentralization. If local governments and private

organizations are to carry out decentralized functions effectively, they must have an adequate level of
revenues –either raised locally or transferred from the central government– as well as the authority to
make decisions about expenditures. Fiscal decentralization can take many forms, including a) self-
financing or cost recovery through user charges, b) co-financing or co-production arrangements through
which the users participate in providing services and infrastructure through monetary or labor
contributions; c) expansion of local revenues through property or sales taxes, or indirect charges; d)
intergovernmental transfers that shift general revenues from taxes collected by the central government to
local governments for general or specific uses; and e) authorization of municipal borrowing and the
mobilization of either national or local government resources through loan guarantees. In many
developing countries local governments or administrative units possess the legal authority to impose
taxes, but the tax base is so weak and the dependence on central government subsidies so ingrained that
no attempt is made to exercise that authority.

 Economic or Market Decentralization

 The most complete forms of decentralization from a government's perspective are privatization
and deregulation because they shift responsibility for functions from the public to the private sector.
Privatization and deregulation are usually, but not always, accompanied by economic liberalization and
market development policies. They allow functions that had been primarily or exclusively the
responsibility of government to be carried out by businesses, community groups, cooperatives, private
voluntary associations, and other non-government organizations.

Privatization.

Privatization can range in scope from leaving the provision of

goods and services entirely to the free operation of the market to "public-
private partnerships" in which government and the private sector
cooperate to provide services or infrastructure. Privatization can include:
1) allowing private enterprises to perform functions that had previously
been monopolized by government; 2) contracting out the provision or
management of public services or facilities to commercial enterprises
indeed, there is a wide range of possible ways in which function can be
organized and many examples of within public sector and public-private
institutional forms, particularly in infrastructure; 3) financing public
sector programs through the capital market (with adequate regulation or
measures to prevent situations where the central government bears the
risk for this borrowing) and allowing private organizations to participate;
and 4) transferring responsibility for providing services from the public
to the private sector through the divestiture of state-owned enterprises.

Deregulation.

Deregulation reduces the legal constraints on private

participation in service provision or allows competition among private
suppliers for services that in the past had been provided by the
government or by regulated monopolies. In recent years privatization and
deregulation have become more attractive alternatives to governments in
developing countries. Local governments are also privatizing by
contracting out service provision or administration.
  REGIONALIZATION - MS. STEPHANIE GREECE VALLEGA & MR. ACE VINCENT
TAYER
◦ DEFINITION
Regionalization is the process of dividing big regions into small regions. General regionalization,
from the perspective of a country, is how to divide a few first level regions in the range of a country.
It can be defined as politico- administrative process by which regions emerge as relevant units of
analysis for economic and political activity and welfare and service provision. Devolution, i.e.
regions being the objects of governmental reforms. Regionalization is the process of transferring
power from the central government to the regions, for a better application of the subsidiarity
principle, within the framework of national or federal solidarity. It includes the establishment,
enlargement or empowerment of authorities and the transfer of competences and responsibilities to
the regions.
The regionalization process can be defined as the process through which an autonomous action
capacity of a territory is built having as objective the promotion of socio-economic growth and
sustainable development of that territory by using its endogenous and exogenous resources.
The regionalization process is a political one that makes operational the subsidiary principle with
or without the creation of new institutions. Process which creates a capacity for independent action
aimed at developing a specific area. This process can occur on the basis of existing institutions, or can
give rise to a new territorial organization which will better fulfill these aims.
The concept of regionalization is reserved for more spontaneous processes of region formation
by different actors – state or non-state. In many cases this notion of regionalization can be equated to
notions of ‘regionalization from above’ or devolution, i.e. regions being the objects of governmental
reforms.
PURPOSE:
The reasons for regionalization is the development of each town and province. Regionalization is the
important reference for rational allocation of resources in rummage. Regionalization is the presupposition
of comparing regions. Regionalization is a powerful tool to mobilize the administration power to support
economic development.
The most important reason for regionalization has to do with the basic purpose of government.
Government here is viewed as a sort of marketing or selling operation in which the clientele is the public
and the end-product or "good" is the service. On this basis, it is felt that government service would be
much more effective if there were greater personal contacts between government personnel and the
public, the target clientele.
FIVE ELEMENTS OF REGIONALIZATION
1. IMPERSONAL BASIS OF REGIONALIZATION: is regionalization possible?
2. MAIN BODY OF REGIONALIZATION: who to divide?
3. REGIONALIZATION TARGET: why to divide?
4. PRINCIPLE OF REGIONALIZATION: under what regulation?
5. REGIONALIZATION INDEX: according to what specific requirement?

REGIONS IN THE PHILIPPINES:

LUZON VISAYAS MINDANAO
REGION I-ILOCOS REGION REGION VI-WESTERN REGION IX-ZAMBOANGA
REGION II-CAGAYAN VISAYAS PENINSULA
VALLEY REGION VII-CENTRAL REGION X-NORTHERN
REGION III- CENTRAL LUZON VISAYAS MINDANAO
REGION IV-A CALABARZON REGION VIII-EASTERN REGION XI-DAVAO REGION
REGION IV-B MIMAROPA VISAYAS REGION XII- SOCCSKSARGEN
REGION V- BICOL REGION REGION XIII- CARAGA
CAR- CORDILLERA AD.
REGION
NCR- NATIONAL CAPITAL
REGION

Regionalization is not new or uncommon, but it has earned increased attention as nations seek new ways
and forms of working and living together. Kacowicz (1998) suggested a close interrelationship among the
concepts of globalization, regionalization and nationalism where the first is seen as a more overarching
term that refers to a “set of related changes” in the economic, ideological, technological and cultural
spheres of the global society (para 4). Regionalization, on the other hand, may be discussed in the context
of a group of states, often defined by geography, but also by other criteria such as social and cultural
homogeneity, similarities in political attitudes, and economic interdependence, and builds on the idea of
regionalism (Kacowicz, 1998).

Mittelman (1996 as cited in Kacowicz, 1998) further suggested three lenses by which one can view the
interrelationship between globalization and Regionalization: Regionalization as a subset or component of
globalization; Regionalization as a response to globalization; and Regionalization and globalization as
either parallel or overlapping processes. As a subset of globalization, Regionalization promotes
integration activities aimed at multi-lateral cooperation. As a response to globalization, it is a counter
alternative, an opposing response of nation-states to the idea of a “single universal culture” that is
associated with the goals of globalization (para 22). The third notion views the two as more than an
economic process: the integration and creation of “megaregions” (Wyatt-Walter, 1995 as cited in
Kacowicz, 1998, para 23).

 DEFINITION OF LOCAL GOVERNMENT - MR. JOHN ROMMEL MICO RODELAS

DEFINITION
 Local Government is the lowest level of elected territorial organization within a state, whether
federal or unitary. Broadly, local governments have two a twofold task: to provide local public
services such as garbage collection, health services, etc., and to implement national welfare policies.
However, their role has evolved since the 1980s with the trend toward involving communities more
and more, particularly in local policy making. In addition, in many unitary systems, including that of
the Philippines, the trend is to decentralized responsibility to the lower levels of government. Hence
there is renewed interest in local government worldwide.
The Constitution of the Philippines recognizes the importance of local governments. It provides
as a policy that “the State shall guarantee and promote the autonomy of the local government units –
especially the barangays – to ensure their fullest development as self-reliant communities.” Local
governments constitute the foundation of the entire structure of the government. The acts of the local
government units affect the ordinary citizen more directly than those of the national government. The
average citizen has more and closer contacts with the local governments and their agencies than with
the national or provincial government, and is more concerned with the local affairs than with those of
the national or provincial in scope.

 CHARACTERISTICS OF LOCAL GOVERNMENT UNITS - MS. XANTARIA ZARIA

GUMANGAN

The Philippines' local government is divided into three levels: provinces and independent
cities, component cities and municipalities, and barangays, which are all referred to as "local
government units" collectively (LGUs). They have several required responsibilities as well as a
broad range of permissive authorities. There is no hierarchy of authorities, each authority is
autonomous within the range of power granted by the central government. LGUs play an
important role in the development of a community by serving as a link between the people and
the government, addressing community problems and concerns, enforcing policies, and exerting
influence over their residents.

Almost all such local government bodies share key qualities, including a continuing
organization, the capacity to engage in public activities, the ability to enter into contracts, the
ability to sue and be sued, and the ability to collect taxes and set a budget. These local
governments are national government entities in charge of tax collecting, law enforcement, and
other governmental tasks that the national government may delegate to these local governments.
History of Local Government in the Philippines

The cities, municipalities, and provinces of today evolved from the barangays of pre-
Spanish times, the pueblos (municipalities) and cabildos (cities) of the Spanish colonial days and
the townships of the American regime.

PROVINCES
The province is the Philippines' largest political entity. The governor, vice governor, and
members of the provincial board are all elected by the people of the province (vocals). The
provincial board is the province's legislative body, with the governor serving as the presiding
officer. The Provincial Governor, as the highest executive of the provincial government, is
charged with exercising authorities and carrying out responsibilities and functions that promote
the province's and its people's overall well-being. Its most important duties include: a) passing
laws for the welfare of the municipalities and cities under its jurisdiction; b) preparing and
approving the provincial budget; c) allocating funds for provincial purposes; d) exercising the
power of eminent domain; and e) providing for the maintenance of equipment and buildings for
provincial purposes. The board meets once a week on a date set by the board. The provincial
governor, on the other hand, has the authority to summon special sessions on any given day.

MUNICIPALITIES
Each province is made up of municipalities known as towns. The municipality is a public
organization established by an act of Congress and regulated by the Municipality Law, which
spells out its responsibilities and powers. The municipal mayor, vice mayor, and councilors are
elected the officials. The municipal council has the following mandatory powers: 1) fix the
salaries of all municipal offices and employees, except the treasurer, public school teachers, and
staff of national government agencies assigned to the municipality; 2) provide for expenses
necessary to carry out the functions of the municipality; 3) provide for buildings adequate for
municipal uses, including school houses; 4) to build and maintain an effective police department
and a sufficient municipal jail as sources of municipal revenue through the levy and collection of
taxes, fees, and charges; and 5) to establish and maintain an efficient police department and an
adequate municipal jail.

CITIES
The chartered city is also a local government unit. The mayor, vice mayor, and members
of the board of councilors are the city's elected officials. The council is the city's legislative body.
The following are some of its important qualities: 1) levy and collect taxes in accordance with the
law; 2) enact ordinances; 3) provide for public works constructions and the maintenance of a
local police force; 4) establish fire zones within the city and regulate the type of building that may
be constructed within each zone; and 5) provide for the protection of the inhabitants from public
calamities and to provide relied in times of emergency.

BARANGAYS
A number of villages or barangays make up each municipality or city. In the Philippines,
barangays are the smallest subdivisions of local government. A barangay has a variety of powers,
responsibilities, and functions. The Punong Barangay is tasked with, among other things,
enforcing all laws and ordinances, maintaining public order, ensuring the delivery of basic
services, enforcing laws and regulations relating to pollution control and environmental
protection, preventing and controlling the spread of squatters, and preventing and eradicating
drug abuse, child abuse, and juvenile delinquency.
  STATE OF LOCAL GOVERNMENTS VIS-À-VIS CENTRAL GOVERNMENT - MS.
MARY ROSE ANCHETA

Local Government 

The government of a specific local area constituting a subdivision of a major political unit (such as a
nation or state) also: the body of persons constituting such a government.

Local Governments during the First Philippine Republic

 The importance of local governments was recognized by Gen. Emilio Aguinaldo and Apolinario
Mabini in their program of government for the First Philippine Republic. Fillipino leaders knew that
“if a strong and enduring Filipino nation was to be established, it must be able to maintain itself in all
emergencies, and the whole political fabric must be well founded on an efficient system of local
governments. The Malolos Constitution provided a separate article on local government (Title XI,
Article 82). Local autonomy was made explicit in the introductory portion which stipulated that “the
organization and powers of the provincial and municipal assemblies shall be governed by their
respective laws.”

Local Governments during the American Regime

 The Americans contributed very little, if at all, to the development of local autonomy. In fact,
national-local relationship reverted to the strong centralism that characterized the Spanish colonial
regime”. 

 The Commission’s blueprint for town organization provided for a President to be elected viva voce
by residents of the town with the approval of the Commanding Officer. His duty consisted in the
establishment of a police force, collection of taxes, enforcement of regulations on market and
sanitation, establishment of schools, and the provision for lighting facilities.

The Commonwealth and Centralism

 The forms and patterns of local government during the American civil administration remained
essentially the same during the Commonwealth period. The only notable changes were the transfer of
central supervision from the Executive Bureau to the Department of Interior and the creation of more
chartered cities.

 President Quezon, the central figure of the government during this period, even argued against
autonomy in the cities, hinting that “under the unitary system of government which exists in the
Philippines, the national chief executive does and should control all local offices.”

 The evolution of state of local government and centralization in the Philippines was enacted by Sen.
Nene Pimentel the state of governance is govern by Republic Act 7160 (Local Government Code of
 the Philippines) The code establishes the system and defines powers of provincial, city, municipal and
barangay governments in the Philippines.

The salient provision of the law is that the preservation and enrichment of culture. Promote health and
safety. Enhance the right of the people to a balanced ecology. Encourage and support the development of
appropriate and self-reliant, scientific and technological capabilities.

The Importance of the Law 

 Congress enacted the Local Government Code of the Philippines in 1991 to "provide for a more
responsive and accountable local government structure instituted through a system of decentralization
with effective mechanisms of recall, initiative, and referendum, allocate among the different local
government units their respective areas of responsibility.

 Among its important functions are as follows: 1) to levy and collect taxes in accordance with law; 2)
to enact ordinances; 3) to provide for public work constructions and for the maintenance of a local
police force; 4) to establish fire zones within the city and to regulated the type of building which may
be built within the area of responsibility. 

Case Digest

Citing the case of MUNICIPALITY OF CAVITE V. ROJAS – G.R. NO.  9069

Facts:

The municipal council of Cavite by Resolution No. 10, leased to Rojas some 70 or 80 square meters of
Plaza Soledad, on condition that she pay rent quarterly in advance according to the schedule fixed in
Ordinance No. 43, series of 1903 and that she obligate herself to vacate said land within 60 days
subsequent to notification to that effect. Upon such notification, however, she refused to vacate the land,
forcing the municipality to file a complaint before the CFI to order her to vacate the land. After a hearing
of the case, the CFI dismissed the complaint.

Issues:

(1) Is the contract valid?

(2) If in the negative, what are the obligations of the parties?

Held:   (1) No. Article 1271 of the Old Civil Code, prescribes that everything which is not outside the
commerce of man may be the object of a contract, and plazas and streets are outside of this
commerce. Communal things that cannot be sold because they are by their very nature outside of
commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc.

2. Rojas must restore and deliver possession of the land described in the complaint to the municipality
of Cavite, which in its turn must restore to her all the sums it may have received from her in the
nature of rentals just as soon as she restores the land improperly leased.

 The case shows the power of the local government in protecting the property owned from any
intruder. 
 Most common power of the local government that mostly exercised is that the power to tax and 
eminent domain .

 Its local government units are given authority to create and effect reasonable taxes effective for their
aor as long as the tax being implemented is in accordance with the law and other existing governing
laws of the local government units. 

 With regards to eminent domain every LGU can also exercise such right as long the taking of private
property is for public use and purpose and after giving due payment to the private owner of the
property. 

 ORGANIZATION OF LOCAL GOVERNMENT - MS. RAICHELLE POBLETE

What is local government and how is it organized?

OUTLINE:
• Summary information on methodological aspects of SDG indicator 5.5.1b
• Key terms and definitions related to local government organization
• Illustrations of local government organization in countries from other regions of the world
Common elements in identifying local government

• National legal frameworks provide for the existence of/regulates local government
• A formal institutional organization of local governments, consisting of legislative and executive bodies.
• The principle of self-government and the associated political, administrative, and fiscal authority over
some local matters within the limits of the law;
• Closest to the people mandated to serve.

Local government tiers/levels

• Local government may be organized in 1 or more tiers

• Local government tiers are political-administrative levels of a territorial division of country (such as
municipalities, districts, regions, etc.) with the legislative, executive and financial authority to make
binding decisions in some local policy areas.
• The organization of local government by tiers involves a hierarchical territorial (geographical) division
of the country – for example, a region may comprise several municipalities, and each municipality may
contain several municipal districts.
• However, this hierarchical territorial division does not necessarily imply a hierarchy of powers between
the different tiers of local government.
Administrative tiers of government

• In addition to tiers of local government with political, administrative, and financial authority, countries
may have additional administrative tiers.

• These tiers lack legislative and/or executive power; however, they may support the implementation of
state or local policies and regulations, and they may be provided for in the legal framework of the
country.

• Although not often the case, some country constitutions or local government acts may
emphasize the distinction between local government units and other administrative units.

Local government units

Each tier and type of local government has one or more local government units. A local
government unit includes:
(1) A deliberative body (council/ assembly), usually elected by universal suffrage, that has decision-
making power, including the ability to issue by-laws, on a range of local aspects of public affairs;
(2) An executive body, elected, appointed or nominated, such as an executive committee or a mayor that
prepares and executes decisions made by the deliberative body.
The members of these two bodies are referred to as local government authorities. A distinct
category from local government authorities is the public administration staff. Public administration staff
are government employees that support the implementation of the local decisions and the provision of
government services at the local level.

Distinction between local government and local governance

• Local governance is a broader concept than local government. Government, in general, refers to the
formal organization of public authorities responsible for governing a society.
• By comparison, local governance refers to “a situation of multiple inter-linkages and relationships in
which different and various actors in the public and private sectors as well as civil society at the local,
national and international levels play different roles, sometimes mutually conflicting and sometimes
mutually reinforcing and complementary focusing on satisfying the interests and needs of the local
community.”

Composition of local executive bodies

• The head of the executive body is the only position within the executive body that may be directly
elected.
• However, the proportion of countries where the head of the executive body is directly elected is small:
• In single-tier local government: 41% + additional
9%, where the head is directly elected in some parts of a country but not in others

• In two-tier local government: 35% for lowest tier and 31% for higher tie
TYPES OF LOCAL GOVERNMENTS
Municipalities

Cities, towns and villages are known as municipalities and are represented by a council, elected by
residents. Council is in place to ensure the delivery of services that meet the interests and needs of
residents, businesses, and organizations, at a cost these groups are willing and able to fund. Council is
also the vehicle through which residents express their thoughts and concerns in an effort to create local
opportunities or to find solutions to community concerns. At minimum, a municipality is responsible to
provide administration, land use planning, emergency measures, and policing, road, and garbage
collection services to residents.
Regional Municipalities

In May 2013, the regional municipality was introduced as a new restructuring option for New Brunswick
communities. A population greater than 15,000 and a community grouping that includes at least one
municipality are required to become a regional municipality. Like a municipality, a regional municipality
is governed by a council, elected by residents. Unlike a municipality, a regional municipality must only
take on community administration, planning and emergency measures services, with the option to take on
more services as it chooses. The regional municipality is responsible; however, to provide all services that
were previously provided by a former municipality that is now part of the regional municipality.
Responsibility for police protection and road services in an area(s) of the regional municipality that used
to be a local service district would continue to be delivered by the Province of New Brunswick, unless the
regional municipality chooses to take on the service.

Rural Communities (RC)

A rural community is an incorporated community that has a locally elected council to oversee the delivery
of local services in a manner that reflects the community’s needs, wants, and ability to pay. This local
government option is open to a local service district, a group of LSDs, or a grouping of an LSD(s) and a
town or village so long as the target feasibility requirement of 3,000 population or $200 million tax base
is met. RCs are responsible to provide administrative services, community planning and emergency
measures services only. The province ensures the delivery of other services (e.g. solid waste collection,
recreation services, etc.) until the RC chooses to take them on. This allows communities to transition to a
new governance structure with flexibility. However, a rural community that includes a former village or
town is responsible to provide all services that were previously provided by in the former municipality.
Local Service Districts (LSD)

Unincorporated communities are known as local service districts and are not local governments.
They are administered by the Minister of Environment and Local Government. Department staff
coordinates service delivery to LSDs, such as fire protection and garbage collection services,
among others. To assist staff in providing local services, and to ensure residents have an
opportunity to be heard, unincorporated communities may elect a Local Service District Advisory
Committee. These committees do not have decision making powers but help advice the minister
on local matters.

 SYSTEM OF LOCAL GOVERNMENT IN SOME SELECTED COUNTRIES - MR. MARC

JASPER VILLANO

Local governments are responsible for delivering the public services people rely on day-
to-day: schools for their children, public health services, access to clean water, clean streets,
sanitation for the urban poor, and so on. The local government in the Philippines is divided into
three levels: provinces and independent cities, component cities and municipalities,
 and barangays, all of which are collectively known as local government units (LGUs). The
Philippines is a republic with a presidential form of government wherein power is equally divided
among its three branches: executive, legislative, and judicial. The government seeks to act in the
best interests of its citizens through this system of check and balance.

First local government that I’ve tackled is Cambodia’s local government. Cambodia is a
sector ally deconcentrated local government. Meaning that responsibilities are transferred to local
level departments while the key decisions are in the hand of the central governments. In the case
of Cambodia, provincial line departments are responsible for providing key localized services,
such as the Provincial department for education and provincial health department. However,
responsibility for providing capital infrastructure is still retained by the centralized central line
ministries and the council for development of Cambodia. The local governments of Cambodia are
only primarily responsible for community developments and small infrastructure schemes, with
little to no role in the provision of major or public services.
Next country is Mozambique. Mozambique is a perfect example of a highly transparent,
territorially deconcentrated public sector. Although there are no elected local governments in
rural areas, urban public services in urban areas are delivered by elected municipal governments.
However, Mozambique’s budget structure is quite transparent, and allocates a relatively
substantial share of sectoral resources in many sectors, towards provincial and district level.
Just like Cambodia, Mozambique has a deconcentrated public sector structure. Urban
services are delivered by elected municipalities, thus providing a degree of responsive local
governance.
The law on the local organs of the state also known as LOLE sets forth the organization
in, competencies and functioning of provinces, districts, administrative posts and localities as
deconcentrated state organs, following a territorial approach to deconcentration. While provinces
have elected councils, these councils are not an authoritative decision-making body. Instead they
have little or to no authority over the functioning or financing state of the organs within their
province.

 DISCUSS - CONGRESSMAN HERMILANDO I. MANDANAS, ET AL. VS. EXECUTIVE

SECRETARY PACQUITO N. OCHOA, JR., ET AL. / HONORABLE ENRIQUE T.
GARCIA, JR. VS. HONORABLE PACQUITO N. OCHOA, JR., ET AL. G.R. NO. 199802/
G.R. NO. 208488. APRIL 10, 2019 - MS. CHRISEL GONZALES

EN BANC

April 10, 2019

G.R. No. 199802

 CONGRESSMAN HERMILANDO I. MANDANAS; MAYOR EFREN B. DION A; MAYOR
ANTONINO AURELIO; KAGA WAD MARIO ILAGAN; BARANGAY CHAIR PERLITO MANALO;
BARANGA Y CHAIR MEDEL MEDRANO;BARANGAY KAGA WAD CRIS RAMOS; BARANGA Y
KAGA WAD ELISA D. BALBAGO, and ATTY. JOSE MALVAR VILLEGAS, Petitioners
vs.
EXECUTIVE SECRETARY PAQUITO OCHOA; SECRETARY CESAR PURISIMA, Department of
Finance; SECRETARY FLORENCIO H. ABAD, Department of Budget and Management;
COMMISSIONER KIM JACINTO-HENARES, Bureau of Internal Revenue; and NATIONAL
TREASURER ROBERTO TAN, Bureau of the Treasury, Respondents

x-----------------------x

G.R. No. 208488

HONORABLE ENRIQUE T. GARCIA, JR., in his personal and official capacity as Representative of the
2nd District of the Province of Bataan, Petitioners
vs.
HONORABLE [PAQUITO] N. OCHOA, Executive Secretary; HONORABLE CESAR V. PURISIMA,
Secretary, Department of Finance; HONORABLE FLORENCIO H. ABAD, Secretary, Department of
Budget and Management; HONORABLE KIM JACINTO-HEN ARES, Commissioner, Bureau of
Internal Revenue; and HONORABLE ROZZANO RUFINO B. BIAZON, Commissioner, Bureau of
Customs, Respondents

DECISION
BERSAMIN, J.:

The petitioners hereby challenge the manner in which the just share in the national taxes of the local
government units (LGUs) has been computed.

Antecedents
One of the key features of the 1987 Constitution is its push towards decentralization of government and
local autonomy. Local autonomy has two facets, the administrative and the fiscal. Fiscal autonomy means
that local governments have the power to create their own sources of revenue in addition to their equitable
share in the national taxes released by the National Government, as well as the power to allocate their
resources in accordance with their own priorities.[1] Such autonomy is as indispensable to the viability of
the policy of decentralization as the other.
Implementing the constitutional mandate for decentralization and local autonomy, Congress enacted
Republic Act No. 7160, otherwise known as the Local Government Code (LGC), in order to guarantee the
fiscal autonomy of the LGUs by specifically providing that:
SECTION 284. Allotment of Internal Revenue Taxes. — Local government units shall have a share in
the national internal revenue taxes based on the collection of the third fiscal year proceeding the current
fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent (30%);
(b) On the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).

Provided, That in the event that the National Government incurs an unmanageable public sector deficit,
the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance,
Secretary of Interior and Local Government, and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to
make the necessary adjustments in the internal revenue allotment of local government units but in no case
shall the allotment be less than thirty percent (30%) of the collection of national internal revenue taxes of
the third fiscal year preceding the current fiscal year: Provided, further, That in the first year of the
effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal
revenue allotment which shall include the cost of devolved functions for essential public services, be
entitled to receive the amount equivalent to the cost of devolved personal services.

The share of the LGUs, heretofore known as the Internal Revenue Allotment (IRA), has been regularly
released to the LGUs. According to the implementing rules and regulations of the LGC, the IRA is
determined on the basis of the actual collections of the National Internal Revenue Taxes (NIRTs) as
certified by the Bureau of Internal Revenue (BIR).[2]
G.R. No. 199802 (Mandanas, et al.) is a special civil action for certiorari, prohibition and mandamus
assailing the manner the General Appropriations Act (GAA) for FY 2012 computed the IRA for the
LGUs.
Mandanas, et al. allege herein that certain collections of NIRTs by the Bureau of Customs (BOC) –
specifically: excise taxes, value added taxes (VATs) and documentary stamp taxes (DSTs) – have not
been included in the base amounts for the computation of the IRA; that such taxes, albeit collected by the
BOC, should form part of the base from which the IRA should be computed because they constituted
NIRTs; that, consequently, the release of the additional amount of P60,750,000,000.00 to the LGUs as
their IRA for FY 2012 should be ordered; and that for the same reason the LGUs should also be released
their unpaid IRA for FY 1992 to FY 2011, inclusive, totaling P438,103,906,675.73.

In G.R. No. 208488, Congressman Enrique Garcia, Jr., the lone petitioner, seeks the writ of mandamus to
compel the respondents thereat to compute the just share of the LGUs on the basis of all national taxes.
His petition insists on a literal reading of Section 6, Article X of the 1987 Constitution. He avers that the
insertion by Congress of the words internal revenue in the phrase national taxes found in Section 284 of
the LGC caused the diminution of the base for determining the just share of the LGUs, and should be
declared unconstitutional; that, moreover, the exclusion of certain taxes and accounts pursuant to or in
accordance with special laws was similarly constitutionally untenable; that the VATs and excise taxes
collected by the BOC should be included in the computation of the IRA; and that the respondents should
compute the IRA on the basis of all national tax collections, and thereafter distribute any shortfall to the
LGUs.
It is noted that named as common respondents were the then incumbent Executive Secretary, Secretary of
Finance, the Secretary of the Department of Budget and Management (DBM), and the Commissioner of
Internal Revenue. In addition, Mandanas, et al. impleaded the National Treasurer, while Garcia added the
Commissioner of Customs.
The cases were consolidated on October 22, 2013.[3] In the meanwhile, Congressman Garcia, Jr. passed
away. Jose Enrique Garcia III, who was subsequently elected to the same congressional post, was
substituted for Congressman Garcia, Jr. as the petitioner in G.R. No. 208488 under the resolution
promulgated on August 23, 2016.[4]
In response to the petitions, the several respondents, represented by the Office of the Solicitor General
(OSG), urged the dismissal of the petitions upon procedural and substantive considerations.

Anent the procedural considerations, the OSG argues that the petitions are procedurally defective
because, firstly, mandamus does not lie in order to achieve the reliefs sought because Congress may not
be compelled to appropriate the sums allegedly illegally withheld for to do so will violate the doctrine of
separation of powers; and, secondly, mandamus does not also lie to compel the DBM to release the
amounts to the LGUs because such disbursements will be contrary to the purposes specified in the GAA;
that Garcia has no clear legal right to sustain his suit for mandamus; that the filing of Garcia's suit violates
the doctrine of hierarchy of courts; and that Garcia's petition seeks declaratory relief but the Court cannot
grant such relief in the exercise of its original jurisdiction.
On the substantive considerations, the OSG avers that Article 284 of the LGC is consistent with the
mandate of Section 6, Article X of the 1987 Constitution to the effect that the LGUs shall have a just
share in the national taxes; that the determination of the just share is within the discretion of Congress;
that the limitation under the LGC of the basis for the just share in the NIRTs was within the powers
granted to Congress by the 1987 Constitution; that the LGUs have been receiving their just share in the
national taxes based on the correct base amount; that Congress has the authority to exclude certain taxes
from the base amount in computing the IRA; that there is a distinction between the VATs, excise taxes
and DSTs collected by the BIR, on one hand, and the VATs, excise taxes and DSTs collected by the
BOC, on the other, thereby warranting their different treatment; and that Development Budget
Coordination Committee (DBCC) Resolution No. 2003-02 dated September 4, 2003 has limited the base
amount for the computation of the IRA to the "cash collections based on the BIR data as reconciled with
the Bureau of Treasury;" and that the collection of such national taxes by the BOC should be excluded.

Issues

The issues for resolution are limited to the following, namely:

I.

Whether or not mandamus is the proper vehicle to assail the constitutionality of the relevant provisions of
the GAA and the LGC;

II.

Whether or not Section 284 of the LGC is unconstitutional for being repugnant to Section 6, Article X of
the 1987 Constitution;
 III.

Whether or not the existing shares given to the LGUs by virtue of the GAA is consistent with the
constitutional mandate to give LGUs a "just share" to national taxes following Article X, Section 6 of the
1987 Constitution;

IV.

Whether or not the petitioners are entitled to the reliefs prayed for.

Simply stated, the petitioners raise the novel question of whether or not the exclusion of certain national
taxes from the base amount for the computation of the just share of the LGUs in the national taxes is
constitutional.

Ruling of the Court

The petitions are partly meritorious.

I. Mandamus is an improper remedy.

II. Municipal corporations and their relationship with Congress.

II. Municipal corporations and their relationship with Congress.

III. The extent of local autonomy in the Philippines.

IV. Section 284 of the LGC deviates from the plain language of Section 6 of Article X of the 1987
Constitution.

V. Congress can validly exclude taxes that will constitute the base amount for the computation of the
IRA only if a Constitutional provision allows such exclusion.

VII. Automatic release of the LGUs' just share in the National Taxes.

DECLARES that:

(a) The apportionment of the 25% of the franchise taxes collected from the Manila Jockey Club and
Philippine Racing Club, Inc. – that is, five percent (5%) to the National Government; five percent (5%) to
the host municipality or city; seven percent (7%) to the Philippine Charity Sweepstakes Office; six
percent (6%) to the Anti-Tuberculosis Society; and two percent (2%) to the White Cross pursuant to
Section 6 of Republic Act No. 6631 and Section 8 of Republic Act No. 6632 – is VALID;

(b) Section 8 and Section 12 of Republic Act No. 7227 are VALID; and, ACCORDINGLY, the proceeds
from the sale of the former military bases converted to alienable lands thereunder are EXCLUDED from
the computation of the national tax allocations of the Local Government Units; and

(c) Section 24(3) of Presidential Decree No. 1445, in relation to Section 284 of the National Internal
Revenue Code, apportioning one-half of one percent (1/2 of 1%) of national tax collections as the
auditing fee of the Commission on Audit is VALID;
4. DIRECTS the Bureau of Internal Revenue and the Bureau of Customs and their deputized collecting
agents to certify all national tax collections, pursuant to Article 378 of the Implementing Rules and
Regulations of R.A. No. 7160;

5. DISMISSES the claims of the Local Government Units for the settlement by the National Government
of arrears in the just share on the ground that this decision shall have PROSPECTIVE APPLICATION;
and

6. COMMANDS the AUTOMATIC RELEASE WITHOUT NEED OF FURTHER ACTION of the just
shares of the Local Government Units in the national taxes, through their respective provincial, city,
municipal, or barangay treasurers, as the case may be, on a quarterly basis but not beyond five (5) days
from the end of each quarter, as directed in Section 6, Article X of the 1987 Constitution and Section 286
of Republic Act No. 7160 (Local Government Code), and operationalized by Article 383 of the
Implementing Rules and Regulations of RA 7160.

Let a copy of this decision be furnished to the President of the Republic of the Philippines, the President
of the Senate, and the Speaker of the House of Representatives for their information and guidance.

SO ORDERED.

Carpio, (Acting C.J.) Leonardo-De Castro, Peralta, Del Castillo, Perlas-Bernabe, Martires, Tijam, and
Gesmundo, JJ., concur.
Velasco, Jr., concur. Please see separate opinion.
Leonen, Gaguioa, and Reyes J., JJ., dissent. See separate opinions.
Jardeleza, J., no part prior OSG action.

Nature of the Case

In these consolidated cases before the Court, petitioners question the manner by which budgetary
appropriations are made in favor of local government units (LGUs). At the core, petitioners seek
clarification on whether or not respondents had been gravely abusing their discretion in excluding
certain tax collections in determining the base amount for computing the just share in the national taxes
LGUs are entitled to.

The Facts

G.R. No. 199802 for Certiorari, Prohibition, and Mandamus, with Prayer for Preliminary Injunction
and/or Temporary Restraining Order
Section 284 of Republic Act No. (RA) 7160, otherwise known as the Local Government Code (LGC),
allocates 40% of national internal revenue tax collections to LGUs. The provision pertinently reads:

Section 284. Allotment of Internal Revenue Taxes. - Local government units shall have a share in the
national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal
year as follows:

(a) On the first year of the effectivity of this Code, thirty percent (30%);
(b) On the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
Provided, That in the event that the national government incurs an unmanageable public sector deficit, the
President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance,
Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to
make the necessary adjustments in the internal revenue allotment of local government units but in no case
shall the allotment be less than thirty percent (30%) of the collection of national internal revenue taxes of
the third fiscal year preceding the current fiscal year: Provided, further, That in the first year of the
effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal
revenue allotment which shall include the cost of devolved functions for essential public services, be
entitled to receive the amount equivalent to the cost of devolved personal services. (emphasis added)

Petitioners, local elective government officials from the province of Batangas, allege that the mandated
base under Section 284 is not being observed as some tax collections are allegedly being unlawfully
withheld by the national government and excluded from distribution to the LGUs.

In particular, petitioners pray that respondents include the (a) Value Added Tax (VAT), (b) Excise Tax,
and (c) Documentary Stamp Tax (DST) collections of the Bureau of Customs (BOC) in computing the
base amount. Through letters addressed to petitioner Hermilando I. Mandanas (Mandanas), then
congressman of the second district of Batangas, and dated September 12, 2011[1] and November 18,
2011,[2] BOC Commissioners Angelito A. Alvarez and Rozanno Rufino B. Biazon, respectively, attested
to the amount of VAT, Excise Tax, and DST collections of the BOC from 1989-2009:

CONCLUSION

EXECUTIVE ORDER No. 138, s. 2021 was issued to support the efficient implementation of the
Supreme Court Ruling on the Mandanas-Garcia case and strengthen the autonomy and empowerment of
local government units (LGUs). It directs the full devolution of certain functions of the Executive Branch
to the LGUs.

Implementing Rules and Regulations of Executive Order No. 138, s. 2021 June 1, 2021 FULL
DEVOLUTION OF CERTAIN FUNCTIONS OF THE EXECUTIVE BRANCH TO LOCAL
GOVERNMENTS, CREATION OF A COMMITTEE ON DEVOLUTION, AND FOR OTHER
PURPOSES Download Implementing Rules and Regulations of Executive Order No. 138, s. 2021 Last
Updated: 30 July 2021.

The Supreme Court (SC) ruling on the Mandanas-Garcia Petition concerning the Internal Revenue
Allotment (IRA) follows a long and persistent effort of local government units (LGUs) and stakeholders
in demanding greater autonomy and resources from the national government (NG). While the SC ruling’s
effect is straightforward—greater amount of resources for LGUs in implementing devolved functions—
there are concomitant and equally important issues that the NG needs to contend with. Foremost of these
is the ruling’s effect on the NG fiscal situation. Aside from fiscal considerations, the transition calls for an
examination of programs, activities, and projects (PAPs) to be devolved. There are concerns on how the
intended outcomes can be achieved as NG transfers to LGUs some of the PAPs it continues to perform
despite being devolved functions. As deliberations on the FY 2022 National Budget commence, Congress
is called on to take a close look at the implications of the SC ruling beyond the outright effect of
transferring more resources to LGUs. Full devolution of functions, along with the concomitant transition,
entails both fiscal and PAP implementation issues which can impact on fiscal sustainability, service
delivery, and the achievement of national objectives. In this regard, this paper discusses the implications
of the SC ruling as it relates to budgetary and some operational concerns. This paper aims to provide
relevant information and discuss prospectively some of the issues that could help Members of Congress in
examining the FY 2022 proposed National Budget.
PHILIPPINES: Mandanas Ruling Provides Opportunities for Improving Service Delivery Through
Enhanced Decentralization.

MANILA, JUNE 10, 2021 – Addressing inequality in financial resources among local government units
(LGUs), improving the capacity of LGUs, and enhancing transparency and accountability are key to
improving decentralization as the country starts implementing the Mandanas Ruling in 2022, increasing
the share of national government tax revenue transferred to local governments.

These are among the recommendations of the Philippines Economic Update released recently by the
World Bank.

As a result of the Mandanas Ruling by the Supreme Court in 2018 (and confirmed in 2019) the IRA are
programmed to increase by 55 percent in the 2022 budget, reaching Php1.08 trillion or 4.8 percent of the
country’s gross domestic product compared to 3.5 percent of GDP in 2021.

“We look at the implementation of the Mandanas Ruling not just as a transfer of resources but an
opportunity to strengthen decentralization and improve social service delivery in the Philippines,” said
Ndiame Diop, World Bank Country Director from Brunei, Malaysia, Philippines and Thailand. “If this
ruling leads to better coordination in planning and implementation across levels of government, taking
into account the capacity and needs of LGUs, it could improve the lives of people and communities
especially those that far from the country’s economic growth centers.”

“Local governments are on the ground and can directly feel citizen’s needs and aspirations,” Diop added.
“Hence, decentralization encourages prompt responses and better matching of government services to
local needs, making governance more inclusive. This is especially true if citizens have effective channels
through which their voices are heard to enhance accountability.”

To lessen the fiscal impact of having to transfer more financial resources to LGUs, the national
government has started to identify spending responsibilities for select devolved mandates to be transferred
back to local government.

However, some local governments have started to raise concerns regarding their financial and technical
capacity to absorb re-devolved mandates, while maintaining full autonomy in planning and managing the
additional resources from the Mandanas Ruling. Underspending by local governments may worsen, as
many local governments do not have the capacity to absorb a significant increase in revenues.

As a result, the government faces a significant risk that the transition process could lead to a large gap in
service delivery, as a lack of coordination between the national and local government and weak
implementation capacity could delay the transition towards increased decentralization.

According to World Bank Economist Kevin Cruz, addressing weaknesses in planning and coordination is
a first step towards managing the transition and improving decentralization.

“The national government should clearly define re-devolved functions and communicate these clearly to
both national government agencies and local government units,” said Cruz. “The authorities need to
ensure that the development goals of the national government and local governments are well-aligned,
and that service delivery gaps are minimized, particularly during this unprecedent crisis. This will require
the national government and local government units to review the division of labor between national
government agencies and local government units in re-devolving functions, while keeping fiscal and
absorptive capacity in mind.”

Other recommendations for managing the transition due to the Mandanas Ruling include:

Channeling the increase in IRA towards local government’s COVID-19 response efforts to mitigate
budget execution risks while providing much needed support to local constituents;
Providing capacity building support to local government units to improve their implementation capacity
and overall service delivery;
Addressing inequality among LGUs by providing targeted support to poor local governments that lack
proper capacity and resources; and
Strengthening citizen’s capacity to demand accountability through measures like citizen participation in
budgeting and expenditure processes; public hearings on budget information; civic monitoring of
intergovernmental transfers; monitoring of local service provision; and social audits.

MALACAÑAN PALACE
MANILA

BY THE PRESIDENT OF THE PHILIPPINES

[ EXECUTIVE ORDER NO. 138, June 01, 2021 ]

FULL DEVOLUTION OF CERTAIN FUNCTIONS OF THE EXECUTIVE BRANCH TO LOCAL

GOVERNMENTS, CREATION OF A COMMITTEE ON DEVOLUTION, AND FOR OTHER
PURPOSES

WHEREAS, Section 6, Article X of the Constitution provides that local government units (LGUs) shall
have a just share, as determined by law, in the national taxes which shall be automatically released to
them;

WHEREAS, in Mandanas, et al. v. Executive Secretary, et al. (G.R. Nos. 199802 and 208488)
(“Mandanas"), the Supreme Court held that all collections of national taxes, except those accruing to
special purpose funds and special allotments for the utilization and development of the national wealth,
should be included in the computation of the base of the just share of LGUs;

WHEREAS, considering the prospective character of the Mandanas ruling, and in keeping with Section
284 of Republic Act (RA) No. 7160 or the "Local Government Code of 1991," which states that the share
of LGUs in national taxes is based on the collections in the third year preceding the current fiscal year,
the adjusted national tax allocations of LGUs shall only start in Fiscal Year (FY) 2022;

WHEREAS, given the revenue collections of the National Government in FY 2019, the total shares of the
LGUs from the national taxes is expected to significantly increase starting FY 2022 in line with the
implementation of the Mandanas ruling;

WHEREAS, the substantial increase in the shares of the LGUs from the national taxes will empower the
LGUs in providing basic services and facilities to their constituents, and aid them in the effective
discharge of other duties and functions devolved to them under Section 17 of RA No. 7160;
WHEREAS, Section 3 of RA No. 7160 provides the operative principles of decentralization that shall
guide the formulation of policies and measures on local autonomy;

WHEREAS, Section 17(f) of RA No. 7160 provides that the National Government or the next higher
level of LGU may provide or augment the basic services and facilities assigned to a lower level of LGU
when such services or facilities are not made available or, if made available, are inadequate to meet the
requirements of its inhabitants;

WHEREAS, under Section 24(a), Rule V of the Implementing Rules and Regulations of RA No. 7160,
the provision for the delivery of basic services and facilities shall be devolved from the National
Government to provinces, cities, municipalities and barangays so that each LGU shall be responsible for a
minimum set of services and facilities in accordance with established national policies, guidelines and
standards;

WHEREAS, with the full devolution of the provision of basic services and facilities to the LGUs, national
government agencies can assume more strategic and steering functions to address persistent development
issues;

WHEREAS, Section 83 of the General Provisions of RA No. 11518 or the "General Appropriations Act
of Fiscal Year 2021," directs heads of departments, bureaus, offices and instrumentalities under the
Executive Branch to: (i) conduct a comprehensive review of their respective mandates, missions,
objectives and functions, systems and procedures, and programs, activities and projects; and (ii) identify
areas where improvements are necessary and more resources need to be rechanneled;

WHEREAS, Section 17, Article VIIof the Constitution provides that the President shall have control of
all executive departments, bureaus and offices, and that he shall ensure the faithful execution of laws; and

WHEREAS, Section 4, Article X of the Constitution provides that the President shall exercise general
supervision over local governments;

NOW, THEREFORE, I, RODRIGO ROA DUTERTE, President of the Republic of the Philippines, by
virtue of the powers vested in me by the Constitution and existing laws, do hereby order:

Section 1. Policy. The National Government (NG) is fully committed to the policy of decentralization
enshrined in the Constitution and relevant laws which are aimed at (i) developing capabilities of local
governments to deliver basic social services and critical facilities to their constituents, increase
productivity and employment, and promote local economic growth; and (ii) ensuring accountability,
competence, professionalism and transparency of local leaders through the development of institutional
systems that uphold good governance and strengthen their capacities for managing public resources.

Section 2. Guiding Principles. Consistent with Sections 3 and 17 of RA No. 7160, all department
secretaries and agency heads concerned shall, in pursuit of the full devolution of functions to the LGUs,
conduct a functional and organizational review of their respective mandates guided by the following
principles:

a. The role of the NG is to set the national policy, development strategy, and service delivery standards,
and to assist, oversee and supervise the LGUs, complementary to the stronger implementing role that the
LGUs shall assume by reason of devolution;
b. The devolution of the provision of basic services and facilities to the LGUs and the determination of
the functional assignments between and among the different levels of government shall be guided by the
following:

i. Public services with little or no benefit spillover are best administered and financed by lower level
governments, while public services with significant inter-jurisdictional externalities or benefit and cost
spillovers are best assigned to higher levels of government;

ii. The provision of public goods and services that involve economies of scale is best assigned to higher
levels of government; and

iii. Functions related to the redistributive role of government should be best assigned to the NG;

c. The NG, in close collaboration with the LGUs through their respective Leagues, shall formulate and
pursue an institutional development program to support the LGUs in order to strengthen their capacities
and capabilities to fully assume the devolved functions based on RA No. 7160 and other relevant laws;
and

d. Except as otherwise provided in this Order, any ambiguity as to the interpretation of a power granted to
an LGU shall be resolved and interpreted in favor of devolution.

Section 3. Coverage. This Order shall cover all LGUs, departments, agencies and instrumentalities of the
Executive Branch whose functions are in line with the devolved functions of the LGUs under Section 17
of RA No. 7160, and other pertinent laws.

Section 4. Functions, Services and Facilities for Full Devolution. The functions, services and facilities
which shall be fully devolved from the NG to the LGUs no later than the end of FY 2024, shall include
those indicated under Section 17 of RA No. 7160 and other existing laws which subsequently devolved
functions of the NG to LGUs.

Consistent with Section 17(e) of RA No. 7160, and for purposes of this Order, devolution shall pertain to
the act by which the NG, as may be allowed by existing laws, confers power and authority to the various
LGUs to perform specific functions and responsibilities.

Except those functions that shall continue to be shared with the NG pursuant to Section 2 of this Order,
local governments shall be primarily and ultimately responsible and accountable for the provision of all
basic services and facilities fully devolved to them in accordance with the standards for service delivery
to be prescribed by the NG.

In accordance with Section 17(g) of RA No. 7160, the basic services and facilities fully devolved shall be
funded from the share of the LGUs in the proceeds of national taxes and other local revenues. Local chief
executives shall ensure that any fund or resource available for the use of their respective LGUs shall be
first allocated for the provision of basic services or facilities devolved before applying the same for other
purposes, in accordance with relevant laws and budgeting and auditing laws, rules and regulations.

Section 5. Devolution Transition Plans. The national government agencies (NGAs) concerned and all
LGUs shall prepare their respective devolution transition plans (DTPs) which conform to the guidelines
to be jointly issued by the Department of Budget and Management (DBM) and the Department of the
Interior and Local Government (DILG).
There shall be only one (1) DTP for each department, which shall already cover the agencies and
government-owned or -controlled corporations (GOCCs) under the control or supervision or attached to
such department. The department secretaries shall lead and oversee the preparation and implementation of
their DTPs. Agencies and instrumentalities not under the control or supervision or attached to a
department shall prepare and implement their own DTPs in consultation and coordination with the DBM
and DILG.

The NGA DTPs shall identify and clarify the functions and services devolved to the LGUs, by level of
LGU, based on RA No. 7160 and other relevant laws, and the strategy for and phasing of devolution to
the LGUs. They shall also include the definition of standards for the delivery of devolved services;
strategy for the capacity development of the LGUs; framework for monitoring and performance
assessment of the LGUs; and an organizational effectiveness proposal to strengthen the
department/agency in assuming "steering functions" as part of the devolution efforts.

The NGAs concerned may consult and collaborate with the DILG, National Economic and Development
Authority (NEDA), Department of Finance (DOF), Civil Service Commission (CSC), and the
Development Academy of the Philippines (DAP), and other resource institutions for technical assistance
in the preparation of their respective DTPs.

The DTP shall be submitted by the NGAs concerned to the DBM within one hundred twenty (120J days
from the effectivity date of this Order, for evaluation and approval.

Section 6. Committee on Devolution. A Committee on Devolution (ComDev) is hereby created to be

composed of the following:

Chairperson : Secretary, DBM

Co-Chairperson : Secretary, DILG
Members : Socioeconomic Planning Secretary, NEDA;
Secretary, DOF; Executive Secretary; and
Presidents of the Leagues of Provinces, Cities and Municipalities of the Philippines, the Liga ng mga
Barangay ng Pilipinas, and the Union of Local Authorities of the Philippines.
The ComDev Chairperson, Co-Chairperson and Members from the government sector shall designate,
within fifteen (15) days from the effectivity date of this Order, a senior official within their respective
departments, with a rank not lower than an Undersecretary or its equivalent, to act as their permanent
representative in the ComDev and who shall be responsible for overseeing their respective agency's
overall efforts on the implementation of this Order. Alternates from the various leagues shall be endorsed
by their organizational heads.

The DBM shail provide secretariat services to the ComDev.

Section 7. Functions of the ComDev. The ComDev shall perform the following functions:

a. Oversee and monitor the implementation of administrative and fiscal decentralization goals of this
Order consistent with RA No. 7160, as amended;

b. Evaluate the status and monitor the implementation of the DTPs of NGAs and LGUs, and ensure
compliance of NG officials or employees and local chief executives or personnel, and initiate appropriate
action(s) as may be warranted;

c. Resolve issues and concerns that may arise in the implementation of this Order, without prejudice to
the respective mandates of its member-agencies in individually resolving the same;
d. Ensure the elimination of any regulatory or fiscal controls on the automatic release of LGU shares on
national taxes, in accordance with Sections 286 and 293 of RA No. 7160, unless such restrictions are
warranted under relevant laws;

e. Adopt mechanisms to ensure continuous delivery of public services by the NGAs and the LGUs during
the transition period to full devolution;

f. Develop a strong communications plan and pursue strategies to effectively inform the public, as well as
other stakeholders, on the delineation of the functions between the NGAs and the LGUs, and their
respective accountabilities. For this purpose, the ComDev may tap the Presidential Communications
Operations Office and its attached agencies and offices, call upon ail NGAs, both the oversight and the
affected agencies, to designate focal officials and personnel who shall participate in this information
drive, and ensure the integration of the ComDev's key messaging and communications plan to their
respective agencies' communication efforts;

g. Issue rules and regulations for the effective implementation of this Order within thirty (30) days from
its effectivity, and thereafter, such other supplemental guidelines as may be appropriate;

h. Submit to the Office of the President an annual report on the implementation of this Order. ℒαwρhi ৷
The report shall include the status of implementation of the DTPs, as well as the recommendations of the
ComDev based on the annual assessments thereof; and

i. Call on any relevant department, agency or office of the Executive Branch for the fulfillment of its
functions and the accomplishments of the objectives of this Order, and ensure convergence of all
government efforts on the devolution program.

Section 8. Growth Equity Fund. A Growth Equity Fund (GEF) shall be proposed by the ComDev to
Congress to address issues on marginalization, unequal development, high poverty incidence and
disparities in the net fiscal capacities of LGUs. The amount constituting the GEF shall be included by the
DBM in the National Expenditure Program starting FY 2022 and thereafter, to cover the funding
requirements of programs, projects and activities of poor, disadvantaged and lagging LGUs to gradually
enable the full and efficient implementation of the functions and services devolved to them.

The GEF shall be released to the LGUs in accordance with the implementing rules and regulations to be
prescribed by the Devefopment Budget Coordination Committee. It shall be subject to the mechanisms
and guidelines for an equitable, performance-based, and time-bound allocation and distribution of the
fund to the LGUs.

Section 9. Capacity Development. The DILG, through its Local Government Academy (LGA), shall
oversee the provision of capacity development interventions for local governments, and shall develop the
appropriate mechanisms to ensure efficient utilization of government resources on this effort. The LGA
shall harmonize all capacity development interventions by the DBM, NEDA, DOF, other NGAs, DAP
and third party service providers for the LGUs. It shall optimize the potential of the Local Governance
National and Regional Resource Centers as the convergence platform for capacity development.

Further, the DILG, DBM and the Bureau of Local Government Finance of the DOF shall include public
financial management processes, such as local planning, investment programming, resource mobilization
and budgeting, in the capacity development of the LGUs to ensure that the allocation of the revenue
allotment for basic services and facilities is in accordance with Section 17 of RA No. 7160 and other
relevant laws.

Moreover, the DILG shall develop other capacity development strategies, facilitate institutionalization of
performance standards, and develop performance incentive mechanisms under the Seal of Good Local
Governance to promote excellence in local governance.

To ensure continuity in the efficient and effective delivery of services, capacity development
interventions shall, as far as practicable, be offered preferably to career or permanent local government
personnel as a means of institutional strengthening.

Section 10. Role of LGUs. Consistent with Section 5 of this Order, all LGUs shall likewise prepare their
DTPs in close coordination with the NGAs concerned, especially with regard to devolved functions and
services critical to them. The DTPs of LGUs shall be used as a guide in the monitoring and performance
assessment of the LGUs by the DBM, DILG and NGAs concerned.

In view of the devolution of certain functions from the NGAs, the LGUs shall also formulate their
respective Capacity Development Agenda based on the assessment framework and guidelines to be issued
by the DILG-LGA. The capacity development agenda shall be guided by, among others, the strategy for
capacity development of the LGUs as contained in the NGA DTPs, local development thrusts, and
performance goals and objectives.

In accordance with Section 8(f) of this Order, all LGUs are highly encouraged to formulate their
respective communications plans and strategies which are aligned and complementary to the
communications plan formulated and approved by the ComDev.

Local programs and policies shall be integrated and coordinated towards a common national goal and
shall abide by the policies, standards and strategies which the NG may establish pursuant to the Guiding
Principles in Section 2 of this Order.

Section 11. Strengthening Planning, Investment Programming and Budgeting Linkage and Monitoring
and Evaluation (M&E) Systems. The vertical and horizontal linkages across different levels of
government in development planning, investment programming and budgeting shall be strengthened to
align NG, regional and local priorities. The Regional Development Councils shall set the strategic
direction for the faster development of the regions, especially in the lagging areas, and facilitate the
alignment of the local development and the land use plans with the goals, objectives and targets in the
Updated Philippine Development Plan and the respective regional development plans.

The regional development investment programs shall contain the proposed intra- and inter-region a)
programs, projects and activities (PPAs) of regional line agencies to be funded by the NG, while the
provincial/local development investment program (P/LDIP) of provinces, cities and municipalities shall
contain their prioritized list of PPAs for funding by the LGUs. The annual investment program of the
LGUs to be funded through local funds, borrowings and public-private partnerships shall be sourced from
their respective P/LDIPs.

Horizontal linkages shall be strengthened through the improvement in the coordination, synchronization,
and joint execution of programs and projects between and among the LGUs. In line with this, provincial
governments are reminded of their oversight and coordination functions in the provision of services and
implementation of projects within their provinces that cut across city/municipal borders.
Relative to this, the DILG, DOF, NEDA and DBM shall update existing circulars, and recalibrate the
synchronized local and regional planning and budgeting calendars accordingly.

Further, results-based M&E systems shall be in place in the DILG, DBM, DOF and other NGAs to ensure
the purposive conduct of evaluations by the agencies concerned, and to guarantee that the LGUs have
assumed the devolved functions and services effectively in support of good governance, transparency,
accountability and evidence-based decision making.

Section 12. Personnel Options. To the extent authorized by civil service laws, rules and regulations,
personnel hired on a permanent basis, who may be affected by the devolution shall have the option to:

a. Apply for transfer to other units/offices within the department/agency/GOCC concerned without
reduction in pay;

b. Apply for transfer to other departments/agencies/GOCCs in the Executive Branch without reduction in
pay; or

c. Avail the retirement benefits and separation incentives as provided under Section 13 of this Order and,
subject to the discretion of the LGUs, apply to vacant positions therein, provided that their reemployment
shall be considered as new entry to the civil service and that they shall be subject to the compensation
system of the LGU concerned.

Affected employees occupying medical/allied-medical items may apply for transfer to a Department of
Health-supervised hospital of their choice.

The DBM and DILG, in coordination with the CSC and with prior consultation with the LGUs through
their respective Leagues, shall develop and issue the guidelines, as may be necessary, to ensure the fair,
orderly, and transparent implementation of this provision: provided, that the NGAs are authorized to
institute their respective internal operation a lization guidelines, subject to existing CSC and DBM rules
and regulations.

Section 13. Retirement/Separation Benefits. Affected personnel with permanent appointments who would
opt to retire or separate from the service shall be given the option to avail the retirement benefits under
existing laws, if qualified.

In addition to said retirement benefits, the affected personnel who would opt to retire or separate from the
service shall be entitled to the following separation incentives:

Length of Service Rate

Less than eleven (11) years of service 1/2 of the actual monthly basic salary for every year of
government service
Eleven (11) to less than twenty-one (21) years of service 3/4 of the actual monthly basic salary for every
year of government service, computed starting from the 1st year
Twenty-one (21) to less than thirty-one (31) years of service actual monthly basic salary for every
year of government service, computed starting from the 1st year
Thirty-one (31) years of service and above 1 1/4 of the actual monthly basic salary for every year of
government service, computed starting from the 1st year
The actual monthly basic salary shall refer to the salary of the affected personnel as of the date of
approval of the department/agency's revised organizational structure and staffing pattern by the DBM.
A minimum of five (5) years of government service is required in order for affected personnel to be
entitled to avail of the separation incentives; Provided, that for the purpose of computing the total amount
of separation incentives that affected personnel shall receive, only the government service up to the age of
fifty-nine (59) and a fraction thereof shall be counted. Government service starting at the age of sixty (60)
shall no longer be subject to the separation incentives provided herein; Provided, further, that for the
purpose of complying with the required number of years of service under RA No. 8291 or the “The
Government Service Insurance System (GSIS) Act of 1997," the portability scheme under RA No. 7699
(Portability Law) may be applied, subject to existing policies and guidelines.

The retirement gratuity benefit of affected personnel who are qualified and shall avail of RA No. 1616, as
amended, shall be paid by the GSIS.ℒαw ρhi ৷ The GSIS shall no longer pay the refund of retirement
premiums, both personal and government shares, of the affected personnel who will opt to retire under
RA No. 1616.

Section 14. Other Benefits of Retired/Separated Personnel. The affected personnel who retired or
separated from the service shall, on top of applicable statutory benefits, be entitled to the following:

a. Refund of Pag-IBIG contributions, both personal and government shares, of all affected members,
pursuant to existing rules and regulations of the Home Development Mutual Fund; and

b. Commutation of unused vacation and sick leave credits of the affected personnel in accordance with
existing civil service rules and regulations.

Section 15. Prohibition on the Rehiring of Personnel. Without prejudice to existing laws and regulations,
affected personnel with permanent appointments who retired/separated from the service as a result of the
devolution efforts shall be prohibited from reemployment in any agency of the Executive Branch, for a
period of five (5) years, except as teaching and medical staff in educational institutions and hospitals,
respectively.

The reemployment of the retired/separated personnel in the Executive Branch within the prohibited period
shall cause the refund of the separation incentives received by subject personnel under Section 13 of this
Order, on a pro-rated basis.

It is understood that the prohibition on the reemployment of the affected personnel shall not apply in the
other branches of the Government and in the local governments. However, the affected personnel who
will opt to be reemployed in the local governments shall be subject to the prevailing compensation system
in the LGU concerned.

The engagement of consultancy services of government personnel who retired or separated from the
service as a result of the devolution efforts shall be governed by Section 7 of RA No. 6713 or the "Code
of Conduct and Ethical Standards for Public Officials and Employees," and other pertinent laws, rules and
regulations.

Section 16. Funding. The amount necessary for the first year of implementation of this Order shall be
sourced from existing appropriations in the case of NGAs, and the respective corporate funds of GOCCs,
subject to availability thereof, and existing budgeting, accounting, and auditing rules and regulations. The
amounts necessary for subsequent years shall be included in the budget proposals of the agencies
concerned.
The funds for the separation incentive of the affected personnel in regular government agencies shall be
provided by the NG, subject to existing and applicable budgeting, accounting, and auditing rules and
regulations. The separation incentives for the affected personnel of GOCCs shall be sourced from their
respective corporate funds. In case of deficiency of funds of GOCCs not exempted from the Salary
Standardization Law, the NG may provide assistance in the payment of the separation incentives.

Section 17. Non-interruption of Government Service. This Order, or any guidelines, rules or regulations
issued in pursuance thereof, or any initiative towards the transition of devolved functions from the NGAs
to the LGUs, shall not operate to suspend or exempt any government office or personnel from compliance
with the provisions of RA No. 11032 or the "Ease of Doing Business and Efficient Government Service
Delivery Act of 2018."

Section 18. Construction and Interpretation. Any conflict between and among the provisions of this
Order, or any guidelines, rules or regulations issued in pursuance thereof, shall be resolved or construed
liberally in favor of the interpretation that would prevent any impediment in the delivery of public
services by the NGAs and the LGUs.

Section 19. Reparability. Should any part or provision of this Order be held unconstitutional or invalid,
the other parts or provisions not affected thereby shall continue to be in full force or effect.

Section 20. Repeal. Executive Order Nos. 48 (s. 1998), 444 (s. 2005), and all other orders, rules and
regulations, issuances, or any part thereof, inconsistent with the provisions of this Order are hereby
repealed, amended or modified accordingly.

Section 21. Effectivity. This Order shall take effect immediately following its publication in the Official
Gazette or in a newspaper of general circulation.

DONE, in the City of Manila, this 1st day of June , in the year of the Lord Two Thousand and Twenty-
One.

(SGD.) RODRIGO ROA DUTERTE

By the President:

(SGD.) SALVADOR C. MEDIALDEA

Executive Secretary.