Implementation of the

Supreme Court Decision

on the Mandanas-Garcia Case
 IRA AND THE SC RULING ON THE MANDANAS-
GARCIA CASE
INTERNAL REVENUE ALLOTMENT NATIONAL INTERNAL REVENUE TAXES

• LGUs shall have a just share, as

determined by law, in the national taxes
which shall be automatically released to
Local
them. Government
Unit
National
[PERCEN Government
TAGE] [PERCEN
• Forty percent (40%) of the share in the
TAGE]
national internal revenue taxes (NIRT)
based on the collection of the third fiscal
year preceding the current fiscal year will be
given to LGUs
IRA AND THE SC RULING ON THE MANDANAS-
GARCIA CASE
SUPREME COURT RULING ON THE MANDANAS
CASE
• The Supreme Court ruled that the just share of
LGUs from the national taxes is not limited to
“national internal revenue taxes” collected by the
Bureau of Internal Revenue but includes collections
(customs duties) by the Bureau of Customs and
other collecting agencies.  
IRA AND THE SC RULING ON THE MANDANAS-
GARCIA CASE

It is to be emphasized that cognizant of the autonomy of LGUs

pursuant to the 1987 Constitution and RA No. 7160, there will be
no new or additional functions in the set of devolved functions
and services that the LGUs are expected to assume, nor
transferring of personnel from the NGAs to LGUs.

Thus, Mandanas-Garcia ruling is about the Computation of the

“Just Share” of LGUs in the National Taxes.
FULL DEVOLUTION AS A MEASURE
TO MITIGATE THE FISCAL IMPACT
OF THE MANDANAS-GARCIA
RULING
FULL DEVOLUTION AS A MEASURE TO MITIGATE
THE FISCAL IMPACT OF THE MANDANAS-GARCIA
RULING

• Considering, that many national

agencies continue to provide IRA/ NG fiscal
those basic services/facilities NTA resources
devolved to the LGUs under shares
Section 17 of the Local
Government Code of 1991.
₱194 Billion
FULL DEVOLUTION AS A MEASURE TO MITIGATE
THE FISCAL IMPACT OF THE MANDANAS-GARCIA
RULING
EXECUTIVE ORDER NO. 138
DATED JUNE 1, 2021
FULL DEVOLUTION OF
CERTAIN FUNCTIONS OF THE
EXECUTIVE BRANCH TO
LOCAL GOVERNMENTS
SALIENT FEATURES OF EXECUTIVE ORDER NO.
138

Delineation Creation of Preparation of Establishment of

of NG and Committee on Devolution Growth Equity
LGU Roles Devolution Transition Plans Fund
SALIENT FEATURES OF EXECUTIVE ORDER NO.
138

Strengthening of
Capacity Planning, Investment Options for
Building Roles of LGUs Programming, and Affected NGA
Budgeting Linkage and
for LGUs M&E Systems Personnel
 Guiding Principles
• Functions, basic services and facilities which have already
been devolved based on Section 17 of the Local
Government Code and other pertinent laws

• 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 full devolution.
 Guiding Principles
• Public services with little or no benefit spillover are best administered
and financed by lower level government;

• While significant inter-jurisdictional externalities or benefit (received

by more than one or multiple LGUs); and goods and services that involve
economies of scale (increased in size of production capacity decreases
in average cost of production, thus lower the unit costs) are best
assigned to higher levels of government.

• Functions related to the redistributive role of government should be

best assigned to the NG, as it aims to improve the distribution of
income in society, and reduce inequality and poverty.
Functions, Services, And Facilities For Full
Devolution
• The functions, services, and facilities under Section 17 of RA
No. 7160 and other existing laws, shall be fully devolved
from the NG to the LGUs not later than the end of FY
2024.

• 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.
Preparation of Devolution Transition Plans
NGA Devolution Transition Plan LGU Devolution Transition Plan
• Identification of devolved functions and
services and phasing of or strategy for
devolution, subject to capacity and • LGUs to prepare their DTPs in close
resources of the LGUs to take on these coordination with pertinent NGAs
devolved functions (based on experience
and assessment of the NGA) • LGU DTPs to serve as guide on the
monitoring and performance
• Definition of service delivery standards assessment of the LGUs by the NGAs
• Capacity development strategy for LGUs concerned, DBM and DILG
and NGAs
• Framework for monitoring and
performance assessment of LGUs
• Organizational effectiveness proposal
Preparation of Devolution Transition Plans
LGU-DTPs shall also be submitted within 60/90/120 days
after issuance of the JMC for the purpose.

With respect to Provinces and Highly Urbanized Cities their

DTPs shall be submitted to DILG, while Component Cities
and Municipalities to the Provincial Government and
Barangays to the Cities/ Municipalities.
 Establishment of Growth Equity Fund

A Growth Equity Fund shall

be established starting FY
2022 to address problem of
marginalization, unequal
development, and high
poverty incidence across
different LGUs.
Establishment of Growth Equity Fund

GEF shall be released to the LGUs in accordance with the

implementing rules and regulations to be prescribed by the
DBCC.

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.
Establishment of Growth Equity Fund
2024

2022
 REMINDERS for LGUs
• While the NTA shares of LGUs significantly increased in FY
2022 by 37.89% as a result of the implementation of the
Mandanas-Garcia ruling, LGUs are strongly encouraged to
consider the expected down trend of NTA in the
succeeding years, specifically in FYs 2023-2024, given
the lower revenue collections of the Government in FY
2020 and possibly in FY 2021 due to the COVID-19
pandemic restrictions.
 REMINDERS for LGUs
Finally, NTA and other local sources shall first cover
the cost of providing the “BASIC” services and
facilities enumerated under Section 17(b),
particularly those devolved by the National
Government, before applying the same for other
purposes.
Thank you!