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

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

The law translates to a State policy promoting autonomy designed to ensure development in accordance with the local set-up, culture and potential of the provinces, cities, municipalities and even the barangays forming the foundation and structure of the government.

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

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

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

In fact, discussions at the congressional plenary sparked debates among legislators coming from both sides – the pro and the anti.
 
The Supreme Court’s Mandanas Ruling

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

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

It has been contended that computation of LGUs’ share in national collections should not just be limited to IRA, particularly cited in the Local Government Code, but should be based on all collections of national taxes including, among others, those that are collected by the Bureau of Customs.

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

From how it looks, the Supreme Court decision is expected to affect the national budget for the next fiscal year, notwithstanding the fact that the national government badly needs more funds in view of the continuing onslaught of the COVID-19 pandemic.

The Department of Finance hinted at an increase of 27.61 percent to the budget that has to be given as share to LGUs, which should now be receiving P1.083 trillion or roughly P234.4 billion more than what it used to get.

The more than a trillion peso IRA will be devolved and divided to 81 provinces, 145 cities, 1,489 municipalities and 42,029 barangays, which would be taking over some functions of the national government, particularly on health, infrastructures, education, social welfare, livelihood and environment, among many other concerns requiring more than what the LGUs stand to get.

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

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

Taking the case of Makati City, which has been getting an IRA amounting to P1.2 billion, one of the country’s richest cities will be getting P1.8 billion next year — and to think, there’s not much infrastructure that the city government would be able to do in their area since everything seemed already covered — roads, bridges, school buildings, hospitals, etc.

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

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

According to Dr. Romulo Virola, secretary-general of the National Statistical Coordination Board (NSCB), the imbalance in the distribution of national government collection seemed aggravating poverty in the Philippines, even as he cited Metro Manila getting a huge chunk of funds, which should have been given to poor localities — particularly 4th and 5th class municipalities outside the NCR.

Referring to it as Metro Manila bias, Virola finds it rather weird for the national government to pour that much to Metro Manila cities, which are already deemed financially capable enough to generate enough revenue to meet their needs, while depriving poor localities from getting what is required for them to cope with the difficulties amid the pandemic.

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

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

Outcome indicators like poverty incidence, prevalence of malnutrition among children aged 0 to 5 and net participation rate in secondary schools show a better situation in Metro Manila.

Metro Manila cities have more resources so they have more options to improve health and education, and yet they receive more from the IRA such as the rich cities of Quezon City and Manila. The reason is the formula used that provides more allotment for those with bigger populations.

The seven consistently biggest recipient cities are Quezon City, Davao, Manila, Zamboanga City, Caloocan, Puerto Princesa, and Cebu. Others in the top 10 are General Santos City and Cagayan de Oro, with Antipolo in 2008 and Iligan in 2007.

The four richest cities in 2006 and 2007 were Quezon City, Makati, Manila, and Pasig. The next two were Paranaque and Davao. Consistently in the top 10 richest were Cebu, Caloocan, and Pasay, with Muntinlupa rounding up the top 10 in 2008 and Mandaluyong in 2007.

Despite the amount of resources that the richest cities in Metro Manila have, they do not allot more than 20 percent of their income on education, culture, and sports/manpower development.

Interestingly, these already rich localities are seen to get an IRA amounting to one billion each, at the very least — far from the P30 million that the poor towns outside the NCR will be receiving as their “equitable share” of the national government collection.
 
What to Expect in 2022

In view of the predicament that the Philippines is currently in, the Department of Finance admitted that the Mandanas ruling somehow inflicted a negative impact on the national budget. 

Notwithstanding the more than P5-trillion proposed national budget that was submitted by the Department of Budget and Management to Congress, the DOF claims to be sourcing out funds to sustain the high-cost of keeping the national health emergency on check, since there is no way for the national government to touch what has already been earmarked as IRA. 

When the year comes to a close, LGUs would be made to take over the responsibilities in addressing social welfare, agriculture, and health aspects — devolved functions requiring so much more than what is coming for them.

(PHOTO CREDIT: Constitutional Reform YouTube channel)

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