6/14/2021

1
DEPARTMENT OF BUDGET AND MANAGEMENT
OUTLINE OF Internal Revenue Allotment and the Supreme
Court Decision on the Mandanas Case
THE MANDANAS-GARCIA PRESENTATION
RULING AND OTHER 2
Salient Features of Executive Order No. 138
PROSPECTS IN THE Directing the Full Devolution of Functions to
PREPARATION OF THE FY 2022 LGUs

ANNUAL BUDGETS OF LGUs 3

Other Prospects in the Preparation of the FY
2022 Annual Budgets of LGUs
REALBO Virtual Local Budgeting Forum
June 10 and 11, 2021, 9:00 AM | via Google Meet

IRA AND THE SC RULING ON THE MANDANAS CASE

INTERNAL REVENUE ALLOTMENT INTERNAL REVENUE ALLOTMENT

• LGUs shall have a just share, as determined
NATIONAL INTERNAL REVENUE TAXES

AND THE SUPREME COURT RULING by law, in the national taxes which shall be
automatically released to them.
Internal
Revenue

ON THE MANDANAS CASE • Forty percent (40%) of the share in the

Allotment
40%

national internal revenue taxes (NIRT) based National

on the collection of the third fiscal year Government
60%
preceding the current fiscal year will be given
to LGUs
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IRA AND THE SC RULING ON THE MANDANAS CASE

SUPREME COURT RULING ON THE MANDANAS CASE
• The Supreme Court (SC) ruled that the just share of LGUs from the national taxes is not limited to
FULL DEVOLUTION AS A MEASURE TO
“national internal revenue taxes” collected by the Bureau of Internal Revenue (BIR) but includes
collections (customs duties) by the Bureau of Customs (BOC).
MITIGATE THE FISCAL IMPACT OF THE
BEFORE MANDANAS RULING AFTER MANDANAS RULING (NATIONAL TAXES)
MANDANAS RULING
IRA
40%
60%
NG

NATIONAL TAXES National Government Internal Revenue Allotment

FULL DEVOLUTION AS A MEASURE TO MITIGATE THE

FISCAL IMPACT OF THE MANDANAS RULING EXECUTIVE ORDER NO. 138
• Sec. 17 of the LGC mandates the devolution of DATED JUNE 1, 2021
basic services and facilities to LGUs - FULL DEVOLUTION OF
• However, many national agencies continues
to provide these services/facilities
CERTAIN FUNCTIONS OF
• For fiscal sustainability, the devolved functions
THE EXECUTIVE BRANCH
must permanently be taken out from the TO LOCAL GOVERNMENTS
national agencies to empower the LGUs to
assume them
Adapted from Powers and Devolved Services of Local Government Units (LGUs) by Dr. Maria Ela Atienza (Professor and Chair), Asst. Prof. Jan Robert Go (Assistant
Professor), and Herby Jireh Esmeralda (Research Assistant). Retrieved from https://halalan.up.edu.ph/powers-and-devolved-services-of-local-government-units-
lgus/

IRA NG fiscal
shares resources
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EXECUTIVE ORDER DIRECTING THE FULL DEVOLUTION OF CERTAIN

FUNCTIONS OF THE EXECUTIVE BRANCH TO LOCAL GOVERNMENTS
SALIENT FEATURES OF THE SALIENT FEATURES

EXECUTIVE ORDER
ON FULL DEVOLUTION
Delineation Preparation of Creation of
Establishment of
of NG and Devolution Committee on
Growth Equity Fund
LGU Roles Transition Plans Devolution

EXECUTIVE ORDER DIRECTING THE FULL DEVOLUTION OF CERTAIN (Section 1)

FUNCTIONS OF THE EXECUTIVE BRANCH TO LOCAL GOVERNMENTS POLICY OF DECENTRALIZATION

SALIENT FEATURES
The National Government is committed to the policy of
decentralization which are aimed at:
• Developing capabilities of local governments to deliver basic services
and facilities; and
Capacity Strengthening of Planning, Options for • Ensure accountability, competence, professionalism and
Investment Programming,
Building Roles of LGUs and Budgeting Linkage and Affected NGA transparency of local leaders
for LGUs M&E Systems Personnel

(Section 2)
GUIDING PRINCIPLES
The role of the NG is to set the national
01 policy, development strategy, and
service delivery standards, and assist,
oversee and supervise the LGUs.
Devolution of basic services and
02
facilities to the LGUs, and determination
of functional assignments between and
among the different levels of
government
(Sections 5 and 10)
PREPARATION OF DEVOLUTION TRANSITION PLANS
NGA Devolution Transition Plan
• Identification of devolved functions and
services and phasing of or strategy for
devolution
• Definition of service delivery standards
• Capacity development strategy for LGUs and
NGAs
• Framework for monitoring and performance
assessment of LGUs
• Organizational effectiveness proposal
FUNCTIONS, SERVICES, AND FACILITIES FOR FULL DEVOLUTION
The NG, in close coordination with the LGUs,
03 shall formulate and pursue an institutional
development program.
Any ambiguity as to the interpretation shall
04
be resolved and interpreted in favor of
devolution.
LGU Devolution Transition Plan
• LGUs to prepare their DTPs in close
coordination with pertinent NGAs
• LGU DTPs to serve as guide on the monitoring
and performance assessment of the LGUs by
the NGAs concerned, DBM and DILG
6/14/2021
(Sections 3 and 4)
• Functions, basic services and facilities which have already been devolved
based on Section 17 of the Local Government Code and other pertinent laws
• Local governments shall be primarily and ultimately responsible and
accountable for the provision of all basic services and facilities fully devolved
to them.
• Covers all LGUs and all departments, agencies, and instrumentalities of the
Executive Branch with devolved functions to LGUs
(Section 6)
CREATION OF COMMITTEE ON DEVOLUTION
• To be composed of the following members:
• Secretary of Budget and Management, as Chairperson;
• Secretary of Interior and Local Government, as Co-Chairperson;
• Executive Secretary, Secretaries of Socioeconomic Planning, Finance; and
• Presidents of the Leagues of Provinces/Cities/Municipalities of the Philippines, Liga ng
mga Barangay sa Pilipinas, and Union of Local Authorities of the Philippines, as
members
• The ComDev shall designate a senior official to act as their permanent representative and shall
be responsible for overseeing the overall efforts on the implementation of the EO.
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(Section 7) (Section 7)

FUNCTIONS OF THE COMMITTEE ON DEVOLUTION FUNCTIONS OF THE COMMITTEE ON DEVOLUTION

Adopt mechanisms Develop a strong Submit to the Call on any relevant

Evaluate the status Ensure the elimination Issue rules and office of the
Oversee and monitor
and monitor the to ensure communications Office of the
the implementation Resolve issues of any regulatory or
continuous delivery regulations for Executive Branch for
implementation of fiscal controls on the plan and pursue President an
of administrative and and concerns of public services the effective annual report on
the fulfilment of
DTPs, and ensure automatic release of strategies to functions and ensure
fiscal decentralization that may arise during the implementation the implementation
compliance of LGU shares on effectively convergence on the
goals
officials national taxes
transition period to of the EO of the EO
full devolution inform the public devolution program

(Section 8) (Sections 9 and 10)

ESTABLISHMENT OF GROWTH EQUITY FUND CAPACITY DEVELOPMENT FOR LGUs

Shall harmonize and oversee

A Growth Equity Fund shall be Capacity Development Agenda for provision of needed capacity
development interventions
established starting FY 2022 to LGUs to be formulated based on the
DILG-LGA assessment framework and
address problem of marginalization, Shall strengthen capabilities of
guided by the strategies identified by
unequal development, and high the NGAs, local development thrusts,
local chief executives

poverty incidence across different and performance goals and

LGUs. objectives. Shall conduct programs regarding
revenue generation and fiscal
management
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(Section 10) (Section 11)

STRENGTHENING PLANNING, INVESTMENT PROGRAMMING AND BUDGETING

ROLE OF LGUs LINKAGE AND MONITORING AND EVALUATION SYSTEMS

• Vertical and horizontal linkages across different levels of

government in development planning, investment
programming and budgeting to be strengthened

• Results-based monitoring and evaluation systems shall be in

Development of place and strengthened to ensure purposive conduct of
LGU Devolution Capacity evaluations in the performance and delivery of devolved
Communications Plan
Transition Plan Development Agenda and Strategy functions and services

(Sections 12 to 15)
NEXT STEPS / WAYS FORWARD 2021
OPTIONS FOR AFFECTED PERSONNEL • Crafting of the Implementing Rules and Regulations of the EO
• Conduct of Inception Workshops with LGUs
• Preparation and submission of transition plans of NGAs and LGUs
• Implementation of communications plan and strategy
Retire or separate from
Transfer to other • Development of framework for performance assessment of devolved functions
Transfer to other units the service, and may be
agencies within the
within the agency given preference to • Strengthening capacities of NGAs on monitoring and coaching functions
Executive Branch
vacant positions in LGUs
• Capacity building activities for LGUs through LGA, DAP, BLGF, and NGAs
concerned
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PREPARATION OF THE FY 2022 ANNUAL BUDGETS OF LGUs

OTHER PROSPECTS IN THE Implementation of the SC Ruling

on the Mandanas-Garcia petitions
Leeway for LGUs

PREPARATION OF THE FY 2022

ANNUAL BUDGETS OF LGUs
Effect concomitant
adjustment in planning PS limitation

Other programs and projects

Impacts of the
based on existing laws
COVID-19 pandemic

PROJECTED LOWER NTA IN FYs 2023 AND 2024

1200
???
???
???
1000

800

575.52
648.92
695.49
Thank you!
Billions

600

400

200

0
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