Reflection: MANDANAS-GARCIA RULING

Former Bataan Gov. Enrique "Tet" Garcia Jr. and Batangas Gov. Hermilando Mandanas
have filed a petition. They questioned the methodology used in the Local Government Unit's
(LGU) Internal Revenue Allotment (IRA). They asked the Supreme Court to order the federal
government to calculate the IRA based on all taxes collected in their petition. As per Article X,
Section 6 of the 1987 Constitution, each local government unit receives a dedicated share or
percentage of the tax collected by the national government "national taxes." Only those collected
by the Bureau of Internal Revenue have made up this proportion in recent years. In the 2018 case
of Mandanas vs. Ochoa, however, this approach was modified. According to the Supreme Court's
Mandanas ruling, all taxes collected by the government, not simply those collected by the BIR,
should be used to determine the proportion that goes to LGUs, including tariffs and customs duties
collected by the Bureau of Customs, as well as other taxes. President Rodrigo Duterte reached that
conclusion when he signed Executive Order No. 138 in June 2021, which instructs local
governments and the national government on how to implement Devolution Transition Plans
(DTPs). As LGUs gain full responsibility for devolved duties and services, the DTP will serve as
a roadmap to ensure purposeful and systematic actions.

As indicated by World Bank on their website, because of the Mandanas Ruling by the
Supreme Court in 2018. The IRA is customized to increment by 55% in the 2022 budget, arriving
at Php1.08 trillion or 4.8 percent of the nation's GDP contrasted with 3.5 percent of GDP in 2021.
And with the Supreme Court ruling, the Department of Budget and Management (DBM) assessed
that five-star regions would have an increment of about P814 million in their IRA, raising it to
P4.4 billion this year; profoundly urbanized urban areas, up by P394 million to P2.13 billion; and
top-notch districts, up by P187.62 million to P1.01 billion. Some local governments have
expressed their dissatisfaction with the proposed changes to the LGU's budget. They feel that the
Mandanas ruling will harm economic growth. According to Finance Secretary Carlos G.,
Dominguez III considering their estimation thinks that in return the implementation of the ruling
will lower the economic growth because the LGUs spend less economically.

After reading the case and accompanying publications, I believe this petition is worthwhile,
although some may disagree. An increased share of national government tax money collected by
local governments can help to improve rural development given additional funding available to
the LGU. If the fund is used correctly to provide advancement, stimulate economic growth, and
enhance the socio-economic condition in the community, it will undoubtedly give more
opportunities to people and communities, but misappropriation and waste are disadvantages for
others. According to World Bank economist Kevin Cruz, unspent budgets squander opportunities
to provide essential services to communities that need them the most. The reason why the fund
must be used appropriately and need some strategic plan to efficiently and effectively use it for the
sake of improving our economy is that if not we might experience low economic growth with the
wastage of funds by the LGUs.