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Implications of the SC Ruling on the Mandanas - Garcia IRA Case

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.


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