Shortchanging local government big time

The federalism noise from the Duterte administration has abated. Not that there is no merit to federalism, but that the federalism project has been treated as a half-baked strategic governance reform powered by executive bombast. Now federalism as the ultimate form of local autonomy has surreptitiously reared itself once again by a Supreme Court ruling in July 2018 and affirmed with finality in April 2019. The ruling was triggered by separate petitions by local chief executives and representatives led by Hermilando Mandanas and Enrique T. Garcia Jr., who championed faithfulness to the spirit and letter of the 1987 Constitution on decentralization and local autonomy. The high court ruling increases the internal revenue allotment (IRA) of local government units (LGUs) by increasing the base on which the share is reckoned, from “internal revenue taxes” to the more inclusive “national taxes,” the term used in the 1987 Constitution. The high court decision, however, ruled the new computation will apply retroactively, and will not entitle LGUs to collect arrears which Mandanas estimated to total P500 billion.

Colonial governments—the Spanish, the American, and the Japanese regimes—were understandably highly centralized, in view of the archipelagic fragmentation and centripetal political and religious tendencies such fragmentation and ethnolinguistic diversity engendered. Centralization was a strategy for keeping the state and country together. With the post-war Philippine republic under the 1935 Constitution, however, the itch to reorganize the national government for more effective governance and administration was matched only by the itch to transfer administrative power from the center to the periphery. This move was very cautious and stingy, starting from the lowest and farthest level from the top and center. This was the barrio which was rebranded as the barangay under the Marcos regime. But the local empowerment under the Marcos regime had a weird twist—it became more an instrumental agent of the national authoritarian government rather than an expression of the collective energy of the local people. Despite current misgivings about its transformative impotence, the 1986 People Power Revolt was the strongest politectonic shaking of the establishment. Its energy was encapsulated in the 1987 Constitution, which, unfortunately, contained wiggle room in its provisions on political dynasties, decentralization, autonomous regions. The 1987 Constitution impelled Congress to eventually legislate the Local Government Code (LGC) of 1991, the most encompassing critical political and administrative reinvention of government in the post-people power revolt era. But the LGC, while an exercise in empowering LGUs, was also an exercise by the national government, represented by Congress and the president, in backpedaling decentralization and local autonomy. Congress failed to undertake the mandatory review of the implementation of the LGC every five years, as the law itself mandated. LGUs and communities hoped that this review would lead to the incremental increase of the IRA share of LGUs.


Unbeknownst to the people, the 8th Congress that produced the LGC did a sleight of hand, replacing the term “national taxes” with the term “internal revenue taxes,” which in effect reduced the pie on which the 40 percent share of LGUs was applied. It limited the pie to the taxes collected by the Bureau of Internal Revenue and excluded the taxes collected by the Bureau of Customs, among other sources.

The Supreme Court ruling points to the real weakness in the federalism proposal championed by the Duterte administration. Nobody firmed up the necessary financial, political, and administrative milestones required to make that federalism idea plausible. The enlarged share of local governments as ruled by the Supreme Court is nothing more than a necessary step toward greater local autonomy and empowerment that should have been taken to make federalism feasible and acceptable. Remember that one of the strongest arguments against federalism was that many LGUs will not be financially viable as states.


Mandanas had hoped the new IRA will be reflected in the 2019 budget. Now, the Duterte administration seems to dodge the local autonomy harness that he himself advocated through his bold championship of federalism. He and his Cabinet are now stonewalling LGUs, negotiating with LGUs the postponement of the new IRA sharing until the next administration. This move is reminiscent of the tactic “obedezco pero no cumplo (I obey but I do not comply),” practiced in government since the Spanish period.

—————[email protected]

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TAGS: centralization, federalism, local government, On The Move, Segundo Eclar Romero, taxation
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