MANDANAS RULING AND ITS IMPACT TO MINDANAO LGUS

Mindanao Development Authority (MinDA) Deputy Executive Director ASec. Romeo Montenegro cited MinDA’s initial assessment on the impact of the Mandanas Ruling implementation next year at today’s Mindanao Affairs Committee Hearing on the “Mandanas Ruling and Its Implications in Mindanao,” chaired by Lanao del Norte 1st District Representative Hon. Mohamad Khalid Dimaporo, via Zoom, 23 November 2021.

“Overall in Mindanao, we have 27 provinces, 33 cities, and 422 municipalities that will be covered by this landmark ruling in terms of its implementation. We want to look at this by LGU level impact and based on the initial assessment by MinDA, there are things that need sorting out.”

Montenegro noted that generally reflective of the national picture, IRA accounts for around 80% to 90% of the total revenues of Mindanao municipalities and provinces. However, for cities, which have better sources of local revenues on account of being urban, IRA accounts for 70% of their revenue sources.

“But there is, however, one important item that needs to be reckoned with in seeing the impact of Mandanas ruling and increase of IRA to Mindanao – an issue or may not be an issue but still needs |November 20-26, 2021

to be sorted out nonetheless - and that is most LGUs consistently have surpluses and therefore might not have maximized the use of their budget allocations all these years,” Montenegro said.

He further cited data from DOF’s Bureau of Local Government Finance (BLGF), such as in 2012 and 2016 for instance, there’s an average of 14.5% surplus for provinces in Mindanao with one region posting 29% surplus. For municipalities, there was average of 20% surplus, and one region having 37%. For cities in Mindanao, it posted 10.85% average surplus with one region having average of 20% surplus in their budget.

“Based on the BLGF scorecard, the local revenue should be increased by greater than 5% and the dependence on local locallysourced income for cities should be greater than 14%, and for municipalities and provinces should be over 20%. But if we look at the case of Mindanao, most of the LGUs have not yet reached those parameters,” he further underscored.

Montenegro also stressed that it’s inevitable that LGUs need to leverage on more bigger fiscal space next year with increased IRA share owing to Supreme Court’s landmark ruling on the MandanasGarcia petition. Still, the challenges of full devolution and expected increase in LGU deliverables present a rather challenging trade-off, especially on whether or not these are ready and capable to deal not just with bigger share but with bigger roles as well.

The meeting was attended by the Members of the House of Representative’s Committee on Mindanao Affairs, DILG Undersecretary Marlo Iringan, DBM Director John Aries Macaspac, and representatives from the Department of Finance (DOF) and Bureau of Local Government Finance (BLGF).