DBM-DILG memo: No layoff of gov’t employees in devolution | Inquirer News

DBM-DILG memo: No layoff of gov’t employees in devolution

By: - Reporter / @bendeveraINQ
/ 05:59 PM October 08, 2021

MANILA, Philippines—Tenured employees in government departments and agencies whose work will be deemed redundant when some functions are transferred to local governments in 2022 cannot be laid off but can transfer to other vacancies in the bureaucracy.

Joint Memorandum Circular No. 2021-3—issued by acting budget chief and Budget Undersecretary Tina Rose Marie Canda and Interior Secretary Eduardo Año—addressed the looming redundancy among government workers in the implementation of the so-called Mandanas ruling.


The Mandanas ruling is a Supreme Court decision that would raise local government shares in national taxes and devolve many national government functions.

The share of LGUs in national revenue, national tax allotment (NTA), is worth over P959 billion in 2022 which would narrow national government’s fiscal space, or capacity to spend, which was already under heavy pressure from COVID-19 response.


NTA used to be called internal revenue allotment.

Last June, President Rodrigo Duterte issued Executive Order (EO) No. 138 to devolve or transfer to LGUs the responsibility to spend on local infrastructure, agriculture, social welfare, health care, and livelihood, among other sectors listed by the Local Government Code.

The DBM earlier ordered national government agencies to no longer duplicate the programs, activities and projects being transferred to LGUs—but this will result in government employees losing their current roles to be transferred to LGUs.

According to the joint DBM-DILG circular, despite the implementation of EO 138, “there shall be no involuntary separation, termination, or lay-off of permanent national government personnel affected by the full devolution effort.”

Permanent employees, who will affected by the devolution, will be given three options:

  • Transfer to other units or offices within the same department or agency, without a pay cut
  • Transfer to another executive agency or department, without pay reduction
  • Avail themselves of retirement benefits and separation incentives under EO 138 and then apply for vacant positions in LGUs which assumed the devolved functions

“Affected employees occupying medical/allied-medical items in the Department of Health (DOH) and other departments/agencies/GOCCs [government-owned and/or -controlled corporations] may apply for transfer to a DOH-supervised hospital of their choice,” the circular said.

In a text message on Friday (Oct. 8), Budget Undersecretary and spokesperson Rolando Toledo said the DBM has yet to determine the exact number of employees who will be affected by the full devolution process.


Toledo said the positions to be let go by the national government will depend on agencies’ devolution transition plans, which were currently being evaluated by the DBM.

For positions and workers to be displaced in 2022, the circular said that “in no case shall there be any diminution in the basic salaries of incumbent affected employees who would opt to be transferred to any department or agency within the executive branch.”

“They would have full rights to all the benefits which may be available to other government employees, except for certain allowances that were used to be given corresponding to the performance of specific functions which would no longer form part of their new functions,” the circular read.

“The forfeiture or non-grant of specific purpose allowances which are anchored on the performance of particular functions or the presence of certain conditions will not constitute diminution in pay,” it said.

Also, “the personnel shall enjoy security of tenure in the agencies where they have been transferred to as a result of the implementation of full devolution under EO 138, in accordance with the civil service laws, rules and regulations,” it added.

“The positions of personnel who may be affected by the full devolution effort and will not opt to retire or separate from the service shall be marked coterminous with the incumbent, either in the parent- or the recipient-agency, to be abolished once vacated,” according to the circular.

The Supreme Court granted in 2018 and reaffirmed a year later the petitions of Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique Garcia Jr., which stated that the LGUs’ IRA should come from 40 percent of the collection of all national taxes—the Bureau of Internal Revenue’s (BIR) tax take, as well as the Bureau of Customs’ (BOC) collections of import duties and other taxes.

Until this year, LGUs’ IRA represented two-fifths of national internal revenue taxes collected by the BIR.

The NTA, meanwhile, was based on LGUs’ 40-percent share from all tax revenues collected three years prior, hence next year’s allotment had 2019 as base year.

LGUs’ 2022 NTA jumped from an estimated IRA of only P846.31 billion for next year without the Mandanas ruling. This year, LGUs’ IRA amounted to P695.49 billion.

While the Supreme Court’s Mandanas ruling will provide LGUs with more money, they were expected to struggle spending their larger budgets to implement big-ticket programs and projects to be devolved by the national government.

Both the Manila-based Asian Development Bank (ADB) and the Washington-based World Bank already flagged potential underspending by LGUs next year as they had not been equipped to roll out projects of a much-bigger scale compared to what they handled at present. For instance, the World Bank had estimated that LGUs may fail to spend as much as P155 billion from their NTA in 2022.

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TAGS: budget, devolution, Employees, Local Governments, Mandanas ruling, revenue, Supreme Court
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