President Ferdinand Marcos Jr. addresses the alumni of the Philippine Military Academy on Saturday, February 18, 2023. Photo grabbed from Radio Television Malacañang Facebook Live
President Marcos said he is “very seriously” reviewing an executive order (EO), issued by former President Rodrigo Duterte, implementing the Supreme Court’s 2018 ruling on the correct share of local governments in national taxes.
Speaking during the general assembly of the League of Municipalities of the Philippines in Manila on Wednesday night, the President said the “net effect” of EO 138 is that local governments will have lesser funds to devote to their own projects, as envisioned by the Constitution.
“When I assumed office, I said, ‘We’ll look into it immediately. Let us look at this, let us study it well.’ Because on paper, it looks okay but the net effect in many places is that there is a decreasing of the funds that the chief executive of the [local government] can use,” he said.
Marcos mentioned his reasons on why the EO might not be implementable yet: “One reason is there are no funds; second, no new item to hire personnel; third, no expertise.”
“We will use this year to study well the [EO] 138. We’ll see, because there may be functions that are being given to the local [authorities] that are not meant to be given to [them],” he said.
Supreme Court ruling
EO 138, issued in June 2021, directed the full devolution of certain functions of the national government to local governments, as ordered by the Supreme Court in the Mandanas-Garcia case and strengthen the autonomy and empowerment of local governments.
In the Mandanas case, the Supreme Court ruled that the just share of local governments from the national taxes is not limited to “national internal revenue taxes,” but also include collections (customs duties) of the Bureau of Customs and other tax collecting agencies.
The local governments’ 40-percent share in national government revenues collected for a specific fiscal year are remitted to them on the third year under Republic Act No. 7160, or the Local Government Code of 1991.
EO 138 was issued in the expectation that with the increase in the local governments’ internal revenue allotments, they would be better equipped to assume responsibility for the delivery of devolved services as prescribed under Section 17 of RA 7160 and other laws.
“And so that’s what we are examining. Expect, as I said, that we are taking very seriously the issues that have come out from the Mandanas ruling and how we will implement it hopefully by next year, because in 2021, the economy was a bit good, it has recovered a bit and maybe we will really get something,” Mr. Marcos said.
The President described the implementation of the Mandanas ruling as one of the most significant issues faced by the government.