The Mandanas ruling and DepEd devolution

In previous articles, we have argued that the Department of Education (DepEd) as presently organized has failed in its mission to provide quality education for all. This calls for the drastic reforms that we are proposing.

In this article, we argue that the Mandanas ruling renders our proposal to devolve the operation of the public elementary and high schools from the Department of Education to the local government units (LGUs) timely and necessary.

Firstly, a study conducted by the Cristina Research Foundation (full disclosure, we are chairman of the Cristina Research Foundation) compared the basic educational system of the Philippines with those of Brazil, Indonesia, Norway, and the United States of America.

The comparison considered the six functions of: 1.) Policy formulation, curriculum establishment, 2.) policy implementation, 3.) fund raising, 4.) management and organization, 5.) staffing, and, 6.) operations and in which government levels they are lodged — National Government, regional/provincial government, and local government. (See Figure 1.)

The study found that among the five countries, the Philippines is the most highly centralized with the LGUs limited to maintaining infrastructure, and funding sports activities and contributions through the Special Education Fund.

The World Bank confirms this prevailing view, “Many developing countries have devolved the responsibility for education services to local governments in an effort to improve educational quality and make public spending more efficient. Advocates of decentralization have argued that bringing decision making closer to schools makes public policy more responsive to local needs, strengthens accountability, and fosters innovation.” (“Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines,” Philippine Education Note, World Bank Group and Australian Aid, June 2016).

Secondly, the passage of the 1991 Local Government Code marked a significant shift in the approach to local development and service delivery. It provided the framework for the devolution of local public administration and service delivery responsibilities to local government units. It also provided local governments with enhanced revenue-mobilization powers and access to financing, which would accompany the increase in spending on devolved mandates. The objectives were to improve local service delivery and facilitate widespread socioeconomic development by bringing resource allocation and prioritization closer to constituents.

The Department of Health (DoH) was the first to devolve its operation in 1992 and has done so successfully. Today, there are 1,800 hospitals in the Philippines, of which 721 are public hospitals and the DoH operates only 70 of them.

See Figure 2 for the current state of devolution in the Philippines. Note that only Education and the National Police have not been devolved.

The proposal to devolve education to the local government units comes at just the right time given the Mandanas ruling of the Supreme Court.

There was a major development in Philippine decentralized governance in 2022 with the implementation of the Mandanas-Garcia Supreme Court (Mandanas) ruling. The Supreme Court (SC) ruled that the just share of LGUs from national taxes is not limited to “national internal revenue taxes” collected by the Bureau of Internal Revenue (BIR) but includes collections (customs duties) by the Bureau of Customs (BoC).

This SC decision effectively increases the base from which to compute the intergovernmental fiscal transfer now known as the National Tax Allotment (NTA). This amounts to a 38% increase in the overall NTA settlements at a total of P959 billion or almost 20% of the 2022 national budget of P5.024 trillion and roughly 4% of GDP.

The World Bank in its June 2021 Philippine Economic Updated stated:

“We look at the implementation of the Mandanas ruling not just as a transfer of resources but an opportunity to strengthen decentralization and improve social service delivery in the Philippines.

“If this ruling leads to better coordination in planning and implementation across levels of government, taking into account the capacity and needs of LGUs, it could improve the lives of people and communities especially those that far from the country’s economic growth centers.

“Local governments are on the ground and can directly feel citizen’s needs and aspirations. Hence, decentralization encourages prompt responses and better matching of government services to local needs, making governance more inclusive. This is especially true if citizens have effective channels through which their voices are heard to enhance accountability.”

The President also took cognizance of the implication of the Mandanas ruling. In a press release (“PBBM orders National Government agencies to analyze full devolution initiative; come up with a list of functions of LGUs”) on Dec. 25, 2023, the Presidential Communications Office stated:

“President Ferdinand R. Marcos, Jr. has ordered National Government agencies (NGAs) to conduct an analysis on the operationalization of the full devolution initiative and come up with the list of functions that should be devolved to the local government units.

“President Marcos ordered the National Economic and Development Authority (NEDA) to conduct a sensitivity analysis on the most that the government can gain from its investments, which include the functions and services to be performed by the LGUs.

“The NEDA is also tasked to recommend ways to better implement a phased-in devolution, including its timeline based on LGU capacity, which is in addition to the ongoing study on the determinants of functions and services that should performed by the NG and devolved to LGUs. President Marcos ordered the NEDA to complete the study and submit it to the Office of the President by end of February 2024.

“The President also ordered the Department of Interior and Local Government (DILG), in collaboration with the Union of Local Authorities of the Philippines, to come up with a list of basic functions and services that the LGUs should be performing based on their Devolution Transition Plans, and of the National Government. The DILG is given until January 2024 to present to the President the list by January 2024, or a month earlier than the analysis report of the NEDA.”

We are hoping that both NEDA and DILG will seriously consider our proposal to devolve the operation of the public elementary high schools from the Department of Education to the local government units.

Dr. Victor S. Limlingan is a retired professor of AIM and a fellow of the Foundation for Economic Freedom. He is presently chairman of Cristina Research Foundation, a public policy adviser and Regina Capital Development Corp., a member of the Philippine Stock Exchange.