The Mandanas Ruling

What the case decided

Section 6, Article X of the 1987 Constitution guarantees local government units "a just share, as determined by law, in the national taxes which shall be automatically released to them." For decades, that "just share" was computed against only national internal revenue taxes (BIR-collected taxes), per the original wording of Section 284 of the Local Government Code (RA 7160).

The petitions were brought by then-Batangas Representative (Congressman) Hermilando Mandanas, who filed during his term in Congress, together with then-Bataan (2nd District) Representative Enrique T. Garcia, Jr. — hence the case's common name, the Mandanas-Garcia ruling. They challenged the BIR-only computation, arguing the Constitution's word "national taxes" is broader than "national internal revenue taxes" and must include customs duties, BOC collections, and other national-tax sources.

The Supreme Court agreed. In the 2018 decision and its 2019 resolution on the motions for reconsideration, the Court held that:

• "National taxes" in Section 6, Article X is broader than the BIR-collected internal revenue taxes used before — the Court struck the words "internal revenue" from Section 284 and expressly added the tariff and customs duties collected by the Bureau of Customs to the base. (The Court also carved out specific exclusions, such as collections already earmarked to special-purpose funds and shares exclusive to particular LGUs or the autonomous region.)
• The LGU share is fixed at 40 percent of the third-fiscal-year-prior collection of national taxes.
• The expanded computation applies prospectively; LGUs cannot collect back-amounts for past years where the BIR-only base was applied.

The pre-Mandanas baseline

Before Mandanas, the Internal Revenue Allotment (IRA) — the term then used for the LGU share, renamed the National Tax Allotment (NTA) from FY 2022 onward — was computed against only BIR-collected internal revenue taxes. This systematically undercounted the constitutional base, because significant national tax revenues (customs duties, certain excise taxes) sit outside the BIR's collection scope. Mandanas didn't change the 40-percent fraction; it expanded the base against which that 40 percent is computed.

The 2022 implementation: EO 138

The Court gave the political branches time to operationalize the new computation. The Executive issued Executive Order No. 138, s. 2021 (signed 1 June 2021), which:

• Recomputed the LGU share for FY 2022 onward against the broader base.
• Devolved several previously national-level functions to LGUs in tandem — recognizing that the larger share comes with larger responsibilities.
• Set transition arrangements for national agencies whose functions were devolved.

Critics argued the devolution was rushed; supporters argued the Constitution required exactly this kind of recalibration. The political-economy implications continue to unfold across 2022-2026 budget cycles.

Relevant cases

Why this matters in current practice

Mandanas is cited in:

• Local government finance litigation (LGUs suing for the correct share).
• Constitutional-law academic writing on fiscal autonomy.
• Administrative-law cases on the devolution of functions under EO 138.
• Tax cases that touch on the LGU share computation mechanics.

For Bar candidates: Mandanas is a frequent essay topic in Political Law and Local Government. The doctrinal core (Section 6, Article X interpretation) is testable; the implementation details (EO 138, devolution schedule) are usually optional context.

Related reading

• Obligations & Contracts — the Civil Code foundation of private-law practice
• Deep Synthesis — research a multi-source constitutional question with traceable citations
• Local Government Code (RA 7160) — look up the statute on Intellegal
• Prejudicial Question (forthcoming)

FAQ