# The Mandanas Ruling and Public Schools: What Changed

The Mandanas ruling enlarged the LGU share in national taxes from FY 2022. It devolved no school function; EO 138 covers school buildings, by FY 2027 or 2028.

This is the Markdown copy of [The Mandanas Ruling and Public Schools: What Changed](https://nash.com.ph/blog/mandanas-ruling-public-schools), an article on the NASH Reviewer Blog by Mark Anthony Llego, published Nov 12, 2026. Topics: School leadership. NASH Reviewer is an independent practice platform not affiliated with DepEd, BHROD, or NEAP.

The Mandanas ruling is the Supreme Court's decision of July 3, 2018 in *Mandanas v. Ochoa* (G.R. Nos. 199802 and 208488). It holds that the share of local government units (LGUs) in national taxes must be computed on all national taxes, customs duties included, and not only on national internal revenue taxes. The larger share began in fiscal year (FY) 2022.

The ruling did not hand public schools to local governments. Basic education stays with the Department of Education (DepEd): teachers, the curriculum and school Maintenance and Other Operating Expenses (MOOE) are still paid from DepEd's budget. One school function was already assigned to LGUs by the Local Government Code of 1991: school buildings and other facilities, with "Support for education" added for cities. Executive Order No. 138, s. 2021 ordered the full devolution of such functions by the end of FY 2024, and Executive Order No. 103, s. 2025 moved the date to FY 2028 (FY 2027 for cities).

In practice the national budget still funds classrooms through DepEd. The FY 2026 budget gives DepEd PHP 85.4 billion for basic education facilities and lets it tap "qualified local government units" to build them. A school that needs classrooms still starts from DepEd's list, and the builder may now be the provincial, city or municipal government.

## Key findings

- **The Court struck two words from the law.** It declared the phrase "internal revenue" in Section 284 of the Local Government Code unconstitutional, so the 40% share of LGUs is now taken from "national taxes" (*Mandanas v. Ochoa*, G.R. Nos. 199802 and 208488, July 3, 2018, En Banc).
- **The larger share started in FY 2022, by the Court's own resolution.** The share rose from PHP 695.5 billion in FY 2021 to PHP 959.0 billion in FY 2022, up 37.89% (DBM, Local Budget Memorandum No. 82). Of the FY 2022 amount, PHP 185.17 billion came from the ruling (Development Budget Coordination Committee, *Fiscal Risks Statement 2023*, Box 2).
- **It fell in FY 2023 because it follows collections three years back.** The FY 2023 share was PHP 820.3 billion, 14.47% lower, because it was based on the collections of 2020 (DBM, Local Budget Memorandum No. 85). It passed the FY 2022 level only in FY 2025 and stands at PHP 1,190.5 billion in FY 2026 (Local Budget Memoranda Nos. 90-A and 92-B).
- **Full devolution was set for the end of FY 2024 and is now set for FY 2028.** EO 138 (June 1, 2021) set the first date. EO 103 (November 6, 2025) extends the transition to FY 2028 for provinces and municipalities and FY 2027 for cities.
- **Basic education is not devolved; school buildings are.** The Code lists "school buildings and other facilities for public elementary and secondary schools" among a municipality's basic facilities (RA 7160, Sec. 17(b)(2)(viii)), and exempts projects that the national budget funds (Sec. 17(c)).
- **The Basic Education Facilities budget fell by nearly half in the first year, then grew.** DepEd's Basic Education Facilities appropriation went from PHP 11.15 billion in FY 2021 to PHP 5.95 billion in FY 2022 and PHP 85.40 billion in FY 2026 (General Appropriations Acts).
- **In 2026 LGUs build classrooms with DepEd's money, under DepEd's standards.** [DepEd Memorandum No. 038, s. 2026](https://www.deped.gov.ph/2026/06/09/june-9-2026-dm-038-s-2026-guidelines-on-the-implementation-of-classroom-and-school-building-construction-projects-by-partner-local-government-units-of-the-department-of-education/) governs these projects and gives the school head four roles at the site (Sec. IV.D.17.1).

## What the Supreme Court decided in the Mandanas case

Two petitions reached the Court. Congressman Hermilando Mandanas and several local officials questioned how the FY 2012 budget computed the Internal Revenue Allotment (IRA). They said taxes collected by the Bureau of Customs had been left out, and asked for PHP 60.75 billion more for FY 2012 and PHP 438.1 billion in arrears for FY 1992 to FY 2011. Congressman Enrique Garcia Jr. of Bataan went further: he asked the Court to compute the share "on the basis of all national taxes".

The text that decided the case is Section 6, Article X of the 1987 Constitution:

> "Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them."

Section 284 of the Local Government Code gave LGUs a share "in the national internal revenue taxes". The Court found the mismatch fatal: "The phrase national internal revenue taxes engrafted in Section 284 is undoubtedly more restrictive than the term national taxes written in Section 6." Congress may fix the size of the share, the Court held, but it may not narrow the base the Constitution names.

| What the decision did | In the Court's words or terms |
|---|---|
| Struck the phrase | "DECLARES the phrase 'internal revenue' appearing in Section 284 of Republic Act No. 7160 (Local Government Code) UNCONSTITUTIONAL" |
| Widened the base | Finance, budget, revenue, customs and treasury officials must "include ALL COLLECTIONS OF NATIONAL TAXES in the computation of the base of the just share", including "Tariff and customs duties collected by the Bureau of Customs" |
| Kept some exclusions | Collections "accruing to special purpose funds and special allotments for the utilization and development of the national wealth" stay out of the base |
| Refused back payments | It dismissed the claim for arrears "on the ground that this decision shall have PROSPECTIVE APPLICATION" |
| Ordered automatic release | The shares are released "WITHOUT NEED OF FURTHER ACTION", quarterly, "but not beyond five (5) days from the end of each quarter" |
| Changed the name's meaning | Any mention of the "Internal Revenue Allotment" in the Code "shall be understood as pertaining to the allotment of the Local Government Units derived from the national taxes" |

Justice Lucas Bersamin wrote the decision. Three justices dissented.

The decision also describes the Local School Board. It classes the board under administrative decentralization: the Code "has created the Local School Boards" and "has transferred some of the authority from the agencies of the National Government, like the Department of Education and the Department of Health, to such bodies to better cope up with the needs of particular localities". That is the Court's description of the existing law. The ruling itself changed the money, not the functions.

## How the LGU share is computed and divided

The rules are in the Local Government Code, as the Court modified it.

| Rule | Provision |
|---|---|
| LGUs receive 40% of national taxes, "based on the collection of the third fiscal year preceding the current fiscal year" | RA 7160, Sec. 284 |
| The share is divided 23% to provinces, 23% to cities, 34% to municipalities and 20% to barangays | Sec. 285 |
| Among provinces, cities and municipalities, each one's share follows population (50%), land area (25%) and equal sharing (25%) | Sec. 285 |
| Each LGU must appropriate "no less than twenty percent (20%) of its annual allotment for development projects" | Sec. 287 |

The Department of Budget and Management (DBM) has called the share the National Tax Allotment (NTA) since FY 2022 (Local Budget Memorandum No. 82, June 14, 2021). It is the same allotment the Code called the IRA, on a wider base.

The NTA is separate from the Special Education Fund (SEF), which comes from an additional 1% tax on real property and is budgeted by the Local School Board. [Local School Boards and the Special Education Fund](https://nash.com.ph/blog/local-school-board-special-education-fund) covers that fund.

## Why the larger share started in 2022 and fell in 2023

The decision came out in July 2018. The larger share arrived three and a half years later, for two reasons that the Court and the Code supply.

**The ruling is prospective, and it became final in 2019.** The government asked the Court to reconsider and, failing that, to say that LGUs "WILL BEGIN RECEIVING THE ADJUSTED IRA IN 2022". On April 10, 2019 the Court denied reconsideration and accepted the date. It noted that "The OSG suggests that the adjusted amounts be given to the LGUs starting with the 2022 budget cycle", and ruled: "The suggestion of the OSG is well taken." OSG is the Office of the Solicitor General, the government's counsel.

**Each year's share follows collections three years back.** The FY 2022 share was based on the national taxes collected in FY 2019. EO 138's preamble states the result: "the adjusted national tax allocations of LGUs shall only start in Fiscal Year (FY) 2022".

The same three-year rule explains what happened next. The FY 2023 share was based on 2020, the first year of the pandemic.

| Fiscal year | Share of LGUs | Change from the year before | Based on the collections of |
|---|---:|---:|---:|
| FY 2018 | PHP 522.75 billion | | 2015 |
| FY 2019 | PHP 575.52 billion | +10.10% | 2016 |
| FY 2020 | PHP 648.92 billion | +12.75% | 2017 |
| FY 2021 | PHP 695.49 billion | +7.18% | 2018 |
| FY 2022 | PHP 959.04 billion | +37.89% | 2019 |
| FY 2023 | PHP 820.27 billion | -14.47% | 2020 |
| FY 2024 | PHP 871.38 billion | +6.23% | 2021 |
| FY 2025 | PHP 1,034.60 billion | +18.73% | 2022 |
| FY 2026 | PHP 1,190.51 billion | +15.07% | 2023 |
| FY 2027 (indicative) | PHP 1,319.83 billion | +10.86% | 2024 |

![Bar chart of the share of local governments in national taxes by fiscal year, in billions of pesos: 522.7 in FY 2018, 575.5 in FY 2019, 648.9 in FY 2020 and 695.5 in FY 2021 as the Internal Revenue Allotment; then, as the National Tax Allotment on all national taxes, 959.0 in FY 2022, 820.3 in FY 2023, 871.4 in FY 2024, 1,034.6 in FY 2025, 1,190.5 in FY 2026 and an indicative 1,319.8 in FY 2027.](https://nash.com.ph/blog/_astro/mandanas-lgu-share-fy2018-fy2027.Cz-yjskS_2qrny.webp)

*Figure 1. The share of local governments in national taxes, FY 2018 to FY 2027. Data: DBM Local Budget Memoranda Nos. 75-A, 77-B, 78-A, 80-A, 82-A, 85-B, 87-A, 90-A, 92-B and 94. Chart: © 2026 Mark Anthony Llego, NASH Reviewer. [Download the full-resolution chart (PNG)](https://nash.com.ph/blog/charts/school-leadership/mandanas-lgu-share-fy2018-fy2027.png) or [its data (CSV)](https://nash.com.ph/blog/charts/school-leadership/mandanas-lgu-share-fy2018-fy2027.csv).*

For FY 2022, DBM counted PHP 765.2 billion from the Bureau of Internal Revenue and PHP 193.7 billion from the Bureau of Customs (Local Budget Memorandum No. 82). The Development Budget Coordination Committee put the effect of the ruling at PHP 185.17 billion: the FY 2022 share was that much "higher than the ₱773.87 billion NTA for FY 2022 without the Mandanas Ruling" (*Fiscal Risks Statement 2023*, Box 2).

The same statement warned that the increase "may be short-lived", because "The FY 2023 NTA will be based on the FY 2020 actual collections which are lower relative to the FY 2019 collections due to limited economic activity brought about by the global health crisis." The share recovered slowly. FY 2024 was still below FY 2022, and FY 2025 was the first year above it.

The FY 2027 figure is DBM's indicative amount of June 10, 2026. The final shares follow in a later memorandum "to be issued in December 2026" (Local Budget Memorandum No. 94).

## What Executive Order No. 138 ordered in 2021

A larger share for LGUs leaves less for national agencies. EO 138, signed on June 1, 2021, answered with devolution: functions the Code had assigned to LGUs in 1991 would be fully handed over, and national agencies would stop funding them.

| Provision | What EO 138 says |
|---|---|
| What is devolved (Sec. 4) | The functions "indicated under Section 17 of RA No. 7160 and other existing laws" are to be "fully devolved from the NG to the LGUs no later than the end of FY 2024" |
| Who pays (Sec. 4) | Devolved services "shall be funded from the share of the LGUs in the proceeds of national taxes and other local revenues" |
| Transition plans (Sec. 5) | Each department and every LGU prepares a Devolution Transition Plan (DTP); departments submit theirs to DBM for approval |
| Oversight (Sec. 6) | A Committee on Devolution, chaired by the DBM Secretary and co-chaired by the Interior and Local Government Secretary |
| Poorer LGUs (Sec. 8) | A Growth Equity Fund for "poor, disadvantaged and lagging LGUs" |

The committee signed the order's implementing rules on July 2, 2021. Their Annex A lists three entries under DepEd, all as local infrastructure services: for municipalities, "School buildings and other facilities for public elementary and secondary schools" and information services that include a public library; for barangays, an information and reading center.

DBM had drawn the line by income class even before the order. Its budget call for FY 2022 told agencies to "refrain from including in their proposals, funding for devolved local projects for LGUs belonging to the 1st to 4th income classifications" and to "limit subsidies for local projects of LGUs to LGUs belonging to the 5th and 6th income classes", to geographically isolated areas and to those with the highest poverty incidence (National Budget Memorandum No. 138, January 6, 2021, par. 2.7). DBM's own list of programs for discontinuance named DepEd's "Basic Education Facilities" (DBM, *Frequently Asked Questions: Mandanas-Garcia SC Ruling*, as of November 9, 2021, Annex A).

For the Growth Equity Fund, Congress appropriated PHP 1.25 billion in FY 2022, PHP 1.0 billion in FY 2023, PHP 700 million in FY 2025 and PHP 11.3 billion in FY 2026 (DBM Local Budget Circulars Nos. 146, 159, 167 and 166, which cover those four years).

## What devolution covers in basic education, and what it does not

Section 17 of the Local Government Code lists the basic services and facilities of each level of LGU. Two entries concern schools.

- **Municipalities:** "Infrastructure facilities intended primarily to service the needs of the residents of the municipality and which are funded out of municipal funds including, but not limited to, municipal roads and bridges; school buildings and other facilities for public elementary and secondary schools" (Sec. 17(b)(2)(viii)).
- **Cities:** all the services of a municipality and a province, and in addition "Support for education, police and fire services and facilities" (Sec. 17(b)(4)(ii)).

Three more paragraphs of the same section limit how far that goes.

| Paragraph | What it says | Why it matters for schools |
|---|---|---|
| Sec. 17(c) | Projects "funded by the National Government under the annual General Appropriations Act" are "not covered under this section", except where the LGU "is duly designated as the implementing agency" | DepEd may keep building classrooms whenever Congress funds them, and may name an LGU to build them |
| Sec. 17(f) | The national government "may provide or augment the basic services and facilities assigned to a lower level of local government unit" when these are not available or are inadequate | National help for LGUs that cannot build is lawful |
| Sec. 17(g) | Devolved services are funded from the LGU's share in national taxes, other local revenues and national support, and any fund available to an LGU "shall be first allocated for the provision of basic services or facilities" | An LGU's funds go first to these basic services |

Nothing in Section 17 assigns teaching, the curriculum, the hiring and pay of teachers, or school MOOE to LGUs. DepEd's plan of 2022 records how narrow the change was: in the budget call for FY 2022, "only local infrastructure services", which include "school buildings and other facilities for public elementary and secondary schools", were devolved from DepEd to the LGUs ([DepEd Order No. 024, s. 2022](https://www.deped.gov.ph/2022/05/30/may-30-2022-do-024-s-2022-adoption-of-the-basic-education-development-plan-2030/), Basic Education Development Plan 2030, "Trends in Education Spending in the Philippines"). The same plan observes that "The ruling transfers the locus of spending yet is silent on the amount of spending."

A study for the Second Congressional Commission on Education (EDCOM II) reads the Code the same way: "the only function specifically devolved to LGUs is the maintenance of school buildings and other facilities for public elementary and secondary schools" (Laguda et al., 2025, p. 14).

## A 2021 position paper from DepEd's Administration strand: "Education is not devolved"

DepEd's Office of the Undersecretary for Administration set out its position in an aide memoire dated August 14, 2021, submitted for the Secretary's approval. It is a position paper, not a rule, and it shows what devolution of the School Building Program would have meant.

The paper reports DBM's proposal: "The DBM has proposed that DepEd will address the school building needs of the 5th and 6th class municipalities." The rest would pay their own way: "The 1st to 4th class LGUs will fund the school building requirements in their area".

Its tables show where that line fell.

| DepEd's count in August 2021 | In 1st to 4th class LGUs | In 5th and 6th class LGUs |
|---|---:|---:|
| Public elementary and secondary schools | 43,055 (91%) | 4,344 (9%) |
| Classroom shortage | 120,320 (95%) | 5,885 (5%) |
| Last Mile Schools needing intervention | 7,927 (88%) | 1,128 (12%) |

![Three panels of horizontal bars by income class of the LGU, from the aide memoire of DepEd's Office of the Undersecretary for Administration, August 14, 2021. Public schools: 21,612 in 1st class, 5,766 in 2nd, 7,207 in 3rd, 8,470 in 4th, 4,010 in 5th and 334 in 6th class LGUs. Classroom shortage: 81,059, 12,594, 12,800, 13,867, 5,278 and 607. Last Mile Schools: 3,343, 1,074, 1,577, 1,933, 1,087 and 41. The 1st to 4th classes hold 91 percent of schools, 95 percent of the classroom shortage and 88 percent of Last Mile Schools.](https://nash.com.ph/blog/_astro/mandanas-school-building-needs-by-lgu-class-2021.Bt3VT0WV_Z1bN316.webp)

*Figure 2. Public schools, classroom shortage and Last Mile Schools by income class of the LGU, as DepEd counted them in August 2021. Data: DepEd Office of the Undersecretary for Administration, Aide Memoire on the Proposed Devolution of the School Building Program, August 14, 2021, Tables 1 to 3. Chart: © 2026 Mark Anthony Llego, NASH Reviewer. [Download the full-resolution chart (PNG)](https://nash.com.ph/blog/charts/school-leadership/mandanas-school-building-needs-by-lgu-class-2021.png) or [its data (CSV)](https://nash.com.ph/blog/charts/school-leadership/mandanas-school-building-needs-by-lgu-class-2021.csv).*

Under the proposal, LGUs would have taken over 95% of the classroom shortage as DepEd then computed it. The paper raised these points in reply.

- **Scope.** "Education is not devolved." The provision of basic education "is not, under the law, a function devolved to the LGUs under the Local Government Code of 1991".
- **No exclusive duty.** "there is nothing in the LGC that states that the DepEd is excluded in the construction of school buildings", and Section 17(c) lets DepEd build what the budget funds.
- **The list.** "The list of projects and schools must emanate from the DepEd, through its comprehensive educational facilities plan, regardless of fund source." The stated reason is that "the construction of school buildings must be insulated from partisan political activities or interests".
- **School sites.** "It should be made clear that the devolution does not mean transfer of ownership of the school site to the LGU."
- **A law.** "The devolution of the construction of school buildings must and shall be defined by the General Appropriations Act and/or a special devolution law on the matter."

The paper also noted that DepEd "is not a member of the Committee on Devolution".

## What happened to the school building budget

The first budget under the ruling cut DepEd's Basic Education Facilities appropriation almost in half. Later budgets raised it far above the old level.

| Fiscal year | Basic Education Facilities in DepEd's budget |
|---|---:|
| FY 2021 | PHP 11.15 billion |
| FY 2022 | PHP 5.95 billion |
| FY 2023 | PHP 23.42 billion |
| FY 2024 | PHP 33.86 billion |
| FY 2025 | PHP 28.06 billion |
| FY 2026 | PHP 85.40 billion |

A study by the Philippine Institute for Development Studies (PIDS) ties the FY 2022 cut to the ruling, which "reduced the national government's budget envelope for some programs, including school infrastructure" (Navarro, 2022, p. 40). The proposed budget for that year asked for PHP 5.44 billion.

Most of the drop was in repairs, from PHP 4.71 billion to PHP 1.03 billion. School furniture fell from PHP 1.83 billion to PHP 1.12 billion, and the FY 2021 item of PHP 1.63 billion for amortization or lease payments on public-private partnership school buildings has no counterpart in the FY 2022 Act. The amount for new construction rose, from PHP 2.92 billion to PHP 3.18 billion.

The income-class line did not become the rule in the budget law. Since FY 2023 the appropriation for new school buildings has covered municipalities and cities of every income class: "in all income municipalities and cities" in FY 2023 (General Appropriations Act, FY 2023, DepEd Special Provision No. 6) and "in all income class municipalities and cities" from FY 2024 (FY 2024 and FY 2025, Special Provision No. 5; FY 2026, Special Provision No. 6).

After the Committee on Devolution met on October 3, 2022, DBM reported that of 18 plans submitted by national agencies, two had been approved, those of the Department of Health and the Commission on Population and Development. [DepEd Order No. 018, s. 2023](https://www.deped.gov.ph/2023/07/21/july-20-2023-do-018-s-2023-revised-multi-year-guidelines-on-the-allocation-receipt-utilization-monitoring-and-reporting-of-the-basic-education-facilities-funds-beff/), the current guidelines on the Basic Education Facilities Fund, defines the plan as "the strategy of the department for the eventual turnover or full devolution of the School Building Program to the Local Government Units", and tells Schools Division Offices to prioritize schools "in accordance with the approved Devolution Transition Plan (DTP) of the department" (Sec. V.12). In July 2025 DepEd wrote that EO 138 "is currently being studied for its full implementation" (Quality Basic Education Development Plan 2025-2035, p. 33).

## EO 103 in 2025: the deadline moved to FY 2028

The review began early in the next administration. In August 2022 President Ferdinand Marcos Jr. said it was still unclear who would do, and who would pay for, the repair of school buildings (PTV News, August 3, 2022). On March 21, 2023 DBM announced that the Committee on Devolution would "conduct further study on the full devolution of functions and services to Local Government Units (LGUs) based on their respective absorptive capacities, including possible amendments to Executive Order No. 138".

The amendment came as Executive Order No. 103, signed on November 6, 2025.

| Subject | What EO 103 provides |
|---|---|
| New deadline | "The transition period for the full implementation of the devolution pursuant to this Order shall be extended until FY 2028." |
| By level of LGU | "Provinces and municipalities shall gradually shift to full devolution by no later than FY 2028, while cities shall fully implement the devolved functions and services by no later than FY 2027." |
| Priority | Assistance goes first to "4th and 5th income classes and other poor, lagging, and disadvantaged LGUs" |
| Coverage | All LGUs "except those belonging to the Bangsamoro Autonomous Region in Muslim Mindanao" |
| New plans | Agencies submit Devolution Transition Plans to DBM "within 90 days from the effectivity of the IRR or any supplemental guidelines of this Order" |
| Review | The Committee on Devolution reviews the order "During the last year of the transition period, or as the need arises" |

The reason is stated in the order: devolved functions "may not be fully absorbed or implemented uniformly across all LGUs within the transition period mandated under EO No. 138".

The order speaks of 4th and 5th income classes where the documents of 2021 speak of 5th and 6th. [Republic Act No. 11964](https://lawphil.net/statutes/repacts/ra2023/ra_11964_2023.html) set five income classes for LGUs in place of six, in force since January 1, 2025, so the 6th class of the 2021 documents belongs to the earlier scheme.

DBM's Budget Priorities Framework for the FY 2027 budget repeats the instruction: national agencies "shall establish Devolution Transition Committees (DTCs) and submit updated DTPs to the Department of Budget and Management" (National Budget Memorandum No. 157, March 16, 2026).

## Who builds classrooms in 2026

The FY 2026 budget keeps the money with DepEd and widens who may build. In implementing its school building projects, "the DepEd may enter into a MOA with other government agencies, such as the Department of Public Works and Highways, qualified local government units, and the AFP Corps of Engineers: *Provided,* That the implementation by the LGUs shall be subject to Section 103 of the General Provisions of this Act" (General Appropriations Act, FY 2026, DepEd Special Provision No. 6). Section 103 rests on the exception in the Code: "pursuant to Section 17(c) of R.A. No. 7160", national agencies "may designate LGUs as implementing agencies".

This is not the devolution EO 138 describes. The money is national, DepEd chooses the schools, and the LGU builds. The President described the split on February 11, 2026: "the DepEd will set technical standards, provide designs, and supply the funding for these classrooms. On the other hand, the LGUs will take the lead in their procurement and actual construction."

[DepEd Memorandum No. 038, s. 2026](https://www.deped.gov.ph/2026/06/09/june-9-2026-dm-038-s-2026-guidelines-on-the-implementation-of-classroom-and-school-building-construction-projects-by-partner-local-government-units-of-the-department-of-education/) (June 9, 2026) sets the rules for these projects.

| Subject | Rule in DM 038, s. 2026 |
|---|---|
| Two modes | "Construction by Contract", where the LGU procures a contractor, and "Construction by Administration", where it builds with its own personnel (Sec. IV.A.1) |
| Who may join | The LGU "must have no adverse or serious negative findings in its latest audit report issued by the Commission on Audit (COA)" and must have liquidated earlier funds from DepEd (Sec. IV.A.1.3) |
| Release of funds | In three tranches: 50%, 30% and the remaining balance (Sec. IV.B.7.2) |
| DepEd's authority | DepEd retains "its authority over technical standards, review and approval of plans and specifications, monitoring, validation, acceptance" (memorandum, par. 6) |
| Site | Where the LGU owns the school site, a Deed of Donation or a Usufruct Agreement in favor of DepEd (Secs. IV.A.3.2 and IV.A.3.3); the steps are under "What this means for school heads" |
| After completion | The LGU must "Formally turn over completed facilities to DepEd upon completion" (Sec. IV.C.13.1) |

DepEd said in October 2026 that allocations under the LGU-led initiative cover "439 LGUs, 1,955 schools, and 8,777 classrooms nationwide" (GMA News, October 24, 2026). DepEd's 2026 masterlist, an earlier count, assigns 8,665 classrooms to provinces, cities and municipalities: 26.7% of the whole list, and 53.8% of the 16,114 classrooms funded under the FY 2026 budget, since the rest of the list is a public-private partnership still for bidding. [DepEd School Building Program 2026 in Numbers](https://nash.com.ph/blog/deped-school-building-program-2026) and [Classroom Allocation by LGU Income Class, 2026](https://nash.com.ph/blog/classroom-allocation-lgu-income-class) analyze that list.

## What EDCOM II and researchers found

**Responsibilities overlap.** EDCOM II's final report finds that the overlap between DepEd and LGUs after the ruling and EO 138 "has created confusion about funding responsibilities, project implementation, and maintenance obligations". DBM had identified Basic Education Facilities for phase-out to local funding, yet "the national government cannot directly impose on local governments which specific programs and services to fund". The result is "a potential gap where neither level of government takes full responsibility for ensuring adequate school infrastructure particularly in financially constrained localities" (Final Report, p. 391).

**Local officials doubted that the larger share is enough for poorer LGUs.** In EDCOM II's consultations, participants said of LGUs with limited funds, particularly smaller municipalities, that "Though the Mandanas ruling has increased the available funds to LGUs, the additional funds would still be insufficient since many health governance functions have also been devolved" (Year One Report, p. 313).

**No one can yet tell what LGUs will do.** The PIDS study concluded in 2022 that "there is no easy way of knowing if the LGUs' increased share in national taxes will be enough for the devolved services or if indeed the LGUs will prioritize school infrastructure in their spending" (Navarro, 2022, p. 41).

**LGUs said they were not ready.** The World Bank cited a study in which "LGUs still deem themselves unprepared for a full devolution by 2024" (World Bank, 2024, p. 73).

**Fewer of the poorest municipalities are allocated classrooms.** EDCOM II reported in October 2026 that 55% of fifth-class municipalities were allocated classrooms under the 2026 program, against 91% of first-class ones. The [income-class analysis](https://nash.com.ph/blog/classroom-allocation-lgu-income-class) tests that gap against the list.

## What this means for school heads

- **Plan the school's operating budget as before.** The ruling changes the LGU's income, not the school's MOOE, which comes from DepEd's budget under [DepEd Order No. 008, s. 2019](https://www.deped.gov.ph/2019/05/02/may-2-2019-do-008-s-2019-revised-implementing-guidelines-on-the-direct-release-use-monitoring-and-reporting-of-maintenance-and-other-operating-expenses-allocation-of-schools-including-other-fu/). [DepEd School MOOE](https://nash.com.ph/blog/deped-school-mooe) covers what it may buy.
- **Keep the school's classroom need in DepEd's records.** Projects start from DepEd's list whichever agency builds: LGU projects are "subject to the original project timelines and DepEd's classroom needs assessment" (General Appropriations Act, FY 2026, DepEd Special Provision No. 6). DepEd identifies and prioritizes sites "based on the updated Instructional Room Analysis of the Basic Education Information System (BEIS)" (DM 038, s. 2026, Sec. IV.C.10.1), so keep the school's room and enrollment data in the BEIS current.
- **Know your role when the LGU builds at your school.** Under DM 038, s. 2026 (Sec. IV.D.17.1), the school head:
  1. "provides unhindered site access to the LGU Engineering team, contracted workers, and DepEd Division Engineers";
  2. "monitors ongoing on-site activities to ensure that construction works minimize learning disruptions and enforce student safety", and reports severe delays or safety hazards to the District Office;
  3. "may confirm if construction activities are actually ongoing on site and may report visible delays, disruptions, or inconsistencies in submitted project updates or photographs"; and
  4. receives copies of site inspections and tracking sheets, but "holds no data-gathering, data-entry, or data-reporting responsibilities" in DepEd's monitoring system.
- **Your confirmation is not an engineering validation.** The memorandum limits the school head to "operational observations only". Acceptance runs through the higher offices: the Certificate of Final Acceptance is signed by the LGU Engineer and concurred in by the Schools Division Superintendent, and the Certificate of Completion is signed by the Assistant Regional Director (Sec. IV.C.13.2).
- **Bring the school's needs to the Local School Board through its DepEd co-chair.** That is the district supervisor for a municipal board, and the division or city superintendent for a provincial or city board (RA 7160, Sec. 98). The LGU may build or repair school buildings with its own funds (RA 7160, Sec. 17(b)(2)(viii)), among them the SEF. The [guide to the Local School Board and the SEF](https://nash.com.ph/blog/local-school-board-special-education-fund) covers how the board budgets.
- **Know the status of the school site.** Where the LGU owns the site, the LGU and not the school handles the transfer. Within 60 days of signing the agreement it chooses between a deed of donation and a usufruct of at least 25 years in favor of DepEd, and writes to the Schools Division Superintendent with certified copies of the ownership documents. It executes the deed or usufruct within 90 days of that choice, and DepEd releases the third tranche only after it (DM 038, s. 2026, Secs. IV.A.3.2 and IV.A.3.3).

Managing school facilities belongs to Domain 2 of the Philippine Professional Standards for School Heads, and working with the local government to Domain 5; see [PPSSH Domain 2: Managing School Operations](https://nash.com.ph/blog/ppssh-domain-2-managing-school-operations) and [PPSSH Domain 5: Building Connections](https://nash.com.ph/blog/ppssh-domain-5-building-connections). [RA 9155 at 25](https://nash.com.ph/blog/ra-9155-shared-governance-decentralization) explains the other kind of decentralization, from DepEd's Central Office to its own field offices and schools.

## Frequently asked questions

### What is the Mandanas ruling in simple terms?

It is a 2018 Supreme Court decision that enlarged the money local governments receive from the national government. LGUs get 40% of national taxes; the Court ruled that "national taxes" includes customs duties and other national taxes, not only national internal revenue taxes (*Mandanas v. Ochoa*, G.R. Nos. 199802 and 208488, July 3, 2018). The larger share began in FY 2022.

### Did the Mandanas ruling devolve public schools to local governments?

No. The ruling is about how the LGU share is computed. The Local Government Code assigns to LGUs "school buildings and other facilities for public elementary and secondary schools" (RA 7160, Sec. 17(b)(2)(viii)) and, for cities, "Support for education, police and fire services and facilities" (Sec. 17(b)(4)(ii)). Nothing in Section 17 assigns teaching, the curriculum, teachers' pay or school MOOE to LGUs.

### Is the LGU now responsible for building classrooms?

Partly. The Code has listed school buildings among municipal facilities since 1991, and EO 138 as amended by EO 103 sets FY 2028 for full devolution (FY 2027 for cities). The Code also exempts projects funded by the national budget (Sec. 17(c)), and the FY 2026 budget funds PHP 85.4 billion of school facilities through DepEd, which may ask qualified LGUs to build them.

### Is Executive Order No. 138 still in effect?

Yes, as amended. Executive Order No. 103, s. 2025 extended the transition period to FY 2028 and added priority for 4th and 5th income class and other disadvantaged LGUs. It excludes LGUs in the Bangsamoro Autonomous Region in Muslim Mindanao.

### What is the National Tax Allotment, and how much is it in 2026?

It is the share of provinces, cities, municipalities and barangays in national taxes, called the Internal Revenue Allotment before FY 2022. For FY 2026 it is PHP 1,190,509,672,000 (DBM, Local Budget Memorandum No. 92-B).

## Download the data

- [The share of LGUs in national taxes, FY 2018 to FY 2027 (CSV)](https://nash.com.ph/blog/charts/school-leadership/mandanas-lgu-share-fy2018-fy2027.csv): the total for each fiscal year in pesos, its change from the year before, the year of collections it is based on, and the DBM Local Budget Memorandum that states it.
- [Schools, classroom shortage and Last Mile Schools by LGU income class, 2021 (CSV)](https://nash.com.ph/blog/charts/school-leadership/mandanas-school-building-needs-by-lgu-class-2021.csv): the totals of Tables 1 to 3 of the aide memoire of DepEd's Office of the Undersecretary for Administration, August 14, 2021.

The CSVs and charts may be reused only with written permission: email [support@nash.com.ph](mailto:support@nash.com.ph). The rules themselves come from the Supreme Court, the executive orders and DepEd's issuances, which you can cite directly.

## Sources

**Court decisions**

- [*Mandanas v. Ochoa*](https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64325), G.R. No. 199802, and *Garcia v. Ochoa*, G.R. No. 208488, July 3, 2018 (En Banc, Bersamin, J.).
- [*Mandanas v. Ochoa*](https://lawphil.net/judjuris/juri2019/apr2019/gr_199802_2019.html), G.R. Nos. 199802 and 208488, Resolution, April 10, 2019 (En Banc, Bersamin, C.J.).

**Constitution, laws and executive orders**

- 1987 Constitution, Article X, Section 6.
- [Republic Act No. 7160](https://www.officialgazette.gov.ph/1991/10/10/republic-act-no-7160/), Local Government Code of 1991, Secs. 17, 98, 284, 285 and 287.
- [Executive Order No. 138, s. 2021](https://www.officialgazette.gov.ph/2021/06/01/executive-order-no-138-s-2021/), *Full Devolution of Certain Functions of the Executive Branch to Local Governments, Creation of a Committee on Devolution, and for Other Purposes* (June 1, 2021), and its Implementing Rules and Regulations (July 2, 2021), Annex A.
- [Executive Order No. 103, s. 2025](https://www.officialgazette.gov.ph/2025/11/06/executive-order-no-103-s-2025/), *Amending Executive Order No. 138 (s. 2021) to Extend the Transition Period for the Full Implementation of Devolution of Certain Functions of the Executive Branch to Local Governments, to Provide Additional Policies Therefor, and for Other Purposes* (November 6, 2025).
- Republic Act No. 12314, General Appropriations Act, FY 2026: [DepEd Special Provision No. 6](https://www.dbm.gov.ph/wp-content/uploads/GAA/GAA2026/VolumeIA/DEPED/A.pdf) and [General Provisions, Sec. 103](https://www.dbm.gov.ph/wp-content/uploads/GAA/GAA2026/VolumeIB/GENPRO.pdf). The General Appropriations Acts of FY 2021 to FY 2025, DepEd special provisions on Basic Education Facilities (No. 5, and No. 6 in FY 2023).
- [Republic Act No. 11964](https://lawphil.net/statutes/repacts/ra2023/ra_11964_2023.html), Automatic Income Classification of Local Government Units Act (October 26, 2023), and Department of Finance Department Order No. 074-2024 (November 5, 2024), the income reclassification in force since January 1, 2025.

**DepEd issuances and documents**

- [DepEd Memorandum No. 038, s. 2026](https://www.deped.gov.ph/2026/06/09/june-9-2026-dm-038-s-2026-guidelines-on-the-implementation-of-classroom-and-school-building-construction-projects-by-partner-local-government-units-of-the-department-of-education/), *Guidelines on the Implementation of Classroom and School Building Construction Projects by Partner Local Government Units of the Department of Education* (June 9, 2026).
- [DepEd Order No. 018, s. 2023](https://www.deped.gov.ph/2023/07/21/july-20-2023-do-018-s-2023-revised-multi-year-guidelines-on-the-allocation-receipt-utilization-monitoring-and-reporting-of-the-basic-education-facilities-funds-beff/), *Revised Multi-Year Guidelines on the Allocation, Receipt, Utilization, Monitoring, and Reporting of the Basic Education Facilities Funds (BEFF)* (July 20, 2023), Secs. III and V.12.
- [DepEd Order No. 024, s. 2022](https://www.deped.gov.ph/2022/05/30/may-30-2022-do-024-s-2022-adoption-of-the-basic-education-development-plan-2030/), *Adoption of the Basic Education Development Plan 2030* (May 30, 2022).
- [DepEd Order No. 008, s. 2019](https://www.deped.gov.ph/2019/05/02/may-2-2019-do-008-s-2019-revised-implementing-guidelines-on-the-direct-release-use-monitoring-and-reporting-of-maintenance-and-other-operating-expenses-allocation-of-schools-including-other-fu/), *Revised Implementing Guidelines on the Direct Release, Use, Monitoring and Reporting of Maintenance and Other Operating Expenses Allocation of Schools, Including Other Funds Managed by Schools* (May 2, 2019).
- DepEd, Office of the Undersecretary for Administration. *Aide Memoire on the Proposed Devolution of the School Building Program* (August 14, 2021), with Tables 1 to 3.
- DepEd. [*Quality Basic Education Development Plan 2025-2035*](https://www.deped.gov.ph/wp-content/uploads/Quality-Basic-Education-Development-Plan-QBEDP-2025-to-2035-29-July-2025.pdf) (July 29, 2025), p. 33.

**Department of Budget and Management**

- [Local Budget Memoranda](https://www.dbm.gov.ph/index.php/dbm-issuances/local-budget-memorandum) Nos. 75-A, 77-B, 78, 78-A, 80, 80-A, 82, 82-A, 85, 85-B, 87, 87-A, 90, 90-A, 92, 92-B and 94 (2017 to 2026).
- Development Budget Coordination Committee. [*Fiscal Risks Statement 2023*](https://www.dbm.gov.ph/wp-content/uploads/DBCC_MATTERS/FiscalRiskStatement/2023-Fiscal-RIsks-Statement-FINAL.pdf), Box 2 (pp. 25-26).
- [National Budget Memorandum No. 138](https://www.dbm.gov.ph/wp-content/uploads/Issuances/2021/National-Budget-Memorandum/NATIONAL-BUDGET-MEMORANDUM-NO-138.pdf) (January 6, 2021), par. 2.7, and [National Budget Memorandum No. 157](https://www.dbm.gov.ph/wp-content/uploads/Issuances/2026/National-Budget-Memorandum/NATIONAL-BUDGET-MEMORANDUM-NO-157-dated-March-16-2026.pdf) (March 16, 2026).
- [*Frequently Asked Questions: Mandanas-Garcia SC Ruling*](https://www.dbm.gov.ph/wp-content/uploads/Mandanas-Garcia-Case/IEC-Materials/FAQs-Mandanas-Garcia-Ruling.pdf) (as of November 9, 2021), Annex A.
- Local Budget Circulars Nos. 146 (July 7, 2022), 159 (July 16, 2024), 166 and 167 (both February 6, 2026), on the Growth Equity Fund.
- ["PBBM Directs further study on full devolution"](https://www.dbm.gov.ph/index.php/management-2/319-pbbm-directs-further-study-on-full-devolution), press release, March 21, 2023, and ["ComDev convenes to discuss latest implementation strategies for full devolution"](https://www.dbm.gov.ph/index.php/management-2/408-comdev-convenes-to-discuss-latest-implementation-strategies-for-full-devolution), on the committee's meeting of October 3, 2022.

**Reports and studies**

- Laguda, R., Aquino, G., Cangayao, L., and Tagle, R. (2025). [*Realizing Shared Governance: Decentralization of Philippine Basic Education*](https://asiafoundation.org/wp-content/uploads/2025/11/27_LAGUDA-et-al-Realizing-Shared-Governance-Decentralization.pdf). The Asia Foundation and EDCOM II. Pp. 13-14 and Annex A (p. 48).
- Second Congressional Commission on Education (2026). [*Final Report*](https://edcom2.gov.ph/media/2026/01/EDCOM-II-Y03-for-web-012626_final.pdf), p. 391 and Table 7; (2024). [*Miseducation: The Failed System of Philippine Education*](https://edcom2.gov.ph/media/2024/02/EDCOM-II-Year-One-Report-PDF-022924.pdf) (Year One Report), p. 313.
- Second Congressional Commission on Education (October 20, 2026). ["Put classrooms where they're needed most, EDCOM 2 tells DepEd"](https://edcom2.gov.ph/put-classrooms-where-theyre-needed-most-edcom-2-tells-deped/), news release.
- Navarro, A. M. (2022). [*School Infrastructure in the Philippines: Where Are We Now and Where Should We Be Heading?*](https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidsdps2210.pdf) PIDS Discussion Paper Series No. 2022-10, pp. 40-41.
- World Bank (2024). [*Philippines Human Capital Review*](https://documents1.worldbank.org/curated/en/099062024032533487/pdf/P18060313496220b71b50416ae4e2822cf2.pdf), p. 73.

**Statements and news reports**

- Office of the President. [Speech of President Ferdinand R. Marcos Jr. at the memorandum of agreement signing of DepEd and the provinces for classroom building](https://pbbm.com.ph/speeches/speech-by-president-ferdinand-r-marcos-jr-during-the-constructing-our-future-memorandum-of-agreement-moa-signing-of-the-deped-and-provinces-for-a-nationwide-classroom-building/), February 11, 2026.
- PTV News (August 3, 2022). ["Marcos Jr. forms team to look into devolution, LGUs prudent use of enhanced IRA from Mandanas ruling"](https://ptvnews.ph/marcos-jr-forms-team-to-look-into-devolution-lgus-prudent-use-of-enhanced-ira-from-mandanas-ruling/).
- GMA News (October 24, 2026). ["DepEd using data-driven criteria in determining classroom allocation — Angara"](https://www.gmanetwork.com/news/topstories/nation/1006993/deped-using-data-driven-criteria-in-determining-classroom-allocation-angara/story/).

*This guide explains a Supreme Court decision, executive orders and DepEd rules for study and professional awareness. It is not legal advice; for a specific case, consult a lawyer or your Schools Division Office's legal unit.*

*Written by Mark Anthony Llego for NASH Reviewer. Sources: Mandanas v. Ochoa (G.R. Nos. 199802 and 208488) and its 2019 resolution; Republic Act No. 7160; Executive Orders No. 138, s. 2021 and No. 103, s. 2025; the General Appropriations Acts of FY 2021 to FY 2026; DBM Local Budget Memoranda; DepEd Memorandum No. 038, s. 2026 and DepEd Orders No. 018, s. 2023 and No. 024, s. 2022; the aide memoire of DepEd's Office of the Undersecretary for Administration (August 14, 2021); EDCOM II's reports. Charts may be reused only with written permission from support@nash.com.ph.*

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© 2026 Mark Anthony Llego, NASH Reviewer. All rights reserved. You may quote up to 100 words from this article with the author's name, its title and a link. In research, cite it as: Llego, M. A. (2026, November 12). *The Mandanas Ruling and Public Schools: What Changed*. NASH Reviewer. https://nash.com.ph/blog/mandanas-ruling-public-schools. Any other reuse of the article, its charts or its data needs written permission: email support@nash.com.ph. Terms of Service: https://nash.com.ph/terms#website-content-and-data