Mandanas-Garcia Ruling and Opportunities for Electric Coops and Renewable Energy Adoption
July 27, 2022

Jay A. Carizo

The Mandanas-Garcia Ruling, a consolidation of case numbers G.R. No. 199802 and G.R. No. 208488 filed in the Philippine Supreme Court, increases the income base for the computation of the national tax allocation (NTA) between the national and local governments. With the increased income base, along with a favorable increase in tax collections, local governments units (LGUs) received an additional 37.89% tax allocation in 2022.

The increased resources at the disposal of the LGUs mean greater power and autonomy to invest on their priority programs, projects, and activities (PPAs). Increased resources also mean greater opportunities for improving service delivery as provided in Section 17, “Basic Services and Facilities”, of the Local Government Code. But what does the Mandanas-Garcia Ruling mean for electric cooperatives or electric power distribution utilities? How about in the advocacy for the adoption of renewable energy by the LGUs and communities?


There are 152 electric distribution utilities (DUs) in the Philippines. Six of these are owned by LGUs, 10 are electric cooperatives registered with the Cooperative Development Authority (CDA), 21 are privately-operated, and the rest are with the National Electrification Administration (NEA). Together, however, these DUs can only energize 94.5% of the country primarily because some communities are geographically isolated with the number of prospective consumers not enough to cover the investments for electric power transmission. A number of these DUs are also categorized as Red or those that are “not performing at par to the operational parameters” according to the NEA. This means poor service to the consumers which, at the same time, are also the constituencies of the LGUs.  

With poor DU performance and around 5.5% to be energized, LGUs are looking for ways to maximize the available resources under the Mandanas-Garcia Ruling. The LGU of Irosin in Sorsogon, for instance, is looking at increasing its investments on renewable energy. Prior to the pandemic, the LGU conducted feasibility studies on the use of hydro-electric power to reach its remote barangays and is now taking stock on the use of solar power for its government offices. For Mayor Pidoy Cielo, renewable energy is a long-term investment that can reduce electric power costs and allocate the savings to other public goods and services for the people of Irosin.

Resource-constrained members of the Philippine Rural Electric Cooperatives Association (PHILRECA) are likewise wondering how they can partner with LGUs to improve electric distribution services. They fear that with the Mandanas-Garcia Ruling, the technical and financial assistance that they have been receiving from the NEA might be eventually reduced. In 2021, for example, NEA allocated around PhP 2.6 Billion in subsidies for sitio electrification as well as rehabilitation of electric power infrastructure in areas affected by calamities. If the LGUs will not provide at least financial assistance, electric power distribution services will further erode.

Under the Local Government Code, LGUs have the autonomy to prioritize projects. With the Mandanas-Garcia Ruling, LGUs now have a relatively freer hand and additional resources that can be invested in electric power-related ventures including renewable energy-utilization projects. LGUs may also develop local economic enterprises including ownership of distribution utilities, or enter into partnerships focused on energy development, generation, and distribution, among others.

But of course, LGUs have different sets of priorities and energization, particularly of rural communities, is just one of them. Unless LGU-operated, a distribution utility may even be the least of LGUs’ concerns. Exception is the Albay Electric Cooperative which recently became the priority of Albay Governor Noel Rosal because of the brownouts that have become the norm rather than the exception. Albay is the political and economic center of the Bicol Region and is also the source of two power plants that supply the Luzon Grid.

CDA- and NEA-registered and/or operated electric cooperatives, however, can still benefit from the Mandanas-Garcia Ruling by invoking Sections 16 and 17 of the Local Government Code, and by availing of the Code-mandated local special bodies and mechanisms. Using these venues, renewable energy advocates and non-LGU-owned DUs can participate in local planning and budgeting and influence the LGU to focus on energization and enhancing social service delivery. This can be done, of course, by first understanding the LGU’s priorities particularly the executive-legislative agenda and by gaining membership in the local development council and local special bodies.

Most LGUs also complain of the lack of data and information for their decision- and policymaking. By addressing this need and highlighting how local economic development will be achieved with an improved energy sector, LGUs will definitely open its doors in forging partnerships with renewable energy advocates and DUs. Mayor Cielo, for instance, already worked with groups that could assist in harnessing hydro and solar powers for his municipality while Governor Rosal had started conducting consultations with ALECO managers and consumers on how to address the problems of the electric cooperative.

Of course, the path to a productive cooperation is not always easy and depends on the local context particularly on the positioning of the stakeholders. This is also being complicated by the lack of clear guidance from the NEA and the Department of Energy as the latter still needs to release its devolution transition plan (DTP). This DTP could define which PPAs will be downloaded to the LGUs, and what can still be expected from the department or at least the NEA. Even then, the ECs and renewable energy advocates can rely on the opportunities available under the Local Government Code and the promise of additional resources under the Mandanas-Garcia Ruling.