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International Conference on Magsaysay Awardees:

Good Governance and Transformative Leadership in Asia, 31 May 2016

Governance Matters: Decentralization, Democratization for

Development, Mandaluyong City Philippines Experience

Hon. Benjamin C. Abalos Jr., Mayor, City Government of Mandaluyong, President of the

League of Cities of the Philippines and Union of Local Authorities of the Philippines .

Abstract

Historically, the Philippines has a centralized form of government under a democratic

system. Decentralization efforts were initiated during the Martial Law period in the

70s but these were focused on the administrative aspect of governance until the

passage of the Local Government Code in 1991. In the 25 years since the passage of

the local government code of 1991 (RA 7160), it can be argued that the local

government units have been able to adapt to their expanded devolve powers. There

are elected local chief executives who have exemplified excellence in the use of their

powers and become model leaders of the rest of the world.

Decentralization continuous to play an important role in governance, it also helps

address democracy giving the local government autonomy and building their

capability and capacity in generating local revenues and therefore contributes to

development.

Decentralization is important, as remarked by former Sen. Aquilino Q. Pimentel Jr. as

it brought the government closer to the people. With decentralized system, the local

government unit are empowered to modernized and develop their community. It

becomes really effective once accompanied by serious attempts to change the existing

structures of power, improved the opportunities for participation and engage the

disadvantage in the political process. Fundamentally, it is a process of making

governance at the local level more responsive to the needs of the large majority of the

population.

This paper will explore on the good practices of Mandaluyong City, a highly

urbanized city in the heart of Metro Manila that experiences the positive gains of

decentralization and democratization. It will look at the innovative programs and

projects intended to achieve development. The City took pride in the success of the

programs which prompted the Department of the Interior and Local Government

(DILG) to award Mandaluyong with the Seal of Good Local Governance in 2015

covering the areas of Good Financial Housekeeping; Social Protection; Disaster

Preparedness; Business - friendliness and Competitiveness; Environmental

Management; and Peace and Order. Another pride of Mandaluyong is when it

received the United Nations Award for Public Service for its innovative project for

children with special needs, aptly called Project TEACH (Therapy, Education and

Assimilation of Children with Handicap).

Keywords: Local Government Code/ Decentralization/ Democratization/ Development/ Devolution/ Philippines

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Introduction

For more than two decades, decentralization has been the dominant trend in

central-local relations in Asia. The starting point was the 1991 Local Government

Code in the Philippines that followed “people power” democratization. This

legislation introduced significant political decentralization into a country that had

undergone considerable centralization under the authoritarian regime. Functions were

transferred to provincial, city and municipal administrations. The Philippines

provided both a model and inspiration to other countries in Asia where centralization

had been the dominant themes across the continent.

Decentralization is defined by United Nations Development Program ( UNDP ) as

“ the restructuring or reorganization of authority so that there is a system of

co-responsibility between institutions of governance at the central, regional and local

levels according to the principle of subsidiarity, thus increasing the overall quality

and effectiveness of the system of governance, while increasing the authority and

capacities of sub-national at all levels”.

Decentralization and Democratization

Decentralization is a strategy used by the government towards democratizing the

political system and accelerating the attainment of sustainable development (Morda,

2006) for the reason that it will promote or allow fuller participation of the citizens in

government affairs and will give the local governments and communities a more

active role in the economic, social and political development (De Guzman, 1993).

Government further assures that through decentralization “development would be

more responsive to the needs of the people and would create opportunities in the

regions, promote employment and economic activities and economic activities and

strengthen people’s participation in the affairs of the government (Ibid.)..Different

forms of decentralization can be distinguished primarily in terms of the extent of

authority transferred and the amount of autonomy. Decentralization may take the form

of devolution and deconcentration.

Deconcentration involves the “redistribution of administrative responsibilities only

with the central government (Morada, 2006). It is not a transfer of power from the

central government but merely to “delegate such powers and responsibilities to the

hierarchical levels, primarily to facilitate the administration of national programs and

services, and this approach is otherwise referred to as administrative decentralization

(De Guzman, 1993). Administrative decentralization can take effect without the

necessity of legislation but with the issuance of an executive administrative order

although the local units now have responsibilities bestowed to them, they are still

supervised and controlled the central government, therefore, all transactions cannot be

done unless approved by the central government.

Devolution on the other hand, “seek to create or strengthen independent levels or units of

government through giving them certain functions or create units of government that are

outside its control” (De Guzman, 1993). It is also called as “political decentralization and

involves the transfer of power, responsibility and resources for the performance of certain

functions from the national to the local government” (Ibid.)

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Local Government Code

In 1991, a Local Government Code was enacted in the Philippines. It was by far the

most radical and far-reaching policy that addressed the decades-old problem of an

overcentralized politico-administrative system, where the most significant political

and administrative decisions were made in Manila. The promulgation of the Code was

in accordance to a provision in the 1987 Constitution that declares that “the state shall

ensure the autonomy of local governments.”

The enactment of the Code was welcomed by most sectors of society. It finally

transferred to the local government units the responsibility for the delivery of basic

services, including appropriate personnel, assets, equipment, programs and projects.

The following are the major features of the Code:

(a) It devolves to local governments units the responsibility for the delivery of

various aspects of basic services that earlier were the responsibility of the

national government. These basic services include the following: health; social

services; environment; telecommunications services and housing projects.

(b) The Code also provides the legal and institutional infrastructure for expanded

participation of civil society in local governance. More specifically, it allocates to

non-governmental organizations (NGO) and people’s organizations (POs) specific

seats in local special bodies. These special bodies include the local development

council, the local health board, and the local school board. Because of their ability

to organize and mobilize the people, one door-wide open for NGO and PO

participation in governance are in the areas of promoting local accountability and

answerability, specifically through the recall and people’s initiative provisions.

(c) The Code increases the financial resources available to local government units by

broadening their taxing powers; providing them with a specific share from the

national wealth exploited in their area (e.g. Mining, fishery and forestry charges)

and increasing their share from the national taxes, internal revenue allotment (IRA)

from previously low at 11% to as much as 40%. The Code also increases the elbow

room of local governments to generate revenues from local fees and charges.

(d) Finally, the Code lays the foundation for the development and evolution of more

entrepreneurial oriented local governments. For instance, it provides the

foundations for local governments to enter in build-operate-transfer (BOT)

arrangements with the private sector, float bonds, obtain loans from local private

institutions, etc. “all within the context of encouraging them to be “more

business-like” and competitive in their operations in contradistinction to

“traditional”government norms and operations.

(Source: Local Government in the Philippines: Book of Readings)

Local Government System in the Philippines

Local government may be defined as a political subdivision of the state endowed with

authority to manage local affairs and vested with a political power to tax. The

Philippines is a unitary state consisting of 81 provinces, 1,489 municipalities, 145

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cities and 42,036 villages (barangays) as political subdivisions. The first tier in the

local government hierarchy or at the subnational level is the province; at the next

lower level are the municipality and the city, and the lowest tier is represented by the

barangay or village which directly interacts with the grassroots- people in the

community. A province, city or municipal government is structured somewhat like the

national government in that: it has a local legislative branch, the Local Council,

whose members are directly elected by the electorate in the province, city, or

municipality, as the case may be, and which is responsible for the above-stated

passage of ordinances and resolutions; and, it has the local executive, represented by

the provincial governor, city of municipal mayor, as the case may be, who also

directly elected by the voting population of the locality and who is responsible for

executing local legislation and administering public services at the local level. The

barangay or village is the smallest local government unit and is headed by the village

chief who is elected with the village councilors. The Village chief enforces all laws

and ordinances applicable to his or her constituencies. Village are also public

corporations and therefore can be sue and be sued in court, enter into contracts,

acquire and hold all kinds of property, and exercise such power or perform such acts

as provided by law.

Sources of Income and Revenue

Local governments have common sources of revenue and income as well as

respective revenue raising powers. They are empowered to derive income and revenue

from: local taxation; rentals and charges for the use of public property and resources

within local jurisdictions; earnings from local public enterprises and utilities; permits

and licenses issued for establishments and operation within local boundaries; charges

and fees for local government services and activities. They are also entitled to:

stipulated shares from internal revenue collections or collections of national taxes and

shares from the proceeds of the utilization, exploitation, and development of the

national wealth (natural resources, mines, and mineral within their jurisdictional

areas.

Structure of Local Governments in the Philippines

National

Govern

ment

Municipalities Component

Cities

Villages Villages Villages

Provinces Highly Urbanized Cities and

Independent Component

Cities

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Figure 1 Map of ASEAN Countries

Source: http://i395.photobucket.com/albums/pp40/ssa_admin/FASA/south_east_asia_maprevised.jpg

Figure 2 Map of National Capital Region

source: Google Maps

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Local Governance in Mandaluyong City: An Overview

Historical Account and the Present Political Context

There are different stories on the origin of the ancient name “Mandaluyong”. One

claimed that the Spaniards named the placed Mandaluyong based on the report of

what a navigator named Acapulo saw that the rolling hills were frequently lashed at

by daluyong (“big waves from the sea”). This seems to give credence to traditional

stories before the coming of the Spaniards that giant waves from the sea lashed at the

adjoining hills of the vast lowland, referred to as “Salpukan ng Alon”. Father Felix

dela Huerta, observed that the rolling topography of this land resembled giant waves

of the sea. Hence, natives replying to the questio of strangers as to what the place was

called, used to answer Mandaluyong, later hispanized by Spansih writers into

Mandaluyong by affixing the “n” to the first syllable.

In the 1800, Mandaluyong was first known as a barrio of Sta. Ana de Sapa which was

part of te District of Paco, Province of Tondo. Named San Felipe Neri by the

Spaniards in honor of the Patron Saint of Rome, it was separated civility from Santa

Ana de Sapa in 1841.

During the American regime in 1900’s San Felipe Neri was raised to a first class

municipality with five (5) barrios, namely, Poblacion, Barangka, Hagdang Bato,

Namayan and Hulo. Under Presidential Act No. 942, it was consolidated with the

municipality of San Juan del Monte and became the seat of government. For several

months in 1904, San Felipe Neri became the capital of the province of Rizal. San

Felipe Neri was separated from San Juan and became an independent municipality on

March 27, 1907. It was renamed the Municipality of Mandaluyong by virtue of House

Bill No.3836 which was authored and sponsored by Assemblyman Pedro Magsalin,

then the Representatives of the District of Rizal.

During World War II, Mandaluyong lost many of her people, among them were

Catholic priests and civilians. Destruction was felt all over, but with the timely arrival

of the American Liberation Forces on February 9. 1945, the municipality was saved

from further damages. That day became a red calendar day for Mandaluyong marking

its liberation from Japanese imperial forces by the Americans.

In the 60’s, Mandaluyong became a component municipality of Metropolitan Manila.

Together with other component cities and municipalities, it has undergone significant

physical and economic transformation. From a forestal town to a progressive

municipality. Mandaluyong is now a highly urbanized city known to host most of the

country’s best companies and corporations, shopping malls and hotels which are

certainly world class in status.

Mandaluyong and the municipality of San Juan used to be represented in Congress by

a single Congressman. As it entered a cityhood in 1994, Mandalyong became a lone

district with its own Representatives in Congress.

Mandaluyong have come a long way from being a forested rolling hill to a bustling

city of vibrant economic activities. In 2003, Mandaluyong was named the new tiger

city of Metro Manila, among other accomplishments.

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Profile

Mandaluyong is a city that lies at the heart of Metropolitan Manila in the Republic of

the Philippines. Mandaluyong’s remarkable rate of development since the early 80’s

established the city as one of the most progressive economic centers in the country.

Notable institutions and establishments in the city include the main headquarters of

Asian Development Bank, Super Mall (SM) Megamall, Shangrila Plaza, San Miguel

Corporation. Mandaluyong has a projected population of 339,769 at nighttime and 1.4

million at daytime. It has a land area of 1,127 hectares.

Decentralization and Economic Growth

The implementation of the Standard Business Registration Procedure (SBRP) in

Mandaluyong had immensely contributed to the steady increase in the yearly

collection performance from the business sector. What used to take 3 days and 27

steps to register a business has been streamlined to only 15 minutes and 4 main steps

thereby encouraging more entrepreneurs and business owners to put up and open new

businesses in the city. Not only that this resulted in the dramatic increase in the

collection of tax payments for the month of January but also in the increase of

businesses in the city.

The conducive business atmosphere in the City with its perfect location and fast

Business Processing System has attracted giant corporations in the country to transfer

their head offices to the City of Mandaluyong, the likes of notable giant corporations

SM Group, San Miguel, United Laboratories, Asian Development Bank, Banco de

Oro, among others.

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Remarkable Business Tax Collection for January alone

The flourishing business climate in the city is very steadily evident that even for

January alone of the year 2016, payments for business taxes have reached the 900

million mark (P913,578,789.92) for the first time with an increase of 25% or 182

million compared to January of last year. The figure has more than doubled since

2007 with P285,197,223.31 collection or 221% increase from January 2007 to January

2016.

With all these developments, the city’s income from the Business Sector alone had

shown constant increase through the years. Income from business operations reached

more than 1.66 billion at the close of 2015, registering an increase of more than 206

million or 14.19% from last year’s 1.46 billion.

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There is also a noted steady increase in city revenues collection. In 2014, city

revenues totaled 2.91 billion (P2,914,993,522.95) and increased to 3.53 billion

(P3,534,679,016.79) at the close of 2015. This is an increase of more than 619 million

or 21.25% from collections in taxes, permits and licenses fee, service and other

general income.

Business Awards and Citations

Local Government Luminary 2015 in recognition of being a Partner for Progress

that promotes sustainable developments awarded by Meralco on March 8, 2016

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One of Top 5 Performing Local Government Units in the NCR awarded by the

Department of the Interior and Local Government on October 2013

Most Business Friendly City in the Philippines--because of the untiring pursuit of

excellence, Mandaluyong City was named and awarded as the Philippines’ Most

Business Friendly City for 2013 (Highly Urbanized City Category), awarded by

the Philippine Chamber of Commerce and Industry (PCCI), a respectable group

of businessmen in the country

Ranked 2nd

Best City in Metro Manila based on the City’s Performance on

Locally Generated income published in The Philippine Star on April 6, 2013 by

the Bureau of Local Government Finance- Department of Finance. Mandaluyong

City was recognized because of its ability and competence in Creating Own

Revenues.

Top 3 Performing Cities Based on Locally Generated Revenues - 2015 List of

Cities with Locally-sourced Revenues published in the Philippine Daily Inquirer

dated January 13, 2016 by the Department of Finance-Bureau of Local

Government Finance

Top 13 Competitiveness Index 2014 (Cities Ranking) cited by the National

Competitive Council

Decentralization and Health

The City Government of Mandaluyong ensures that all children are well-taken cared of as

early as from the time the mother gets pregnant. Literally and figuratively speaking, the

mother and the babies inside her womb enjoy intensified health and nutrition programs.

Programs such as Breastfeeding patrol, Mothers’ class, Task Force Young Mothers,

Empowerment and Reaffirmation of Parental Abilities (ERPAT) and making nutrition as a

priority program of the city.

Rapid improvements in Health and Nutrition maybe ascribed to specific, deliberate

health-nutrition related intervention and to change in the underlying social, economic, and

health environment. In the early 90’s the city had little progress until recently, and the

start of an improved trend coincided with increase in the number of health activities of the

city.

Decentralization and Environmental Protection

Although Mandaluyong City has been doing well in the business front, they believe

that sustainable development can occur if they are focused on addressing concern for

the environment. The City Government wanted Mandaluyong to be a progressive city

with clear air and healthy environment leading toward a more ecologically-sound

community of empowered Mandaleños through constituent-responsive leadership.

The City introduced the City Green Initiatives like the promotion of pro-

environmental projects like the use of electric tricycles which are zero - emission

vehicles. These e-trikes are availed through the grant from the Asian Development

Bank. This ensures a more environment- friendly surrounding, protecting the health &

general well-being of everyone, particularly the children. There is also an underpass

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solar powered LED lighting project. In the face of climate change, the City

Government has taken the lead in partnership with the International Finance

Corporation (IFC) to set the framework for future structures and skycrapers in the

City. Green Architectures will rise in that City that utilize only renewable resources.

The project will focus on performance in the following areas of energy efficiency,

water efficiency, materials and waste management, site sustainability and indoor

environmental quality. There is also the creation of Green space or park development.

Decentralization and Infrastructure

a) The City Government converted a dirty, congested public cemetery into an

environment-friendly and income generating facility. The cemetery is now known

as Garden of Life Park and it is a “one-stop-shop”, a project that entailed a 4-C

approach - i.e. cemetery, columbarium, crematorium, and chapel rolled into one.

By transforming the cemetery into a park, the LGU also dispelled the nation that a

cemetery is an eerie place. It has practically become an eco-tourism facility, with

visitors coming from Laos, PDR, Korea, Australia and many others.

b) Mandaluyong City entered to a partnership with the private sector through

Build-Operate-Transfer (BOT) mode and has now constructed a public market

that has approached world-class standards. In 1990, the public market in

Mandaluyong burned down leaving the then municipality with no center of

commerce and the prospect of reduced revenues. Then Mayor Benjamin S. Abalos

reconstructed the public market through the Build-Operate-Transfer (BOT)

scheme with the Macro Fund Builders, the concept of which was new in BOT law

at that time. This is a pioneering effort that was both exciting and challenging.

Decentralization and Social Services

a) The local government of Mandaluyong City spearheaded the conceptualization

and implementation of Project Therapy, Education and Assimilation of

Children with Handicap (TEACH). This is a community-based program that

directly benefits youth with disabilities residing in depressed areas. By providing

children with special needs they can access to a network of free medical,

rehabilitative, educational and related services. Project TEACH helps enable

them to become integrated and productive members of society. The direct

beneficiaries of this project are children with developmental conditions such as

Intellectual Deficiency, Cerebral Palsy, Autism, and Down Syndrome

b) Code of Parental Responsibility

Ordinance 538, otherwise known as the Code of Parental Responsibility was

enacted on March 2014. The ordinance underscores the duties and responsibilities

of parents/guardians to their children as well as children with disability and

provides for penalties consequent to failure to perform their parental obligations.

Issues and Concerns

In pursuit of genuine democratization, there must be a good communication between

the National and Local Governments. The difficulty lies in the poor linkages among

the different levels of government. National institutions (executive and legislative)

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still continue to dominate the allocation of financial resources in the politico-

administrative system. The IRA still constitutes a bulk of the budgets of most of the

lower class municipalities. The experience of Mandaluyong has shown that the IRA

has been unable to cover the cost of devolution. Many local governments have been

unable to cover for the salaries of national government personnel devolved to them.

This has been particularly true for the health sector where local governments have

been required to pay the upgraded salaries of devolved health workers. There is a need

to reform the financial decentralization. This includes the need to re-study the formula

for the internal revenue allotment. For instance, there have been proposals to include

the performance of local governments as a criterion in allocating their IRA.

At present, democratization policies of the government are implementers based on the

transfer of functions but not the transfer of power. The fact remains that central

government still retains huge bureaucracies that execute government policies and

programs.

The imperatives of globalization and the response of local public institutions.

Globalization here is manifested mostly in the continued growth of international trade

between and among sovereign nations. How ready are local government units to

response to the challenge of ASEAN?

The role of Information, Communication and Technology (ICT). In this age of

Technology, local government units must harness their capacities in management and

development operations, e.g., payroll, issuance of permits and licenses, taxation etc.

the challenge is a paperless bureaucracy.

The term of office of local chief executives is only three years. Once a newly elected

assumed office, the tendency is not to continue the good programs and projects of the

past administration.

Lessons Learned

(1) The transfer of power to the local level unburdened the central government and

allowed it to concentrate on national issues. The Local Chief Executives, on the

other hand, are able to immediately attend to the needs of the communities

because they do not have to wait for the go signal of the national. The set-up

encourages the local chief executives to be innovative, creative and dynamic to

respond to the needs of their constituents.

(2) Broad participation is needed for the decentralization process to be successful.

Private sector should be recognized as a critical partner in the process. In

Mandaluyong, there is an active partnership with Mandaluyong Chamber of

Commerce, Filipino-Chinese Chamber of Commerce and Mandaluyong-Muslim

Chamber of Commerce. There is also participation of civil society in local

governance. Over the years, various consultations have been conducted by the

NGO community. Decentralization can facilitate empowerment and encourage

creative local solutions.

(3) There can be no genuine local autonomy without fiscal autonomy. Fortunately, in

the experience of Mandaluyong City under a decentralized set-up there is an

adaptive financial resource to match the basic services rendered to communities.

Mandaluyong looks for alternative ways of doing things to generate revenues and

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mobilize resources at the local level. They have entered into partnership with the

business sector. One best example is Built-Operate-Transfer scheme. The first city

in the Philippines to implement this law.

(4) A key factor that will facilitate the success of decentralization is the political will

as manifested by a vision for excellent public service and leadership commitment.

(5) The experience of other local government units are replete with innovations.

ASEAN countries need to share their good practices and learn from each other

success stories. International Conferences served as a venue to learn and update

themselves with reform in public administration and governance.

(6) Improvement in the quality of life which includes citizen empowerment,

promoting public interest especially for the marginalized sector of the community,

and sensitivity to gender roles.

Conclusion

Decentralization, Democratization and Development are concepts that are related to

each other. Decentralization is seen as a process involving the transfer of power,

functions and resources from the centre to local authority in an attempt to bring the

government “closer to the people”. In the process, ordinary citizens acquired a voice

in certain decisions what affects them. Hence, this is the fundamental challenge to

democracy. In the growing decentralization and democratization, the new mantra now

is development and this reaches to the different actors of governance the state, civil

society (NGOs) and private sector.

Looking back, 25 years of decentralization and democratization had been useful in the

city of Mandaluyong. The incumbent Mayor took full advantage of the opportunities

opened up in the Local Government Code. Development is evident in the increase of

investment of the city. During the watch of the present administration, the City

transformed from a sleepy town to a progressive one now called “Tiger City.”

Factors that contributed to the success of decentralization is due to a number of

factors. One is the political will and leadership commitment to serve. Second is the

strong partnership with the civil society and private sector. Lastly, changing the

mindsets of the people and empowering them to make governance works.

Mandaluyong’s Good Practices paved the way for the local and international

recognition. The city experience brings so much pride to the people of Mandaluyong

as the chief executive is always invited to international conferences for an exchange

of experiences in developing integrated urban solutions, building economies,

engaging communities and providing high quality of life.

Fruits of Decentralization and Democratization in Mandaluyong City:

United Nations Award for Public Service 2015

Regional winner in the Most Child Friendly City 2015

Seal of Good Local Governance 2015

Guinness World Records Title Holder, Largest Zumba in one location 2015

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Galing Pook Award, Back to Back for Project TEACH and Cemetery (Garden

of Life)

Grand Slam Winner: Green Banner Award for 3 Consecutive Years

(2010-2012) for innovative Health and Nutrition Program

CROWN AWARD: Excellence in Nutrition Program Implementation 2015

Best in the Philippines: Manpower Training School and Program 2103

Given the success of its implementation, it is hope that it can sustain the different

programs and projects that will lead to development even with the changes in

administration.

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