Legal basis and cited laws
- The Executive Order is anchored on Sections 77 and 78 of the General Provisions of Republic Act No. 9206 (General Appropriations Act of 2003, as reenacted), which authorize the President to direct organizational and key-position changes and require comprehensive agency review.
- The Executive Order also rests on the Administrative Code of 1987 vesting the President with residual powers to reorganize the Executive Branch.
- The Executive Order expressly recognizes judicial rulings upholding the President’s authority to reorganize the Executive Branch.
- Republic Act No. 1616 governs the retirement gratuity option under Section 10.1.
- Republic Act No. 660, and Republic Act No. 8291 (amending Presidential Decree No. 1146) govern retirement/separation/unemployment benefits under Section 10.2.
- Republic Act No. 6656 governs the three-years separation gratuity option under Section 10.3 and the appeals mechanism under Section 19.
- Republic Act No. 7699 enables portability for qualifying service under Section 10.2.
- Republic Act No. 9006 is cited as the basis for the President’s organizational review authority through the General Provisions of Republic Act No. 9206 (General Appropriations Act of 2003, as reenacted).
- Republic Act No. 8291 and Republic Act No. 660 define the retirement/separation/unemployment benefit framework applied in Section 10.2.
Policy and strategic review direction
- The Executive Order directs a strategic review of the operations and organizations of the Executive Branch to improve public service delivery.
- The review is designed to transform the bureaucracy into an efficient and results-oriented structure.
- The program focuses government efforts and resources on vital/core services.
- The program improves service delivery quality and efficiency by eliminating/minimizing overlaps and duplication.
- The program rationalizes service delivery and support systems, and organization structure and staffing.
Coverage and voluntary application
- Section 1 covers all Departments of the Executive Branch and their component units/bureaus.
- Section 1 covers all corporations, boards, task forces, councils, commissions, and all other agencies attached to or under the administrative supervision of a Department.
- The Constitutional Offices, Legislature, Judiciary, and State Universities and Colleges (SUCs) may apply the parameters on a voluntary basis if they choose to conduct similar reviews.
- The strategic review is carried out under the leadership of Department Secretaries over components including attached agencies and GOCCs under administrative supervision.
Rationalization plan requirements
- Each Department Secretary must prepare a Rationalization Plan for the whole Department, including attached agencies and government-owned and/or controlled corporations (GOCCs) under administrative supervision (Section 4).
- The Rationalization Plan must be prepared consistent with the Department’s strategic plan.
- The Rationalization Plan must include the disposition of functions, programs, projects, activities, organizational units, agencies, staffing, and personnel (Section 4).
- The Rationalization Plan must identify core functions, programs, activities, and services of the Department and its units/agencies.
- The Rationalization Plan must state specific shifts in policy directions for functions, programs, projects, activities, and strategies, including the phasing of intended shifts.
- The Rationalization Plan must state which functions/programs/projects will be scaled down, phased out, or abolished, including those that:
- Duplicate or unnecessarily overlap within the Department or with other government entities.
- Do not produce desired outcomes, do not achieve objectives, and/or are not cost efficient or do not generate adequate physical and economic returns.
- Are redundant/outdated or no longer relevant to accomplishment of major final outputs.
- Directly compete with the private sector and can be done more efficiently and effectively by the private sector.
- Have been devolved to local government units.
- The Rationalization Plan must state where more resources will be channeled, including those that:
- Support core/frontline services.
- Promote social, economic, and political empowerment, or private sector initiative.
- Create livelihood/employment opportunities and an environment conducive to investment and entrepreneurship and productivity.
- Contribute directly to national government societal outcome objectives and intermediate/sector/sub-sector/organizational outcome objectives of the agency.
- The Rationalization Plan must include the resulting structural and organizational shift, including specific changes in units/agencies.
- The Rationalization Plan must include a staffing unit showing staffing pattern changes and organizational strengthening strategies.
- The Rationalization Plan must include a resource allocation shift and specify effects on budgetary allocations.
- The Rationalization Plan must include an internal and external communication plan conveying the rationalization process to affected personnel and stakeholders.
Submission, timetable coordination, and hiring prohibition
- The Rationalization Plan must be submitted to the Department of Budget and Management (DBM) for review to ensure consistency with the objectives of the effort (Section 5).
- After DBM review, the Rationalization Plan must be subsequently submitted to the President for approval (Section 5).
- If a Department Secretary fails to submit a Rationalization Plan, the DBM must submit to the President the areas for rationalization and improvement in the concerned Department/agencies (Section 5).
- DBM, together with the Civil Service Commission (CSC), must coordinate implementation of the Program (Section 6).
- DBM and CSC are authorized to prepare an implementation timetable, including phasing and availment of the incentive package under Section 10 (Section 6).
- During preparation of the Rationalization Plan, hiring is restricted: Section 7 prohibits, except for newly created agencies, the hiring of additional personnel and renewal of contracts/appointments of employees hired on contractual, casual, or temporary basis during plan preparation.
Personnel options and transfers under CSC
- Personnel who may be affected by rationalization have two option pathways under Section 8: remain in government service or avail of retirement/separation benefits.
- Under Section 8.1, affected personnel may remain in government service if they have permanent appointment attested by the CSC.
- Under Section 8.1, those with temporary appointment attested by the CSC may opt to remain but are guaranteed tenure up to the expiration of their appointment only.
- Under Section 8.2, affected personnel may avail of retirement/separation benefits provided under the Executive Order.
- Under Section 9, affected personnel who opt to remain with permanent or temporary appointment must be placed in other agencies by the CSC where additional personnel are required.
- Under Section 9, the transferred position in the recipient agency must be co-terminus with the position of the incumbent.
- Under Section 9, the transferred personnel must not suffer diminution in pay, except for certain allowances that correspond to performance of specific functions that would no longer form part of the new functions.
- Under Section 9, personnel who object later to the new job assignment must be deemed separated/retired and must be paid the applicable retirement, separation, or unemployment benefit under existing retirement/separation laws, without the incentives provided in the Executive Order.
Retirement/separation incentives and benefit mechanics
- Affected personnel with CSC-attested appointments who opt to retire or be separated, and casual/contractual employees who are qualified, must be given options under Section 10 for the benefit package that is beneficial to them.
- Section 10.1 provides a retirement gratuity under Republic Act No. 1616 payable by the last employer, plus refund of retirement premiums payable by the GSIS, without the incentives provided under the Executive Order.
- Section 10.2 provides retirement benefits under Republic Act No. 660 or applicable retirement/separation/unemployment benefits under Republic Act No. 8291, plus the following incentives for those qualified:
- Section 10.2.1: 12 months of the present basic salary for every year of government service and a fraction thereof for those with 20 years of service and below.
- Section 10.2.2: 34 months of the present basic salary for every year of government service and a fraction thereof for those with 21–30 years of service, computed starting from the 1st year.
- Section 10.2.3: 1 month of the present basic salary for every year of government service and fraction thereof for those with 31 years of service and above, computed starting from the 1st year.
- Under Section 10 (provided clause), the GSIS must pay on the day of separation the retirement/separation/unemployment benefits the affected employee is entitled to under Republic Act No. 660 or Republic Act No. 8291, and when there is an option, the GSIS must pay the benefit the affected employee chose as most beneficial.
- Under Section 10 (provided further), to comply with the required number of years of service under Republic Act No. 8291, the portability scheme under Republic Act No. 7699 may be applied subject to existing policies and guidelines.
- Under Section 10.3, those with three (3) years of government service may opt for separation gratuity under Republic Act No. 6656, plus the incentive under Section 10.2.
- Under Section 10, no affected employee who opted for retirement/separation may receive less than an aggregate of Fifty Thousand pesos (P50,000.00) as retirement/separation gratuity benefits from both the National Government and the GSIS.
- Under Section 10, for employees in agencies and GOCCs exempted from or not following the Salary Standardization Law, total incentive received must not exceed One Million Five Hundred Thousand Pesos (P1,500,000.00).
- Under Section 11, when employees cannot yet avail of Republic Act No. 660 or Republic Act No. 8291, the GSIS must return to the National Government the corresponding share of the government to retirement premiums with interest.
- Under Section 12, the GSIS must fast-track reconciliation of GSIS members’ records with Departments/agencies of the Executive Branch to ensure release of retirement/separation benefits on the day of retirement/separation.
Additional benefits, position abolition, and rehiring ban
- Under Section 13, affected personnel who retired or were separated must receive:
- Section 13.1: Refund of Pag-IBIG contributions (both personal and government) pursuant to existing Pag-IBIG rules and regulations.
- Section 13.2: Commutation of unused vacation and sick leave credits in accordance with existing rules and regulations.
- Under Section 14, for each employee who opts for voluntary retirement/separation, the Department/agencies must offer a funded position for abolition.
- Under Section 14, unless approved by the DBM, the number of positions offered for abolition must not be less than the number of personnel who availed themselves of voluntary retirement/separation benefits.
- Under Section 15, personnel who opted to retire or be separated due to rationalization may not be appointed or hired in any Executive Branch agency, including GOCCs/GFIs, for five (5) years.
- Under Section 15, the hiring policy may be adopted by the Constitutional Offices, and the Judicial and Legislative Branches.
- Under Section 15, the CSC and COA assist in implementing the hiring directive.
Funding, timetable availability, skills assistance, appeals, and rules
- Under Section 16, funds necessary to pay incentives of affected personnel in all regular government agencies must be provided by the National Government.
- Under Section 16, incentives of affected personnel of GOCCs/GFIs must come from their respective corporate funds.
- Under Section 16, when a GOCC not exempted from the Salary Standardization Law has funding deficiency, the National Government may provide assistance for incentive payments.
- Under Section 17, availability of the retirement/separation package is based on the implementation timetable prepared by the DBM and CSC.
- Under Section 18, Department Secretaries may seek assistance from agencies involved in skills/livelihood/entrepreneurial/investments/development/enhancement programs, and business management training and counseling to help affected employees decide which option benefits them most.
- Under Section 18, for functions to be privatized, Secretaries must assist affected personnel in forming cooperatives/business enterprises.
- Under Section 19, any appeal must be resolved following the pertinent provisions of Republic Act No. 6656.
- Under Section 20, the DBM must issue guidelines for effective implementation, including the mechanism for how agencies utilize savings.
- Under Section 20, savings must not be used for creation of new positions or hiring additional personnel on contractual, casual, consultancy, or job order basis.
Repeal, separability, and effectivity clause
- Section 21 revokes or modifies any Executive Orders, rules, regulations, other issuances, or parts thereof that are inconsistent with the Executive Order.
- Section 22 makes the Executive Order effective upon publication in a newspaper of general circulation.
- The Executive Order directs implementation through DBM and CSC in coordination with other concerned agencies for rationalization, incentive payment mechanics, and hiring restrictions.