Policy and guiding principles
- Section 1 declares that the NG is committed to decentralization aimed at:
- developing LGU capabilities to deliver basic social services and critical facilities, increase productivity and employment, and promote local economic growth; and
- ensuring accountability, competence, professionalism, and transparency through institutional systems that uphold good governance and strengthen capacities for managing public resources.
- Section 2 requires department secretaries and agency heads, for full devolution, to conduct a functional and organizational review guided by:
- the NG’s role to set national policy, development strategy, and service delivery standards, and to assist, oversee, and supervise LGUs;
- allocating services based on spillover and scale principles:
- services with little or no benefit spillover are best administered and financed by lower level governments;
- services with significant inter-jurisdictional externalities or benefit and cost spillovers are best assigned to higher levels of government; and
- public goods and services involving economies of scale are best assigned to higher levels of government;
- assigning functions related to government’s redistributive role to the NG; and
- pursuing an institutional development program in close collaboration with LGUs through their leagues.
- Section 2(d) mandates a strong interpretive rule: any ambiguity in an LGU power must be resolved and interpreted in favor of devolution.
- Section 2 ties devolution to Sections 3 and 17 of RA No. 7160.
Scope, definition of devolution, and fiscal responsibility
- The Order applies to all LGUs, departments, agencies, and instrumentalities of the Executive Branch whose functions align with devolved functions under Section 17 of RA No. 7160 (Section 3).
- Section 4 mandates full devolution no later than the end of FY 2024, covering:
- functions, services, and facilities indicated under Section 17 of RA No. 7160; and
- other existing laws that subsequently devolved functions of the NG to LGUs.
- Devolution, for this Order, means the act by which the NG, as allowed by existing laws, confers power and authority on various LGUs to perform specific functions and responsibilities (Section 4).
- Section 4 states that, except for functions that remain shared with the NG under Section 2 of this Order, LGUs are primarily and ultimately responsible and accountable for fully devolved basic services and facilities in accordance with service delivery standards to be prescribed by the NG.
- Section 4 requires that fully devolved basic services and facilities be funded from the share of LGUs in the proceeds of national taxes and other local revenues.
- Local chief executives must ensure available funds or resources are first allocated for devolved basic services or facilities before other purposes, consistent with relevant laws and budgeting and auditing laws, rules, and regulations (Section 4).
Devolution transition plans (DTPs)
- Section 5 requires national government agencies concerned (NGAs) and all LGUs to prepare Devolution Transition Plans (DTPs) consistent with guidelines jointly issued by DBM and DILG.
- There must be only one (1) DTP for each department, covering the department’s agencies and government-owned or -controlled corporations (GOCCs) under its control, supervision, or attachment (Section 5).
- Department secretaries must lead and oversee preparation and implementation of their DTPs (Section 5).
- Agencies and instrumentalities not under a department’s control or supervision or attachment must prepare and implement their own DTPs, in consultation and coordination with DBM and DILG (Section 5).
- Section 5 requires NGA DTPs to identify and clarify devolved functions and services by LGU level based on RA No. 7160 and other relevant laws, and to include:
- the strategy for and phasing of devolution;
- the definition of standards for delivery of devolved services;
- the strategy for capacity development of LGUs;
- a framework for monitoring and performance assessment of LGUs; and
- an organizational effectiveness proposal to strengthen the department/agency in assuming “steering functions.”
- Section 5 permits NGAs to consult and collaborate with DILG, NEDA, DOF, Civil Service Commission (CSC), Development Academy of the Philippines (DAP), and other resource institutions for technical assistance.
- Section 5 sets the deadline: each NGA’s DTP must be submitted to DBM within one hundred twenty (120) days from the effectivity date of the Order for evaluation and approval (Section 5).
Committee on Devolution (ComDev) structure and powers
- Section 6 creates a Committee on Devolution (ComDev) composed of:
- Chairperson: Secretary, DBM
- Co-Chairperson: Secretary, DILG
- Members: Socioeconomic Planning Secretary (NEDA); Secretary, DOF; Executive Secretary; and Presidents of the Leagues of Provinces, Cities and Municipalities of the Philippines; the Liga ng mga Barangay ng Pilipinas; and the Union of Local Authorities of the Philippines.
- Section 6 requires each Chairperson, Co-Chairperson, and government members to designate within fifteen (15) days from effectivity a permanent representative with rank not lower than an Undersecretary (or equivalent) to oversee agency implementation of the Order.
- Section 6 requires the DBM to provide secretariat services to the ComDev.
- Section 7 empowers ComDev to oversee and monitor administrative and fiscal decentralization goals consistent with RA No. 7160, as amended.
- Section 7 requires ComDev to evaluate status and monitor implementation of DTPs of NGAs and LGUs and to ensure compliance by NG officials/employees and local chief executives/personnel, including initiating appropriate actions as warranted.
- Section 7 directs ComDev to resolve implementation issues and concerns without prejudice to member-agencies’ respective mandates.
- Section 7(d) requires ComDev to ensure elimination of any regulatory or fiscal controls on the automatic release of LGU shares on national taxes, consistent with Sections 286 and 293 of RA No. 7160, unless restrictions are warranted under relevant laws.
ComDev deliverables: rules, communications, reports, and funding support
- Section 7(e) requires ComDev to adopt mechanisms ensuring continuous delivery of public services by NGAs and LGUs during transition.
- Section 7(f) requires ComDev to develop a communications plan and pursue strategies to inform the public and stakeholders on delineation of NG and LGU functions and accountabilities, including:
- tapping the Presidential Communications Operations Office and its attached agencies and offices;
- calling on all NGAs to designate focal officials and personnel; and
- integrating ComDev’s messaging and communications plan into agency communication efforts.
- Section 7(g) requires ComDev to issue rules and regulations for effective implementation within thirty (30) days from the Order’s effectivity, and thereafter issue supplemental guidelines as appropriate.
- Section 7(h) requires an annual report to the Office of the President on implementation, including the status of DTPs and ComDev recommendations based on annual assessments.
- Section 8 creates a Growth Equity Fund (GEF) to address marginalization, unequal development, high poverty incidence, and disparities in LGU net fiscal capacities.
- Section 8 requires ComDev to propose the amount constituting the GEF to Congress.
- Section 8 directs that the DBM include the GEF amount in the National Expenditure Program starting FY 2022 and thereafter.
- Section 8 mandates that GEF cover funding requirements of programs, projects, and activities of poor, disadvantaged, and lagging LGUs to enable full and efficient implementation of devolved functions and services.
- Section 8 requires that GEF releases to LGUs follow implementing rules to be prescribed by the Development Budget Coordination Committee and remain subject to equitable, performance-based, and time-bound allocation and distribution mechanisms and guidelines.
- Section 9 mandates capacity development through the DILG, via the Local Government Academy (LGA), including harmonizing capacity development interventions among DBM, NEDA, DOF, other NGAs, DAP, and third-party service providers and using the Local Governance National and Regional Resource Centers as a convergence platform.
- Section 9 requires that capacity development include public financial management processes (local planning, investment programming, resource mobilization, and budgeting) to ensure revenue allotment allocation for basic services and facilities aligns with Section 17 of RA No. 7160 and other relevant laws.
- Section 9 directs DILG to develop other strategies, institutionalize performance standards, and develop performance incentive mechanisms under the Seal of Good Local Governance to promote local governance excellence.
- Section 9 directs that, as far as practicable, capacity development interventions be offered preferably to career or permanent local government personnel.
LGU roles, planning-budget linkages, and monitoring systems
- Section 10 requires LGUs to prepare their own DTPs in close coordination with NGAs concerned, especially for devolved functions and services critical to them.
- Section 10 requires the DBM, DILG, and concerned NGAs to use LGU DTPs as guides for monitoring and performance assessment.
- Section 10 requires LGUs to formulate a Capacity Development Agenda based on the assessment framework and guidelines issued by the DILG-LGA, guided among others by the NGA DTP capacity development strategy, local development thrusts, and performance goals and objectives.
- Section 10 highly encourages LGUs to formulate communications plans and strategies aligned and complementary to the ComDev-approved communications plan.
- Section 10 requires local programs and policies to be integrated and coordinated toward a common national goal and to abide by NG policies, standards, and strategies under Section 2.
- Section 11 requires strengthening vertical and horizontal linkages across government levels in planning, investment programming, and budgeting to align NG, regional, and local priorities.
- Section 11 directs Regional Development Councils to set strategic direction for regional development and facilitate alignment of local development and land use plans with the Updated Philippine Development Plan and regional development plans.
- Section 11 requires regional development investment programs to contain proposed intra- and inter-region PPAs of regional line agencies funded by NG, while provincial/local development investment programs (P/LDIP) must contain prioritized PPAs for LGU funding.
- Section 11 requires LGUs’ annual investment programs funded through local funds, borrowings, and public-private partnerships to be sourced from their respective P/LDIPs.
- Section 11 requires strengthening horizontal linkages through improved coordination, synchronization, and joint execution among LGUs, with provincial oversight and coordination functions for services and projects cutting across city/municipal borders.
- Section 11 directs DILG, DOF, NEDA, and DBM to update existing circulars and recalibrate local and regional planning and budgeting calendars.
- Section 11 mandates results-based Monitoring and Evaluation (M&E) systems in DILG, DBM, DOF, and other NGAs to support purposive evaluations ensuring LGUs effectively assume devolved functions in support of good governance, transparency, accountability, and evidence-based decision-making.
Personnel, benefits, prohibitions, and funding rules
- Section 12 gives affected personnel hired on a permanent basis who may be affected by devolution, to the extent authorized by civil service laws, rules and regulations, an option to:
- apply for transfer to other units/offices within the same department/agency/GOCC without reduction in pay;
- apply for transfer to other departments/agencies/GOCCs in the Executive Branch without reduction in pay; or
- avail retirement benefits and separation incentives under Section 13 and, subject to LGU discretion, apply to vacant positions where reemployment is treated as new entry to civil service and subject to the LGU compensation system.
- Section 12 provides that employees occupying medical/allied-medical items may apply for transfer to a Department of Health-supervised hospital of their choice.
- Section 12 directs DBM and DILG, with CSC and prior consultation with LGUs through their leagues, to develop and issue guidelines to ensure fair, orderly, and transparent implementation, while allowing NGAs to institute internal operationalization guidelines subject to existing CSC and DBM rules.
- Section 13 gives affected personnel with permanent appointments who opt to retire or separate the option to avail retirement benefits under existing laws if qualified.
- Section 13 provides separation incentives by length of service, using the actual monthly basic salary (as of the date of approval of the department/agency’s revised organizational structure and staffing pattern by DBM) computed starting from the 1st year:
- Less than eleven (11) years of service: 1/2 of actual monthly basic salary for every year of government service;
- Eleven (11) to less than twenty-one (21) years of service: 3/4 of actual monthly basic salary for every year, computed starting from the 1st year;
- Twenty-one (21) to less than thirty-one (31) years of service: actual monthly basic salary for every year, computed starting from the 1st year;
- Thirty-one (31) years of service and above: 1 1/4 of actual monthly basic salary for every year, computed starting from the 1st year.
- Section 13 requires a minimum of five (5) years of government service for entitlement to separation incentives.
- Section 13 restricts incentive computation by counting only government service up to the age of fifty-nine (59) and a fraction thereof; government service starting at age sixty (60) is no longer subject to the separation incentives.
- Section 13 provides that, to comply with required years under RA No. 8291 (GSIS Act of 1997), the portability scheme under RA No. 7699 may be applied, subject to existing policies and guidelines.
- Section 13 mandates that the retirement gratuity benefit of affected personnel qualified and availing RA No. 1616, as amended, shall be paid by GSIS, and GSIS shall no longer pay refund of retirement premiums (personal and government shares) for those retiring under RA No. 1616.
- Section 14 requires retired/separated affected personnel, on top of applicable statutory benefits, to receive:
- refund of Pag-IBIG contributions (personal and government shares) pursuant to existing rules of the Home Development Mutual Fund; and
- commutation of unused vacation and sick leave credits under existing civil service rules.
- Section 15 prohibits affected personnel with permanent appointments who retired/separated due to devolution efforts from reemployment in any agency of the Executive Branch for five (5) years, except as teaching and medical staff in educational institutions and hospitals, respectively.
- Section 15 states that reemployment within the prohibited period requires refund of the separation incentives received under Section 13 by the subject personnel on a pro-rated basis.
- Section 15 limits the prohibition effect by clarifying that it does not apply in other branches of government and in local governments, and reemployment in local governments is subject to the prevailing LGU compensation system.
- Section 15 governs consultancy engagements of government personnel who retired or separated due to devolution under Section 7 of RA No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees) and other pertinent laws, rules, and regulations.
- Section 16 requires funding for the first year to be sourced from:
- existing appropriations for NGAs; and
- respective corporate funds of GOCCs, subject to availability, and subject to existing budgeting, accounting, and auditing rules and regulations.
- Section 16 requires subsequent years’ amounts to be included in the budget proposals of the concerned agencies.
- Section 16 requires NG to provide funds for separation incentives of affected personnel in regular government agencies, subject to applicable budgeting, accounting, and auditing rules; and requires GOCC separation incentives to come from GOCC corporate funds.
- Section 16 allows NG assistance for deficient GOCC funds only if the GOCC is not exempted from the Salary Standardization Law.
- Section 17 requires that the Order and any implementing guidelines, rules, regulations, or devolution transition initiatives do not suspend or exempt any office or personnel from complying with RA No. 11032 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018).
Construction, separability, repeal, and compliance effect
- Section 18 requires any conflict among provisions or among implementing guidelines/rules to be resolved or construed liberally in favor of an interpretation that prevents impediments to public service delivery by NGAs and LGUs.
- Section 19 provides separability: unconstitutional or invalid parts do not affect the continued full force and effect of the remaining parts.
- Section 20 repeals Executive Order Nos. 48 (s. 1998) and 444 (s. 2005) and repeals, amends, or modifies all other orders, rules, regulations, issuances, or parts inconsistent with the Order.
- Section 1 through Section 20 operates within the constitutional and statutory framework cited in the recitals, including:
- the decentralization principle in Section 6 of Article X of the Constitution;
- the LGU just share computation as discussed in Mandanas, et al. v. Executive Secretary, et al. (G.R. Nos. 199802 and 208488);
- the Local Government Code of 1991 (RA No. 7160), including Section 17 and references to Sections 286 and 293;
- the General Provisions of RA No. 11518 (General Appropriations Act for Fiscal Year 2021); and
- the President’s control and supervision powers under Sections 17 and 4 of Articles VII and X, respectively.