WHEREAS, the President has directed a rationalization program of all functions and agencies of the Executive Branch through Executive Order No. 366 dated 04 October 2004 as part of the National Government’s efforts to address the challenges of increasing services amidst fiscal and budgetary constraints;

WHEREAS, to attain improved government performance, there is a need to institute reforms that would transform the bureaucracy into an efficient and results-oriented structure;

WHEREAS, local government units (LGUs) are the frontline agencies of government mandated to deliver basic services to the people and serve as the National Government’s main partner and implementing arm of its productivity and development programs;

WHEREAS, Section 3 (h) of the Local Government Code of 1991 provides for a continuing mechanism to enhance local autonomy not only by legislative enabling act but also by administrative and organizational reforms;

WHEREAS, LGUs through their respective Leagues have expressed unequivocal and formal support to the President’s 10-point agenda of government and relieving the National Government’s fiscal burden through good local governance and efficient delivery of basic services.

NOW, THEREFORE, I, GLORIA MACAPAGAL - ARROYO, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order:

SECTION 1. Strategic Review. The Department of the Interior and Local Government (DILG) is hereby directed to conduct a strategic review on the continuing decentralization and devolution of services and functions of all departments, agencies and bureaus, including corporation, boards, task forces, councils and commissions of the Executive Branch, for purposes of:

1. Supporting the objectives of the National Government’s rationalization policy as provided for under EO 366;
2. Identifying functions, services, programs, projects, and activities of national government agencies and offices that duplicate or unnecessary overlap with those exercised by the LGUs that could further be devolved or decentralized without undermining their vital/core services and mandates and consistent with the provisions of the Local Government Code;
3. Determining the extend of the devolution of powers and transfer of assets, resources and personnel to local governments by national government agencies and offices as identified to be devolved under the Local Government code in order to achieve real fiscal autonomy;
4. Submitting recommendations and courses of actions, including policy and administrative proposals, to implement findings and results of the strategic review.

SECTION 2. Duties and Responsibilities. To fulfill its mandate under this Executive Order, the DILG shall have, among others, the following duties and responsibilities:

1. To call upon all national and local agencies for technical, policy, documentary, information and resource assistance and support, in the conduct of its strategic review;
2. Initiate and conduct national and regional public forums, round –table discussions and consultations relating to issues, objectives and purposes of the strategic review;
3. Identify and sponsor broad, extensive and deliberate policy and institutional studies, researches, surveys and polls on key issues and concerns relating to the strategic review;
4. Initiate partnership and coordinating activities with private sector groups, donor agencies and projects, and other relevant external bodies; and
5. Initiate and conduct public information, education and communication activities to generate awareness and understanding, feedback and support to the strategic review outputs and recommendations.
6. Submit its recommendations, outputs, regular reports and updates to the office of the President and relevant national agencies.
7. Perform such other functions as may be directed by the President.

SECTION 3. Consultants. The DILG may engage the services of individuals and institutional experts and specialists from both national and local agencies and bodies as resource persons.

SECTION 4. Funding. The budget needed to carry out the provisions of this Executive Order shall be taken from available funds of the DILG. Other sources of funds such as grants, donations and other forms of technical and resources assistance from donor agencies, projects and other public or private entities may be tapped and facilitated by the DILG subject to regular auditing guidelines and procedures.

SECTION 5. Repealing Clause. All orders, rules, regulations and issuances or parts thereof which are inconsistent with this Executive Order are hereby repealed or modified accordingly.

SECTION 6. Effectivity. This Executive Order shall take effect immediately.

DONE in the City of Manila, this 5^th day of July in the Year of our Lord, Two Thousand and Five.

(Sgd.) GLORIA MACAPAGAL - ARROYO

By the President: