,

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MALACANA~ l'2Jtll
MANILA

,A/lFN

BY THE PRESmENT OF THE PIllLIPPINES

EXECUTIVEORDERNO.~
ESTABLISffiNG A PROGRAM FOR DEVOLUTION
ADJUSTMENT AND EQUALIZATION

WHEREAS, Republic Act 7160, otherwise known as the Local GovernmentCode of

1991 conferred upon local governmentunits (LGUs) specific functions, powers and
responsibilitiesto continueand effectively implementthe delivery of basic servicesand
facilities devolved to them by the national governmentagencies(NGAs) and offices
pursuantto the provisionsof said Code;

WHEREAS, the NGAs concernedhaveeffectedthe devolutionof basicservices,powers

and responsibilities and the transfer of assets,liabilities, personnel, equipment and
recordsto LGUs not laterthan June30, 1992 pursuantto Executive Order 503, seriesof
1992;

the EO 503, seriesof 1992, likewise directed recipient LGUs to provide

appropriate fWlds in their respective budgets for maintenanceand other operating
expendituresof the transferredpersonnelandassets,amongothers;

WHEREAS, based on the results of the status appraisal on the functions and services
devolved to the LGUs, there is an urgent need to undertake resour~e mobilization and
augment the funding required to ensure the effective implementation and delivery of
devolved services and maintenance of transferred assetsand facilities;

WHEREAS, to establish increased participation in achieving the priority agenda for

action of the national government on food security and poverty alleviation, there is the
urgency to address the critical needs and recognize the vital roles of local government
units at all levels;

WHEREAS, there is an urgentneedto ensurethe full and effective implementationof

devolvedbasicservicesand facilities by LGUs throughthe establishmentof a mechanism
for addressingpolicy, program and resource issues arising from the devolution of
functions and servicesto the LGUs towards autonorr,y,decentralizationand efficient
governance;

(p?31
WHEREAS,
-1'
 NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the
Republic of the Philippin~s~ by virtue of the powers vested in -me by law~ do hereby orderthat:

Section 1. Establishment of a Program for Devolution Adjustm~nt and

Equalization. A Program for Devolution Adjustment and Equalization is hereby
establishedto facilitate the processof enhancingthe capacitiesof local governmentunits
in the dischargeof the fwlctions and servicesdevolvedto them by the NGAs concerned
pursuantto the Local GovernmentCode.

The Programshall seekto achievethe following objectives:

a) Addressthe currentshortfallsencounteredby LGUs in the implementationof

devolution-relatedprograms,projectsandactivities;

b) Establisha fund allocation systemand equitabledistributionschemesto cover

the costof devolution for the effective exerciseof the devolvedfunctionsand
servicesby the LGUs;

c) Adopt and institutionalizea performanceincentivessystemandcounterparting

schemesfor LGUs to enhancetheir devolvedfunctionsand services;

d) Providethe opportunitiesand accessto resourcesandtechnicalassistancethat

will enableLGUs to build their capacitiesfor the effective dischargeof the
devolvedfunctionsand services;

e) Strengthen cooperation and partnership among the key proponents in

undertaking legislative and policy advocacy for the meaningful
implementationof devolution;

f) Develop and facilitate cooperative arrangementsamong NGAs, Government-

owned and -controlled corporations (GOCCs), LGUs? private fmancial
institutions and foreign bilateral and multilateral organizations for purposes of
resource mobilization and fwlds generation;

g) Ensure effective monitoring and assessmentof devolved functions and

services of LGUs and track performanceand accountabilitiesof LGUs in
attainingthe objectivesof devolution.

Section 2. The Devolution Committee. The Devolution Committee, as

constitutedin consonancewith Book IV, Title Three,Sec.533 (b) of Republic Act 7160,
otherwise known as the Local GovernmentCode of 1991,shall formulate and issuethe
appropriate rules and regulations necessaryfor the effective implementationof this
Executive Order. The Devolution Committee may call on any governmentagencyor
instrumentality,as may be deemednecessaryin the exerciseof its mandateunderthis
ExecutiveOrder.
 ~

Section 3. The Secretariat. A Secretariatis herebycreatedto coordinateand

implementthe provisions of this Executive Orderand suchpolicies, implementingrules
and regulations,as may be promulgatedby the DevolutionCommittee. The Devolution
Committeeshall adoptthe appropriateandnecessaryorganizationalstructureand staffing
pattern of the Secretariatsubject to existing rules and regulations governing such
purposes.

Section 4. Funding. To addressthe funding shortfalls of functions and services

devolvedto the LGUs and other funding requirementsof the Program,the Devolution
Adjustment and EqualizationFund is herebycreated.For CY 1998,the Departmentof
Budgetand Managementis herebydirectedto set asidean amountto be determinedby
the OversightCommitteebasedon the devolutionstatusappraisalsurveysundertakenby
the Departmentof Interior and Local Government.Said Fund shall be sourcedfrom the
availablesavingsof the national governmentfor CY 1998. For CY 1999and succeeding
years,the correspondingamountrequiredto sustainthe Programshall be incorporatedin
the annual General Appropriations Act. The Devolution Committee shall issue the
implementingrules and regulationsgoverningan equitableallocationand distributionof
saidFundto the LGUs.

The Devolution Committee is hereby authorizedto allocate an amount not to

exceed one-half of one percent of said Fund for the operating and maintenance
requirementsof the Committeeandthe Secretariat.

Section 5. Administrative and Implementing Guidelines. The Devolution

Committeeshall adoptadministrativeand implementingguidelinesas may be necessaryto
implementthis ExecutiveOrder.

Section 6. Repealing Clause. All orders, issuances,rules and regulations or

parts thereof, which are inconsistentwith this Executive Order are hereby repealedor
modified accordingly.

DONE in the City of Manila, this L' dayof'Of3"di in the year of Our Lord,
NineteenHundredandNinety-Eight.

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~

By the President

PMS LIBRARY
--~AN'/1, ..RA
Received 111111111111111111111111111111

PJEEHolog"m
' 208ftr
B. ZAMORA DEC 28 1998
ExecutiveSecretary
Da..r

RONALDO