The current administration of the Republic of the Philippines is seen as an ardent advocate of federalism. This research study purports to explore the appreciation and understanding of the youth – specifically the Liberal Arts students in higher educational institutions who have the knowledge on the government forms, laws, and history of our system of government as regards a possible shift in the system of government. This study utilized descriptive qualitative design through Collaizi’s method of data analysis. Findings show that informants having perceived the possible shift on the system of government of the Philippines, have led to three clustered themes namely: (1) federalism defined, (2) benefits of federalism, and, (3) possible challenges during the transition period. Moreover, it is concluded that informants defined federalism as a system of government where powers are being decentralized to the local government and the latter being independent from the national / central government. Standardized local legislation, increased economic status, and responsive local government were identified as the benefits of federalism. Lack of proper knowledge, constitutional proceedings and amendments, and, costly and time-consuming were cited as the possible challenges during the transition period on the shift in our system of government. We suggest that, in order to actualize federalism, there is a need to enhance governance capabilities through transparency and accountability and a clearer definition of local autonomy should be observed.