How to Avail the PCF

To ensure an efficient and effective implementation of the Performance Challenge Fund, the following guidelines are hereby prescribed:

Eligible LGUs

  1. Only Eligible LGUs can apply for the PCF.
  2. Eligible LGUs are those which passed the assessment on good housekeeping and conferred with the Seal of Good Housekeeping (SGH).
  3. Priority will be given to the less able LGUs (4th to 6th class municipalities, 4th to 5th class cities and 4th-5th class provinces).
  4. LGUs which are recipients of PCF for 2010 shall not be eligible to access PCF unless they have completed PCF funded projects and submitted audited report of disbursement.

Amount of PCF Subsidy and Counter-Parting Scheme

The PCF project cost-sharing scheme between the National Government (NG) and the eligible LGU shall be implemented as a matching fund or on a 50-50 basis sharing scheme. The NG shall match the investment of the eligible LGU up to a maximum amount based on the LGU level.
In order to receive the maximum PCF subsidy, an LGU has to provide a specified counterpart amount as illustrated below:

LGU Level Maximum PCF Subsidy Minimum LGU Counterpart
Province P 7 Million P 7 Million
City P 3 Million P 3 Million
Municipality P 1 Million P 1 Million

The LGU Counterpart must be sourced from the 20% Development Fund of the eligible LGU.

Eligible Projects

  1. Projects eligible for the PCF subsidy are those aligned to the achievement of the following national government thrusts and priorities:
    • Attainment of Millennium Development Goals (MDGs) (e.g. school buildings, rural health units and health centers, birthing facilities, water and sanitation system, farm-to-market roads, housing and settlements)
    • Local Economic Development (e.g. local roads and bridges, tourism facilities, irrigation systems, post harvest facilities, cold storage facilities, ports and wharves,  and other economic infrastructures and growth enhancing projects such as market, slaughterhouses, and water supply system)
    • Adaptation to Climate Change and Preparedness for Disasters (e.g. flood control, reforestation, solid waste management facilities, storm drainage, dikes and related flood protection measures, slope protection, evacuation centers, rain water collector, early warning devices and rescue equipment).
  2. An LGU can receive only one PCF subsidy. However, the PCF subsidy may be applied to as many projects as the LGU may wish to propose for cost-sharing with the National Government.

Utilization of PCF at the Local Level

  1. The PCF with the LGU counterpart may be used as:
    • subsidy for big projects of LGUs;
    • counterpart funds for foreign-assisted projects of the LGUs;
    • co-financing for joint projects with other LGUs; and
    • counterpart for projects of the LGUs with the private sector in the context of public partnership in establishing more economic activities.
  2. The utilization of PCF shall be governed by the existing policies on the appropriation and utilization of 20% development component of the Annual Internal Revenue Allotment (IRA) of LGUs.

Procedures for Accessing PCF Subsidy

  1. Assessment of Seal of Good Housekeeping
    1. The DILG shall conduct an annual assessment of LGUs' good housekeeping practices along the governance areas of transparency, accountability, planning, fiscal management, and valuing performance monitoring.
    2. LGUs that passed the assessment shall be conferred with the SGH which shall make them eligible to apply for PCF subsidy.
  2. Application and Compliance to PCF Requirements

    Upon conferment of the SGH, eligible LGUs shall submit, within thirty (30) days, a letter of interest to their respective DILG Regional Offices accompanied by the following documents for evaluation:

    1. Project Proposal inclusive of Annual Investment Program, Program of Work, Detailed Estimates, and Detailed Engineering Design (for infrastructure projects)
    2. Sanggunian Resolution
      1. Authorizing the Local Chief Executive to enter into a Memorandum of Agreement (MOA) for the PCF subsidy;
      2. Approving the allocation of LGU funds as counterpart to the PCF subsidy; and
      3. Certifying that the project is included in the current Annual Investment Program.
    3. Certification from the Budget Officer that the project has an allocation from the 20% component of the IRA for development projects.
  3. Review of Project Proposals and Approval of PCF Subsidy
    1. Within fifteen (15) days after receipt of the letter of interest and complete required documents, the DILG Regional Office shall conduct the review of the LGU's application and appraisal of the project proposal. If necessary, site inspection shall be conducted to assess the location and physical viability of the project.
    2. After satisfactory compliance with the requirements and approval of the project proposal, the eligible LGU shall enter into a Memorandum of Agreement (MOA) with the Department of the Interior and Local Government (DILG) through the Regional Director.
    3. The Regional Office shall issue the LGU a Certificate of Availability of Funds for the corresponding amount of the approved PCF subsidy and shall be required to submit the following documents:
      • Certification from the Local Treasurer on the availability of counterpart fund
      • Certification from a Government Bank that the LGU had opened a Trust Account for the PCF and the corresponding amount of LGU counterpart
      • Appropriations Ordinance to cover the total cost of project/s.
  4. Release of PCF Subsidy to LGUs
    1. Upon submission of the report of physical accomplishment and report on disbursement of LGU counterpart, the DILG Regional Office shall release the PCF subsidy to the LGU recipient.
    2. LGU recipient shall issue an official receipt corresponding to the amount of PCF subsidy received.
  5. Monitoring and Evaluation of PCF-funded Projects
    1. The LGU recipient shall submit to the DILG Regional Office quarterly progress reports of physical accomplishment and fund utilization, and report of disbursement verified and found correct by the Commission on Audit (COA) Field Auditor.
    2. Upon completion of the project, the LGU recipient shall submit a project completion report to the DILG Regional Office inclusive of the following documents:
      • Certificate of Completion
      • Certificate of Acceptance (if by Contract)
      • Disbursement Report verified by local COAOfficer