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

Eligible LGUs

Local Government Units that passed the Seal of Good Local Governance of the Department shall be eligible to avail of the PCF.


Amount of PCF Subsidy Scheme

The Performance Challenge Fund provides incentive to LGUs who have passed the Seal of Good Housekeeping (SGH) from CY 2010 to CY 2013, Good Financial Housekeeping in CY 2014 and Seal of Good Local Governance in CY 2015. Shown below is the subsidy scheme and distribution per Province, Cities and Municipalities.

LGU Level Seal of Good Housekeeping Good Financial Housekeeping Seal of Good Local Governance
Province P 7 Million P 7 Million P 7 Million
City P 3 Million P 3 Million P 5 Million
Municipality P 1 Million P 1 Million P 3 Million

Eligible Projects

The PCF subsidy shall be used to finance local development projects supportive of the Philippine Development Plan (PDP) 2011-2016 such as those:

  • Supporting the Millennium Development Goals (e.g. school buildings, rural health units/health centers, birthing or lying-in facilities, water and sanitation, and housing and settlements)
  • Stimulating Local Economic Development (e.g. core local roads and bridges, farm-to-market roads, tourism facilities, irrigation systems, post-harvest facilities, cold storage facilities, ports and wharves and other economic structures and growth enhancement projects like market, slaughter house, etc.)
  •  Preparing for Disaster and Adapting to Climate Change (e.g. flood control, reforestations, storm drainage, dikes, seawall and related flood protection measures and slope protection, evacuation centers, rainwater collection facility, early warning system/devices and rescue equipment)
  •  Promoting Environmental Protection (e.g. sanitary landfill, material recovery facilities, sewerage system)
  •  Furthering Transparency and Accountability (e.g. website development)

Utilization of Unexpended Balance After Project Completion

Any balance can be used by the LGUs and utilized by them subject only to the conditions such as:

  • Enhancement/improvement of the original project
  • Procurement of or subsidizing a project supporting the original one

Use of unexpended balances shall no longer require the approval of the DILG Regional Director. However, the use of these Unexpended Balances is still subject to the submission of reports to the DILG Regional Offices thru the appropriate channel. In cases, where LGUs will not propose projects supportive of the original, said balances shall be refunded to the National Treasury following existing guidelines on the transfer of funds. Proof of such remittance/refund shall be submitted to the concerned DILG regional office, which shall, in turn, forward the same to FMS of the DILG Central Office for record purposes.