Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
TWENTIETH CONGRESS

2694

House Bill No.

Introduced by Representative Timothy Joseph Cayton

“AN ACT AUTHORIZING LOCAL GOVERNMENT UNITS TO ALLOCATE THE
CERTIFIED YEAR-END SAVINGS FOR THE GRANT OF ADDITIONAL
BENEFITS TO LGU PERSONNEL”

EXPLANATORY NOTE

Local Government Units (LGUs) serve as the frontlines of governance, delivering
essential public services across the nation. The commitment and efficiency of LGU
officials and personnel, which ensure the timely and effective implementation of
programs and services, must be duly recognized and incentivized. Their unwavering
dedication plays a vital role in fostering a results-oriented, transparent, and
accountable system of local governance.

The “Kawani Bonus Act of 2025” seeks to authorize Local Government Units (LGUs)
to allocate the certified year-end savings for the grant of additional benefits to their
officials and employees, whether permanent, temporary, or contractual. This
measure represents a step toward fostering a culture of excellence and accountability
in local public service. By anchoring incentives to performance and savings to service,
it aims to reward efficiency, uplift morale, and promote good governance at all levels
of the local bureaucracy.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

Lone Diktrict, Nueva Vizcaya


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
TWENTIETH CONGRESS

House Bill No, 2694

Introduced by Representative Timothy Joseph Cayton

“AN ACT AUTHORIZING LOCAL GOVERNMENT UNITS TO ALLOCATE THE
CERTIFIED YEAR-END SAVINGS FOR THE GRANT OF ADDITIONAL
BENEFITS TO LGU PERSONNEL”

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Title. -This Act shall be known and cited as the “Kawani Bonus
Act of 2026.”

SEC. 2. Declaration of Policy. — \t is hereby declared to be the policy of the
State to recognize the dedication and performance of Local Government Unit (LGU)
personnel. This Act seeks to institutionalize merit-based incentives and promote
responsible fiscal management within LGUs in accordance with principles of good
governance.

SEC. 3. Definition of Terms. —

a) Year-End Savings - Unobligated and unexpended balances from
LGU appropriations certified as savings by the Local Finance
Committee (LFC) and validated by the Commission on Audit (COA).

b) Additional Benefits - Any performance-based bonus, collective
incentive, or allowance not otherwise covered by existing
compensation laws.

SEC. 4. Allocation. - LGUs may allocate the certified year-end savings for
the grant of additional benefits to permanent, temporary, and contractual employees
of the LGU, subject to the following:


1) The year-end savings to be utilized shall be duly certified by the LFC
and validated by the COA as unobligated and unexpended
appropriations for the same fiscal year:

2) The LGU has no outstanding statutory obligations or payables; and

3) That the grant of additional benefits shall be in accordance with
existing compensation laws, rules, and regulations issued by the
Department of Budget and Management (DBM), and shall be
consistent with the guidelines of the Civil Service Commission (CSC).

SEC. 5. Distribution of Additional Benefits. —

The distribution of additional benefits authorized under this Act shall follow these
guidelines:

1) The grant of benefits shall be performance-based and aligned with
joint guidelines to be issued by the Department of the Interior and Local
Government (DILG), the Civil Service Commission (CSC), and the
Department of Budget and Management (DBM);

2) The amount of benefits to be received by each official or employee
shall be proportionate to their individual performance ratings,
attendance records, and contribution to the delivery and performance of
local government services;

3) Each eligible official or employee may receive an amount not lower
than Fifty Thousand Pesos (P50,000.00) but not exceeding One Hundred
Thousand Pesos (100,000.00) subject to the availability of certified
savings and the guidelines to be issued:

4) No elected official shall receive an amount that is grossly
disproportionate to the benefits granted to rank-and-file employees;

5) The LGU shall ensure that the distribution is fair, transparent, and
documented in accordance with the rules of the COA and DBM.

SEC. 6. Implementing Rules and Guidelines. - The DBM, DILG, and CSC
shall issue the necessary rules and regulations for the performance metrics and
effective implementation of this Act within ninety (90) days from its effectivity.


SEC. 7. Separability Clause. -If any provision of this Act is declared
unconstitutional or invalid, the remaining provisions not affected thereby shall
remain in full force and effect.

SEC. 8. Repealing Clause. — Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation,
contrary to, or inconsistent with, the provisions of this Act is hereby repealed,
modified or amended accordingly.

SEC. 9. Effectivity. - This Act shall take effect fifteen (15) days after the
completion of its publication in the Official Gazette or in a newspaper of general
circulation.

Approved,