Republic of the Philippines a
HOUSE OF REPRESENTATIVES REGEIVED
Quezon City pare 28 UL 205

‘Twentieth Congress
First Regular Session

HOUSE BILL NO. 2373

Introduced by Representative RAYMOND ADRIAN SALCEDA

AN ACT
INSTITUTIONALIZING THE SEAL OF GOOD LOCAL GOVERNANCE,
ESTABLISHING A PERFORMANCE-BASED SPECIAL LOCAL GOVERNMENT
SUPPORT FUND, PROMOTING MERITOCRACY IN LGU FISCAL SUPPORT,
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Local government units (LGUs) are the backbone of service delivery and development
at the grassroots level. They are tasked with implementing national policies, ensuring public
welfare, and managing resources that directly impact the lives of their constituents. However,
the level of governance, transparency, and efficiency varies greatly among LGUs. There is a
need to institutionalize a system that not only benchmarks good governance but also rewards
and sustains it.

The Seal of Good Local Governance (SGLG), launched by the Department of the
Interior and Local Government (DILG) in 2014, is a pioneering performance-based recognition
system that promotes integrity and excellence among LGUs. It measures compliance across
key areas such as financial administration, disaster preparedness, social protection, peace and
order, environmental management, and business-friendliness, among others. Over the years,
the SGLG has not only raised the bar for local governance but has also become a symbol of
LGU credibility and public trust.

This bill seeks to institutionalize the Seal of Good Local Governance and establish a
Performance-Based Special Local Government Support Fund that provides additional national
government support to LGUs that qualify under the SGLG. This measure promotes
meritocracy, ensures that public funds are invested in high-performing LGUs, and motivates
others to improve their governance systems and services.

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The positive impact of the SGLG is already evident across the country, including in
Albay. In 2023, the Municipality of Polangui in Albay’s 2nd District was recognized as the
sole SGLG awardee in the province, earning access to the SGLG Incentive Fund and other
support programs. In 2025, the Municipality of Camalig, from the 3rd District, followed suit
and earned its first-ever SGLG award, marking a milestone in its local governance journey and
receiving over P1.1 million in performance-based incentives.

These examples prove that with the right policies and recognition systems in place,
even resource-constrained municipalities can rise to meet national standards and deliver better
services to their people. Institutionalizing this mechanism ensures that local governments are
continuously guided and motivated by clear, measurable benchmarks, and rewarded
accordingly.

The primary beneficiaries of this measure are the constituents of high-performing
LGUs, who will experience improved access to social services, disaster-resilient infrastructure,
safer communities, and more inclusive local development. At the same time, local leaders and
civil servants are incentivized to pursue excellence, transparency, and innovation.

By linking recognition to tangible fiscal support, this Act will drive a nationwide culture
of performance and accountability in local governance. It ensures that the best-performing
LGUs are empowered to do more, and that others are encouraged to follow suit, thus
accelerating inclusive and sustainable development across the country.

In view of the foregoing, the immediate approval of this measure is earnestly sought.

RIAN SALCEDA

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘Twentieth Congress
First Regular Session

HOUSE BILL NO. 2373

Introduced by Representative RAYMOND ADRIAN SALCEDA

AN ACT
INSTITUTIONALIZING THE SEAL OF GOOD LOCAL GOVERNANCE,
ESTABLISHING A PERFORMANCE-BASED SPECIAL LOCAL GOVERNMENT
SUPPORT FUND, PROMOTING MERITOCRACY IN LGU FISCAL SUPPORT,
AND FOR OTHER PURPOSES

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

SECTION 1. Short Title. — This Act shall be known as the "Good Local Governance
Advancement Act.”

SEC. 2. Declaration of Policy. ~ The State shall promote excellence, accountability,
and meritocracy in local governance to enhance the delivery of public services and foster
sustainable development, as mandated by Republic Act No. 7160, otherwise known as the
Local Government Code. It shall institutionalize the Seal of Good Local Governance as a
statutory mechanism to assess and reward local government unit performance. The State shall
establish a performance-based Special Local Government Support Fund to provide fiscal
support to high-performing LGUs, leverage public-private partnerships, ensure anti-corruption
safeguards, and align with national development goals to empower local communities and
advance decentralized governance.

SEC. 3. Definition of Terms. — For the purposes of this Act, the following terms are
defined as follows:

(a) Seal of Good Local Governance (SGLG) refers to the recognition awarded by the
Department of the Interior and Local Government to local government units that meet
performance standards in governance, financial administration, service delivery, and
compliance with national laws;

(b) Special Local Government Support Fund refers to the fund established under this
Act, allocated to LGUs achieving the Seal of Good Local Governance, to finance local
development projects;

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(©) Local Government Unit (LGU) refers to provinces, cities, municipalities, and
barangays, as defined under Republic Act No. 7160;

(4) National Tax Allotment (NTA) refers to the share of local government units in
national internal revenue taxes, as provided under Republic Act No. 7160;

(©) Performance-Based Assessment refers to the evaluation process for the Seal of
Good Local Governance, based on criteria such as financial housekeeping, disaster
preparedness, social protection, and service delivery;

(® Local Development Project refers to infrastructure, social services, or economic
initiatives undertaken by LGUs to address community needs, funded through the Special Local
Government Support Fund; and

(g) Public-Private Partnership (PPP) refers to a cooperative arrangement between
LGUs and private entities to support capacity-building, infrastructure, or service delivery, as
defined under Republic Act No, 6957, as amended.

SEC. 4. Institutionalization of the Seal of Good Local Governance. ~The Seal of Good
Local Governance is hereby institutionalized as a mandatory annual assessment for all local
government units, administered by the Department of the Interior and Local Government. The
SGLG shall operate with the following features:

(a) Assessment Criteria. The SGLG assessment shall evaluate LGU performance
based on the following core areas:

(1) Financial housekeeping, including transparency, accountability, and
compliance with Republic Act No. 9184, shall be assessed;

(2) Disaster preparedness and climate resilience, aligned with Republic Act No.
10121, shall be evaluated;

(3) Social protection and service delivery, including health, education, and child
welfare, shall be measured;

(4) Economic development and investment promotion, supporting local
businesses and employment, shall be reviewed;

(5) Environmental management, ensuring compliance with Republic Act No.
9003, shall be appraised; and

(6) Peace and order, as well as compliance with national laws and policies, shall
be considered.

(b) Assessment Process. The assessment process shall ensure fairness and
transparency. The following procedures shall be adopted:
(1) Annual assessments shall be conducted by the Department of the Interior

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and Local Government, in coordination with national agencies and civil
society organizations;

(2) LGUs shall submit performance data through a digital platform maintained
by the Department of the Interior and Local Government;

(3)Independent validation teams, composed of government and non-
‘government representatives, shall verify LGU submissions; and

(4) Assessment results shall be published on the Department of the Interior and
Local Government’s website, ensuring public access.

(c) Recognition and Incentives. LGUs achieving the SGLG shall receive recognition
and support. The following measures shall be implemented:

(1) The Seal of Good Local Governance shall be awarded annually to qualifying
LGUs during a national ceremony;

(2) SGLG awardees shall receive priority access to the Special Local
Government Support Fund, as provided in Section 5;

(3) Technical assistance and capacity-building programs shall be offered to
SGLG awardees through public-private partnerships; and

(4) Non-awardee LGUs shall receive tailored support plans to improve
performance, facilitated by the Department of the Interior and Local
Government.

SEC. 5. Creation of the Special Local Government Support Fund. — The Special Local
Government Support Fund is hereby established, administered by the Department of the
Interior and Local Government, to provide performance-based fiscal support to LGUs
achieving the Seal of Good Local Govemance. The Fund shall operate with the following
features:

(a) Funding Sources. The Fund shall be sourced from the following:

(1) An initial appropriation of One Billion Pesos (P1,000,000,000.00) shall be
allocated under the General Appropriations Act;

(2) Two percent (2%) of the annual National Tax Allotment shall be allocated

to the Fund, as determined by the Department of Budget and Management;
and

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(3) Voluntary contributions from private sector partners through public-private
partnerships shall augment the Fund.

(b) Fund Utilization. The Fund shall be utilized exclusively to support local
development projects of SGLG awardees. The following initiatives shall be prioritized:

(1) Infrastructure projects, such as roads, health centers, and water systems,
shall be funded;

(2) Social service programs, including education, healthcare, and child welfare,
shall be supported;

(3) Economic development initiatives, such as livelihood programs and market
facilities, shall be financed;

(4) Environmental management projects, including waste management and
reforestation, shall be prioritized; and

(5) Disaster resilience programs, such as evacuation centers and early warning
systems, shall be implemented.

(c) Allocation Criteria. The allocation of funds shall be performance-based. The
following criteria shall be applied:

(1) Only LGUs achieving the Seal of Good Local Governance shall be eligible
to access the Fund;

(2) Fund allocations shall be proportional to the LGU’s performance score in
the SGLG assessment, as determined by the Department of the Interior and
Local Government;

(3) LGUs shall submit project proposals aligned with their Local Development
Plans, subject to approval by the Department of the Interior and Local
Government; and

(4) Fund utilization shall be monitored through geo-tagged reports submitted
by LGUs, ensuring transparency.

SEC. 6. Mandates for Implementation. — To ensure the effective implementation of this,
Act, the following mandates shall be enforced:

(a) National Government Agencies. National agencies shall lead policy
implementation and coordination. The following responsibilities shall be assigned:

(1) The Department of the Interior and Local Government shall oversee the

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SGLG assessment, administer the Special Local Government Support Fund,
and provide technical assistance;

(2) The Department of Budget and Management shall ensure adequate funding
for the Fund through National Tax Allotment allocations and General
Appropriations Act appropriations;

(3) The Commission on Audit shall conduct regular audits of Fund
disbursements to ensure compliance with Republic Act No. 9184;

(4) The Department of Social Welfare and Development shall support LGUs in
aligning social protection programs with SGLG criteria; and

(5) The Department of Environment and Natural Resources shall assist LGUs
in meeting environmental management standards for SGLG eligibility.

(b) Local Government Units. LGUs shall comply with SGLG requirements and utilize
Fund allocations effectively. The following mandates shall be enforced:

(1) LGUs shall participate in the annual SGLG assessment, submitting required
data through the digital platform;

(2) A Local Governance Performance Plan, aligned with the Local
Development Plan and approved by the local sanggunian, shall be submitted
to qualify for SGLG assessment;

(3) A registry of local development projects funded by the Special Local
Government Support Fund shall be maintained, in coordination with the
Department of the Interior and Local Government;

(4) LGUs shall allocate a portion of their general funds to support SGLG-related
capacity-building and project implementation, as determined by the local

sanggunian; and

(5) LGUs shall publish SGLG assessment results and Fund utilization reports
on their official websites to ensure transparency.

(©) Private Sector and Civil Society. Non-government stakeholders shall support
implementation. The following roles shall be encouraged:

(1) Private sector partners shall provide technical expertise, training, and
infrastructure support through public-private partnerships;

(2) Civil society organizations shall participate in SGLG validation teams and

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conduct advocacy for good governance; and

(3) Academic institutions shall develop training modules to enhance LGU
capacity for SGLG compliance.

SEC. 7. Inter-Agency Convergence Program. - The Good Local Governance
Convergence Program, chaired by the Department of the Interior and Local Government, is
hereby established, with the Department of Budget and Management, Commission on Audit,
Department of Social Welfare and Development, Department of Environment and Natural
Resources, and Department of Health as members. The Program shall undertake the following:

(a) An annual Good Local Governance Implementation Plan targeting low-performing
LGUs for capacity-building shall be published;

(b) National agency budgets and Special Local Government Support Fund allocations
shall be coordinated under a unified framework;

(c) The effectiveness of the SGLG assessment and Fund utilization shall be evaluated
annually, with reports submitted to Congress; and

(@ LGU performance shall be monitored using the Seal of Good Local Governance
metrics, integrated with other national governance standards.

SEC. 8. Anti-Corruption Safeguards. - Disbursements from the Special Local
Government Support Fund and national agency budgets for the SGLG Program shall comply
with Republic Act No. 9184, otherwise known as the Government Procurement Reform Act,
and be subject to audit by the Commission on Audit. Local government units and agencies
shall publish fund utilization reports on their official websites, including geo-tagged project
documentation, to ensure transparency and accountability.

SEC. 9. Implementing Rules and Regulations. — Within sixty (60) days from the
effectivity of this Act, the Department of the Interior and Local Government, in coordination
with the Department of Budget and Management, Commission on Audit, Department of Social
Welfare and Development, Department of Environment and Natural Resources, and
Department of Health, shall promulgate the implementing rules and regulations to ensure
effective execution of this Act.

SEC. 10. Appropriations. - The amount necessary for the initial implementation of this,
Act, including the establishment of the Special Local Government Support Fund and SGLG
assessment processes, shall be charged against the current year’s appropriations of the
Department of the Interior and Local Government. Subsequent funding shall be included in the
annual General Appropriations Act, supplemented by National Tax Allotment allocations.

SEC. 11. Separability Clause. — If any provision of this Act is declared
unconstitutional, the remaining provisions shall remain in full force and effect.

SEC. 12. Repealing Clause.— All laws, decrees, executive orders, rules, and regulations
inconsistent with this Act are hereby repealed or modified accordingly.

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SEC. 13. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,

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