QuestionsQuestions (Republic Act No. 4477)
They are First to Seventh class, determined by the province/city’s average total revenue during the last four fiscal years (as certified by the Auditor General), with specific revenue thresholds in the law.
Manila, Quezon City, and the City of Trece Martires are excluded (as stated in Sections 1 and 2).
“Revenue” means all revenues and receipts accruing to the province or city except specified items, including proceeds from bond issues, loan proceeds/repayments, aids from the National Government, private contributions, return of advances, sale of fixed assets or real property income, prior-year/inventory adjustments, and other non-regularly recurring receipts.
The first classification takes effect on July 1, 1965. It is based on the average total revenue during the last four fiscal years immediately preceding such classification (per the certification rule in Section 2).
It is classified based on its average income during the lesser number of full fiscal years, or based on the fiscal year immediately following its organization as such province/city.
No readjustment may be made oftener than once in four consecutive fiscal years after the first classification, except in cases of diminishing revenues where the Secretary of Finance may order a readjustment at any time.
If the province’s general fund incurs an overdraft or operating expenses exceed revenue collections, the provincial board must make a proportional reduction, or the President (upon recommendation of the Secretary of Finance) may reduce salaries to the maximum rates in the next lower class or further down to levels the province can afford.
A uniform percentage reduction must be applied to all affected salaries.
One-half of the salary of the provincial auditor and provincial health officer (and assistant counterparts) is paid out of national funds; the other half is paid out of the funds of the province, with the rule that increases borne by the province until the National Government’s share is provided in the General Appropriations Act.
It uses bed capacity ranges and provides that the chief of hospital receives the salary corresponding to a certain class of province based on the number of beds; it also includes a special provision for training/teaching hospitals with a school of nursing.
It may not exceed certain percentages of the ordinary and regular income that accrued to the general fund during the preceding fiscal year, excluding balances carried forward, transfers from other funds, and receipts from loans, aids, or gifts.
First: 50% (provinces) and 55% (cities); Second: 55% (provinces) and 60% (cities); Third/Fourth: 60% (provinces) and 65% (cities); Fifth: 65% (provinces) and 70% (cities); Sixth: 70% (provinces) and 75% (cities); Seventh: 80% (provinces) and 85% (cities).
The fixed percentages are based on the reduced current fiscal year income for that general fund.
The Secretary of Finance may authorize a province or city to exceed the percentages under conditions he may impose.
The rates fixed for First Class-A cities apply to Quezon City if such rates are higher than those currently provided by existing laws.
They automatically become entitled to the benefits under RA 4477, subject to the proviso conditions stated in Section 7.