Revised Government Compensation and Classification

Policy and governance framework

Section 2 declares the State policy to provide equal pay for substantially equal work and to base pay differences on substantive differences in duties and responsibilities and qualification requirements.
Section 2 directs DBM, through a unified system under Presidential Decree No. 985 (as amended), to establish and administer the Compensation and Position Classification System for government.
Section 3 requires the system to follow the principles that:
- all government personnel must be paid just and equitable wages; and
- while pay distinctions must exist with work distinctions, the ratio between higher and lower ranks must be kept equitable, considering higher percentage increases for lower level positions and lower percentage increases for higher level positions.
Section 3 requires basic compensation (including in government-owned or controlled corporations and financial institutions) to generally be comparable with the private sector for comparable work and to comply with laws on minimum wages.
Section 3 requires maintaining total compensation at a reasonable level in proportion to the national budget.
Section 3 requires periodic review of government compensation rates to account for inflation and possible erosion in purchasing power.

Coverage and who is included

Section 4 applies the Compensation and Position Classification System to all positions in the government that are appointive or elective, on full or part-time basis, whether existing or later created.
Section 4 covers positions in:
- government-owned or controlled corporations and government financial institutions, whether governmental or proprietary in function.
Section 4 defines “government” to include the Executive, Legislative, and Judicial Branches, and Constitutional Commissions, including departments, bureaus, offices, boards, commissions, courts, tribunals, councils, authorities, administrations, centers, institutes, state colleges and universities, local government units, and the armed forces.
Section 4 defines “government-owned or controlled corporations and financial institutions” as those owned or controlled by the National Government, regardless of whether they perform governmental or proprietary functions.

Position classification system structure

Section 5 establishes that the Position Classification System consists of classes of positions grouped into four main categories plus implementing rules:
- professional supervisory
- professional non-supervisory
- sub-professional supervisory
- sub-professional non-supervisory
Section 5 defines professional supervisory positions as responsible managerial positions involving management functions (planning, organizing, directing, coordinating, controlling, overseeing within delegated authority), requiring professional/technical/scientific knowledge and experience, and assigning Salary Grade 9 to Salary Grade 33.
Section 5 defines professional non-supervisory positions as positions requiring exercise of a profession or application of professional knowledge acquired through formal training, or natural/creative/artistic ability, including research functions and religious/educational/legal/artistic/literary functions, assigning Salary Grade 8 to Salary Grade 30.
Section 5 defines sub-professional supervisory positions as supervisory functions over groups of employees engaged in responsible work along technical/manual/clerical lines short of professional work, requiring training and moderate experience or lower training but considerable experience and knowledge of a limited subject matter or skills, assigning Salary Grade 4 to Salary Grade 18.
Section 5 defines sub-professional non-supervisory positions as structured work supporting office or fiscal operations or crafts/trades/manual work, typically requiring skills from training/experience or completion of elementary/secondary/vocational education or up to two (2) years of college education, assigning Salary Grade 1 to Salary Grade 10.

Occupational index and salary grades

Section 6 requires DBM to prepare an Index of Occupational Services, Position Titles and Salary Grades for allocation of all covered positions to proper position titles and salary grades.
Section 7 requires DBM to implement the Salary Schedule prescribed by the Act for positions paid on annual or monthly rate basis.
The Salary Schedule uses monthly rates in pesos, which represent full compensation for full-time employment, regardless of where the work is performed.
Section 7 provides that salaries for part-time services must be adjusted proportionately.
Section 7 requires DBM to update the schedule whenever there are across-the-board salary adjustments provided by law.
Section 7 sets the daily wage rate by dividing the monthly salary rate by twenty-two (22) working days per month.

Salary schedule and constitutional officials

Section 7 prescribes monthly salary rates by Salary Grade with “a” and “1st/2nd/3rd/…” steps as shown in the Act’s Salary Schedule, covering Grades 1 to 33 (including step variations for grades with “a” sub-grades and entries for 31a, 32a, 33a).
Section 8 sets salaries of constitutional officials and equivalents by the Salary Grades below:
- President of the Philippines — 33
- Vice-President of the Philippines — 32
- President of the Senate — 32
- Speaker of the House of Representatives — 32
- Chief Justice of the Supreme Court — 32
- Senator — 31
- Member of the House of Representatives — 31
- Associate Justices of the Supreme Court — 31
- Chairman of a Constitutional Commission under Article IX, 1987 Constitution — 31
- Member of a Constitutional Commission under Article IX, 1987 Constitution — 30
Section 8 authorizes DBM to determine officials that are organizationally equivalent and assign the same salary grades, using these guidelines:
- Grade 33a is limited to the President of the Republic of the Philippines as the highest position; no other position is considered equivalent.
- Grade 32a is limited to the Vice-President and heads of the Legislative and Judicial Branches (Senate President, Speaker, Chief Justice); no other position is equivalent.
- Grade 31a is assigned to Senators and Members of the House, and equivalent ranks including the Executive Secretary, Department Secretary, Presidential Spokesman, Ombudsman, Press Secretary, Presidential Assistant with Cabinet Rank, Presidential Adviser, National Economic and Development Authority Director General, Court of Appeals Presiding Justice, Sandiganbayan Presiding Justice, Secretary of the Senate, Secretary of the House, and President of the University of the Philippines; entities comparable in scope and the head comparable to a Department Secretary may be treated as equivalent.
- Grade 30a includes specified department- and agency-level positions and comparable heads of nationwide or broadly scoped councils/commissions/boards.
- Equivalent rank for positions not mentioned or created later is determined based on these guidelines.
Section 8 delays salary upgrades for constitutional officials until consistent with the Constitution, and imposes additional implementation limits for increases:
- for the President and Vice-President, President of the Senate, Speaker, Senators, and Members of the House, no increase in salary takes effect even beyond 1992 until the Act is amended.
- implementation for Assistant Secretaries and Undersecretaries is deferred by one (1) year from effectivity, and for Secretaries is deferred until July 1, 1992.
- in the case of Assistant Secretaries, Undersecretaries, and Secretaries, the salary rates authorized are used in computing retirement benefits for those who retire under existing retirement laws within the deferred period.

Other positions, LGU rates, and uniformed personnel

Section 9 directs DBM to prepare an Index of Occupational Services for positions below the constitutional officials and their equivalents, using the Benchmark Position Schedule and factors including education/experience, complexity, supervision, mental/physical strain, internal/external relationships, decision-making responsibility, accuracy/records/report accountability, accountability for funds/properties/equipment, and hardship/hazard/personal risk.
Section 9 provides a Benchmark Position Schedule that assigns salary grades to listed titles such as:
- Laborer I — 1
- Messenger — 2
- Clerk I — 3
- Driver I — 3
- Stenographer I — 4
- Mechanic I — 4
- Carpenter II — 5
- Electrician II — 6
- Secretary I — 7
- Bookkeeper — 8
- Administrative Assistant — 8
- Education Research Assistant I — 9
- Cashier I — 10
- Nurse I — 10
- Teacher I — 10
- Agrarian Reform Program Technologist — 10
- Budget Officer I — 11
- Chemist I — 11
- Agriculturist I — 11
- Social Welfare Officer I — 11
- Engineer I — 12
- Veterinarian I — 13
- Legal Officer I — 14
- Administrative Officer II — 15
- Dentist II — 16
- Postmaster IV — 17
- Forester III — 18
- Associate Professor I — 19
- Rural Health Physician — 20
Section 9 caps compensation for the chairman, president, general manager, or administrator and the board of directors of government-owned or controlled corporations and financial institutions so that their salary may not exceed Salary Grade 30, and gives the President authority to approve higher compensation only in truly exceptional cases.
Section 10 requires LGU pay rates to be determined based on the class and financial capability of each LGU, but sets ceilings as percentages of the Section 7 salary schedule:
- Provinces/Cities: Special Cities 100%, 1st Class 100%, 2nd Class 95%, 3rd Class 90%, 4th Class 85%, 5th Class 80%, 6th Class 75%
- Municipalities: Special Cities 100%, 1st Class 90%, 2nd Class 85%, 3rd Class 80%, 4th Class 75%, 5th Class 70%, 6th Class 65%
Section 11 sets base pay of uniformed personnel of the Armed Forces of the Philippines and the Integrated National Police based on the salary schedule in R.A. No. 6638 and H.A. No. 6648, and sets longevity pay based on R.A. No. 6638 and R.A. No. 1134 as amended by R.A. No. 3725 and H.A. No. 6648.
Section 11 includes in the Integrated National Police longevity pay services rendered before police integration as uniformed members of the police, jail, and fire departments of local government units.
Section 11 provides that existing allowances for uniformed personnel (including cost of living allowance, longevity pay, quarters allowance, subsistence allowance, clothing allowance, hazard pay, and other allowances) continue to be authorized.

Allowance integration, pay adjustments, and system administration

Section 12 consolidates allowances into standardized salary rates by deeming that all allowances are included except the following:
- representation and transportation allowances
- clothing and laundry allowances
- subsistence allowance of marine officers and crew on board government vessels and hospital personnel
- hazard pay
- allowances of foreign service personnel stationed abroad
- other additional compensation not otherwise specified herein as determined by DBM
Section 12 provides that other additional compensation received by incumbents only as of July 1, 1989 that is not integrated continues to be authorized.
Section 12 requires that existing additional compensation of any national government official or employee paid from local funds of an LGU must be absorbed into the basic salary of the official or employee and paid by the National Government.
Section 13 amends Paragraphs (b) and (c) of Section 15 of Presidential Decree No. 985 so that:
- Pay Reduction: moving an employee from a higher to a lower class does not cause reduction in salary if the movement is not the result of disciplinary action or voluntary demotion.
- Step Increments: effective January 1, 1990, step increments must be granted based on merit and/or length of service in accordance with rules and regulations jointly promulgated by DBM and the Civil Service Commission.
Section 14 amends Subparagraph (a) of Section 17 of Presidential Decree No. 985 so that the DBM must administer the compensation and position classification system established and revise it as necessary.
Section 15 updates references in Presidential Decree No. 985 and Presidential Decree No. 1597 by substituting:
- “Commissioner of the Budget,” “Budget Commission,” or “Commission” and “Office of Compensation and Position Classification” or “OCPC” with the Secretary of Budget and Management, DBM, and the Compensation and Position Classification Bureau (CPCB), respectively.

Transition allowances and COA independence restrictions

Section 17 provides that incumbents receiving aggregate compensation/fringe benefits exceeding the standardized salary rate continue receiving the excess as transition allowance.
Section 17 requires that transition allowance be reduced by the amount of salary adjustment the incumbent receives in the future.
Section 17 treats transition allowance as part of basic salary for purposes of computing retirement pay, year-end bonus, and other similar benefits.
Section 17 requires that, as basis for computation of the first across-the-board salary adjustment for incumbents with transition allowance, no incumbent receiving compensation exceeding the standardized salary rate at the Act’s effectivity date may be assigned a salary lower than ninety percent (90%) of the present compensation or the standardized salary rate, whichever is higher.
Section 17 requires subsequent increases to be based on the resultant adjusted salary.
Section 18 prohibits COA officials and employees from receiving salaries, honoraria, bonuses, allowances, or other emoluments from any government entity, LGU, government-owned or controlled corporation, or government financial institution, except compensation paid directly by COA out of its appropriations and contributions.
Section 18 also prohibits government entities (including GOCCs and financial institutions and LGUs) from assessing or billing other government entities to pay additional compensation to COA officials and employees for services rendered as part of their regular functions.

Funding, separability, and repeal rules

Section 19 establishes funding sources for implementation:
- For national government entities, funding comes from appropriations set aside in the 1989 General Appropriations Act and from savings generated; thereafter, needed amounts are included in the annual General Appropriations Act.
- For LGUs, funding comes from their respective funds; LGUs without adequate funds implement rates only partially as approved by the Joint Commission under Section 3 of Presidential Decree No. 1136.
- Partial implementation for LGUs must be uniform and proportionate for all positions within each LGU.
- Savings from National Assistance to Local Government Units (NALGU) funds may be used.
- For government corporations, funding comes from their respective corporate funds.
Section 20 provides separability: if any section or provision is declared unconstitutional or invalid, the other sections remain in full force and effect.
Section 21 preserves Presidential Decree No. 985 (as amended by Presidential Decree No. 1597) provisions that are not inconsistent with this Act and are not expressly modified, revoked, or repealed.
Section 22 provides the general repealing rule: all laws, decrees, orders, rules, regulations, or parts inconsistent with the Act are repealed, amended, or modified accordingly.
Section 16 specifically repeals laws, decrees, executive orders, corporate charters, and other issuances (or parts) that:
- exempt agencies from the System’s coverage, or
- authorize and fix position classification, salaries, pay rates, or allowances of specified positions or groups of officials/employees, or agencies,
- in a manner inconsistent with the System, including the proviso under Section 2 and Section 16 of Presidential Decree No. 985.

Implementing position allocation and consolidated effect

Section 6 and Section 23 require DBM to implement and issue guidelines necessary for applying the classification and salary framework through allocation of positions and issuance of implementing guidelines within sixty (60) days after approval.
The Act consolidates House Bill No. 10054 and Senate Bill 862, and was finally passed on August 9, 1989.