Policy, purpose, and mandate
- Local governments must implement the second phase of the Revised CPS to reflect the increase of one thousand pesos (P1,000.00) in the basic salaries as of December 31, 1994 for local government personnel, effective January 1, 1995.
- Salary adjustments under the Circular must be carried out under the Revised Compensation and Position Classification System mandated by Executive Order No. 218.
Key definitions used
- “Present salary of an incumbent” means the actual basic salary rates received as of December 31, 1994, exclusive of PERA (Personnel Economic Relief Allowance), Additional Compensation, representation and transportation allowances, bonus and cash gift, honorarium, and any other form of additional compensation.
- “Transition allowance” means the excess of the present salary over the eight step of the grade allocation of the employee’s position.
Salary grade and basic pay rules
- LGUs must maintain the salary grades and the corresponding salary grade allocation in the salary schedule prescribed under Republic Act No. 6758.
- Effective January 1, 1995, salary rates must be adjusted pursuant to Section 1 of Executive Order No. 218, as shown in the Interim Salary Schedules in Annexes “A” to “H”.
- Incumbents must receive the salary rates corresponding to their designated salary steps in the salary grade allocation of their positions as of December 31, 1994.
- Incumbents with transition allowance must receive the authorized salary adjustment; the excess of the adjusted salary over the prescribed rates is treated as advance implementation of the Revised CPS under Joint Senate and House Resolution No. 1, s. 1994.
- Appointments effective January 1, 1995 and thereafter must be at the first step of the salary grade allocation of the position prescribed under the Circular.
- If an appointee already received a higher salary than the first step under an approved permanent appointment, the existing salary rules apply.
- Personnel Economic Relief Allowance (PERA) and Additional Compensation must continue to be paid as allowances and must not be integrated into basic salary rates in the Interim Salary Schedules.
- Contractual employees whose salaries are paid out of lump sum appropriations or project funds may be entitled to not more than 120% of the adjusted minimum hiring rate of comparable regular positions.
- For daily paid employees, wage rates must be computed by dividing the monthly salary rate in the Interim Salary Schedules by twenty-two (22) working days.
- For daily paid employees, the total wages received in a month must not exceed the monthly salary rate used in the computation.
- The rates in the Interim Salary Schedules must be used for computing retirement pay, year-end bonus, and other similar benefits.
Funding, budgeting, and local implementation limits
- The amount necessary for the second phase implementation must come from the respective funds of the LGUs.
- The amount must be provided for in an appropriation ordinance enacted by the local Sangguniang Panlalawigan/Panlungsod/Bayan.
- If local funds are insufficient, salary increases must be implemented partially and proportionately for all positions in the LGU.
- The partial implementation must be fixed at a uniform rate/amount such that no official or employee receives a salary increase higher than that of any other employee in the same LGU, subject to the exception rules for devolved personnel under the Circular.
- The Provincial Governor, City Mayor, or Municipal Mayor concerned is held personally liable for any salary adjustment payment not in accordance with the Circular, without prejudice to refund of any excess payment by the employee concerned.
Special rules for public health workers
- Locally-paid public health workers—whether devolved or otherwise—must receive the salary rates shown in the Annex of the Interim Salary Schedules, notwithstanding the income classification of the LGU where assigned.
- LGUs without adequate or sufficient funds must implement the established health worker rates only partially and uniformly and proportionately for their health workers.
- Partial implementation for health workers must not prejudice financial assistance that may be availed of from the Department of Health for differentials required under Executive Order No. 215 and Administrative Order No. 170.
Prohibitions, retroactivity, and classification limits
- Local Chief Executives and their relevant sanggunian bodies—the Sangguniang Panlalawigan/Panlungsod/Bayan—are prohibited from granting any salary adjustment in excess of the amounts authorized in the Circular.
- LGUs unable to implement the salary adjustment in the current year are prohibited from implementing the same retroactively in future years, in consonance with Section 325(g) of Republic Act No. 7160.
- In adopting a higher salary schedule, LGUs must not alter the existing classification of the LGU.
Contributions and mandatory insurance coverage
- Authorized salary adjustments are subject to mandatory requirements for:
- GSIS life and retirement insurance premiums, and
- Home Development Mutual Fund (HDMF) contributions,
- applicable when the recipient is a member of GSIS and HDMF, pursuant to Republic Act No. 660 and CA 186.
Adoption of higher salary schedules by lower-class LGUs
- LGUs lower than special cities and first class provinces and cities may adopt the salary schedule for higher class LGUs subject to conditions/limitations.
- The adopting LGU must be financially capable.
- The adopted salary schedule must be uniformly applied to all positions in the LGU concerned.
- The salary schedule for Special and Highly Urbanized Cities and first class Provinces and Cities must not be higher than that adopted by the national government.
- When implementing a new and higher salary schedule, the LGU must retain the salary grade allocation of positions and the salary steps of personnel.
- Adoption is subject to budgetary and general limitations on Personal Services Expenditures mandated under Sections 324 and 325 of Republic Act No. 7160.
- For component cities and municipalities, the adopted salary schedule must not be higher than that of the Province or City where they belong.
- Adoption of a higher salary schedule must not alter the existing classification of the LGU concerned.
Allowance provision for uniforms and clothing
- The Local Chief Executive, with approval of the Sanggunian, may grant uniform/clothing allowance to local government officials and employees at rates not exceeding P1,500.00 each per annum.
- The uniform/clothing allowance must be granted in lieu of any similar grant, in cash or in kind, of the same amount or value to employees.
Responsibility, saving clause, and effectivity
- Cases not governed by the Circular’s provisions must be referred to the Secretary of Budget and Management for resolution.
- The Circular takes effect on January 1, 1995.