Legal basis and related issuances
- The Circular implements the salary schedule framework authorized under Republic Act No. 6758 for salary grades and allocations.
- The Circular references Executive Order No. 164 for adoption of the salary grade changes under Joint Senate and House of Representatives Resolution No. 1, s. 1994.
- The Circular applies funding rules under RA 7845 and the 1995 General Appropriations Act through the Compensation Adjustment Fund and other set-aside appropriations.
- DBM fund release is tied to National Budget Circular No. 437, dated January 2, 1995.
- Post-audit and reporting mechanics are implemented through DBM’s Compensation and Position Classification Bureau (CPCB) and DBM Regional Offices.
- Compensation mechanics reference the Constitution’s timing rules under Section 6, Article VII and Section 10, Article VI for certain national officials and legislators.
- The Circular recognizes mandatory contributions under Republic Act No. 660 and CA 186, covering GSIS life and retirement insurance premiums and related retirement and life insurance requirements.
- Compensation adjustment notifications must use DBM forms Annex A (For Individuals) and Annex B (For Groups).
Purpose and policy intent
- The Circular prescribes rules to govern the second year implementation of the new government salary schedule mandated by Executive Order No. 218.
- The salary adjustments authorized must align with the Interim Salary Schedule and the authorized adjustments for January 1, 1995.
Coverage and exempted personnel
- The Circular applies to all positions, whether permanent, temporary, contractual, casual, or emergency in nature.
- Coverage includes positions that are appointive or elective, and full-time or part-time, whether existing or later created.
- Covered entities include the national government, state universities and colleges, and government-owned and/or controlled corporations and financial institutions.
- Officials and employees of agencies that are exempt from the Position Classification and Compensation System and/or do not follow the Salary Schedule prescribed for government employees are exempt.
- Consultants and experts hired by government for a limited period for specific activities with expected outputs are exempt if they continue compensation under existing applicable laws, rules, and regulations until revised or amended.
- Student laborers and apprentices and others similarly situated are exempt if they continue compensation under existing applicable laws, rules, and regulations until revised or amended.
- Laborers hired as part of a job or contract (pakiao), those paid on piecework basis (including mail contractors), and similarly situated workers are exempt.
Key definitions for salary computation
- “Present salary” means the actual basic salary rates received as of December 31, 1994, excluding PERA, Additional Compensation, representation and transportation allowances, bonus and cash-gift, honorarium, and any other forms of additional compensation usually paid in addition to basic salary.
- “Transition allowance” means the excess of the present salary over the eight step of the grade allocation of the employee’s position.
- “Over-and-above allowance” means additional compensation other than basic salary regularly paid on a monthly basis by LGUs to public school teachers prior to July 1, 1989, and which was added over and above their basic salary.
Compensation rules and salary adjustments
- Salary grades under the prescribed salary schedule under Republic Act No. 6758 and the corresponding salary grade allocations of positions must be maintained.
- For purposes of the authorized increase, the monetary value of each salary step is adjusted effective January 1, 1995 through the Interim Salary Schedule referenced in the Circular.
- Incumbents must receive salary rates corresponding to their designated salary steps in the salary grade allocation of their positions as of December 31, 1995.
- Incumbents whose positions were moved to a higher salary grade allocation under Joint Senate and House of Representatives Resolution No. 1, s. 1994 as adopted under EO No. 164 must continue receiving the salary rate of their old salary grade allocation as of December 31, 1994.
- Incumbents with transition allowance and/or over-and-above allowance must receive the salary adjustments authorized, and the excess of their adjusted salary over prescribed salary rates is treated as advance implementation of the Salary Schedule contained under Joint Senate and House Representatives Resolution No. 1, s. 1994 as adopted by EO No. 164.
- Appointments effective January 1, 1995 and thereafter must be at the first step of the salary grade allocation of the position.
- If an appointee previously received under an approved permanent appointment a salary higher than the first step, the existing salary rules apply.
- PERA and Additional Compensation must continue to be paid as allowances and are not integrated into the basic salary rates in the Interim Salary Schedule.
- 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.
- Wage rates of daily paid employees must be computed by dividing the monthly salary rate in the Interim Salary Schedule by twenty-two (22) working days.
- Total wages received by a daily paid employee in a month must not exceed the monthly salary rate shown in the Interim Salary Schedule.
- The Interim Salary Schedule rates must be used as the basis for computing retirement pay, year-end bonus, and other similar benefits.
- Salary adjustments for the President, Vice-President, and Members of the House of Representatives take effect only after the expiration of their respective present terms, and salary adjustments for Senators take effect only after the expiration of the term of all incumbent Senators, in accordance with Section 6, Article VII and Section 10, Article VI of the Constitution.
- Uniformed personnel of the Department of National Defense, the Department of Interior and Local Government, and the commissioned officers and enlisted personnel of the NAMRIA must be paid in accordance with the salary schedule shown in the Circular’s referenced schedule.
Prohibition on exceeding authorized adjustments
- Heads of all national government agencies and corporate entities are prohibited from granting any salary adjustment in excess of the amounts authorized by the Circular.
Funding, cash allocation, and payment steps
- For national government agencies, the implementation amounts must be charged against the Compensation Adjustment Fund and such other appropriations set aside for the purpose under RA 7845 and the 1995 General Appropriations Act.
- Any deficiency for national government agencies must be charged against savings in agency appropriations.
- For government corporations, implementation amounts must come from their respective corporate funds.
- Government corporations without adequate or sufficient funds must implement the established rates only partially, provided that partial implementation is uniform and proportionate for all positions within each government corporation.
- DBM must release the covering Notice of Cash Allocation (NCA) needed to implement the salary adjustment in accordance with National Budget Circular No. 437 dated January 2, 1995.
- Agencies must pay the required salary adjustment upon receipt of the NCA.
- Any salary adjustment under the Circular is subject to appropriate adjustments if found not in order upon review by DBM.
- Heads of agencies must notify affected officials/employees of the salary adjustment through a Notice of Salary Adjustment (For Individuals, Annex A).
- A copy of the Notice of Salary Adjustment (for individuals) must be furnished to the GSIS if the official/employee is a member thereof.
- For similar information covers groups (including classification of position, salary grade, present salary, and adjusted salary), a Notice of Salary Adjustment (For Groups, Annex B) must be issued in lieu of the individual form.
- A copy of the group notice must be furnished to the GSIS if the beneficiaries are members thereof.
Post-audit, documents, deadlines, and distribution
- Agencies must prepare a Plantilla of Personnel and Salary Adjustment Form (PPSAF) for post-audit, using the form prescribed under the Circular’s annexes.
- Separate PPSAF forms must be prepared for contractual, casual, and emergency positions.
- For each PPSAF, the original and three (3) copies must be certified correct by the Human Resource Management Officer/Administrative Officer and approved by the Head of the government agency.
- PPSAF submission for post-audit must be made within thirty (30) days after the grant of the salary adjustment.
- PPSAF submissions go to CPCB, DBM, or the appropriate DBM Regional Office for regionalized offices.
- CPCB or the DBM Regional Office must examine and verify the PPSAF based on its records and certify them accordingly.
- Certified PPSAF copies must be distributed as follows:
- One copy to the Civil Service Commission Regional Office and Field Office concerned.
- One copy to the Commission on Audit, for compliance with auditing requirements.
- One copy to the Office of origin.
- The original must remain with CPCB or the concerned DBM Regional Office for records, control, and post-audit purposes.
Agency head accountability and contributions
- The Head of agency is responsible for submitting the required reports.
- The Head of agency is personally liable for any salary adjustment payment made not in accordance with the Circular, without prejudice to the refund of any excess payment by the employee concerned.
- Salary adjustments authorized by the Circular are subject to mandatory GSIS life and retirement insurance premiums requirements.
- HDMF contributions must be made if the recipient is a member of GSIS and HDMF, pursuant to RA 660 and CA 186 with respect to retirement and life insurance premiums.
Administrative resolution and effectivity
- Cases not covered by the Circular’s provisions must be referred to the Secretary of Budget and Management for resolution.