Guidelines for implementing revised PCCS in local gov

Legal basis and linked issuances

The circular is issued to implement the revised PCCS in local government under Senate-House of Representatives Joint Resolution No. 01, Series of 1994.
The adoption of the PCCS is tied to Executive Order (EO) No. 389 dated December 28, 1996.
The circular’s salary schedules are required to conform with Section 10 of Republic Act No. 6758.
Implementation rules on local flexibility are anchored on Section 8 of EO 389.
The circular recognizes the Personal Services limitation under Section 325(a) of Republic Act No. 7160 when earlier implementation creates differences subject to that limit.
Compensation rules incorporate related statutes including Republic Act No. 7305 (Public Health Workers rates), Republic Act No. 660 and Republic Act No. 1616 (retirement benefits), and Republic Act No. 7305 (PHWs).
Salary flexibility and reversion rules reference LBC Nos. 56 and 63, and LBC No. 56 dated January 25, 1995.

Policy, purpose, and scope

The circular’s purpose is to prescribe the rules and regulations for the final phase of revised PCCS implementation in local government.
Coverage includes all positions in Local Government Units (LGUs), whether permanent, temporary, contractual, casual, or emergency, and whether appointive or elective, and whether full-time or part-time.
Coverage applies to positions now existing or hereafter created in the LGUs.
Implementation includes salary adjustments with effective dates covering January 1, 1997 and November 1, 1997.

Defined terms governing pay

“Present salary” is defined as the actual basic salary rates received as of December 31, 1996 for the adjustment effective January 1, 1997 and as of October 31, 1997 for the adjustment effective November 1, 1997.
“Present salary” includes transition allowance, but excludes Personnel Economic Relief Allowance (PERA), Additional Compensation (ADCOM), representation and transportation allowances (RATA), year-end bonus and cash gift, honoraria, the 20% premium over the basic pay of contractual personnel, and any other form of additional compensation.
“Transition allowance” is defined as the excess of the present salary over the eighth step of the salary grade allocation of the employee’s position.

Salary schedules and implementation dates

Effective January 1, 1997, salary rates are adjusted in accordance with the Fourth Interim Salary Schedules, attached and marked as Annexes A-1 to A-8.
Effective November 1, 1997, salary rates are adjusted in accordance with the attached salary schedules marked as Annexes B-1 to B-8.
Each LGU may set its own schedule for the final phase of salary increases depending on financial capability, consistent with Section 8 of EO 389.
Where the Annex “B” schedule is implemented earlier than November 1, 1997, the difference between those Annex “B” rates and the Annex “A” rates is subject to the Personal Services limitation under Section 325(a) of RA 7160.
The attached salary schedules are prepared in strict conformance with Section 10 of RA 6758.
Successive across-the-board increases under LBC Nos. 54 and 56 are treated as having resulted in salary rates exceeding those allowable under RA 6758, and such excess rates are treated as advance salary adjustments.

Compensation rules and retirement/separation computations

Salary grades in the prescribed salary schedule under RA 6758 and the corresponding salary grade allocation of positions under it must be maintained (Section 6.1).
Incumbents receive the salary rates corresponding to their designated salary steps in their salary grade allocation as of December 31, 1996 for the January 1, 1997 adjustment and as of October 31, 1997 for the November 1, 1997 adjustment.
Appointments made after implementation of the salary adjustment must be at the first step of the salary grade allocation of the position in the applicable salary schedule under Item 5.1, and are subject to compensation rules in Annex “C”.
Devolved personnel whose salaries are equal to their organic local counterparts are entitled to the same adjusted salary as their organic local counterparts.
Public Health Workers (PHWs) under RA 7305 must have salary rates as indicated in Annex A-I and Annex B-I, notwithstanding the income classification of the local government units where they are assigned.
The transition allowance is treated as advance payment for the authorized salary increase; any excess must be deducted from whatever salary adjustments the employee may receive in the future.
PERA and ADCOM continue to be paid as allowances and are not integrated into the basic salary rates contained in the salary schedules under Items 5.1.1 and 5.1.2.
Contractual employees whose salaries are paid out of lump-sum appropriations or project funds may be entitled to a premium of not more than 20% of the adjusted minimum hiring rate of comparable regular positions.
Daily paid employees’ wage rates are computed by dividing the monthly salary rate in the attached salary schedules by 22 working days, provided the total wages in a month must not exceed the monthly salary rate.
Once implemented, the rates in the salary schedules plus transition allowance (for employees with transition allowance) are the basis for computing retirement pay, year-end bonus, and other similar benefits.
For those compulsorily separated from government service in 1997 but before full implementation effective November 1, 1997 (including separation due to reaching mandatory retirement age or due to death, sickness/disability), retirement/separation gratuity and accumulated leave credits are computed using: (a) the salary rate in the relevant Annex B-1 to B-8 corresponding to the previous designated salary step, plus (b) the remaining balance of transition allowance, if any.
If local funds are insufficient to implement the salary schedule for the LGU’s income class, salary increases under the circular must be implemented partially and proportionately for all positions in the concerned LGU.
For separation due to compulsory retirement, the employee must be given an option to retire pursuant to RA No. 660, but the employee must still be paid by the last employer the difference between: (a) the lump-sum amount under RA No. 660 and (b) the retirement benefit the employee would have received under RA No. 1616.
An employee who opts to be compulsorily retired under RA No. 1616 must be paid only the retirement benefits under RA No. 1616.

Honoraria, adoption/reversion, and honoraria adjustments

The circular adjusts the maximum honoraria rates prescribed under LBC No. 63 for barangay officials and employees based on the salary schedules authorized in the circular.
LGUs lower than special cities and first class provinces and cities may adopt the salary schedule for higher class LGUs, subject to conditions and limitations enumerated under LBC No. 56 dated January 25, 1995.
An LGU that adopted a higher salary schedule may opt to revert to the prescribed salary schedule based on its income classification, with the rule that no personnel must suffer diminution in pay as a result of the reversion.

Prohibitions, funding, and resolution of coverage gaps

The Local Chief Executive and/or the Sangguniang Panlalawigan/Panlungsod/Bayan/Barangay are prohibited from granting any salary adjustment in excess of the amounts authorized in the circular.
Implementation funding must come from the respective funds of the LGUs.
The required amount must be provided through an appropriation ordinance enacted by the Sangguniang Panlalawigan/Panlungsod/Bayan/Barangay.
Cases not governed by the circular’s provisions must be referred to the Secretary of Budget and Management for resolution.