13‘’ CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
JUL -6 
A1032 
S. BILL NO. 
1 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
This bill seeks to improve the income of estimated 1.4 million employees of the 
Philippine Governnient by raising the salaries across the board. The salary increase in the 
amount of P2,OOO.OO aims to cushion the sharp rise in the inflation rate and drop in the 
purchasing power of the peso amidst rising cost of staple products and services. 
Most of the Filipino families continue to draw their income niainly from wage 
and salaty. Suffice to say that, to carry on with their subsistence and well being every 
family has to receive a decent living wage. 
With the prevailing rniniin~un wage, workers and employees had already resofled 
to belt-tightening measures and yet they still continue to live on a hand-to-mouth 
existence. “L~uizg kohig, ismg tukd’ is a very apt description as workers illustrate their 
living condition. 
Statistics showed that the annual per capita poverty threshold was estimated at 
P11, 906 in 2002, a 2.5 percent increase over the 2000 threshold of P1 I, 620. With this 
threshold, a family of five (5) members should have a monthly income ofP4,961 to meet 
its food and non-food basic needs. The purchasing power of the peso continues to erode 
from May 2003 at 0.56 to ,059 this 2004 of the same month. 
More so, the spiraling cost of basic commodities and the recent fare increase has 
robbed workers and employees of meager savings allotted to housing; education and 
medicine expenses. 
Thus, this legislation offers immediate relief to the worsening 
workers situation and necessary to uplift their living condition. 
In view of the foregoing, eame 
f this measure is earnestly 
recommended. 
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13TH C O N G E S S  OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
’04 
JUI. -6 
A10 :12 
Introduced by SENATOR RALPH G. RECTO 
AN ACT PRESCRIBING A REVISED COMPENSATION AND POSITION 
CLASSIFICATION SYSTEM IN THE GOVERNMENT AND FOR OTHER PURPOSES. 
Be it enacted bv the Senate and the House of Representatives of the Philippines in 
Conmess assembled: 
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Section 1. 
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Classi3cation Act of 2004.“ 
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Title. - 
This Act shall be known as the “Compensation and Position 
Sec. 2. Statement of Policy. - 
It is hereby declared the policy of the State to 
provide equal pay for substantially equal work and to base differences in pay upon 
substantive differences in duties and responsibilities, and qualification requirements of 
the positions. In determining rates of pay, due regard shall be given to, among others, 
prevailing rates in the private sector for comparable work. For this purpose, the 
Department of Budget and Managements (DBM) is hereby directed to establish and 
administer a unified Compensation and Position Classification System, hereinafter 
referred to as the System, as provided for in Presidential Decree No. 985, as amended, 
that shall be applied for all government entities, as mandated by the Constitution. 
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Sec. 3. 
General Provisions. - 
The following principles shall govern the 
Compensation and Position Classification System of the Government: 
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(a) 
All government personnel shall be paid just and equitable wages; and 
while pay distinctions must necessarily exist in keeping with work distinctions, 
the ratio of compensation for those occupying higher ranks to those at lower 
ranks should be maintained at equitable levels, giving due consideration to higher 
percentage of increases to lower level positions and lower percentage increases to 
higher level positions; 
(b) 
Basic compensation for all personnel in the government and govemment- 
owned or controlled corporations and financial institutions shall generally be 
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comparable with those in the private sector doing comparable work, and must be 
in accordance with prevailing laws on minimum wages; 
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(c) 
maintained at a reasonable level in proportion to the national budget; 
The total compensation provided for government personnel must be 
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periodically. 
(d) 
A review of government compensation rates, taking into account possible 
erosion in purchasing power due to inflation and other factors, shall be conducted 
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government financial institutions. 
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The term "government" refers to the Executive, the Legislative and the Judicial Branches 
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and the Constitutional Commissions and shall include all, but shall not be limited to, 
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departments, bureaus, offices, boards, commissions, courts, tribunals, councils, 
See. 4. Coverage. - 
The Compensation and Position Classification System herein provided 
shall apply to all positions, appointive or elective, on full or part-time basis, now existing or 
hereafter created in the government, including government-owned or controlled corporations and 
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authorities, administrations, centers, institutes, state colleges and universities, local 
government units, and the anned forces. The term "government-owned or controlled 
corporations and financial institutions" shall include all corporations and financial 
institutions owned or controlled by the National Goveimnent, whether such corporations 
and financial institutions perform governmental or proprietary functions. 
Sec. 5. Position Classification System. - 
The Position Classification System shall consist of 
classes of positions grouped into four main categories, namely: professional supervisory, 
professional non-supervisory, sub-professional supervisory, and sub-professional non- 
supervisory, and the rules and regulations for its implementation. 
Categorization of these classes of positions shall be guided by the following considerations: 
(a) 
Professional 
Supervisory Category. - This category includes 
responsible positions of a managerial character involving the exercise of 
management functions such as planning, organizing, directing, coordinating, 
controlling and overseeing within delegated authority the activities of an 
organization, a unit thereof or of a group, requiring some degree of professional, 
technical or scientific knowledge and experience, application of managerial or 
supervisory skills required to carry out their basic duties and responsibilities 
involving functional guidance and control, leadership, as well as line supervision. 
These positions require intensive and thorough knowledge of a specialized field 
usually acquired from completion of a bachelor's degree or higher degree 
courses. 
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The positions in this category are assigned Salary Grade 9 to Salary Grade 33. 
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(b) 
Professional Non-Supervisory Category. - This category includes 
positions performing task which usually require the exercise of a particular 
profession or application of knowledge acquired through formal training in a 
particular field or just the exercise of a natural, creative and artistic ability or 
talent in literature, drama, music and other branches of arts and letters. Also 
included are positions involved in research and application of professional 
knowledge and methods to a variety of technological, economic, social, industrial 
and governmental functions; the performance of technical tasks auxiliary to 
scientific research and development; and in the perfonnmce of religious, 
educational, legal, artistic or literary functions. 
These positions require thorough knowledge in the field of arts and sciences or 
learning acquired through completion of at least four (4) years of college studies. 
The positions in this category are assigned Salary Grade 8 to Salary Grade 30 
(c) 
Sub-Professional Supervisory Category. - This category includes 
positions performing supervisory functions over a group of employees engaged 
in responsible work along technical, manual or clerical lines of work which are 
short of professional work, requiring training and moderate experience or lower 
training but considerable experience and knowledge of a limited subject matter or 
skills in arts, crafts or trades. These positions require knowledge acquired from 
secondary or vocational education or completion of up to two (2) years of college 
education. 
The positions in this category are assigned Salary Grade 4 to Salary Grade 18 
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(d) 
Sub-professional Non-Supervisory Category. - 
This category includes 
positions involves in structured work in support of office or fiscal operations or 
those engaged in crafts, trades or manual work. These positions usually require 
skills acquired through training and experience of completion of elementary 
education, secondary or vocational education or completion of up to two (2) 
years of college education. 
,The positions in this category are assigned Salary Grade 1 to Salary Grade 10. 
Sec. 6. Index of Occupational Services, Position Titles and Salary . Grades of the 
Compensation and Position Classification System. - 
All positions in the government covered 
under Section 4 hereof shall be allocated to their proper position titles and salary grades in 
accordance with the Index of Occupational Services, Position Titles and Salary Grades of the 
Compensation and Position Classification System which shall be prepared by the DBM. 
Sec. 7. Salary Schedule. - 
The Department of Budget and Management is hereby directed to 
implement the Salary Schedule prescribed below and amend correspondingly the Salary Schedule 
provided for in Republic Act Number 8244 as amended : 
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Salary Schedule 
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The above Salary Schedule shall be used for positions that are paid on the annual or monthly rate 
basis. All salaries in the Salary Schedule expressed as monthly rates in pesos shall represent full 
compensation for full-time employment, regardless of where the work is performed. Salaries for 
services rendered on a part-time basis shall be adjusted proportionately. 
The Department of Budget and Management shall update the above Schedule whenever there are 
across-the-board salary adjustments as may be provided by law. 
The daily wage rate shall be determined by dividing the monthly salary rate by twenty-two (22) 
working days per month. 
SECTION 8. Salaries of Constitutional Officials and their Equivalent. - Pursuant to 
Section 17, Article XVIII of the Constitution, the salary of the following officials shall be in 
accordance 
with 
the 
Salary 
Grades 
indicated 
hereunder: 
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Salary Grades 
President of the Philippines 
Vice-president of the Philippines 
President of the Senate 
Speaker of the House of Representatives 
Chief Sustice of the Supreme Court 
Senator 
Member of the House of Representatives 
Associate Justices of the Supreme Court 
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under Article LX, 1987 Constitution 
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Chairman of a constitutional Commission 
under Article LX, 1987 Constitution 
Member of a Constitutional Commission 
The Department of Budget and Management is hereby authorized to determine the officials who 
are of equivalent rank to the foregoing Officials, where applicable, and may be assigned the same 
Salary Grades based on the following guidelines: 
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G W E  35 - 
This Grade is assigned to the President of the Republic o f  the 
Philippines as the highest position in the government. No other position in the 
government service is considered to be of equivalent rank. 
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GRADE 34 -This 
Grade is limited to the Vice-president of the Republic of the 
Philippines and those positions which head tbe Legislative and Judicial Branches 
of the government, namely: the Senate President, Speaker of the House of 
Representatives and Chief Justice of the Supreme Court. No other positions in 
the government service are considered to be of equivalent rank. 


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GRADE 33 - 
This Grade is assigned to Senators and Members of the House of 
Representatives and those with equivalent rank as follows: the Executive 
Secretary, Department Secretary, Presidential Spokesman, Ombudsman, and 
other Cabinet level positions appointment to which requires confirmation from 
the Commission on Appointments 
GRADE 32 - This Grade is assigned to a head of an entity with a broad 
hnctional scope of operations and wide area of coverage ranging from top level 
policy formulation to the provision of technical and administrative support to the 
units under it, with functions comparable to the positions in the preceding salary 
grade. 
This positions included are those of the Presiding Justice of the Court of Appeals, 
Presiding Justice of the Sandiganbayan, Commissioner of a Constitutional 
Commission, Deputy Ombudsman, Court Administrator of the Supreme Court, 
Secretary of the' Senate, Secretary-General of the House of Representatives, and 
other positions of Cabinet rank appointment to which does not require 
confirmation from the Commission on Appointments. 
GRADE 3 1 - 
This Grade is assigned to the Associate Justices of the Court of 
Appeals, Associate Justices of the Sandiganbayan, Department Undersecretary, 
Cabinet Undersecretary, Cabinet Undersecretary, Executive Clerk of Court V, 
President of the University of the Philippines, Deputy Secretary of the Senate, 
Deputy Secretary-General of the House of Representatives, and other positions of 
equivalent rank. 
GRADE 30 - 
This Grade is assigned to heads of councils, commissions, 
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boards and similar entities whose operations cut across offices or departments 
or are serving a sizeable portion of the general public and whose coverage is 
nationwide. 
Positions included are those of the Government Corporate Counsel, Solicitor 
General, Special Prosecutor, Chief Prosecutor, Chief Public Attorney, Chief State 
Counsel, Presiding Judge of the Court of Tax Appeals, Regional Trial Court 
Judges, Executive Clerk of Court IV, Chairman of Securities and Exchange 
Commission, Chairman of the National Labor Relations Commission, 
Commissioners o f  the Bureau of Internal Revenue, Bureau of Customs, and 
Bureau of Immigration, Director of the National Bureau of Investigation, 
Department Assistant Secretary, University Professor, Mindanao State University 
President, Polytechnic University o f  the Philippines President, and President o f  
other state universities and colleges of the same class and other positions o f  
equivalent rank. 
GRADE29 - 
This Grade is assigned to Shari’a District Court Judges, 
Associate Judges of the Court of Tax Appeals, Executive Clerk of Court III, 
Members of the National Labor Relations Commission, Bureau Directors, 
Department Regional Directors, College Professors, and other positions of 
equivalent rank. 
GRADE 28 - 
This Grade is assigned to Metro Trial Court Judges, Bureau 
Assistant Directors, Assistant Department Regional Directors, and other positions 
of equivalent rank. 
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GRADE 27 - 
Regional Directors, and other positions of equivalent rank. 
This Grade is assigned to City Trial Court Judges, Bureau 
GRADE 26 - 
This Grade is assigned to Municipal Trial Court Judges, 
Municipal Circuit Trial Court Judges, Shari’a Circuit Court Judges, Assistant 
Bureau Regional Directors, and other positions of equivalent rank. 
The equivalent rank of positions not mentioned herein or those that may be created hereafter shall 
be determined based on these guidelines. 
Sec. 9. Salary Grade Assignments for Other Positions. - 
For positions below the Officials 
mentioned under Section 8 hereof and their equivalent, whether in the National Government, 
local government units, government-owned or controlled corporations or financial institutions, 
the Department of Budget and Management is hereby directed to prepare the Index of 
Occupational Services to be guided by the Benchmark Position Schedule prescribed hereunder 
and the following factors: (1) the education and experience required to perfom the duties and 
responsibilities of the positions; (2) the nature and complexity of the work to be performed; (3) 
the kind of supervision received; (4) mental andlor physical strain required in the completion of 
the work; (5) nature and extent of internal and external relationships; (6) kind of supervision 
exercised; (7) decision-making responsibility; (8) responsibility for accuracy of records and 
reports; (9) accountability for funds, properties and equipment; and (10) hardship, hazard and 
personal risk involved in the job. 
Benchmark Position Schedule 
Position Title 
Salary Grade 
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Laborer1 
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Messenger 
Clerk 
Driver I 
Stenographer I 
Mechanic I 
Carpenter 11 
Electrician TI 
Secretary I 
Bookkeeper 
Administrative Assistant 
Education Research Assistant I 
Cashier I 
Nurse I 
Teacher I 
Agrarian Reform Program Technologist 
Budget Officer I 
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Chemist1 
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Agriculturist I 
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Social Welfare Officer I 
Engineer I 
Veterinarian I 
Legal Officer I 
Administrative Officer 
Dentist 
Postmaster IV 
Forester 111 
Associate Professor I 
Rural Health Physician 
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In no case shall the salary of the chairman, president, general manager or administrator, and the 
board of 'directors of government-owned or controlled corporations and financial institutions 
exceed Salary Grade 30: Provided, That the President may, in truly exceptional cases, approve 
higher compensation for the aforesaid officials. 
Sec. 10. 
Local Government Units (LGUs). - The rates of pay in LGUs shall be 
determined on the basis of the class and financial capability of each LGU: Provided, That such 
rates of pay shall not exceed the following percentages of the rates in the salary schedule 
prescribed under Section 7 hereof: 
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Special Cities 
1st Class 
2nd Class 
3rd Class 
4th Class 
5th Class 
6th Class 
ProvincesEities 
100% 
Municipalities 
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90% 
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65% 
Sec. 11.Military and Police Personnel. - 
The base pay of uniformed personnel of the Armed 
Forces of the Philippines and the Integrated National Police shall be as prescribed in the salary 
schedule for these personnel in R.A. No. 6638 and R.A. No. 6648. The longevity pay of these 
personnel shall be as prescribed under R.A. No. 6638, and R.A. No. 1134 as amended by R.A. 
No. 3725 and R.A. No. 6648: Provided, however, That the longevity pay of uniformed personnel 
of the Integrated National Police shall include those services rendered as uniformed members of 
the police, jail and fire departments of the local government units prior to the police integration. 
All existing types of allowances authorized for uniformed personnel of the Armed Forces of the 
Philippines and Integrated National Police such as cost of living allowance, longevity pay, 
quarters allowance, subsistence allowance, clothing allowance, hazard pay and other allowances 
shall continue to be authorized. 
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Sec. 12. 
Consolidation of Allowances and Compensation. - 
All allowances, except for 
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; and such other additional 
compensation not otherwise specified herein as may be determined by the DBM, shall be deemed 
included in the standardized salary rates herein prescribed. Such other additional compensation, 
whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated 
into the standardized salary rates shall continue to be authorized. 
Existing additional compensation of any national government official or employee paid from 
local funds of a local government unit shall be absorbed into the basic salary of said official or 
employee and shall be paid by the National Government. 
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Sec. 13. 
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Pay Adjustments. - 
Paragraphs (b) and (c), Section 15 of Presidential Decree 
No. 985 are hereby amended to read as follows: 
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"(b) 
Pay Reduction - 
If an employee is moved from a higher to a lower 
class, he shall not suffer a reduction in salary: Provided, That such movement is 
not the result of a disciplinary action or voluntary demotion. 
"(c) 
Step Increments - 
Effective January 1, 1990 step increments shall be 
granted based on merit and/or length of service in accordance with rules and 
regulations that will be promulgated jointly by the DBM and the Civil Service 
Commission." 
Sec. 14. 
Administration of Compensation and Position Classification System. - 
Subparagraph (a), Section 17 of Presidential Decree No. 985 is hereby amended to read as 
follows: 
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"(a) 
Administer the compensation and position classification system 
established herein and revise it as necessary." 
Sec. 15. 
Reference to Offices and Positions. - 
All references to the "Commissioner of 
the Budget," "Budget Commission" or "Commission" and "Office of Compensation and Position 
Classification" or "OCPC" in Presidential Decree No. 985 and Presidential Decree No. 1597 shall 
read to mean the Secretary of Budget and Management, the Department of Budget and 
Management or DBM, and the Compensation and Position Classification Bureau or CPCB, 
respectively. 
Sec. 16. 
Repeal of Special Salary Laws and Regulations. - All laws, decrees, 
executive orders, corporate charters, and other issuances or parts thereof, that exempt agencies 
from the coverage of the System, or that authorize and fix position classification, salaries, pay 
rates or allowances of specified positions, or groups of officials and employees or of agencies, 
which are inconsistent with the System, including the proviso under Section 2, and Section 16 of 
Presidential Decree No. 985 are hereby repealed. 
Sec. 17. 
Salaries of Incumbents. - 
Incumbents of positions presently receiving salaries 
and additional compensatiodfringe benefits including those absorbed &om local government 
units and other emoluments, the aggregate of which exceeds the standardized salary rate as herein 
prescribed, shall continue to receive such excess compensation, which shall be referred to as 
transition allowance. The transition allowance shall be reduced by the amount of salary 
adjustment that the incumbent shall receive in the future. 
The transition allowance referred to herein shall be treated as part of the basic salary for purposes 
of comoutine retirement Dav. vear-end bonus and other similar benefits. 
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As basis for computation of the first across-the-board salary adjustment of incumbents with 
transition allowance, no incumbent who is receiving compensation exceeding the standardized 
salary rate at the time of the effectivity of this Act, shall be assigned a salary lower than ninety 
percent (90%) of his present compensation or the standardized salary rate, whichever is higher. 
Subsequent increases shall be based on the resultant adjusted salary. 
Sec. 18. 
Additional Compensation of Commission on Audit Personnel and of Other 
Agencies. - 
In order to preserve the independence and integrity of the Commission on Audit 
(COA), its officials and employees are prohibited from receiving salaries, honoraria, bonuses, 
allowances or other emoluments from any government entity, local government unit, and 
government-owned and controlled corporations, and government financial institution, except 
those compensation paid directly be the COA out of its appropriations and contributions. 
Government entities, including government-owned or controlled corporations including financial 
institutions and local government units are hereby prohibited from assessing or billing other 
government entities, government-owned or controlled corporations including financial 
institutions or local government units for services rendered by its officials and employees as part 
of their regular functions for purposes of paying additional compensation to said officials and 
employees. 
Sec. 19. 
Punding Source. - The funding sources for the amounts necessary to 
implement this Act shall be as follows: 
(a) 
For national government entities, the amount shall be charged against the 
appropriations set aside for the purpose in the 1989 General Appropriations Act 
and from savings generated from the different departments, bureaus, offices and 
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General Appropriations Act. 
agencies. Thereafter, such amounts as are needed shall be included in the annual 
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(b) 
For local government units, the amount shall be charged against their 
respective funds. Local government units which do not have adequate or 
sufficient funds shall only partially implement the established rates as may be 
approved by the Joint Commission under Section 3 of Presidential Decree No. 
1136: Provided, That any partial implementation shall be uniform .and 
proportionate for all positions in each local government unit: Provlded, further, 
That savings from National Assistance to Local Government Units (NALGU) 
funds may be used for this purpose. 
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(c) 
For government corporations, the amount shall come from their 
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respective corporate funds. 
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Sec. 20. 
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Sec. 21. 
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Separability Clause. - 
If for any reason any section or provision of this Act is 
declared to be unconstitutional or invalid, the other sections or provisions thereof which are not 
affected thereby shall continue to be in full force and effect. 
Applicability of Presidential Decree No. 985 as Amended by Presidential 
Decree No. 1597. - 
All provisions of Presidential Decree No. 985, as amended by Presidential 
Decree No. 1597, which are not inconsistent with this Act and are not expressly modified, 
revoked or repealed in this Act shall continue to be in full force and effect. 
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Sec. 22. 
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accordingly. 
Repealing Clause. - all laws, decrees, orders, rules or regulations or parts 
thereof inconsistent with the provisions of this Act are hereby repealed, amended, or modified 
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Approved 
Effectivity. -This 
Act shall take effect 15 days after publication to a newspaper 
of general circulation. The DBM shall, within sixty (60) days after its approval, allocate all 
positions in their appropriate position titles and salary grades and prepare and issue the necessary 
guidelines to implement the same. 
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