GUIDELINES FOR THE GRANT OF TEN PERCENT (10%) SALARY ADJUSTMENT TO PERSONNEL IN THE LOCAL GOVERNMENT EFFECTIVE JANUARY 1, 2000

This Circular is being issued to prescribe rules and regulations to
govern the implementation of new Salary Schedules in the Local
Government as mandated under Executive Order No. 219 dated March 20,
2000, providing for a 10% salary adjustment over the monthly basic
salaries as of December 31, 1999 of government personnel, effective
January 1, 2000.

2.0       Coverage

All positions whether permanent, temporary, contractual, casual or
emergency in nature, appointive or elective, on full-time or part-time
basis, now existing or hereafter created in the Local Government Units
(LGUs).

3.0       EXEMPTIONS

3.1       Consultants and experts hired by local government units
for a limited period to perform specific activities or services with
expected outputs, who will continue to be compensated pursuant to
existing applicable laws, rules and regulations until these are revised
or amended.

3.2       Student laborers and apprentices and others similarly
situated who will continue to be compensated pursuant to existing
applicable laws, rules and regulations until these are revised or
amended.

3.3       Laborers hired as part of a contract (pakiao), those paid
on piecework basis, including mail contractors, and others similarly
situated.

4.0       DEFINITION OF TERMS

4.1       The present salary of an incumbent, for purposes of this
Circular, shall mean the actual basic salary rate received as of
December 31, 1999, inclusive of transition allowance, but exclusive of
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 forms of additional compensation
usually paid in addition to basic salary.

4.2       Transition allowance shall mean the excess of the present
salary over the eighth step of the salary grade allocation of the
employee’s position.

5.0       THE SALARY SCHEDULES

The salary rates are hereby adjusted effective January 1, 2000 as
indicated in the attached Salary Schedules (SS) marked as Annexes A to
H. These SS have been prepared in strict conformance with Section 10 of
RA 6758.

6.0       COMPENSATION RULES

6.1       The salary grades in the SS prescribed under RA 6758 and
the corresponding salary grade allocation of positions pursuant thereto
shall be maintained.

6.2       Incumbents of positions shall receive the salary rates
corresponding to their designated salary steps in the salary grade
allocation of their positions as of December 31, 1999.

6.3       Appointments effective January 1, 2000 and thereafter
shall be at the first step of the salary grade allocation of the
position in the applicable SS prescribed in item 5.0 hereof. In case the
appointee has previously received under an approved permanent
appointment, a salary higher than the first step of the salary grade
allocation, the existing salary rules shall apply as contained in Annex
“C” of LBC 64 dated January 22, 1997.

6.4       Pursuant to RA 7305, the salary rates of devolved and
organic Public Health Workers (PHWs) shall be as indicated in Annex A,
notwithstanding the income classification of the LGUs where they are
assigned.

6.5       Devolved personnel, except the PHWs, whose salaries are
now equal to/the same as their organic local counterparts, shall be
entitled to the same adjusted salary as their counterpart organic local
personnel.

6.6       The transition allowance shall be considered as advance
entitlement of the salary increase herein authorized. Any excess
thereafter shall be deducted from whatever salary adjustments that such
employee may be authorized in the future. (Illustrative Examples A and A
– 1)

6.7       The PERA and ADCOM shall continue to be paid as allowances
and are not considered integrated into the basic salary rates contained
in the SS referred to in item 5.0 hereof, and therefore not subject to
tax.

6.8       Contractual employees whose salaries are paid out of
lump-sum appropriations or project funds shall be entitled to salary
adjustment corresponding to their comparable regular positions
(Illustrative Example B). In accordance with the general provisions of
RA 8760, the FY 2000 GAA, contractual personnel shall no longer be
entitled to the 20% premium over the basic pay.

6.9       The wage rates of daily paid employees shall be computed
by dividing the monthly salary rate shown in the SS indicated under item
5.0 hereof by twenty-two (22) working days, provided that the total
wages received by a daily paid employee in a month shall not exceed said
monthly salary rate.

6.10    The appropriate rates contained in the said SS, as the case
may be, shall be used as basis for computing retirement pay, year-end
bonus and other similar benefits.

6.11    In the event that local funds will not be sufficient to
implement the SS prescribed for its income class, implementation of
salary adjustments under this Circular shall be partial and uniform for
all positions in the LGU concerned (Illustrative Example C).

7.0       The maximum honoraria rates prescribed under LBC No. 63
for the barangay officials and employees are accordingly adjusted based
on the SS herein authorized.

8.0       ADOPTION OF HIGHER SALARY SCHEDULES (SS)

8.1       LGUs lower than special cities and first class provinces
and cities, may adopt the SS for higher class LGUs subject to the
following conditions/limitations:

8.1.1 That the LGU is financially capable;

8.1.2 That the SS to be adopted shall be uniformly applied to all positions in the LGU concerned;

8.1.3 The SS for the Special and Highly Urbanized Cities and first
class Provinces and Cities shall not be higher than that being adopted
by the national government;

8.1.4 In implementing a new and higher SS, the salary grade
allocation of positions and the salary steps of personnel shall be
retained;

8.1.5 The difference arising from the adoption of the higher SS
shall be subject to the budgetary and general limitations on Personal
Services Expenditures mandated under Sections 324 and 325 of RA 7160;

8.1.6 That in the case of component cities and municipalities, the
SS to be adopted shall not be higher than that being implemented by the
Province or City in the case of some municipalities, where they belong;
and

8.1.7 That the adoption of a higher SS shall not in any manner alter the existing classification of the LGU concerned.

8.1.8 That the LGU has fully implemented the authorized salary
rates for its PHWs and its organic personnel (Illustrative Example D).

8.2       A LGU which has adopted a higher SS as authorized may opt
to revert to the prescribed SS based on its income classification
provided, no personnel whose salaries have been adjusted based on the
higher SS shall suffer diminution in pay as a result thereof. For the
new hirees/appointees, their salaries shall be at the hiring rate of
their positions based on the lower SS.

9.0       PROHIBITION

The Local Chief Executive and/or the Sangguniang
Panlalawigan/Panlungsod/Bayan/Barangay are prohibited from granting any
adjustment in excess of the amounts herein authorized.

10.0    FUNDING SOURCE

10.1    The amount necessary to implement the new Salary Schedules
shall come exclusively from the funds of the concerned LGU. The
implementation of the authorized salary rates of a LGU for its organic
personnel and PHWs is exempt from the Personal Services limitation
provided under Section 325 of the Local Government Code.

10.2    Said amount shall be provided for in an appropriation
ordinance to be enacted by the Sangguniang
Panlalawigan/Panlungsod/Bayan/Barangay taking into account item 6.11
hereof.

11.0    PAYMENT OF SALARY ADJUSTMENT

11.1    Any salary adjustment under this Circular shall be subject
to appropriate adjustments if found not in order upon review by DBM.

11.2    The Local Chief Executive shall notify the official/employee
of any salary adjustment in accordance with this Circular through a
Notice of Salary Adjustment (Annex I). A copy of this Notice shall be
furnished the GSIS, if the official/employee is a member thereof.

11.3    In case of adoption of a higher SS, a computation of salary
increase in accordance with “Illustrative Example D” shall be submitted
to the concerned DBM-RO.

12.0    RESPONSIBILITY OF THE HEAD OF AGENCY

The Provincial Governor, City or Municipal Mayor, and Punong
Barangay concerned shall be held personally liable for any payment of
salary adjustment not in accordance with the provisions of this
Circular, without prejudice however, to the refund of any excess payment
by the employee concerned.

13.0    CONTRIBUTIONS

The salary adjustments herein authorized are subject to the
mandatory requirements of GSIS life and retirement insurance premiums,
and Home Development Mutual Fund (HDMF) contribution, if the recipient
is a member of the GSIS and HDMF, pursuant to RA 660 and CA 186 with
respect to retirement and life insurance premiums.

14.0    SAVING CLAUSE

Cases not covered by the provisions of this Circular shall be
referred to the Secretary of Budget and Management for resolution.

15.0    EFFECTIVITY

This Circular shall take effect January 1, 2000.

Adopted: 21 Mar. 2000

(SGD.) BENJAMIN E. DIOKNO
Secretary