Section 18
Effectively
Section 18.
Effectively. This Order shall take effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.
DONE, in the City of Manila, this 16th day of September, in the year of Our Lord, Two Thousand and Twenty-Five.
(Sgd.)
FERDINAND R. MARCOS, JR.
By the President:
(Sgd.)
LUCAS P. BERSAMIN
Executive Secretary
CPCS II ATTACHED TO EXECUTIVE ORDER NO. 95 (S. 2025)
COMPENSATION AND POSITION CLASSIFICATION SYSTEM II FOR THE GOCCS COVERED BY REPUBLIC ACT NO. 10149
I. GUIDING PRINCIPLES.
This Compensation and Position Classification System (CPCS) II shall be implemented, enforced, and interpreted in accordance with the following guiding principles:
1. The CPCS II has been designed to provide government-owned or -controlled corporations (GOCCs) with adequate operational autonomy and flexibility towards ensuring efficient and effective implementation of a total compensation framework within their organizations to ensure that:
(a) The adoption of reasonable, justifiable and appropriate remuneration schemes prevents or deters the granting of unconscionable and/or excessive remuneration packages;
(b) The total compensation framework shall generally be comparable with the private sector doing comparable work in order to attract, engage, and retain the right talent and in compliance with prevailing laws on minimum wages;
(c) The compensation frameworks adopted by GOCCs shall operate within their affordability limits and sustainability capacities, and in accordance with their GOCC classification as provided herein;
(d) There shall be adherence to the principle of equal pay for work of equal value, with due regard for other verifiable factors such as the sector where the GOCCs are classified; and
(e) The rewards system supports and encourages performance-driven, productive, and efficient organizations.
2. The CPCS II shall be updated periodically by the Governance Commission for GOCCs (GCG) based on the following parameters:
(a) A review of the GOCC compensation rates every three (3) years, without prejudice to the provisions of the Executive Order (EO) to which this CPCS II is attached;
(b) The performance of the GOCC and its overall contribution to the national economy;
(c) Drastic changes in market or business environment; and
(d) Implementation of new compensation schemes in National Government Agencies.
II. DEFINITION OF TERMS.
"Authorized Allowances, Benefits, and Incentives (ABIs)" refer to the financial or non-financial compensation that has been duly authorized by the President of the Philippines and/or by law. An approval from the GOCC Governing Board alone, regardless if the GOCC is chartered or non-chartered, shall not be considered as authorization.
"Authorized Salaries" refer to the salary structure that has been duly authorized by the President of the Philippines, GCG, and/or by law. An approval of the salary structure from the GOCC Governing Board alone, regardless if the GOCC is chartered or non-chartered, shall not be considered as authorization.
"Board of Directors/Trustees" or "Governing Board" refers to the collegial body that exercises the corporate powers, conducts all business and controls or holds all properties of a GOCC, whether it formally referred to as the "Board of Directors," "Board of Trustees" or some other term in its Charter, Articles of Incorporation or By-Laws.
"Charter" refers to a law or statute creating a chartered GOCC and defining its franchise.
"Chartered GOCC" refers to a GOCC, including Government Financial Institutions, created and vested with function by a special law.
"Chief Executive Office (CEO)" refers to the highest-ranking corporate executive who could be named as the President or the General Manager, Chief Operating Officer, Executive Director, or Administrator of a GOCC.
"Commercial GOCCs" refer to GOCCs that undertake operations or provide service that compete with the private sector. Such commercial activities can include, but not limited to:
a. Design and conceptualization of the products/services;
b. Manufacturing and production of the products/services;
c. Sales;
d. Logistics involved in delivering the products/services to the end customer;
e. Customer service;
f. Property development and management;
g. Banking operation; and
h. Extractive industries (e.g. oil, gas).
"Collection Negotiation Agreement (CNA) or "Collection Bargaining Agreement (CBA)" refers to the negotiated contract between an accredited employees' organization representing a negotiating unit and the employer/management concerning terms and conditions of employment and improvements thereof that are not fixed by law.
"Employee" when used with reference to a person in the public service, includes any person in the service of the Government or any of its agencies, divisions, subdivisions, or instrumentalities.
"Full-Time Equivalent (FTE) Employees" refer to employees holding plantilla positions in a GOCC.
"GCG or the Governance Commission" refers to the lead Implementing Agency of the CPCS, including this CPCS II, for the GOCC Sector.
"GCG En Banc" refers to the collegial body composed of the GCG Chairperson and two (2) Commissioners, and the Secretaries of the Department of Budget and Management (DBM) and the Department of Finance, that exercises regulatory, supervisory, and policy-making functions for GOCCs covered by Republic Act (RA) No. 10149 or the "GOCC Governance Act of 2011."
"Government Financial Institutions (GFIs)" refer to financial institutions or corporations in which the Government directly or indirectly owns majority of the capital stock and which are either: (1) registered with or directly supervised by the Bangko Sentral ng Pilipinas (BSP); (2) collecting or transacting funds or contributions from the public and places them in financial instruments or assets such as deposits, loans, bonds and equity including, but not limited to, the Government Service Insurance System and the Social Security System.
"Government Instrumentalities with Corporate Powers (GICPs)/Government Corporate Entities (GCEs)" refer to instrumentalities or agencies of the Government, which are neither corporations nor agencies integrated within the Departmental Framework, but vested by law with special functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter including, but not limited to, the following: the Manila International Airport Authority, Philippine Ports Authority, Philippine Deposit Insurance Corporation, Metropolitan Waterworks and Sewerage System, Laguna Lake Development Authority, Philippine Fisheries Development Authority, Bases Conversion and Development Authority, Cebu Port Authority, Cagayan de Oro Port Authority, San Fernando Port Authority, Local Water Utilities Administration, and Asian Productivity Organization.
"Government-Owned or -Controlled Corporation (GOCC)" refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable, as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock: Provided, however, That for purposes of the CPCS II, the term "GOCC" shall include GICP/GCE and GFI as define herein.
"Job Grade" refers to the numerical representation of the relative internal values of jobs in a GOCC's plantilla in accordance with the CPCS attached to EO No. 150 (s. 2021).
"Monthly Basic Salary (MBS)" refers to the amount actually received per month by an officer or employee and determined in accordance with the applicable salary structure, policies, and guidelines of the CPCS, including this CPCS II.
"National Government" refers to the entire machinery of the central government, as distinguished from the different forms of local governments.
"Non-chartered GOCC" refers to a GOCC organized and operating under the applicable Corporation Code of the Philippines.
"Non-commercial GOCCs" refers to GOCCs whose primary operations do not compete with the private sector, such as:
a. Non-governmental business enterprises, as determined by the Commission on Audit;
b. GICPs;
c. Those organized for cultural, educational, civic, scientific, or charitable purposes;
d. Those with social protection objectives;
e. Those which have privatized operations and primarily generate revenue through collection of concession fees;
f. Those primarily derive business income from activities undertaken for developmental purposes (e.g., interest on investments, lease or sale of properties);
g. Those which are conduits for sector development;
h. Marketing arms of the National Government to support its programs;
i. Those which primarily generate revenue through fees borne out of their regulatory powers; and
j. Registered as non-stock, non-profit corporations, including foundations.
"Officer" refers to a person whose duties, not being of a clerical or manual nature, involve the exercise of discretion in the performance of the functions of the Government. When used with reference to a person having authority to do a particular act or perform a particular function in the exercise of governmental power, "officer" includes any government employee, agent, or body having authority to do the act or exercise that function.
"Parent GOCC" refers to a GOCC that owns, holds, or controls, directly or indirectly, through one or more intermediaries, at least a majority of the outstanding capital stock of the subsidiary.
"Pay Grade (PG)" refers to the numerical representation of the relative internal values of jobs in a GOCC's plantilla. The PG will dictate the MBS of said jobs based on the Salary Structure under this CPCS II.
"Supervising Agency" refers to a government agency to which a GOCC is attached for purposes of policy and program coordination and for general supervision.
"Total Compensation Framework (TCF)" refers to all financial and non-financial compensation components such as basic salaries, ABIs, and variable pay.
III. COVERAGE.
The CPCS II shall apply to all GOCCs, including their subsidiaries, which are covered by RA No. 10149.
The CPCS II shall apply to all positions on regular, contractual, or casual basis, now exiting or hereafter created in GOCCs, whether chartered or non-chartered, and whether previously covered by, or previously exempted from, RA No. 6758 or the "Compensation and Position Classification Act of 1989."
IV. EXCLUSION.
The CPCS II shall not apply to the BSP, state universities and colleges, cooperatives, local water districts, economic zone authorities, and research institutions which are expressly outside the coverage of RA No. 10149.
GOCCs with approved dispositive actions such as merger (exclusively referring to the GOCC to be absorbed), consolidation, abolition, deactivation, privatization, or such other related action as determined by the GCG shall not be covered by the CPCS II. The GCG shall have the authority to formulate the appropriate compensation for GOCCs falling under this paragraph in accordance with Section 1 of the EO on CPCS II.
Excluded also from the coverage of the CPCS II are those individuals hired by GOCCs without employer-employee relationships and paid from non-Personnel Services appropriations/budgets, as follows:
(a) Consultants and experts hired to perform specific activities or services with expected outputs;
(b) Laborer hired through job contracts (pakyaw) and those paid on piecework basis;
(c) Student workers and apprentices; and
(d) Those whose services are engaged through job orders, contracts of service, or others similarly situated.
Finally, members of the Governing Board, except for the CEO, are likewise excluded from the CPCS II.
V. GOCC CLASSIFICATION UNDER THE CPCS II.
All GOCCs will be categorized and graded under the CPCS II with due regard to the financial capability of the GOCC, in accordance with RA No. 10149. Measures of a GOCC's magnitude and complexity which will determine the GOCC grade required for the organization to operate and deliver its mandate/s will also be considered to determine the GOCC's classification under the CPCS II. If circumstances so warrant, the GCG may review the category, tier, and/or GOCC grade of all GOCCs that have already implemented the CPCS, whether under EO No. 150 or this CPCS II. Until the GCG En Banc provides otherwise, the following rules shall apply for the classification of GOCCs for purposes of the CPCS II:
1. GOCC CATEROGIZATION
- GOCCs shall be categorized based on their nature of operations and financial viability to sustain their operations/activities. The GOCCs shall be categorized based on the following descriptors:
CATEGORY
DESCRIPTORS
Category 1
GOCCs that are not self-sustaining either because:
•
They rely on National Government subsidies to fund their day-to-day operations; and/or
•
They have an average net loss for the last three (3) years, regardless whether they receive subsidies or not.
Further, at the time of initial CPCS II implementation, GOCCs that failed to submit the required information on their financials and FTE employees will also be included in Category 1.
Category 2
GOCCs that are self-sustaining through sources of funds generated from non-commercial activities.
Category 3
GOCCs that are self-sustaining through sources of funds generated from commercial activities, with products and services that directly compete with the private sector.
2. GOCC GRADING
- Each GOCC shall be classified by its GOCC grade based on the weighted average grade in these three (3) factors:
(a)
Company Financials
- 60%
(b)
Complexity
- 30%
(c)
Number of FTE Employees
- 10%
GOCC grading is the foundation of the job evaluation process for each GOCC. The GOCC grade sets a cap to the number of grades in the organization and determines the grade of the CEO.
Newly created GOCCs shall be subject to the guidelines to be issued by the GCG En Banc.
2.1. Company Financials
- GOCCs shall have a grade based on the average relevant financial indicators over the last three (3) years as reported in their audited financial statements and DBM and/or Board-approved corporate operating budgets:
GOCC GRADE
FINANCIALS (₱)
16
< 3.975 billion
17
≥ 3.975 billion and < 7.95 billion
18
≥ 7.95 billion and < 26.5 billion
19
≥ 26.5 billion and < 53 billion
20
≥ 53 billion and < 106 billion
21
≥ 106 billion and < 265 billion
22
≥ 265 billion and < 530 billion
23
≥ 530 billion and < 2.65 trillion
24
≥ 2.65 trillion and < 5.3 trillion
25
≥ 5.3 trillion
In consideration of the financial viability and source of funds to sustain an organization's full operations and activities, the financial indicators applicable for each GOCC shall be dependent on the Category of the GOCC. The three (3) years financials will be averaged based on the following formula for each category:
CATEGORY
DESCRIPTORS
Category 1
Operating expense plus operating subsidies
Category 2
Operating expense (plus investment income, if any).
Program subsidies will not be included in the computation of financials of GOCCs under this category.
Category 3
Annual revenue or operating expense plus annual revenue minus statutory contributions.
2.2. Complexity
- GOCCs shall have a grade for its complexity based on the fixed grade equivalent to its categorization:
GOCC GRADE
CATEGORY
16
Category 1
18
Category 2
20
Category 3
2.3. Number of FTE Employees
- GOCCs shall have a grade based on the number of FTE Employees as follows:
GOCC GRADE
NO. OF FTE EMPLOYEES
16
Less than 91
17
91 to 240
18
241 to 620
19
621 to 1,600
20
1,601 to 4,100
21
4,101 to 10,600
22
10,601 to 27,500
23
27,501 to 75,000
24
75,001 to 200,000
25
More than 200,000
2.4. Official GOCC Grade
- The GOCC shall have a weighted average grade based on Chapter V, Sections 2.1 to 2.3 to derive the official grade of the GOCC. A sample computation is provided as follows:
COMPONENT
WEIGHT
GRADE
WEIGHTED GRADE
Financials
0.6
16
9.6
Complexity
0.3
18
5.4
FTE Employees
0.1
18
1.8
GOCC Final Grade
17
The resulting weighted average grade shall be rounded off to get the final GOCC Grade under the CPCS which shall be capped at Grade 20.
The conversion of the GOCC grade into the new salary tables will be included in the guidelines that will be issued by the GCG.
IV. COMPENSATION SYSTEM.
The total compensation grated to officers and employees for services rendered shall hereinafter be limited to the following:
(a)
Basic Salaries, including Step Increments
(b)
ABI
(c)
Variable Pay (Performance-Based Bonus)
Provided, That the CPCS II does not cover indirect compensation that is not specified herein and is regulated under existing laws such as, but not limited to: life and retirement insurance benefits, employee compensation insurance, health insurance, and PAG-IBIG Fund benefits: Provided further, That the GCG En Banc may issue clarificatory guidelines relative to the aforementioned indirect compensation as may be necessary.
All GOCCs shall migrate to the rationalized and standardized TCF that shall be implemented for their offices and employees in accordance with the basic salaries, including step increments, ABIs, and variable pay provided therein. The TCF to be adopted by GOCCs that have not yet migrated into the CPCS under EO No. 150 and seek to implement the CPCS II shall be allowed upon authorization of the GCG based on the GCG-certified GOCC Classification under Chapter V, and the job evaluation of all positions of the GOCC based on the Index of Occupational Services, Position Titles, and Job Grades for GOCCs in accordance with Section 15 of the EO on CPCS II.
A. BASIC SALARIES, INCLUDING STEP INCREMENTS
1. Basic Salaries
- The MBS provided under the CPCS II is the maximum amount that the GOCC can grant to its officers and employees which shall be differentiated for Category 1 and Categories 2 and 3. A lower uniform percentage of the prescribed rates herein may be implemented by the GOCC based on its own implementation scheme of the CPCS II, provided that such scheme is based on:
(a) Affordability and sustainability of the GOCC top continually implement the CPCS rates for its offices and employees;
(b) Provision of gradual annual salary increase with the salary rates of the CPCS II as the cap, as authorized by the GOCC Governing Board; and/or
(c) Flexibility of the GOCC to provide its own salary tranches such that the amounts in the salary structure herein shall be the amount of the GOCC's final tranche and shall only be applied on the third year of implementation.
1.1.
Salary Structure
- There are a total of six (6) salary structures which GOCCs can implement depending on their profitability and sustainability of operations. Categorization and Tiering shall then be applied for GOCCs to adopt the appropriate structure that is within their financial capacity.
1.1.1
By Categorization
- GOCCs under Category 1 shall follow one structure and shall not be classified further into Tiers.
GOCCs under Categories 2 and 3 shall have a total of five (5) structures wherein the applicable structure shall be based on the Tiers provided herein.
1.1.2
By Tiering
- GOCCs under Categories 2 and 3 shall be subjected to Tiering which shall determine the corresponding salary structure that the GOCC can implement based on the following financials using the same formula provided under Chapter V,