WHEREAS, in pursuance of Section 5, Article IX-B of the Constitution directing the standardization of compensation in the government, Congress enacted R.A. No. 6758, the Compensation and Position Classification Act of 1989 otherwise known as the Compensation Standardization Law;

WHEREAS, Section 81 of R.A. 7160, the Local Government Code, provides that compensation in the local government units as determined by the sanggunian concerned shall be circumscribed by R.A. 6758;

WHEREAS, pursuant to Section 4, Art. V of the Constitution and Section 25 of RA 7160, the President shall exercise general supervision over local government units to ensure that their acts are within the scope of their prescribed powers and functions;

WHEREAS, Administrative Order No. 42 issued on May 3, 1993 clarified the authority of the Department of Budget and Management to issue policies and guidelines on position classification and compensation in the local government units and affirmed the continued adoption of the Compensation Standardization Law in the local government units;

WHEREAS, notwithstanding the unified Position Classification and Compensation System already in place in the government in consonance with the constitutional mandate, some local government units authorize compensation not consistent with the rules and regulations pertaining thereto issued by the DBM;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct:

SECTION 1. Provinces/Cities/Municipalities/Barangays are hereby directed to adhere strictly to the provisions of R.A. 6758 as amended under Joint Resolution No. 1, s. 1994 of the Senate and House of Representatives and implemented by the rules, policies and guidelines issued for the purpose by the Department of Budget and Management.

SEC. 2. Any grant of salary adjustments and other forms of compensation to officials and employees in any manner inconsistent with the provisions of said law, rules and regulations is strictly prohibited.

SEC. 3. Violation of the Compensation Standardization Law, its implementing rules and regulations shall subject officials responsible thereto to administrative and criminal sanctions.

SEC. 4. In the review and evaluation of the request for allotment specially for personal services, the Municipal/City/Provincial Budget Officers shall ensure that such allotment conforms with existing rules, policies and guidelines on the matter.

SEC. 5. The review of the budgets of component cities and municipalities shall always be based on and in pursuance of the pertinent provisions, rules and regulations of the Compensation Standardization Law.

SEC. 6. This Administrative Order shall take effect immediately.

DONE in the City of Manila, this 25th day of July, in the year of Our Lord, Nineteen Hundred Ninety-Six.

(Sgd.) FIDEL V. RAMOS
President of the Philippines

By the President:
(Sgd.) RUBEN D. TORRES
Executive Secretary