iviHilL'

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF BUDGET AND MANAGEMENT
GENERAL SOLANO STREET, SAN MIGUEL, MANILA

BUDGET CIRCULAR No. 2021 - 3

November 17, 2021

TO Heads of Departments, Bureaus, Offices, and Agencies of

the Nationai Government, Including Constitutional
Offices Enjoying Fiscal Autonomy; State Universities and
Colleges (SUCs); Government-Owned or -Controlled
Corporations (GOCCs); Local Water Districts (LWDs);
Local Government Units (LGUs); and All Others Concerned

SUBJECT Guidelines on the Grant of the Collective Negotiation

Agreement (CNA) Incentive for FY 2021

1.0 Background

1.1 Administrative Order (AO) No. 1351, s. 2005 authorizes the grant of the
CNA Incentive to government employees and directs the Department of
Budget and Management (DBM) to issue the necessary policy and
procedural guidelines for its implementation.

1.2 Item (4)(h)(ii)(aa) of the Congress Joint Resolution (JR) No. 4, s. 20092,
institutionalizes the grant of the CNA Incentive as a form of reward to
motivate employee efforts toward higher productivity, to wit:

"(aa) Collective Negotiation Agreement (CNA) Incentive - This may

be granted to both management and rank-and-file employees of
agencies with approved and successfully implemented CNAs in
recognition of their efforts in accomplishing performance targets
at lesser cost, in attaining more efficient and viable operations
through cost-cutting measures and systems improvement xxx."

Authorizing the Grant of Collective Negotiation Agreement (CNA) Incentive to Employees in Government Agencies
Joint Resolution Authorizing the President of the Philippines to Modify the Compensation and Position Classification System of Civilian
Personnel and the Base Pay Schedule of Military and Unifortned Personnel in the Government, and for Other Purposes
Page 1 of9
 1.3 Section 73 of the General Provisions of the FY 2021 General
Appropriations Act (GAA) provides the rules in the grant of the CNA
Incentive, to wit:

“Sec. 73. Rules in the Grant of Collective Negotiation Agreement

Incentive. Departments, bureaus, and offices of the National
Government, including Constitutional Offices enjoying fiscal autonomy
and SUCs may grant collective negotiation agreement (CNA) Incentive
sourced from the allowable MODE allotments identified by the DBM,
subject to the following:

(a) There is a valid CNA executed between the agency and the
recognized employee organization which includes a provision
on cost-cutting measures to be undertaken collectively by the
agency and its personnel;
(b) The one-time annual payment of CNA Incentive shall be made
through a written resolution signed by agency representatives
from both labor and management, and approved by the
agency head;
(:) The CNA Incentive that may be granted shall be limited to the
amount determined by the DBM; and
(d) The use of MODE for the payment of CNA Incentive shall be
subject to approval by the agency head and made only during
the validity of appropriations. Any excess amounts therefrom
afterpayment of the CNA Incentive shall revert to the General
Eund.

GOCCs and LGUs may likewise grant CNA Incentive to their respective
personnel, subject to the policies, rules and regulations issued by the
DBM."

1.4 Section 3 of AO No. 253 dated December 21, 2011 mandates that the
harmonized Results-Based Performance Monitoring System shall be used
as a basis for determining entitlement to performance-based allowances,
incentives, or compensation of government personnel, including the CNA
Incentive.

2.0 Purpose

This Circular is issued to provide the policy and procedural guidelines on the
grant of the CNA Incentive for FY 2021, pursuant to the laws and executive
issuances stated in Item 1.0 hereof.

3 Creating an Inter-Agency Task Force on the Harmoni/aiion of National Government Performance Monitoring, Information and Reporting
Systems
Page 2 of9
3.0 Coverage

This Circular covers the following civilian personnel occupying regular,

contractual, or casual positions rendering services on full-time or part-time basis
in national government agencies (NGAs), including Constitutional Offices
enjoying fiscal autonomy, SUCs, GOCCs, LWDs, and LGUs, whether or not
covered by Republic Act (RA) No. 67584:

3.1 Rank-and-file employees who are members of an employees'

organization accredited by the Civil Service Commission (CSC) as the sole
and exclusive negotiating agent (hereinafter referred to as "negotiating
agent") in accordance with rules and regulations issued by the Public
Sector Labor Management Council (PSLMC);

3.2 Rank-and-file employees who are non-members of the CSC-accredited

sole and exclusive negotiating agent but want to enjoy or accept benefits
under the CNA, subject to payment of agency fee to the negotiating
agent in accordance with PSLMC Resolution No. I5, s. 1993; and

3.3 Those who perform managerial functions.

4.0 Policy Guidelines

4.1 Conditions for the Grant of the CNA Incentive

4.1.1 Existence of a CNA

(a) There should be a valid and subsisting CNA executed

between the representatives of the management and the
employees' organization accredited by the CSC as the sole
and exclusive negotiating agent for the purpose of
collective negotiations with the management of a
department, line bureau, attached agency. Constitutional
Offices, sue, GOCC, LWD, or LGU.

The registration of the employees' organization of its

respective CNA with the CSC is not a condition precedent
for the grant of the CNA Incentive.

(b) The grant of the CNA Incentive must be stipulated in the

CNA or in supplements thereof.

4.1.2 Accomplishment of Targets

(a) The NGAs, including Constitutional Offices enjoying fiscal

autonomy, SUCs, and GOCCs not covered by

An Act Prescribing a Revised Compensation and Position Classification in the Government and for Other i^irposes
Agency Fee From Non-Members of the Accredited/Rccognized Collective Negotiation Agent
Page 3 of9
 RA No. 101496, s. 2011 should have accomplished,
by September 30, 2021, at least an average of 70% of all
the targets for all the organizational outcomes/
performance indicators under their respective FY 2021
budget approved by Congress, or the approved
FY 2021 Corporate Operating Budget (COB), whichever is
applicable.

(b) GOCCs covered by RA No. 10149 should have

accomplished, by September 30, 2021, at least an average
of 70% of all the targets under their respective
Performance Scorecard, as agreed upon between the
Governance Commission for GOCCs (GCG) and the GOCC
pursuant to GCG Memorandum Circular No. 2017-027
dated June 30, 2017.

(c) LWDs should have a positive net balance in the average

net income for the period January 1 to September 30,
2021, to be validated by the Local Water Utilities
Administration.

(d) LGUs should have accomplished, as of September 30,

2021, at least an average of 70% of all the targets under
their programs/activities/projects approved in the LGU
budget for FY 2021.

4.1.3 Submission ofA ccountabiiity Reports

The NGAs, including Constitutional Offices enjoying fiscal

autonomy and SUCs, should have submitted to DBM their
respective accountability reports as of September 30, 2021
pursuant to Commission on Audit (COA)-DBM Joint Circular No.
2014-18 dated July 2, 2014, as amended by COA-DBM JC No.
2019-19 dated January 1, 2019.

4.2 Rate of the CNA Incentive

4.2.1 The rate of the CNA Incentive shall not be pre-determined in the
CNA since it is subject to compliance with the conditions in Item
4.1 hereof and the availability of the allowable allotments.

4.2.2 The CNA Incentive may be given equally to all qualified employees
under Item 3.0 hereof or at varying rates in consideration of the
employee's or his/her office's contribution to the accomplishment
of performance targets, efficiency, productivity, or profitability, as

An Act to Promote Financial Viability and Fiscal Discipline in (iovcrnmcnl-Owncd or-Controlled Corporations and to Strengthen the Role
oFthe Stale in its Governance and Management to Make Fhem More Responsive to the Needs of Public Interest and lor Other Purposes
Interim Perlomiance Fvalualion System for the GOCC Sector
Guidelines Prescribing the Use ol'Modilied I'ormats of the Hiidgct and Financial Aecounlabilily Reports
Updated Guidelines Relative to Budget and Financial Aeconniability Reports (DFARs) Starting FY 2019
Page 4 of9
 determined by the agency head upon recommendation of the
Employees' Organization-Management Consultative Committee.

4.2.3 In all cases, the CNA Incentive shall not exceed P25f000 per
qualified employee.

4.3 Fund Sources of the CNA Incentive

4.3.1 For NGAs, Including Constitutional Offices and SUCs

The CNA Incentive shall be sourced solely from the available

balances of allowable Maintenance and Other Operating Expenses
(MOOE) allotments after considering the FY 2021 requirements,
provided further that the same have become available as a result
of cost-cutting and systems improvement measures undertaken
collectively by the agency and its personnel, as identified in their
respective CNA and supplements thereof. Such fund sources shall
be limited to the following MOOE items defined under the
Government Accounting and Auditing Manual:

(a) Communication Expenses;

(b) Repairs and Maintenance;
(c) Supplies and Materials Expenses;
(d) Transportation and Delivery Expenses;
(e) Traveling Expenses; and
(f) Utility Expenses.

4.3.2 The following shall, in no case, be used as fund source of the CNA
Incentive:

a. Balances of allotment for programs/activities/projects which

were later discontinued or deferred; and

b. Released allotments intended for acquisition of goods and

services to be distributed/delivered to, or to be used by agency
clients.

4.3.3 Items under Personnel Services, other MOOE, and/or Capital

Outlay shall not be used to increase allowable MOOE items as fund
source for the FY 2021 CNA Incentive.

4.3.4 For GOCCs

The CNA Incentive shall be sourced solely from the allowable

MOOE allotments in FY 2021, as enumerated in Item 4.3.1 hereof,
under their respective approved COBs, provided that the following
conditions are complied with:

l>agc 5 of 9
 a. Actual operating income for the period January 1 to September
30, 2021 shall, at least, meet the targeted operating income
in the approved COB for the same period. For GOCCs/GFIs,
which by the nature of their functions consistently incur losses,
the current year's operating loss should have been minimized
or reduced compared to or at most equal to that of the prior
year's level;

b. Actual operating expenses as of September 30, 2021 are less

than the DBM-approved level of operating expenses in the COB
so as to generate sufficient source of funds for the payment of
CNA Incentive; and

c. For income generating GOCCs/GFIs required to remit earnings,

an amount equivalent to at least 50% of the annual earnings
of the immediately preceding year should have been remitted
to the National Treasury in accordance with Section 3 of
RA No. 765610.

4.3.5 ForLWDs

The CNA Incentive shall be sourced solely from the allowable

MOOE allotments in FY 2021, as enumerated in Item 4.3.1, under
their Board of Directors-approved COBs, subject to the provision
of Item 4.1.2(c) hereof.

4.3.6 ForLGUs

The CNA Incentive shall be sourced solely from the allowable

MOOE allotments in FY 2021, as enumerated in Item 4.3.1, under
their respective approved LGU budgets.

4.4 Payment of the CNA Incentive

4.4.1 The CNA Incentive for the year shall be a one-time benefit to
be granted not earlier than December 15, 2021.

4.4.2 It cannot be given immediately upon signing and ratification of

the CNA as this will transform the CNA Incentive into a CNA
Signing Bonus which the Supreme Court, in the case of Social
Security System vs. COA11, has prohibited for not being a truly
reasonable compensation.

4.4.3 The CNA Incentive for the year shall be granted only during the
validity of appropriations from which the available MOOE
allotments shall be sourced.

’ An Act Requiring Government-Owned or -Controlled Corporations to Declare Dividend.s under Certain Conditions to the National
Government, and for Other Purposes
1 384 SCRA 548
Page 6 of 9
 4.4.4 The amount paid as CNA Incentive shall be recorded in the agency
books under the account code "Collective Negotiation Agreement
Incentive-Civilian," "Other Benefits," and "Collective Negotiation
Agreement Incentive" for NGAs, LGUs, GOCCs, and LWDs,
respectively.

4.4.5 Agencies are advised that additional funds can no longer be

provided during the remainder of the current year for those
program, projects, and activities covered by the MOOE allotments
which are to be modified to fund the CNA Incentive.

5.0 Procedural Guidelines

5.1 An Employees' Organization-Management Consultative Committee

(Committee, for brevity) or a similar body composed of representatives
from management and the negotiating agent shall determine if the
agency is qualified for the grant of CNA Incentive based on compliance
with the requirements under this Circular.

If qualified, the Committee shall review the agency's financial records

and submit recommendations on the following, for approval of the
agency head;

5.1.1 The total amount of allowable MOOE allotments in Item 4.3 hereof
which has become available as a result of cost-cutting and
systems improvement measures identified in the CNAs and
supplements thereto, and which was the result of the joint efforts
of management and employees;

5.1.2 The internal guidelines to be followed in the grant of the CNA

Incentive, such as: (i) the specific criteria for determining who are
entitied, and (ii) the distribution of the amount avaiiabie and the
rate of the CNA Incentive in accordance with Item 4.2 hereof

5.1.3 As provided under Section 73(d) of the General Provisions of the

FY 2021 GAA, the payment of the CNA Incentive shall be subject
to the approval by the Agency head and made only during the
validity of appropriations. Any excess amount from the allowable
MOOE allotments after payment of the CNA Incentive shall revert
to the General Fund.

5.2 In large departments wherein employees' organizations in the regional

offices have been accredited by the CSC as the negotiating agent/s, the
Department Secretary or his duly authorized representative should
provide internal guidelines to ensure uniformity and equity in the
negotiation process, monitor the progress of simultaneous negotiations,
and ensure compliance with the provisions of this Circular.

Page 7 ol'9
 5.3 Agencies shall utilize the Modification Advice Form (MAF) for recording
purposes of the payment of CNA Incentive in the agency books, as
prescribed under National Budget Circular No. 583 dated January 4,
2021.

6.0 Reportorial Requirement

Each NGA and SUC shall submit online to the DBM's Budget and Management
Bureau or Regional Office concerned not later than January 31, 2022, the
annual report on the grant of the CNA Incentive by following the template in
Annex "A."

In this regard, the NGAs and SUCs shall encode the required details/information,
as well as upload the scanned copy of the report using the following link
https: / / www.dbm.qov.ph /add-cna-report.

7.0 Responsibility of Agency Heads

Agency heads and accountable officers shall be responsible for the proper
implementation of the provisions of this Circular in their respective offices. They
shall be held administratively, civilly, and/or criminally liable, as the case may
be, for any payment of the CNA Incentive not in accordance with the provisions
of this Circular, without prejudice to refund by the employees concerned of any
unauthorized or excess payment thereof.

8.0 Repealing Clause

All existing circulars or issuances on the grant of the CNA Incentive, which are
inconsistent herewith, are hereby repealed or modified accordingly.
9.0 Effect! vity

This Circular shall take effect immediately.

TINA ROSE MARIE UGANDA

Officer-in-Chargef DBM Jj

Page 8 of 9
 %

Annex "A"

Report on the Payment

of Collective Negotiation Agreement (CNA) Incentive For
FY

Department/Agency:

I. If CNA Incentive Was Granted

Total Amount Paid for the CNA Incentive:

Number of Qualified Personnel
Regular XXX
Contractual XXX
Casual XXX
Total xxxx

Rate of CNA Incentive

Total Amount Paid

Fund Sources:

Object of Expenditures
XXX
XXX
XXX
XXX
XXX
Total xxxx

II. If the CNA Incentive Was Not Granted

Please state reason/s for non-grant

Submitted by: Certified Correct:

Head, Finance/Administrative Unit Agency Head

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