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« K V B A. S K r

REPUBLIC OF THE PHILIPPINES

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

BUDGET CIRCULAR No. 2023 - 1

November 10, 2023

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

the National 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 2023

1.0 Background

1.1 Administrative Order (AO) No. 135, 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. 2009^
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 die Grant of Collective Negotiation Agi’cement (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 Unifonned Personnel in the Government, and for Other Puiposes

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 1.3 Section 81 of the Genera! Provisions (GPs) under the FY 2023 General
Appropriations Act (GAA) provides the rules in the grant of the CNA
Incentive, to wit:

“Sec. 81. 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 MOOE
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;
(c) The CNA Incentive that may be granted shall be limited
to the amount determined by the DBM; and
(d) The use ofMOOE 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 after payment of the CNA Incentive
shall revert to the General Fund.

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. 25^ 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 2023, pursuant to the laws and executive
issuances stated in Item 1.0 hereof.

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

’ Creating an Inter-Agency Task Force on the Hannonization of National Government Performance Monitoring, Information and Reporting
Systems

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 enjoying fiscal autonomy, SUCs, GOCCs, LWDs, and LGUs, whether or not
covered by Republic Act (RA) No. 6758'’ dated August 21, 1989:

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 the rules and regulations issued
by the Public Sector Labor Management Council (PSLMC);

3.2 Rank-and-file employees who are non-members of the negotiating agent

who wish to enjoy or accept benefits under the CNA, subject to payment
of agency fee to the negotiating agent in accordance with PSLMC
Resolution No. 1, 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
Office, sue, GOCC, LWD, or LGU.
In accordance with PSLMC Resolution No. 9, s. 2023^, the
registration by the employees’ organization of its CNA with
the CSC shall be a condition precedent for the grant of
the CNA Incentive. For this purpose, a Certificate of
Registration shall be secured from the CSC.

(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
RA No. 10149^ dated June 6, 2011 should have
accomplished, by September30, 2023, at least an average
of 70% of all the targets for all the organizational

An Act Prescribing a Revised Compensation and Position Classification in the Government and for Other Purposes
’ Agency Fee from Non-Meinbers of the Accredited/Recognized Collective Negotiation Agent
Registration of Collective Negotiation Agreements (CNAs) with the Civil Service Commission
’ An Act to Promote Financial Viability and Fiscal Discipline in Government-Owned or--Controlled Corporations and to Strengthen the Role
of ths Stale in its Governance and Management to Make Them More Responsive to the Needs of Public Interest and for Other Puiposes

Page 3 of 10
 outcomes/performance indicators under their respective
FY 2023 budget approved by Congress, or the approved
FY 2023 Corporate Operating Budget (COB), whichever is
applicable.

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

accomplished, by September 30, 2023, 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. 2017-02® 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,
2023, to be validated by the Local Water Utilities
Administration.

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

2023, at least an average of 70% of all the targets under
their programs/projects/activities approved in the LGU
budget for FY 2023.

4.1.3 Submission of Accountability Reports

The NGAs, including Constitutional Offices enjoying fiscal

autonomy and SUCs, should have submitted to DBM their
respective accountability reports as of September 30, 2023
pursuant to Commission on Audit (COA)-DBM Joint Circular No.
2014-1® dated July 2, 2014, as amended by COA-DBM JC No.
2019-1’'° 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 determined by the agency head
upon recommendation of the Employees’ Organization-
Management Consultative Committee.

* Interim Perfonnanee Evaluation System for the GOCC Sector

*' Guidelines Prescribing the Use of Modified Formats of the Budget and Financial Accountability Reports
Updated Guidelines Relative to Budget and Financial Accountability Reports (BFARs) Starting FY 2019

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 4.2.3 In all cases, the CNA Incentive shall not exceed F30,000 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 2023
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 CNAs 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 Expenses;
(c) Supplies and Materials Expenses;
(d) Transportation and Delivery Expenses;
(e) Traveling Expenses;
(f) Utility Expenses;
(g) Printing and Publication Expenses;
(h) Advertising Expenses; and
(i) Subscription 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 discontinued with finality, or abandoned; and

b. Released allotments intended for acquisition of goods and

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

4.3-3 Items under Personnel Services, all other MOOE, and/or Capital
Outlay shall not be used to increase allowable MOOE items as
fund source for the FY 2023 CNA Incentive.

4.3.4 ForGOCCs

The CNA Incentive shall be sourced solely from the total MOOE
level under their respective DBM-approved COBs for FY 2023,
provided that the following conditions are complied with:

a. Actual operating income for the period January 1 to

September 30, 2023 shall, at least, meet the targeted

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 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, 2023 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. 7656'’'' dated November 9, 1993.

4.3.5 ForLWDs

The CNA Incentive shall be sourced solely from the allowable

MOOE allotments in FY 2023, 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 For LGUs

The CNA Incentive shall be sourced solely from the allowable

MOOE allotments in FY 2023, as enumerated in Item 4.3.1, under
their respective approved LGU budgets.

4.4 Payment of the CNA Incentive

4.4.1 The FY 2023 CNA Incentive is a one-time benefit which shall be

granted not earlier than December 15, 2023 but not later than
December 31, 2023.

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 Soc/a/ Security
System vs. COA^^, 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 Dividends under Certain Conditions to the National
Government, and for Other Puiposes
384 SCRA 548

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 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, LCDs, 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
programs, 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
entitled', and (ii) the distribution of the amount available and the
rate of the CNA Incentive in accordance with Item 4.2 hereof.

5.1.3 As provided under Section 81(d) of the GPs under the FY 2023
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.

The entire available balance of the selected allowable MOOE

allotments shall be modified to Personnel Services as reflected in
the Modification Advice Form (MAF), as prescribed under
National Budget Circular No. 590'’^ dated January 3, 2023.

Any excess amount from the selected allowable MOOE

allotments utilized for the payment of the CNA Incentive shall
revert to the General Fund.

” Guidelines on the Release ef Funds for Fiscal Year (FY) 2023

Page 7 of 10
 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, monitorthe progress of simultaneous negotiations,
and ensure compliance with the provisions of this Circular.

5.3 For LGUs, the savings in the identified MOOE expense items shall be
determined through the Registry of Appropriations, Allotments and
Obligations and Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances.

A supplemental budget (SB) to cover the CNA Incentive shall be

submitted by the local chief executive for authorization of the
sanggunian within the validity of appropriations sourced from
the allowable MOOE allotments in Item 4.3 hereof which have 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 the LGU and its employees.
Accordingly, the Appropriation Ordinance authorizing the SB shall be
subject to review by the reviewing authority concerned.

For recording purposes of the payment of CNA incentives in LGU

books, LGUs shall comply with the recording requirements consistent
with Section 13 of the Commission on Audit Government Accounting
Manual for Local Government Units-Volume 1.

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, 2024, 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://forms.dbm.gov.ph/index.php/submit-cna-report .

Agencies are enjoined to fully abide by the aforementioned reportorial

requirement. The Budget and Management Bureaus/DBM Regional Offices
concerned shall ensure strict compliance of the agencies with the reportorial
requirement set forth in this Circular.

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

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 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 Effectivity

This Circular shall take effect immediately after publication in the Official
Gazette or in a newspaper of general circulation.

AMEN F. PANGANDAMAN
Secretary

^^71-12691 J

i Page 9 of 10
 Annex’A’
Report on the Payment of the Collective Negotiation Agreement (CNA) Incentive for FY

Depa rtm e n t/Ag e n cy:

I. If CNA Incentive was Granted

Total No. of Employees Entitled to CNA Incentive

Regular XXX
Contractual XXX
Casual XXX
Total XXX

Approved Rate of CNA Incentive XXX

Fund Sources:

Object of Expenditures Amount

Communication Expenses
Repairs and Maintenance Expenses -. +- - XXX
XXX
Supplies and Materials Expenses ..... _,-i. . XXX
Transportation and Delivery Expenses J
XXX
Traveling Expenses XXX
Utility Expenses
-.. 4--- XXX
Printing and Publication Expenses
Advertising Expenses
zzi:.-..
- {■ -
XXX
XXX
Subscription Expenses 1 m
Total: XXX

II. M 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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