DBM rolls out third tranche of government salary hikes

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January 26, 2026 | 12:00am

MANILA, Philippines — The Department of Budget and Management (DBM) has ordered the implementation of the third tranche of the updated salary schedule for civilian government personnel starting Jan. 1, as part of the four-year pay adjustment program.

In National Budget Circular 601 dated Jan. 22, DBM said the new rates are meant to “ensure an effective, competitive and sustainable Compensation and Position Classification System (CPCS) that attracts, retains and engages high-performing civil servants,” with the third tranche taking effect this year.

The circular covers civilian personnel in the executive, legislative and judicial branches, constitutional commissions and other constitutional offices, as well as state universities and colleges and government-owned or controlled corporations (GOCCs) that remain under the DBM’s pay system.

It excludes, among others, military and uniformed personnel, student workers, consultants and experts engaged for a limited period, those hired through job orders or contracts of service and GOCCs covered by a separate CPCS approved by the President.

Under the new schedule, monthly salaries across 33 salary grades will move up to the third tranche levels, with entry-level positions rising to about P14,730 and the highest ranks reaching more than P460,000, depending on step and grade, based on the schedule attached to the circular.

The DBM laid down detailed rules on how agencies should adjust pay. Salaries of incumbents will be aligned with the corresponding step in the new schedule, while new hires will receive Step 1 of the salary grade of their position. Casual and contractual personnel will likewise be adjusted to Step 1 rates.

For those whose current pay already exceeds Step 8 of their salary grade, the circular states that their salary will be capped at Step 8 and they “shall not be entitled to salary increase” under this tranche.

The circular also clarified that compulsory retirees whose services are extended beyond Dec. 31, 2025 are entitled to the adjustment, but their retirement and terminal leave benefits will still be computed based on their salary before retirement, in line with existing rules.

The DBM said the amounts required “are already incorporated in the respective agency budgets” under the 2026 General Appropriations Act, while covered GOCCs must charge the increase against their approved corporate operating budgets, without any additional releases from the national government and without resorting to borrowings.

Implementation will be subject to the usual accounting and auditing rules. The circular stressed that any overpayment will have to be refunded, noting that the adjustment is “subject to review and post-audit, and to appropriate re-adjustment if found not in order.”

DBM added that the salary increases authorized for the President, Vice President and members of Congress will take effect only after the end of the current terms of the incumbents, in line with constitutional restrictions.

The circular was signed by acting Budget Secretary Rolando Toledo and takes effect Jan. 1, marking the third step in the government’s four-tranche pay adjustment program that will run until 2027.