President Marcos has issued Executive Order (EO) No. 95 establishing a new Compensation and Position Classification System II (CPCS II) for government-owned and -controlled corporations (GOCCs), replacing the previous framework issued in 2021.

The EO, signed on Sept. 16, directs the Governance Commission for GOCCs (GCG) to implement the updated system, which was developed after consultations with stakeholders and a review of CPCS I.

The CPCS II seeks to correct job grade distortions, rationalize pay structures, and improve employee health benefits.

Under the new rules, CPCS II applies to all GOCCs, Government Financial Institutions, and other corporate entities not excluded under Republic Act No. 10149. It covers all positions, whether regular, contractual, or casual, in both chartered and non-chartered corporations. GOCCs under merger, consolidation, or privatization, however, are excluded from the system.

For GOCCs that have already adopted CPCS I, the new monthly salary schedule and enhanced allowances and benefits can be implemented retroactively to Jan. 1, 2025, once they receive formal Authority to Implement from the GCG. Those who have yet to adopt CPCS I will follow CPCS II once they are granted authority.

The EO guarantees that the salaries of existing officers and employees will not be reduced. However, GOCCs are prohibited from granting any compensation outside the system unless endorsed by their supervising agency, recommended by the GCG, and approved by the President.

Funding for salary adjustments must come from a GOCC’s own financial resources and its approved operating budget. The EO explicitly bars the use of loans, asset sales, or higher service fees to cover shortfalls. Corporations that lack funds may apply lower-tier salary schedules or implement partial adjustments.

Failure to comply with the new framework may result in mandatory action such as reorganization, merger, abolition, or privatization. Employees affected by such measures will be entitled to separation incentive pay, based on a formula tied to years of service and current salary.

CPCS II also rationalizes allowances, benefits, and incentives by limiting them to those legally authorized for national government agencies. A new annual medical allowance for all qualified employees is introduced, with tiered rates depending on the financial category of the GOCC.

The system mandates a periodic review every three years. The GCG En Banc is tasked to evaluate GOCC performance, contribution to the economy, and inflation, and may recommend further adjustments to the President.