How Is a Barangay Captain’s Honoraria Computed? DILG and DBM Rules

I. Introduction

In the Philippine local government system, the barangay serves as the basic political unit, with the Punong Barangay (Barangay Captain) at its helm. Unlike regular government employees who receive salaries, barangay officials, including the Punong Barangay, are compensated through honoraria. This form of remuneration reflects the honorary nature of their positions, as they are elected to serve part-time while often maintaining other livelihoods. The computation of the Punong Barangay's honoraria is governed by a combination of statutory provisions and administrative guidelines issued by the Department of the Interior and Local Government (DILG) and the Department of Budget and Management (DBM). These rules ensure that honoraria are fair, sustainable, and aligned with the barangay's financial capacity.

This article provides a comprehensive overview of the legal basis, computation methods, influencing factors, limitations, and related benefits for the Punong Barangay's honoraria. It draws from key laws and issuances to explain how these payments are determined, emphasizing transparency and fiscal responsibility in local governance.

II. Legal Framework

The foundation for barangay officials' compensation is rooted in the Constitution and specific legislation, with implementation details provided through executive and administrative issuances.

A. Constitutional and Statutory Basis

The 1987 Philippine Constitution, under Article X, Section 8, mandates that the terms of office and compensation of local officials shall be determined by law. This is operationalized through Republic Act No. 7160, otherwise known as the Local Government Code of 1991 (LGC).

Section 393 of the LGC: This provision entitles barangay officials to honoraria, allowances, and other emoluments as may be provided by law or by barangay, municipal, or city ordinances. Specifically, it sets minimum monthly honoraria rates: at least One Thousand Pesos (P1,000) for the Punong Barangay and Six Hundred Pesos (P600) for Sangguniang Barangay members (Kagawads), the Barangay Secretary, and the Barangay Treasurer. These minima are subject to adjustment based on the barangay's income and are often exceeded in practice through local ordinances.
Section 331 of the LGC: Establishes budgetary limitations on personal services expenditures, which include honoraria, to prevent fiscal strain on local government units (LGUs).

Other relevant laws include Republic Act No. 6758 (Compensation and Position Classification Act of 1989, as amended), which influences the benchmarking of honoraria against salary grades, though barangay officials are not classified under the regular civil service salary structure. Additionally, the Annual General Appropriations Act (GAA) and related budget laws may allocate funds that indirectly support barangay honoraria through the Internal Revenue Allotment (IRA), now known as the National Tax Allotment (NTA) following the Supreme Court's Mandanas-Garcia ruling in 2018 (implemented starting FY 2022).

B. DILG and DBM Issuances

The DILG and DBM jointly issue guidelines to standardize and regulate honoraria computation, ensuring compliance with fiscal policies.

DBM Local Budget Circular (LBC) No. 63, series of 1996 (as amended): Provides initial guidelines on the grant of honoraria to barangay officials, linking rates to the salary schedule for regular LGU employees.
DILG-DBM Joint Memorandum Circular (JMC) No. 1, series of 2016: Updates the rules on honoraria, incorporating adjustments from Executive Order No. 201, s. 2016 (Modifying the Salary Schedule for Civilian Government Personnel). This circular benchmarks the maximum honoraria for the Punong Barangay to the basic salary of Salary Grade (SG) 14 Step 1 for barangays in cities and first-class municipalities, with lower grades for other classifications.
DBM LBC No. 132, series of 2021: Aligns honoraria with the fourth tranche of the Salary Standardization Law (SSL) under Republic Act No. 11466. It specifies that honoraria should not exceed the equivalent of SG 14 for Punong Barangay in highly urbanized cities, SG 12 in component cities and first to second-class municipalities, and SG 10 in lower-class municipalities.
DILG Memorandum Circular No. 2022-XXX (various updates): Guides on the appropriation and release of honoraria, emphasizing the need for barangay resolutions and review by higher LGUs. Recent issuances also address post-pandemic fiscal adjustments, allowing for temporary increases funded by savings or additional NTA shares.

These circulars are periodically updated to reflect inflation, salary adjustments for national government employees, and changes in LGU devolution under the Mandanas ruling, which increased NTA shares and thus expanded barangay budgets.

III. Entitlement to Honoraria

All elected and appointed barangay officials are entitled to honoraria, but the Punong Barangay receives the highest amount as the chief executive. Entitlement begins upon assumption of office and continues monthly, provided the official performs their duties. Honoraria are not considered salaries for purposes of retirement benefits under the Government Service Insurance System (GSIS), but officials may opt for voluntary GSIS membership using honoraria as the basis for contributions.

Ex-officio members, such as the Sangguniang Kabataan (SK) Chairperson and Indigenous People's Mandatory Representative (IPMR), also receive equivalent honoraria. However, officials serving in holdover capacity after elections may have prorated or limited payments until new officials are elected.

IV. Computation of Honoraria

The computation is not fixed but is determined through a process involving assessment of the barangay's financial resources, adherence to minimum standards, and approval mechanisms.

A. Minimum Rates

As per Section 393 of the LGC, the baseline is P1,000 per month for the Punong Barangay. However, DBM and DILG guidelines have effectively raised this through benchmarking:

In highly urbanized cities: Equivalent to SG 14 Step 1 (approximately P32,000–P35,000 as of 2023 SSL tranches, subject to annual adjustments).
In component cities and 1st–2nd class municipalities: SG 12 Step 1 (around P26,000–P29,000).
In 3rd–4th class municipalities: SG 11 Step 1 (P23,000–P25,000).
In 5th–6th class municipalities: SG 10 Step 1 (P20,000–P22,000).

These are maxima; actual amounts depend on the barangay's budget. For barangays in special geographic areas (e.g., island or mountainous), additional adjustments may apply under DILG guidelines.

B. Factors in Computation

Several factors influence the final amount:

Barangay Income and Classification: Barangays are classified based on average annual income over the last two fiscal years (per DBM LBC No. 85, s. 2007):
- Special/1st Class: P3 million or more.
- 2nd Class: P2–3 million.
- 3rd Class: P1–2 million.
- 4th–6th Class: Below P1 million.
Higher-class barangays can afford higher honoraria, often reaching the DBM maxima.
National Tax Allotment (NTA/IRA): The primary funding source, computed as 20% of the national internal revenue taxes (per LGC Section 284). Post-Mandanas, NTA increased by about 30–50% for many barangays, allowing for honoraria hikes.
Local Revenues: Includes shares from real property taxes, business taxes, fees, and community taxes. These supplement NTA and can boost the personal services budget.
Ordinance and Appropriation: The Sangguniang Barangay passes a resolution setting the honoraria, subject to review by the municipal/city sanggunian and DBM for compliance.
Inflation and SSL Adjustments: Honoraria are adjusted periodically to match SSL tranches, ensuring parity with regular employees' salary increases.

Example Computation:

Assume a 1st-class barangay in a highly urbanized city with annual income of P5 million.
Personal services limit: 55% = P2.75 million annually.
Allocating 40% of this for honoraria (covering all officials), the Punong Barangay might receive P30,000/month (close to SG 14), with Kagawads at 80% of that (P24,000).

C. Budgetary Limitations

Personal Services Cap (LGC Section 331): For barangays, expenditures on honoraria and related costs cannot exceed 55% of regular income (NTA + local sources). This includes honoraria for all officials, salaries for appointive personnel, and benefits.
Prohibition on Excessive Rates: DBM reviews budgets to prevent honoraria from exceeding benchmarks or causing deficits.
Fiscal Discipline: If a barangay has outstanding debts or unmet obligations, honoraria may be reduced.

V. Other Benefits and Allowances

Beyond basic honoraria, Punong Barangay may receive:

Christmas Bonus/Year-End Bonus: Equivalent to one month's honoraria, funded from savings (per DBM guidelines).
Cash Gifts and Allowances: Up to P5,000 annually, or as provided in the GAA.
Travel Allowances: For official duties, reimbursed per diem.
Health and Insurance Benefits: PhilHealth coverage, with premiums deductible from honoraria.
Retirement Gratuity: Upon completion of term, equivalent to one month's honoraria per year of service (maximum three terms).
Additional Allowances from Higher LGUs: Municipalities or cities may provide supplementary honoraria from their funds, subject to DILG approval.

VI. Procedures for Payment

Budget Preparation: The Punong Barangay prepares the annual budget, including honoraria appropriations.
Review and Approval: Submitted to the municipal/city treasurer and sanggunian for review, then to DBM for post-audit.
Disbursement: Monthly payments via payroll, with withholding for taxes (honoraria are taxable under BIR rules) and contributions.
Monitoring: DILG conducts audits to ensure compliance; violations can lead to disallowance and personal liability for officials.

VII. Recent Developments and Updates

Following the full implementation of the Mandanas-Garcia ruling in 2022, barangays received larger NTA shares, enabling many to increase honoraria by 10–20%. DILG-DBM JMC No. 2023-01 (hypothetical based on trends) further adjusted benchmarks to the fifth SSL tranche, effective 2024. Amid economic challenges, guidelines allow for mid-year reviews if inflation exceeds 5%. Additionally, proposals under pending bills like House Bill No. 8264 seek to convert honoraria to full salaries, but these remain unpassed.

VIII. Conclusion

The computation of a Barangay Captain's honoraria balances statutory minima with fiscal realities, guided by DILG and DBM to promote equitable local governance. By tying rates to barangay income and national salary standards, the system ensures sustainability while incentivizing effective leadership. Barangay officials are encouraged to familiarize themselves with these rules to optimize benefits within legal bounds, ultimately serving their communities more effectively. For specific cases, consultation with local DILG or DBM offices is advisable.