Clarifying Certain Provisions in Administrative Order No. 372 on the Adoption of Economy Measures for FY 1998

March 2, 1998 REVENUE MEMORANDUM CIRCULAR NO. 10-98 SUBJECT : Clarifying Certain Provisions in Administrative Order No. 372 on the Adoption of Economy Measures for FY 1998 TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, quoted hereunder is DBM Circular Letter No. 3-98 dated January 12, 1998 signed by Secretary Salvador M. Enriquez, Jr. addressed to Heads of Departments and Agencies of the National Government, State Universities and Colleges (SUCs), Government-Owned/-Controlled Corporations (GOCCs) and Local Chief Executives: "1.0 This Circular Letter is being issued to clarify the intent and provisions of Administrative Order No. 372 dated December 27, 1997, on the Adoption of Economy Measures in Government for FY 1998. prcd 2.0 Section 1 of AO 372 provides that, 'All government departments and agencies, including state universities and colleges, government-owned and controlled corporations and local government units will identify and implement measures in FY 1998 that will reduce total expenditures for the year by at least 25% of authorized regular appropriations for non-personal services items . . .'. 3.0 In the case of national government agencies (NGAs) and SUCs, the 25% shall be applied on their 1998 non-personal services (PS) appropriations as reflected in the 1998 General Appropriations Act (GAA) as approved by Congress. 3.1 If no sufficient savings can be identified by NGAs and SUCs along the areas suggested under items 1, 2, 4 and 5 of Section 1 of AO 372, they shall identify other cost-saving areas, including Personal Services items, to come up with the required level of savings. 3.2 A report on the identified cost-saving areas shall be submitted to the DBM not later than 15 days after the approval of the 1998 GAA. Until this report is submitted, an amount equivalent to 25% of non-PS items shall be withheld. This report shall be in addition to the quarterly report of estimated savings called for under Section 3 of AO 372. 3.3 No releases shall be made corresponding to the amounts offered as reserves unless an offsetting amount is identified. 4.0 Pending the enactment of the 1998 GAA, expenditures of NGAs and SUCs shall be governed by the provisions of Circular Letter No. 1-98 dated January 2, 1998 (Obligational Authority for CY 1998 Budget). 5.0 GOCCs shall, on the other hand, apply the 25% on their total Corporate Operating Budget for FY 1998. A report on the identified cost-saving areas of GOCCs shall likewise be submitted to the DBM within 15 days from receipt of this Circular Letter. This report is likewise in addition to the report required under Section 3 of AO 372. dctai 6.0 For local government units (LGUs), an amount equivalent to 10% of their Internal Revenue Allotment shall be withheld. They are, however, enjoined to implement their own economy measures. 7.0 Notwithstanding the provisions of AO 372, NGAs, SUCs and GOCCs are strongly discouraged from incurring the following expenses: 7.1 Payment of honoraria, except in cases where it constitutes the only source of compensation from government received by the person concerned and for teaching overload; and 7.2 Donations, contributions, grants and gifts, except those given by institutions to victims of calamities and those which are part of agency operations. 7.0 In addition, NGAs, SUCs and GOCCs are prohibited from granting new/additional benefits to employees, except those expressly and specifically authorized by law, notwithstanding the provisions of AO 372. 8.0 No release of tax subsidy shall be made to GOCCs and LGUs. 9.0 Realignment of funds and use of savings shall not be allowed. 10.0 An amount equivalent to 25% of the 1998 appropriation shall be withheld on all Special Purpose Funds, except the Internal Revenue Allotment to LGUs on which only 10% shall be withheld, and those specifically exempt in the 1998 GAA from the imposition of reserves." All internal revenue officers and others concerned are requested to give this circular as wide a publicity as possible. LibLex LIWAYWAY VINZONS-CHATO Commissioner