This Circular is issued to amplify and clarify the implementation of the grant of AA to all personnel of the national government, government owned-and-controlled corporations, government financial institutions and local government units as authorized under Administrative Order (AO) No. 37 dated November 21, 1998.

2. Coverage

The coverage of AO No. 37 includes government personnel who are under the following circumstances from January 1, 1998 to the date of payment of AA in the agency as directed/approved by the agency head concerned:

2.1	those who have rendered at least a total of four (4) months of service including leaves of absence with pay;
2.2	those who are on approved leave without pay but have rendered at least a total of four (4) months of service; and
2.3	those who have rendered less than four (4) months of service, but only on a pro-rated basis.

3. Exemptions

All government personnel under the following instances from January 1, 1998 to the date of payment of AA in the agency as directed/approved by the agency head concerned shall not be entitled to AA:

3.1	those who are meted penalties for work-connected offenses in FY 1998;
	3.1.1	In this regard, if the penalty meted out to an employee is only a reprimand, such penalty is not one that can be made as basis of disqualification to receive the said benefit.
3.2	those who are Absent Without Leave (AWOL);
3.3	those under service contracts such as consultants or experts who are hired for a limited period to perform specific activities or services with expected outputs including student laborers, apprentices, laborers of contracted projects, mail contractors, those paid by piecework basis and those who are not hired as part of the organic manpower of government entities; and
3.4	those who are no longer in the service due to retirement/resignation separation/death or for whatever reasons at the date of payment.

4. Rules and Regulations

4.1	The AA of government personnel who are on full-time or part-time detail with another government agency or special project shall be drawn from their respective mother agency. In the case of those who are paid from project funds, the benefit shall be drawn from the same source where they draw their salaries.
4.2	No one shall receive the benefit from more than one resource.
4.3	Government personnel who rendered less than four (4) months of service and are still in the service at the time of payment of AA in the agency shall be entitled to AA pro-rated as follows:

Length of Service	Percentage of the Authorized Amount
less than 1 month	0%
1 month but less than 2 months	25%
2 months but less than 3 months	50%
3 months but less than 4 months	75%

4.4	The AA of government personnel who transferred from one agency to another shall be granted by the new office subject to Section 4.2 herein.
4.5	All agencies are hereby prohibited from granting any food, rice, gift checks or any other form of incentives/allowances except those authorized via Administrative Order by the Office of the President. Agencies which have granted such incentives/allowances before the issuance of AO No. 37 shall be deemed to have complied with Administrative Order No. 37. Administrative authorizations granting any and all forms of additional compensation that are inconsistent with the provisions of AO No. 37 are considered revoked pursuant to Section 2 thereof.
4.6	Government entities which authorized the payment of AA or any form of incentives/allowances in excess of P7,000 are hereby directed to cause the refund of the excess within a period of three (3) months to commence in December 1998.

5. Funding Source

The benefit authorized herein shall be taken from the following funds:

5.1	for NGAs, it shall be charged against their available savings;
5.2	for GOCCs and GFIs, it shall be charged from their respective corporate funds; and
5.3	for LGUs, it shall be charged from their respective local funds.

6. Responsibility of the Head of Entity

The head of entity shall be held responsible and personally liable for any payment of AA not in accordance with the provisions of AO No. 37 and this Circular without prejudice, however, to refund of any excess payment by the official or employee concerned.

7. Saving Clause

Cases not covered by the provisions of the Circular shall be submitted to the Secretary of Budget and Management for appropriate evaluation and resolution.

8. Effectivity

This Circular shall take effect immediately.

Adopted: 26 Nov. 1998

(SGD.) BENJAMIN E. DIOKNO
Secretary