So you may know (First of 2 parts)

Several news items flooded the front pages of some leading newspapers in the country in the past few weeks, among the most prominent of which was the brouhaha at the Senate over the cash outlay given to senators by Senator Juan Ponce Enrile at the end of the previous year.

Sen. Enrile described these as additional funds for Maintenance and Other Operating Expenses (MOOE) but others, particularly the two senators who were given much lesser amounts, labeled them as “bonuses and cash gifts.”

In an effort to understand the issue, this author undertook personal research on the topic, drawing on my vast experience as a government auditor. I would like to share this research and my personal views with you.

1. Under what authority did Sen. Enrile give to the senators the P1.6 million and P250,000, representing savings of the Senate of the Philippines?

Sen. Enrile, in his capacity as President of the Senate, is authorized by the Constitution of the Philippines and the appropriation law to give the senators additional funds for MOOE. The Constitution provides: “No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations” (Sec. 23, par. (5), Article VI, 1987 Philippine Constitution).

2. What specific law implements this particular constitutional provision?

The General Appropriations Act (GAA) which is passed by Congress every year implements the above-mentioned constitutional provision. For year 2013, the General Appropriations Act is contained in Republic Act No. 10155. The following specific provisions are found in this appropriation law:

“Sec. 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other items of their respective appropriations.

3. What is the meaning of the word “augmentation,” as stated in the General Appropriations Act, and how should it be applied?

“Augmentation implies the existence in this Act of a program, activity, or project with an appropriation, which upon implementation or subsequent evaluation of needed resources, is determined to be deficient. In no case shall a non-existent program, activity or project, be funded by augmentation from savings or by the use of appropriations otherwise authorized in this Act” (Sec. 54, General Provisions, GAA 2013).

4. If augmentation is only intended for a “program, activity, or project” that is supposed to be in existence and the funds for which are insufficient” does the so-called additional MOOE qualify as an existing “program, activity, or project”?

Every program, activity or project may have three components — personal services component, MOOE component and capital outlay component. This being the case, the augmentation authority may be exercised if any of the three components of any of the agency’s programs, projects or activities is deficient.

5. Why is it that both the Constitution and the General Appropriations Act granted this special privilege of augmenting items of appropriations only to the government institutions mentioned above to the exclusion of all others?

I can only surmise that these institutions have been granted fiscal autonomy so as to promote their independence when they discharge their constitutionally mandated functions. (This is only my personal opinion and the same is not based on any jurisprudence.)

6. What are these so-called maintenance and other operating expenses or MOOE?

These are travelling expenses, communication expenses, repair and maintenance, transportation and delivery expenses, supplies and materials, rents, subsidies and donations, utility expenses, training and scholarship expenses, extraordinary and miscellaneous expenses, confidential and intelligence expenses, taxes, insurance premium and other fees, professional services, printing and binding expenses, advertising expenses, representation expenses, storage expenses, subscription expenses, and membership dues and contribution to organizations, and rewards and other claims.

7. Are funds appropriated for CY 2012 to be utilized only for expenditures incurred in 2012? Are there any exceptions?

Funds appropriated for CY 2012 shall be used only for expenditures incurred in 2012. “Unexpended balances of appropriations authorized in the GAA shall revert to the unappropriated surplus of the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent legislative enactment: provided, that appropriations for capital outlays shall remain valid until fully spent or reverted: provided, further, that continuing appropriations for such current operating expenditures may be specifically recommended and approved as such in support of projects whose effective implementation calls for multi-year expenditure commitments: provided, finally, that the President may authorize the use of savings realized by an agency during a given year to meet non-recurring expenditures in a subsequent year” (Sec. 33, PD No. 1177, otherwise known as the “Budget Reform Decree of 1977).

8. Can the savings of the Senate of the Philippines be legally used to pay additional Christmas bonuses and cash gifts to officials and employees of the Senate who already got their bonuses and cash gifts last year?

I believe the answer is no. Unless there is another law expressly authorizing the payment of additional bonus and cash gift in addition to those already given for the year, there can be no valid or legal basis for allowing the payment of any additional bonus and cash gift. The law grants government officials and employees a 13th month pay equivalent to a one month salary and a cash gift of P5,000 every year (PD No. 851, Memorandum Order No. 28 dated August 13, 1986 of President Corazon Aquino). They cannot be paid more than what is authorized by law. The following provisions of the 1987 Constitution and the law support this view:

1.  “No elective or appointive public officer or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emolument, office or title of any kind from any foreign government” (Sec. 8, Art. IX(B), 1987 Constitution).

2. “No elective or appointive public officer or employee shall receive additional or double compensation unless specifically authorized by law nor accept without the consent of the President, any present, emolument, office or title of any kind from any foreign state” (Sec. 56, EO 292, otherwise known as the Administrative Code of 1987).

9. Was it legal for Senate President Enrile to give unequal amounts as additional MOOE to the senators?

Unfortunately, this writer is not aware of any jurisprudence that covers this matter. There is also no specific provision of law that I know that requires the equal distribution of savings to augment the MOOE of the senators. Is there a violation of the equal protection of the laws? The Supreme Court held in one case that “The constitutional right to equal protection of the laws is not absolute but is subject to reasonable classification. To be reasonable, the classification (a) must be based on substantial distinctions which make for real differences; (b) must be germane to the purpose of the law; (c) must not be limited to existing conditions only; and (d) must apply equally to each member of the class. (Parreno v. COA and AFP Chief, G.R. No. 16224, June 7, 2007). Whether or not the circumstances surrounding the giving of additional MOOE to the senators satisfy these conditions requires further inquiry.

(This is the first of a two-part series.)