To: Senator Eduardo J.

Angara Re: Reallocation of Judiciary Personnel Funds Dear Senator Angara: We acknowledge receipt of your request for us to furnish a legal opinion on the Executives reallocation of funds appropriated by Congress for the Judiciary. It is our understanding that the Executives proposed national budget for 2012 includes a provision which will enable the President to control Php 1.98 billion originally allocated for unfilled positions in the Judiciary, independent constitutional agencies, and other non-Executive branches of government (including non-independent, non-constitutional, or ordinary agencies). Under the Executives proposal, the funds will be diverted to the Miscellaneous Personnel Benefits Fund (MPBF). Through the MBPF, funds allocated to the judiciary and other agencies will be pooled together, kept in trust by the Department of Budget and Management (DBM) to be released upon proof that the vacant position has been filled.

Main Opinion The Executives exercise of fiscal control is permitted under the Constitution. The 1987 Constitution (the Constitution) expressly grants the Judiciary fiscal autonomy: The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced by the legislature below the amount appropriated for the previous year and, after approval, shall be automatically and regularly released.1 The text places a specific limitation upon Congress, specifically, on its power to make appropriations for the Judiciary. This constraint is operationalized in terms of a guaranteed minimum amount of appropriation, which cannot be lower than the amount allocated in the previous year. The grant of fiscal autonomy does not mean that the Judiciary is exempt from the budget process. Beyond the requirement of a minimum amount, Congress is not prohibited from imposing conditions for the approval of additional appropriations (i.e., the use of the allocated funds for a specific purpose, such as the filling-up of vacancies). The Executives proposal of pooling together funds intended for unfilled positions is not prohibited by the Constitution. Appropriation, in this context, refers to legislative designation of amounts for particular purposes. Since the amount is kept in trust, and the original designation for unfilled vacancies of the Judiciary is preserved, it does not amount to an infringement over
1

Constitution, Article XVIII, Section 3.

Congress power to appropriate the budget, or control reallocation of savings. Not being an act of appropriation, the Executives realignment does not trigger application of Article XVIII, Section 3 of the Constitution. Neither does conditioning the release of the funds upon proof of the vacancy being filled amount to a violation of the constitutional requirement of automatic, regular release. Discretion as to whether or not the amounts are released (i.e., filling up a particular vacancy) is still lodged with the Judiciary, and the requirement of presenting proof is a de minimis procedural requirement, amounting to a notice requirement that imposes no burden to the Judiciarys fiscal autonomy. The Court itself has ruled that a notice requirement, and the scheduling of releases, as such, do not impinge on the constitutional grant of fiscal autonomy.2 The grant of fiscal autonomy does not amount to the Judiciary having unlimited discretion over its appropriations, especially over its savings. The Constitution itself prohibits transfer of appropriation, except by specific offices (relative to their savings, in order to augment other items of their appropriations) and only through subsequent legislation:
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.3

The Judiciarys fiscal autonomy does not remove from Congress its continuing authority over budgetary matters, particularly over the Judiciarys savings. Neither does it limit the Congress and Executives coordinate duties to exercise fiscal responsibility.

Alternative Opinion The Executives proposal amounts to a reallocation is an infringement of the fiscal autonomy to the Judiciary.4 The 1987 Constitution (the Constitution) expressly grants the Judiciary fiscal autonomy:

Civil Service Commission v. Department of Budget and Management, G.R. No. 158791, February 10, 2006. 3 Constitution, Article VI, Sec. 25 (5). 4 Although we refer to the Judiciary in our discussion, the same is applicable to agencies that are guaranteed fiscal autonomy and automatic release of their appropriations.

The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced by the legislature below the amount appropriated for the previous year and, after approval, shall be automatically and regularly released.5 The text provides for a generalized grant of fiscal autonomy, supported by specific guarantees as to 1) the minimum amount of appropriation (which cannot be below that of the previous year) and 2) manner of disbursement (which must be automatic and regular). Fiscal autonomy has been construed by the Court to amount to full flexibility to allocate and utilize, as well as freedom from outside control: As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service Commission and the Commission on Audit, the Commission on Elections, and the Office of the Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require. It recognizes the power and authority to levy, assess and collect fees, fix rates of compensation not exceeding the highest rates authorized by law for compensation and pay plans of the government and allocate and disburse such sums as may be provided by law or prescribed by them in the course of the discharge of their functions. Fiscal autonomy means freedom from outside control. If the Supreme Court says it needs 100 typewriters but DBM rules we need only 10 typewriters and sends its recommendations to Congress without even informing us, the autonomy given by the Constitution becomes an empty and illusory platitude. The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and constraints on the manner the independent constitutional offices allocate and utilize the funds appropriated for their operations is anathema to fiscal autonomy and violative not only of the express mandate of the Constitution but especially as regards the Supreme Court, of the independence and separation of powers upon which the entire fabric of our constitutional system is based.6 The overarching policy, as reflected in the deliberations of the Constitutional Commission (the Commission), is to promote judicial independence and preserve the separation of powers, disabling the use of the budget process as a means of exerting pressure or influence over the Judiciary.7 Both the Commission and the Court rejected an extension of the grant to an automatic
5 6

Constitution, Article XVIII, Section 3. In Re: Clarifying and Strengthening The Organizational Structure and Administrative Set-Up of the Philippine Judicial Academy, A.M. No. 01-1-04-SC-PHILJA, January 31, 2006, citing Bengzon v. Drilon, G.R. No. 103524, 15 April 1992, 208 SCRA 133, 150, later reiterated in Blaquera v. Alcala, 356 Phil. 678, 764 (1998) and Commission on Human Rights Employees Association (CHREA) v. Commission on Human Rights, G.R. No. 155336, November 25, 2004, 444 SCRA 300, 316, emphasis supplied. 7 II Record, Constitutional Commission 170 (1986).

allocation. Thus, the Judiciary is still subject to the budget process and would still need to ask Congress for allocations that go beyond the guaranteed minimum amount, or for supplemental allocations in case the amounts provided by the annual appropriations law do not suffice. However, once the Judiciary has been subjected to the budget process, fiscal autonomy becomes the operating principle and the Executive is tasked with automatic and regular release of the Judiciarys budget.8 The reallocation contained in the Executives proposed budget runs afoul of the specific guarantees contained in Art XVIII, Sec. 3 of the Constitution: Pooling together the Judiciarys funds with those of other independent constitutional agencies, as well as ordinary agencies, may render the guaranteed minimum amount illusory. These other agencies may easily outstrip the Judiciary in terms of capacity to fill up vacant posts, and considering that the release of allocations is subject to meeting revenue targets, the Judiciarys access to the minimum amount guaranteed by the Constitution is attenuated. Though guaranteed on paper, access to the Judiciarys own budget is suddenly conditioned on its ability, relative to nearly all other agencies of government, to search for, recruit, hire, and eventually to retain, personnel for its available positions. If it cannot sustain these activities in parity with the rest of the government, and especially in the event of a revenue shortfall, the Judiciary may end up having no access whatsoever to the funds lawfully reserved by Congress and guaranteed by the Constitution. Subjecting release of funds to proof that a vacancy has been occupied requires 1) a positive act on the part of the Judiciary and 2) acts of discretion on the part of the DBM, both in prescribing guidelines for the presentation and acceptance of such proof, as well as in determining, for each and every case, whether the submissions meet the prescribed guidelines. These requirements impose a significant constraint on the Judiciary and go against the specific guarantee of automatic and regular disbursement of funds. Both these consequences converge to impinge on the Judiciarys freedom of action with regard to the allocation and utilization of its own funds, and render nugatory the guarantee of fiscal autonomy. In the exercise of its fiscal autonomy and institutional independence, the Judiciary is well within its rights to strike its own balance between filling up its vacancies, on one hand, and optimizing performance of current staff levels by converting the savings from unfilled positions into additional compensation or incentives. We hope the foregoing was helpful. Should you have any other queries, please do not hesitate to contact us. Regards, Florin Hilbay Director
8

Supra note 3.