CSC vs. DBM

VOL.
464, JULY 22, 2005
115
Civil Service Commission vs. Department of Budget and

Management
*
G.R. No. 158791. July 22, 2005.
CIVIL
SERVICE
COMMISSION,
petitioner,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT,
respondent.
Actions Administrative Law Doctrine of Exhaustion of
Administrative Remedies The rule on exhaustion of
administrative remedies applies only where there is an express
legal provision requiring such administrative step as a condition
precedent to taking action in court.The rule on exhaustion of
administrative remedies invoked by respondent applies only
where there is an express legal provision requiring such
administrative step as a condition precedent to taking action in
court. As petitioner is not mandated by any law to seek
clarification from the Secretary of Budget and Management prior
to filing the present action, its failure to do so does not call for the
application of the rule.
Same Courts Hierarchy of Courts A direct invocation of the
Supreme Courts original jurisdiction may be allowed where there
are special and important reasons therefor, clearly and specifically
set out in the petition.As for the rule on hierarchy of courts, it is
not absolute. A direct invocation of this Courts original
jurisdiction may be allowed where there are special and
important reasons therefor, clearly and specifically set out in the
petition. Petitioner justifies its direct filing of the petition with
this Court as the matter involves the concept of fiscal autonomy
granted to [it] as well as other constitutional bodies, a legal
question not heretofore determined and which only the Honorable
Supreme Court can decide with authority and finality. To this
Court, such justification suffices for allowing the petition.
Constitutional Commissions Fiscal Autonomy Words and
Phrases Automatic release of approved annual appropriations to
the Civil Service Commission, a constitutional commission which

is vested with fiscal autonomy, should be construed to mean that
no condition to fund releases to it may be imposed.In Province of
Batangas v. Romulo, this Court, in construing the phrase
automatic release in Section 6, Article X of the Constitution
reading: Section
_______________
*
EN BANC.
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SUPREME COURT REPORTS ANNOTATED

Management
6. Local government units shall have a just share, as determined

by law, in the national taxes which shall be automatically
released to them, held: Websters Third New International
Dictionary defines automatic as involuntary either wholly or to
a major extent so that any activity of the will is largely negligible
of a reflex nature without volition mechanical like or suggestive
of an automaton. Further, the word automatically is defined as
in an automatic manner: without thought or conscious intention.
Being automatic, thus, connotes something mechanical,
spontaneous and perfunctory. As such the LGUs are not
required to perform any act to receive the just share accruing
to them from the national coffers. x x x (Emphasis and italics
supplied) By parity of construction, automatic release of
approved annual appropriations to petitioner, a constitutional
commission which is vested with fiscal autonomy, should thus be
construed to mean that no condition to fund releases to it may be
imposed. This conclusion is consistent with the abovecited June
3, 1993 Resolution of this Court which effectively prohibited the
enforcement of a no report, no release policy against the
Judiciary which has also been granted fiscal autonomy by the
Constitution.
Same Same Even assuming that there is a shortfall in
revenues, that does not justify noncompliance with the mandate of
Article IX (A), Section 5 of the Constitution.Respecting
respondents justification for the withholding of funds from

petitioner as due to a shortfall in revenues, the same does not lie.
In the first place, the alleged shortfall is totally unsubstantiated.
In the second place, even assuming that there was indeed such a
shortfall, that does not justify noncompliance with the mandate
of abovequoted Article IX (A), Section 5 of the Constitution.
Asturias Sugar Central, Inc. v. Commissioner of Customs teaches
that [a]n interpretation should, if possible, be avoided under
which a statute or provision being construed is defeated, or as
otherwise expressed, nullified, destroyed, emasculated, repealed,
explained away, or rendered insignificant, meaningless,
inoperative, or nugatory.
Same Same To hold that the Civil Service Commission may
be subjected to withholding or reduction of funds in the event of a
revenue shortfall would, to that extent, place it and the other
entities vested with fiscal autonomy on equal footing with all
others which are not granted the same autonomy, thereby reducing
to naught the distinction established by the Constitution The
agencies which the
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Constitution has vested with fiscal autonomy should be given

priority in the release of their approved appropriations over all
other agencies not similarly vested when there is a revenue
shortfall.Furthermore, the Constitution grants the enjoyment of
fiscal autonomy only to the Judiciary, the Constitutional
Commissions of which petitioner is one, and the Ombudsman. To
hold that petitioner may be subjected to withholding or reduction
of funds in the event of a revenue shortfall would, to that extent,
place petitioner and the other entities vested with fiscal autonomy
on equal footing with all others which are not granted the same
autonomy, thereby reducing to naught the distinction established
by the Constitution. The agencies which the Constitution has
vested with fiscal autonomy should thus be given priority in the
release of their approved appropriations over all other agencies
not similarly vested when there is a revenue shortfall.
Same Same Words and Phrases A.M. No. 929029SC
(Constitutional Mandate on the Judiciarys Fiscal Autonomy [3

June 1993]) The phrase subject to availability of funds in
paragraph 4 of the guiding principles on the Constitutional
Mandate on the Judiciarys Fiscal Autonomy as contained in the
Courts Resolution in A.M. No. 929029SC does not contradict the
present ruling that the funds of entities vested with fiscal
autonomy should be automatically and regularly released, a
shortfall in revenues notwithstandingwhat is contemplated in
the said quoted phrase is a situation where total revenue
collections are so low that they are not sufficient to cover the total
appropriations for all entities vested with fiscal autonomy
Considering that the budget for agencies enjoying fiscal autonomy
is only a small portion of the total national budget, only in the
most extreme circumstances will the total revenue collections fall
short of the requirement of such agencies.This Court is not
unaware that its abovecited June 3, 1993 Resolution also states
as a guiding principle on the Constitutional Mandate on the
Judiciarys Fiscal Autonomy that: 4. After approval by Congress,
the appropriations for the Judiciary shall be automatically and
regularly released subject to availability of funds. (Italics
supplied) This phrase subject to availability of funds does not,
however, contradict the present ruling that the funds of entities
vested with fiscal autonomy should be automatically and
regularly released, a shortfall in revenues notwithstanding. What
is contemplated in the said quoted phrase is a situation where
total revenue collections are so low that they are not sufficient to
cover the total appropriations for all entities vested with
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fiscal autonomy. In such event, it would be practically

impossible to fully release the Judiciarys appropriations or any of
the entities also vested with fiscal autonomy for that matter,
without violating the right of such other entities to an automatic
release of their own appropriations. It is under that situation that
a relaxation of the constitutional mandate to automatically and
regularly release appropriations is allowed. Considering that the
budget for agencies enjoying fiscal autonomy is only a small
portion of the total national budget, only in the most extreme
circumstances will the total revenue collections fall short of the

requirements of such agencies.
Same Same Statutory Construction The plain implication of
the omission in Article IX (A), Section 5 of the Constitution of the
provision proscribing a reduction of appropriations below that for
the previous year is that Congress is not prohibited from reducing
the appropriations of Constitutional Commissions below the
amount appropriated for them for the previous year.Petitioners
claim that its budget may not be reduced by Congress lower than
that of the previous fiscal year, as is the case of the Judiciary,
must be rejected. For with respect to the Judiciary, Art. VIII,
Section 3 of the Constitution explicitly provides: Section 3. 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.
(Emphasis and italics supplied) On the other hand, in the parallel
provision
granting
fiscal
autonomy
to
Constitutional
Commissions, a similar proscription against the reduction of
appropriations below the amount for the previous year is clearly
absent. Article IX (A), Section 5 merely states: Section 5. The
Commission shall enjoy fiscal autonomy. Their approved annual
appropriations shall be automatically and regularly released. The
plain implication of the omission of the provision proscribing such
reduction of appropriations below that for the previous year is
that Congress is not prohibited from reducing the appropriations
of Constitutional Commissions below the amount appropriated for
them for the previous year.
DAVIDE, JR., C.J., Separate Opinion:
Mandamus As an extraordinary remedy, mandamus may be
availed of only if the legal right to be enforced is welldefined, clear
and certain.As an extraordinary remedy, mandamus may be
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availed of only if the legal right to be enforced is welldefined,
clear and certain. It lies only to compel an officer to perform a

ministerial duty, not a discretionary one. The duty is ministerial
only when its discharge requires neither the exercise of official
discretion nor judgment. The performance of a duty which
involves the exercise of discretion may be compelled by
mandamus in cases where there is gross abuse of discretion,
manifest injustice, or palpable excess of authority. The remedy of
mandamus, over which this Court has original jurisdiction, is
proper to enforce a public right and to compel the performance of
a public duty, most especially when mandated by the
Constitution.
Fiscal Autonomy Department of Budget and Management
What is required of the DBM is merely the ministerial act of
implementing fiscal autonomyexercise of discretion is eschewed.
In this instance, what is sought to be observed and
implemented by the DBM is the constitutional mandate of fiscal
autonomy, which is vested in the CSC under Article IXA, Section
5 of the Constitution, which explicitly states that [t]he
Commission shall enjoy fiscal autonomy. Their approved annual
appropriations shall be automatically and regularly released. This
provision is reiterated in Book II, Chapter 5, Section 26 of the
Administrative Code of 1987, and in Section 63 of the General
Provisions of the General Appropriations Act for FY 2000
(Republic Act No. 8760). The DBM, as the agency statutorily
vested with the responsibility of implementing the National
Budget, is dutybound to observe this constitutional provision.
Exercise of discretion is eschewed what is required of the DBM is
merely the ministerial act of implementing fiscal autonomy. Its
responsibility visvis the National Budget is circumscribed only
by its general responsibility to see to the efficient and sound
utilization of government funds and revenues to effectively
achieve our countrys development objectives.
Same Same National Budget Circular No. 478 No Report,
No Release of Funds Policy The DBM gravely abused its
discretion and exceeded its authority in including the CSC in the
coverage of its National Budget Circular No. 478 and by requiring
the CSC to comply with the no report no release of funds policy.
Article IXA, Section 6 of the Constitution mandating the
automatic and regular release of appropriations for the CSC being
couched imperatively on account of the use of the word shall, the
DBM gravely abused its
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discretion and exceeded its authority in including the CSC in the

coverage of its National Budget Circular No. 478 and by requiring
the CSC to comply with the no report no release of funds policy.
Its abuse of discretion is grave and gross, as no less than the
Constitution commands the automatic and regular release of
funds appropriated by law for the CSC.
Moot and Academic Questions Supervening events, whether
intended or accidental, cannot prevent the Supreme Court from
rendering a decision if there is a grave violation of the
Constitution.Assuming that the writ of mandamus has been
rendered moot by the supervening event of the release of the
balance of funds appropriated for the CSC for fiscal years 2001
and 2002, albeit delayed and beyond those fiscal years, the issue
raised in the petition is of paramount importance to constitutional
bodies vested with fiscal autonomy that it cries out for resolution.
On this matter, the Court has said: Granting arguendo that, as
contended by the respondents, the resolution of the case had
already been overtaken by supervening events as the IRA,
including the LGSEF, for 1999, 2000 and 2001, had already been
released and the government is now operating under a new
appropriations law, still, there is compelling reason for this Court
to resolve the substantive issue raised by the instant petition.
Supervening events, whether intended or accidental,
cannot prevent the Court from rendering a decision if
there is a grave violation of the Constitution. Even in cases
where supervening events had made the cases moot, the Court did
not hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar and
public.
Fiscal Autonomy National Budget Circular No. 478 By
imposing National Budget Circular No. 478 on all government
agencies without qualification, the DBM has actually subverted
and weakened the very purpose for the grant of fiscal autonomy
the independence of the grantees.The CSC appears to denounce
only the irregular and controlled releases of appropriated funds
by the DBM in its petition for mandamus. Nonetheless, a reading
of the petition would show that it is actually aimed at compelling
the DBM to respect, observe, and implement the constitutional
mandate of fiscal autonomy of the Judiciary the Constitutional
Commissions, and the Office of the Ombudsman, which, in
exercising its statutory responsibilities, the DBM has cast aside.

By imposing National Budget Circular
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No. 478 on all government agencies without qualification, the

DBM has actually subverted and weakened the very purpose for
the grant of fiscal autonomythe independence of the grantees.
Obviously, the DBM shrugged off and overlooked the very reason
for the grant of fiscal autonomyconstitutional bodies vested
with independent powers must be insulated from interference
by the political departments.
SPECIAL CIVIL ACTION in the Supreme Court.

Mandamus.
The facts are stated in the opinion of the Court.
Mary Grace R. Chua and Ariston P. Aganon for
Department of Budget and Management.
CARPIOMORALES, J.:
The Civil Service Commission (petitioner) via the present
petition for mandamus seeks to compel the Department of
Budget and Management (respondent) to release the
balance of its budget for fiscal year 2002. At the same time,
it seeks a determination by this Court of the extent of the
constitutional concept of fiscal autonomy.
By petitioners claim, the amount of P215,270,000.00
was appropriated for its Central Office by the General
Appropriations Act (GAA) of 2002, while the total
allocations for the same Office, if all sources
of funds are
1
considered, amount to P285,660,790.44. It complains,
however, that the total fund releases by respondent to its
Central Office during the fiscal year 2002 was only
P279,853,398.14, thereby leaving an unreleased balance of
P5,807,392.30.
To petitioner, this balance was intentionally withheld by
respondent on the basis of its no report, no release policy
whereby allocations for agencies are withheld pending their
submission of the documents mentioned in Sections 3.8 to

3.10 and Section 7.0 of National Budget Circular No. 478
on
_______________
1
Rollo at p. 6.
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2
Guidelines on the Release of the FY 2002 Funds, which

documents are:
1. Annual Cash Program (ACP)
2. Requests for the Release of Special Allotment
Release Order (SARO) and Notice of Cash
Allocation (NCA)
3. Summary List of Checks Issued and Cancelled
4.
5.
6.
7.
8.
9.
Statement of Allotment, Obligations and Balances

Monthly Statement of Charges to Accounts Payable
Quarterly Report of Actual Income
Quarterly Financial Report of Operations
Quarterly Physical Report of Operations
FY 2001 Preliminary and Final Trial Balance
10 . Statement of Accounts Payable

Petitioner contends that the application of the no report,
no release policy upon independent constitutional bodies of
which it is one is a violation of the principle of fiscal
autonomy and, therefore, unconstitutional.
Respondent, at the outset, opposes the petition on
procedural grounds. It contends that first, petitioner did
not exhaust administrative remedies as it could have
sought clarification from respondents Secretary regarding
the extent of fiscal autonomy before resorting to this Court.
Second, even assuming that administrative remedies were
exhausted, there are no exceptional and compelling reasons
to justify the direct filing of the petition with this Court
instead of the trial court, thus violating the hierarchy of
courts.
On the merits, respondent, glossing over the issue raised
by petitioner on the constitutionality of enforcing the no
report, no release policy, denies having strictly enforced
the policy upon offices vested with fiscal autonomy, it
claiming that it has applied by extension to these offices
the Resolution
_______________
2
Id., at pp. 2535.

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of this Court in A.M. No. 929029SC (Constitutional

Mandate on the
Judiciarys Fiscal Autonomy) issued on
3
June 3, 1993, particularly one of the guiding principles
established therein governing the budget of the Judiciary,
to wit:
5. The Supreme Court may submit to the Department of Budget
and Management reports of operation and income, current
plantilla of personnel, work and financial plans and similar
reports only for recording purposes. The submission thereof
concerning funds previously released shall not be a condition
precedent for subsequent fund releases. (Emphasis and italics
supplied)
Respondent proffers at any rate that the delay in releasing

the balance of petitioners budget was not on account of any
failure on petitioners part to submit the required
reports
4
rather, it was due to a shortfall in revenues.
The rule on exhaustion of administrative remedies
invoked by respondent applies only where there is an
express legal provision requiring such administrative 5step
as a condition precedent to taking action in court. As
petitioner is not mandated by any law to seek clarification
from the Secretary of Budget and Management prior to
filing the present action, its failure to do so does not call for
the application of the rule.
As for the rule on hierarchy of courts, it is not absolute.
A direct invocation of this Courts original jurisdiction may

be allowed where there are special and important reasons6
therefor, clearly and specifically set out in the petition.
Petitioner justifies its direct filing of the petition with this
Court as the matter involves the concept of fiscal
autonomy granted to [it] as well as other constitutional
bodies, a legal question not heretofore determined and
which only the Honorable Su
_______________
3
Id., at pp. 99100.
Id., at p. 100.
C.N. Hodges v. City of Iloilo, 125 Phil. 442, 447448 19 SCRA 28, 33
(1967).
6
Manalo v. Gloria, 236 SCRA 130, 138 (1994).

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7
preme Court can decide with authority and finality. To

this Court, such justification suffices for allowing the
petition.
Now on the substantive issues.
That the no report, no release policy may not be validly
enforced against offices vested with fiscal autonomy is not
disputed. Indeed, such policy cannot be enforced against
offices possessing fiscal autonomy without violating Article
IX (A), Section 5 of the Constitution which provides:
Sec. 5. The Commission shall enjoy fiscal autonomy. Their
approved appropriations shall be automatically and regularly
released.
8
In Province of Batangas v. Romulo, this Court, in

construing the phrase automatic release in Section 6,
Article X of the Constitution reading:
Section 6. Local government units shall have a just share, as
determined by law, in the national taxes which shall be
automatically released to them,
held:
Websters Third New International Dictionary defines automatic

as involuntary either wholly or to a major extent so that any
activity of the will is largely negligible of a reflex nature without
volition mechanical like or suggestive of an automaton. Further,
the word automatically is defined as in an automatic manner:
without thought or conscious intention. Being automatic, thus,
connotes something mechanical, spontaneous and perfunctory. As
such the LGUs are not required to perform any act to receive
the just share accruing to them
from the national coffers. x x x
9
(Emphasis and italics supplied)
_______________
7
Rollo at p. 9.
429 SCRA 736 (2004).
Id., at p. 760.
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By parity of construction, automatic release of approved

annual appropriations to petitioner, a constitutional
commission which is vested with fiscal autonomy, should
thus be construed to mean that no condition to fund
releases to it may be imposed. This conclusion is consistent
with the abovecited June 3, 1993 Resolution of this Court
which effectively prohibited the enforcement of a no
report, no release policy against the Judiciary which10 has
also been granted fiscal autonomy by the Constitution.
Respecting respondents justification for the withholding
of funds from petitioner as due to a shortfall in revenues,
the same does not lie. In the first place, the alleged
shortfall is totally unsubstantiated. In the second place,
even assuming that there was indeed such a shortfall, that
does not justify noncompliance with the mandate of above
quoted Article IX (A), Section 5 of the Constitution.
Asturias Sugar Central, Inc. v. Commissioner of Customs
teaches that [a]n interpretation should, if possible, be
avoided under which a statute or provision being construed
is defeated, or as otherwise expressed, nullified, destroyed,
emasculated, repealed, explained away, or rendered
11
insignificant, meaningless, inoperative, or nugatory.
If respondents theory were adopted, then the

constitutional mandate to automatically and regularly
release approved appropriations
would be suspended every
12
year, or even every month that there is a shortfall in
revenues, thereby
_______________
10
Art. VIII, Section 3.
11
29 SCRA 617, 628 (1969).
12
Respondent states in its Comment: Consequently, every month, it
behooves upon the department to coordinate with the revenue collecting

agencies and determine if total revenue collections meets total projections,
if the deficit ceiling has been surpassed, and if the total disbursement
program exceeds this ceiling. On the basis of these data, total amount of
cash to be released for the month is set. If the total disbursement program
is less than the ceiling, then allotments of agencies are released in full.
However, if total dis
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emasculating to a significant degree, if not rendering

insignificant altogether, such mandate.
Furthermore, the Constitution grants the enjoyment of
fiscal autonomy only to the Judiciary, the Constitutional
Commissions of which petitioner is one, and the
Ombudsman. To hold that petitioner may be subjected to
withholding or reduction of funds in the event of a revenue
shortfall would, to that extent, place petitioner and the
other entities vested with fiscal autonomy on equal footing
with all others which are not granted the same autonomy,
thereby reducing to naught the distinction established by
the Constitution.
The agencies which the Constitution has vested with
fiscal autonomy should thus be given priority in the release
of their approved appropriations over all other agencies not
similarly vested when there is a revenue shortfall.
Significantly, the Year 2002 GAA itself distinguished
between two types of public institutions in the matter of
fund releases. With respect to government agencies in
general, the pertinent General Provisions of the GAA read
as follows:
Sec.
62.
Prohibition
Against
Impoundment
of
Appropriations. No appropriations authorized in this Act shall
be impounded through deduction or retention, unless in
accordance with the guidelines for the imposition and
release of reserves and the rules and regulations for
deduction, retention or deferral of releases shall have been
issued by the DBM in coordination with the House Committee on
Appropriations and the Senate Committee on Finance.
Accordingly, all the funds appropriated for the purposes,
programs, projects and activities authorized in this Act, except
those covered by Special Provision No. 1 of the Unprogrammed
Fund shall be regularly and automatically released in
accordance with the established allotment period and system by
the DBM without any deduction, retention or imposition of
reserves. (Emphasis and underscoring supplied)
_______________
bursement program exceeds the ceiling, agency allotments are only partially
released. (Rollo at pp. 100101).
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Sec. 63. Unmanageable National Government Budget

Deficit.Retention or reduction of appropriations authorized in
this Act shall be effected only in cases where there is
unmanageable national government budget deficit.
Unmanageable national government budget deficit as used in
this Section shall be construed to mean that the actual national
government budget deficit has exceeded the quarterly budget
deficit targets consistent with the fullyear target deficit of P130.0
billion as indicated in the FY 2002 Budget of Expenditures and
Sources of Financing submitted by the President to Congress
pursuant to Section 22, Article VII of the Constitution or there are
clear economic indications of an impending occurrence of such
condition, as determined by the Development Budget
Coordinating Committee and approved by the President.
(Emphasis and underscoring supplied)
In contrast, the immediately succeeding provision of the
Year 2002 GAA, which specifically applied to offices vested

with fiscal autonomy, stated:
Sec. 64. Appropriations of Agencies Vested with Fiscal
Autonomy.Any provision of law to the contrary
notwithstanding, the appropriations authorized in this Act for
the Judiciary, Congress of the Philippines, the Commission on
Human Rights, the Office of the Ombudsman, the Civil Service
Commission, the Commission on Audit and the Commission on
Elections shall be automatically and regularly released.
(Emphasis and underscoring supplied)
Clearly, while the retention or reduction of appropriations

for an office is generally allowed when there is an
unmanageable budget deficit, the Year 2002 GAA, in
conformity with the Constitution, excepted from such rule
the appropriations for entities vested with fiscal autonomy.
Thus, even assuming that there was a revenue shortfall as
respondent claimed, it could not withhold full release of
petitioners funds without violating not only the
Constitution but also Section 64 of the General Provisions
of the Year 2002 GAA.
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This Court is not unaware that its abovecited June 3, 1993

Resolution also states as a guiding principle on the
Constitutional Mandate on the Judiciarys Fiscal
Autonomy that:
4. After approval by Congress, the appropriations for the
Judiciary shall be automatically and regularly released subject to
availability of funds. (Italics supplied)
This phrase subject to availability of funds does not,

however, contradict the present ruling that the funds of
entities vested with fiscal autonomy should be
automatically and regularly released, a shortfall in
revenues notwithstanding. What is contemplated in the
said quoted phrase is a situation where total revenue
collections are so low that they are not sufficient to cover the
total appropriations for all entities vested with fiscal
autonomy. In such event, it would be practically

impossible to fully release the Judiciarys appropriations or
any of the entities also vested with fiscal autonomy for that
matter, without violating the right of such other entities to
an automatic release of their own appropriations. It is
under that situation that a relaxation of the constitutional
mandate to automatically and regularly release
appropriations is allowed.
Considering that the budget for agencies enjoying fiscal
autonomy is only a small portion of the total national
budget, only in the most extreme circumstances will the
total revenue collections fall short of the requirements of
such agencies. To illustrate, in the Year 2002 GAA the
budget for agencies vested with fiscal autonomy amounted
only to P14,548,620,000.00, which is 2.53% of the total
13
appropriations in the amount of P575,123,728,000.00. In
Year 2003 GAA, which was reenacted in 2004, the budget
for the same agencies was P13,807,932,000.00, which is
2.27% of the total
appropriations amounting to
14
P609,614,730,000.00. And in
_______________
13
R.A. No. 9162, General Appropriations Act, FY 2002.
14

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the Year 2005, the budget for the same agencies was only
P13,601,124,000.00, which is 2.28% of the
total
15
appropriations amounting to P597,663,400,000.00.
Finally, petitioners claim that its budget may not be
reduced by Congress lower than that of the previous fiscal
year, as is the case of the Judiciary, must be rejected.
For with respect to the Judiciary, Art. VIII, Section 3 of
the Constitution explicitly provides:
Section 3. 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
16
released. (Emphasis and italics supplied)
16
released. (Emphasis and italics supplied)
On the other hand, in the parallel provision granting fiscal

autonomy to Constitutional Commissions, a similar
proscription against the reduction of appropriations below
the amount for the previous year is clearly absent. Article
IX (A), Section 5 merely states:
Section 5. The Commission shall enjoy fiscal autonomy. Their
approved annual appropriations shall be automatically and
regularly released.
The plain implication of the omission of the provision

proscribing such reduction of appropriations below that for
the previous year is that Congress is not prohibited from
reducing the appropriations of Constitutional Commissions
below the amount appropriated for them for the previous
year.
WHEREFORE, the petition is, in light of all the
foregoing discussions, GRANTED. Respondents act of
withholding the subject funds from petitioner due to
revenue
shortfall
is
hereby
declared
UNCONSTITUTIONAL.
_______________
15
16
Article VIII, Section 3.

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Accordingly, respondent is directed to release to petitioner

the amount of Five Million Eight Hundred Seven
Thousand, Three hundred Ninety Two Pesos and Thirty
Centavos (P5,807,392.30) representing the unreleased
balance of petitioners appropriation for its Central Office
by the General Appropriations Act for FY 2002.
SO ORDERED.
Quisumbing, Carpio, Corona, Callejo, Sr., Azcuna,
ChicoNazario and Garcia, JJ., concur.
Davide, Jr. (C.J.), See Separate Concurring
Opinion.
Puno, J., Also concurs with the CJs Separate
Opinion.
Panganiban, J., I concur and also join the Separate
Opinion of CJ Davide.
YnaresSantiago, J., Concurs with CJs Separate
Opinion also.
SandovalGutierrez, J., I also concur with the CJ in
his Separate Opinion.
AustriaMartinez, J., I concur with the main and
Separate Opinions.
Tinga, J., I concur with both main and Separate
Opinions.
SEPARATE OPINION
DAVIDE, JR., C.J.:
The Civil Service Commission (CSC) is before this Court on
a petition for mandamus to compel the Department of
Budget and Management (DBM) to release immediately its
unfunded allotment for Fiscal Year 2002 in the amount of
P5,807,392.30. The petitioner also prays that this Court
determine the extent of the fiscal autonomy granted to
government agencies by the Constitution.
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Under the reenacted General Appropriations Act for Fiscal

Year 2000, for FY 2001, the Civil Service Commission
(CSC) had the total allotment of P270,343,318.86. As
shown by the Notice of Cash Allocation (NCA) and the
withheld Tax Remittance Advice (TRA), the Department of
Budget
and
Management
(DBM)
released
only
P263,972,204.43 of the total allotment for the CSC thereby
leaving an unfunded allotment of P6,371,024.43, which the
DBM did not release to the CSC during FY 2001. Only
after six months into FY 2002 or on 12 July 2002 did the
DBM release P1,324,930.00 of the unfunded allotment of
the CSC the DBM released the balance of P5,046,095.00

on 14 October 2002 or on the last quarter of the following
fiscal year.
For FY 2002, the CSC had a total allotment of
P285,660,790.44 but the total amount released, as shown
by the NCA and the TRA, was only P279,853,398.14. The
DBM did not release the unfunded amount of
P5,807,392.30, even as the instant petition was filed on 16
July 2003.
Petitioner CSC alleges in its petition for mandamus that
the DBM would not release allotments without its having
complied with National Budget Circular No. 478 dated 5
February 2002 that sets the guidelines on the release of
funds for FY 2002. Item No. 13 of the circular states that
one of its purposes is [t]o prescribe the required reports
prior to release of funds. The same circular requires all
agencies to submit an Annual Cash Program (ACP) and
reiterates the policy of no report, no release of funds.
Aside from the ACP, the following reports must be
submitted: (1) summary list of checks issued and cancelled
[SLCIC] (2) statement of allotment, obligation and
balances (3) monthly statement of charges to accounts
payable (4) quarterly report of actual income (5) quarterly
financial report of operations (6) quarterly physical report
of operations (7) preliminary and final trial balance and
(8) statement of accounts payable.
The CSC asserts that these tedious requirements of
the DBM undermine fiscal autonomy because budgetary
appro
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priations could not be released without complying

therewith. Moreover, since it enjoys fiscal autonomy, the
CSC must not be made to defend its budget during
deliberations thereon in Congress, as the reduction of its
budget as compared to that of the previous fiscal year
would defeat the purpose of fiscal autonomy, which
precludes undue pressure from Congress when it
deliberates on the bill for the General
Appropriations Act.
1
Citing Santiago v. Vasquez, the CSC adds that the issue
of fiscal autonomy involves an exceptional and compelling

circumstance that justifies availment of a remedy within
the jurisdiction of this Court. More importantly, the far
reaching implications of the petition demands that the
questions raised should be judicially resolved. Like the
CSC, other constitutional bodies vested with fiscal
autonomy are entitled to the automatic and regular release
of approved budget, both in terms of allotment and of cash
allocation.
On the other hand, the DBM asserts that its reporting
requirements are not intended to defy the mandate of fiscal
autonomy constitutionally vested on the CSC because those
were meant to control the budget deficit and regulate cash
flow. Fiscal autonomy does not dispense with
accountability. As such, the petition should be dismissed
because the CSC failed to exhaust administrative remedies
and violated the doctrine of judicial hierarchy.
Traversing the contentions of the DBM, the CSC argues
that the rule on exhaustion of administrative remedies and
the principle of hierarchy of courts need not be observed
when legal questions are raised before this Court. The
issue of whether the constitutional provision on fiscal
autonomy has been curtailed by reporting requirements
imposed by the DBM is a legal issue, which only this Court
may decide with finality. By its reliance on the principle of
accountability, the DBM missed the point of the petition, as
submission of ac
_______________
1
G.R. Nos. 9928990, 27 January 1993, 205 SCRA 162.

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counting reports and other documents are not the only

means of determining accountability. Under the concept of
fiscal
autonomy,
the
annual
appropriations
of
constitutional bodies vested with that mandate shall be
automatically and regularly released by the DBM, with or
without the submission of accounting reports and other
documents, which the DBM requires as a condition for the
release of budgetary appropriations.

The Court is thus faced with two basic issues: (1) the
propriety of the remedy of mandamus and (2) whether the
constitutionally mandated fiscal autonomy of the CSC has
been violated. Being interrelated, these issues will be
discussed together.
The writ of mandamus is available as a remedy before
this Court under these circumstances:
When any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or
station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and
there is no other plain, speedy and adequate remedy in the
ordinary course of law, the person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding
the respondent, immediately or at some other time to be specified
by the court, to do the act required to be done to protect the rights
of the petitioner, and to pay the damages sustained 2by the
petitioner by reason of the wrongful acts of the respondent.
As an extraordinary remedy, mandamus may be availed of

only if the legal
right to be enforced is welldefined, clear
3
and certain. It lies only to compel an officer to perform a
ministerial duty, not a discretionary one. The duty is
ministerial only when its discharge requires neither the
exercise of official
_______________
2
1997 RULES OF CIVIL PROCEDURE, Rule 65, Sec. 3.
See: Commission on Elections v. Judge QuijanoPadilla, 438 Phil. 72,
91 389 SCRA 353, 366 (2002).

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4
discretion nor judgment. The performance of a duty which

involves the exercise of discretion may be compelled by
mandamus in cases where there is gross abuse of
discretion, 5 manifest injustice, or palpable excess of

authority. The remedy of mandamus, over which this
Court has original jurisdiction, is proper to enforce a
public right and to compel the performance of a public6
duty, most especially when mandated by the Constitution.
In this instance, what is sought to be observed and
implemented by the DBM is the constitutional mandate of
fiscal autonomy, which is vested in the CSC under Article
IXA, Section 5 of the Constitution, which explicitly states
that
[t]he Commission shall enjoy fiscal autonomy. Their approved
annual appropriations shall be automatically and regularly
released.
This provision is reiterated in Book II, Chapter 5, Section

26 of the Administrative Code of 1987, and in Section 63 of
the General Provisions of the General
Appropriations Act
7
for FY 2000 (Republic Act No. 8760).
_______________
4
Esquivel v. Ombudsman, 437 Phil. 702, 716 389 SCRA 143, 154
(2002).
5
Roque v. Office of Ombudsman, 366 Phil. 568, 575 307 SCRA 104, 109
(1999) citing Angchangco, Jr. v. Ombudsman, 335 Phil. 766 268 SCRA
301 (1997).
6
Chavez v. PCGG, 366 Phil. 863, 871872 307 SCRA 394, 402 (1999).
The GAA provision reads:
Sec. 63. Appropriations of Agencies Vested with Fiscal Autonomy.Any provision

of law to the contrary notwithstanding, the appropriations authorized in this Act
for the Judiciary, Congress of the Philippines, the Commission on Human Rights,
the Office of the Ombudsman, the Civil Service Commission, the Commission on
Audit and the Commission on Elections shall be automatically and regularly
released.
This is now Sec. 70 of the General Provisions of the GAA for FY 2005
(Rep. Act No. 9336).
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The DBM, as the agency statutorily vested with 8the

responsibility of implementing the National Budget, is
dutybound to observe this constitutional provision.
Exercise of discretion is eschewed what is required of the
DBM is merely the ministerial act of implementing fiscal
autonomy. Its responsibility visvis the National Budget
is circumscribed only by its general responsibility to see to
the efficient and sound utilization of government funds
and revenues to effectively
achieve our countrys
9
development objectives.
When the DBM issued National Budget Circular No. 478
on 5 February 2002, it aimed to apply the guidelines for the
release of FY 2002 funds to all heads of departments/
agencies/state universities and colleges and other offices of
the National Government, governmentowned or controlled
corporations and local government units. In other words,
the circular would apply to all government agencies with
no exceptions whatsoever, and therefore, it subjects all
government agencies, including those constitutionally
vested with fiscal autonomy, to reporting
requirements
10
prior to the release of funds. This means that
noncompliance with the requirements of the circular would
result not only in delay in the release of duly appropriated
funds for any fiscal year but even in the withholding
thereof within the same fiscal year.
The DBM has failed to explain why National Budget
Circular No. 478 is addressed to all government agencies.
All it states in its Comment on the Petition is that the no
report no release of funds policy is not strictly applied to
agencies belonging to the fiscal autonomous group which
are allegedly
_______________
8
ADMINISTRATIVE CODE OF 1987, Book IV, Title XVII, Chapter 1,
Sec. 2.
9
Id.
10
Paragraph 1.3 providing for the purpose(s) of the circular states: To
prescribe the required reports prior to the release of funds.

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Management
placed under the Not Needing Clearance column11 of the

Agency Budget Matrix or Annex A of the circular.
However, the disaggregation of two types of
government agencies into Needing Clearance (NC) and
Not Needing Clearance (NNC) in National Budget
Circular No. 478 does not imply that fiscal autonomous
agencies under the Constitution are included among those
with funds that can be released without clearances or
documentary supports. This is clear from this provision of
the circular:
3.2.2 The NNC column refers to budgetary items not enumerated
in Item 3.2.1 above including the following Special Purpose Funds
(SPFs):
Agriculture and Fisheries Modernization Program
Internal Revenue Allotment
Area Development Assistance Fund, and
Local Government Empowerment Fund.
Paragraph 3.2.1 provides that the NC column pertains to

the portion of the agency budget which can only be released
upon compliance with certain documentary requirements.
Note should be taken of the fact that paragraph 3.2.2
speaks of Special Purpose 12Funds and enumerates only
funds prescribed statutorily. By the principle of ejusdem
generis, funds intended for government agencies with fiscal
autonomy, which is provided by the Constitution and not
by a statute, are ex
_______________
11
Comment, p. 5.
12
The Agricultural and Fisheries Modernization Plan is funded under
Sec. 112 of Rep. Act No. 8435, as amended by Rep. Act No. 9281. The
Internal Revenue Allotment is provided for by Sec. 284, Chapter 1 of the
Local Government Code (Rep. Act No. 7160). An example of an area
development assistance fund is that created on 25 July 1986 by Executive
Order No. 265 (Creating the Aurora Integrated Area Development Project
Office, Providing Funds Thereof and For Other Purposes). The Local
Government Empowerment Fund is provided for under the provisions on
Allocations to Local Government Units under the General Appropriations
Act.
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Management
cluded from the Special Purpose Funds. While this will not
necessarily imply that the National Budget Circular No.
478 was issued to specifically and singularly impose the
submission of documentary requirements upon the CSC, it
ineluctably proves that the DBM may still require the CSC
to comply therewith, as it did require the CSC to submit
the abovementioned reports. Indeed, the admission of the
DBM that it does not strictly apply the no report no
release of funds policy is very revealing.
Article IXA, Section 5 of the Constitution clearly
provides that constitutional commissions such as the CSC
are entitled to automatic and regular release of duly
approved
appropriations. In Province of Batangas v.
13
Romulo the Court explained the meaning of the term
automatically released, as used in Article X, Section 6 of
the Constitution, which provides that [l]ocal government
units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to
them. The Court said:
Websters Third New International Dictionary defines automatic
as involuntary either wholly or to a major extent so that any
activity of the will is largely negligible of a reflex nature without
volition mechanical like or suggestive of an automaton. Further,
the word automatically is defined as in an automatic manner:
without thought or conscious intention. Being automatic, thus,
connotes something mechanical, spontaneous and perfunctory.
As such, the LGUs are not required to perform any act to
receive the just share accruing to them from the national
coffers. As emphasized by the Local Government Code of 1991,
the just share of the LGUs shall be released to them without
need of further action. (Emphasis supplied.)
Province of Batangas also quotes this explanation of the

Court, in another Decision, on the term automatic release
of LGU funds:
_______________
13
G.R. No. 152774, 27 May 2004, 429 SCRA 736.
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Management
. . . A basic feature of local fiscal autonomy is the automatic
release of the shares of LGUs in the national internal revenue.
This is mandated by no less than the Constitution. The Local
Government Code specifies further that the release shall be made
directly to the LGU concerned within five (5) days after every
quarter of the year and shall not be subject to any lien or
holdback that may be imposed by the national government for
whatever purpose. As a rule, the term shall is a word of
command that must be given 14a compulsory meaning. The
provision is, therefore, imperative.
Article IXA, Section 6 of the Constitution mandating the

automatic and regular release of appropriations for the
CSC being couched imperatively on account of the use of
the word shall, the DBM gravely abused its discretion
and exceeded its authority in including the CSC in the
coverage of its National Budget Circular No. 478 and by
requiring the CSC to comply with the no report no release
of funds policy. Its abuse of discretion is grave and gross,
as no less than the Constitution commands the automatic
and regular release of funds appropriated by law for the
CSC.
Moreover, the factual premises of this petition are by no
means uncertain or doubtful as to proscribe availment of
the writ of mandamus as an extraordinary remedy under
the Rules of Court. The claims of the CSC that the
unfunded balance of its appropriation of P6,371,024.43 for
FY 2000 was not released by the DBM during that fiscal
year, and that its unfunded balance of appropriations for
FY 2001 of P5,046,095 was likewise not released until after
the filing of the instant petition on 11 July 2003, are not
rebutted by the DBM. There was then, clearly, failure on
the part of the DBM to perform its duty of automatically
and regularly releasing appropriated funds for the CSC as
required by the Constitution. To reiterate, such failure
cannot be anything but grave abuse of dis
_______________
14
Pimentel, Jr. v. Aguirre, 391 Phil. 84, 105106 336 SCRA 201, 220
221 (2000).
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Management
cretionthe
DBM violated not just a contractual
15
provision for which it could be called to task but no less
than a constitutional provision.
Assuming that the writ of mandamus has been rendered
moot by the supervening event of the release of the balance
of funds appropriated for the CSC for fiscal years 2001 and
2002, albeit delayed and beyond those fiscal years, the
issue raised in the petition is of paramount importance to
constitutional bodies vested with fiscal autonomy that it
cries out for resolution. On this matter, the Court has said:
Granting arguendo that, as contended by the respondents, the
resolution of the case had already been overtaken by supervening
events as the IRA, including the LGSEF, for 1999, 2000 and 2001,
had already been released and the government is now operating
under a new appropriations law, still, there is compelling reason
for this Court to resolve the substantive issue raised by the
instant petition. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a
decision if there is a grave violation of the Constitution.
Even in cases where supervening events had made the cases
moot, the Court did not hesitate to resolve the legal or
constitutional issues raised to formulate
controlling principles to
16
guide the bench, bar and public. (Emphasis supplied.)
The issue of whether the constitutionally mandated fiscal

autonomy of the CSC has been violated, must be resolved,
and for that purpose, the rule on hierarchy of courts will
not prevent
this Court, from assuming jurisdiction over the
17
petition. With respect to the allegation that the CSC
should have exhausted administrative remedies before
filing the instant petition, that doctrine is not absolute. It
admits of these exceptions when judicial action may be
validly resorted
_______________
15
See: Commission on Elections v. Judge QuijanoPadilla, 438 Phil. 72
389 SCRA 353 (2002).

16
Province of Batangas v. Romulo, supra.
17
Id.
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Management
to immediately: (1) when the question raised is purely

legal (2) when the administrative body is in estoppel (3)
when the act complained of is patently illegal (4) when
there is urgent need for judicial intervention (5) when the
claim involved is small (6) when irreparable damage will
be suffered (7) when there is no other plain, speedy and
adequate remedy (8) when strong public interest is
involved (9) when the subject of the controversy
is private
18
land and (10) in quo warranto proceedings. At least four
of these exceptions are found in this instance: the question
raised is purely legal the act complained of is patently
illegal as it involves the violation of a constitutional
provision there is no other plain, speedy and adequate
remedy available to the CSC, and strong public interest is
involved because a government agency is charged with no
less than violation of the Constitution. As this Court said in
Province of Batangas, when the application of a
constitutional provision is involved, the relaxation of
procedural rules to resolve the controversy is warranted.
Moreover, the DBM erroneously invokes a Resolution of
this Court to defend its position of compliance with the
mandate of fiscal autonomy of the CSC. According to the
DBM, the Resolution of 3 June 1993 in A.M. No. 929029
SC (Constitutional Mandate on the Judiciarys Fiscal
Autonomy) allegedly started a healthy correspondence
between the Supreme Court and the DBM that eventually
led to the crafting of guiding principles on fiscal autonomy
19
which presently governs the budget of the judiciary. For
a clear picture of that healthy correspondence, the said
Resolution is quoted in full as follows:
_______________
18
Castro v. Sec. Gloria, 415 Phil. 645, 651652 363 SCRA 417, 422
(2001) citing Sunville Timber Products, Inc. v. Abad, G.R. No. 85502, 24
February 1992, 206 SCRA 482.
19
Comment of DBM, p. 2.
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Management
A.M. No. 929029SC (Constitutional Mandate on the Judiciarys
Fiscal Autonomy).
The administrative matter at bar treats of Section 3, Article
VIII of the Constitution reading as follows:
SEC. 3. 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.
In a letter dated August 27, 1992, addressed to Hon. Salvador

M. Enriquez, Jr., Secretary of Budget and Management, the Chief
Justice made the following statements as regards the budget of
the Court and of the Presidential Electoral Tribunal, and of the
Judiciary in general, viz.:
The Court wishes me to express to you its deep disappointment upon its
discovery that your Department revised the Courts budget for 1993 that
it had asked you, through my letter to you of April 24, 1992, simply to
submit to the Congress for consideration and approval. The Court has
been informed that your Department made its own determination of the
Courts needs and plans as regards personal services (including the
creation of new court salas and new positions), capital outlay (including
the acquisition of equipment), and maintenance and operating expenses.
It is to be regretted that this was done without prior consultation with,
or even advance notice to, the Court, much less a statement of the
reasons therefor, and despite the Courts having made known to you its
desire that the fiscal autonomy provisions of the Constitution be strictly
observed. You will recall that I had occasion to stress this in my letter to
you of February 14, 1992, and again in the letter dated May 22, 1992
which in the Courts behalf I, together with the heads of the other
independent constitutional offices, addressed to Her Excellency, then
President Corazon C. Aquinoof which you were doubtless made aware,
and to which was appended the Joint Resolution on Fiscal Autonomy of
all said officers, dated April 3, 1992. I once more intimated this in my
letter to you of April 24, 1992 transmitting the Courts budget for 1993 to
you for submission in due course to the Congress of the Philippines

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Management
and eventual inclusion in the National Budget. In any event, in its

decision in G.R. No. 103524 (Cesar Bengzon, et al. v. Hon. Franklin N.
Drilon, etc., et al.) and Adm. No. 918225CA (Request of Retired Justices
Manuel P. Barcelona, et al.), promulgated on April 15, 1992, the Court
has made the meaning of fiscal autonomy quite clear.
What is fiscal autonomy?
As envisioned in the Constitution, the fiscal autonomy enjoyed by the
Judiciary, the Civil Service Commission, 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. In the interest of comity and
cooperation,
the
Supreme
Court,
Constitutional
Commissions,
and
the
Ombudsman have so far limited
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Management
143
their objections to constant reminders. We now agree with the petitioners

that this grant of autonomy should cease to be a meaningless provision.
In my letter to you of February 14, 1992 above adverted to, I pointed out
that
* * the constitutional provision ** is clear in what it commands and implies: that
within the bounds of its allotted appropriations, the Judiciary, represented by the
Supreme Court, is the sole judge of how they are to be spent, and where and
when and that the Court does not have to justify its programs of expenditures, or
be answerable in the ordering of its priorities, to any person or agency. No lesser
authority can be inferred from the cited provision, no other meaning given to the
term fiscal autonomy and the unmistakable injunction that appropriations for
the Judiciary shall be automatically and regularly released, i.e., even
without request therefor, and most certainly without being compelled to
justify or explain its requirements.
As one of the three great departments of Government, coordinate and

coequal visvis the Executive and the Legislative branches, the Court
feels that, under the circumstances, it is entitled to know why and by
what authority the unilateral revision of its budget has been done, and
what steps you believe might now be taken to ensure that any change in
the Courts 1993 budget be entrusted solely to the Congress to which,
after all, this function rightfully and exclusively belongs.
I hardly need add that much the same things may be said about the
action taken on the budget of the Presidential Electoral Tribunal by your
office which, regrettably, again appears to have substituted its own
judgment for that of the Tribunal as to some of its requirements.
The letter closed with the request that the Honorable Secretary
give the matter preferential attention and a reply be submitted
in five (5) days.
The Hon. Secretary of Budget and Management having duly
responded, orally and in writing, with the assistance of the
Solicitor General, the Chief Justice had occasion to address
another letter on
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Management
the same subject to the latter, under date of January 15, 1993, in
which the following statements were made, viz.:
Whatever past practice the Court might have put up with in the interest
of comity and cooperation, as Bengzon so aptly states, there was no

agreement to subject budget proposals of the Judiciary as to what is
referred to as the standard preparation, review and evaluation process of
the DBM, or to recognize in that department the capacity to raise issues
on the proposals for submission to Congress for arbitration.
The Court recognizes that it is the duty of the DBM to obtain
as accurate a picture of total resources as possible for any given
year and suggest to Congress how essential services and other
programs of Government might be funded. In other words, DBM
studies priorities and proposes to the legislature how the expected
revenues should be apportioned among the various agencies and
instrumentalities of the Government. This function, however, in so far as
the Judiciary is concerned, is purely advisory and should address
nothing more specific than general fiscal policy. It may not be
exercised in such a manner as, under the guise of budget
preparation, to infringe the Judiciarys independence and fiscal
autonomy.
To be very clear, the Courts position is that the fiscal autonomy
guaranteed by the Constitution makes it the sole judge of the
requirements of the Judiciary and how these are to be funded from
monies appropriated by law, and of the Judiciarys priorities and their
ordering. This prerogative is subject only to the constitutional authority
vested in Congress over the national budget. (Italics supplied.)
I do appreciate * * your * * intent to reduce the areas of irritation and
annoyance between the Court and the DBM on the question of how the
Judiciarys budget is to be dealt with. On the other hand, in light of
Bengzon, any accommodation that would to any extent dilute the Courts
authority on the matter would be out of the question.
Again the Honorable Secretary of Budget and Management

made due response. In none of their responses abovementioned
did either the Secretary or the Solicitor General manifest any
serious objection to the Courts basic postulates indeed, both
expressed substantial agreement therewith.
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After deliberating on the matter, THE COURT RESOLVED TO
ESTABLISH THE FOLLOWING GUIDING PRINCIPLES
GOVERNING
THE
BUDGET
OF
THE
JUDICIARY,
INCLUDING THE PRESIDENTIAL ELECTORAL TRIBUNAL,
HENCEFORTH TO BE OBSERVED AND IMPLEMENTED BY

ALL CONCERNED, to wit:
1. The Court shall prepare the annual budget proposal for
the judiciary and itself submit it to Congress for approval.
A copy thereof shall be submitted to the Department of
Budget and Management pursuant to Section 22 of Article
VI of the Constitution which provides that [t]he President
shall submit to the Congress within thirty days from the
opening of every regular session, as the basis of the
general appropriations bill a budget of expenditures and
sources of financing, including receipts from existing and
proposed revenue measures.
2. The budget proposal for the Judiciary, as prepared by the
Supreme Court, shall be incorporated in the draft national
budget. The Department of Budget and Management may
make revisions thereon as it may deem appropriate
provided that the latter clearly indicate that the revisions
are its own and not the Courts, and provided further that
each item as to which revision is sought by the
Department shall be indicated in brackets on the draft
national budget for consideration by the Congress.
3. The Department of Budget and Management shall consult
with the Supreme Court concerning its comments on and
suggested revisions of the proposed budget for the
Judiciary.
4. After approval by Congress, the appropriations for
the Judiciary shall be automatically and regularly
released subject to availability of funds.
5. The Supreme Court may submit to the Department of
Budget and Management reports of operation and
income, current plantilla of personnel, work and financial
plans and similar reports only for recording purposes.
The
submission
thereof
concerning
funds
previously released shall not be a condition
precedent for subsequent fund releases. (Emphasis
supplied.)
The healthy exchange of communications between then

Chief Justice Andres R. Narvasa and DBM Secretary
Salvador M. Enriquez, Jr. was occasioned by the practice of
the
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Management
DBM of reducing the budget submitted by the Judiciary

without consultation with the Court hence the third
guideline prescribed in the Resolution that requires such
consultation with respect to any revisions of the budget
proposed by the Judiciary.
In its Comment on the Petition, the DBM makes capital
of the fourth guideline prescribed in that Resolution,
explaining as follows:
16. Even the Supreme Court recognizes the need to grant the
Executive Department some form of flexibility during times when
cash resources are scarce. In setting the guiding principle that
will govern budget execution, it has been agreed that:
After approval by Congress, the appropriations for the Judiciary shall be
automatically and regularly released subject to availability of funds.
(Emphasis supplied.)
Consequently, every month, it behooves upon the department

to coordinate with the revenue collecting agencies and determine
if total revenue collections meets (sic) total projections, if the
deficit ceiling has been surpassed, and if the total disbursement
program exceeds this ceiling. On the basis of these data, total
amount of cash to be released for the month is set. If the total
disbursement program is less than the ceiling, then allotments of
agencies are released in full. However, if total disbursement
program exceeds the ceiling, agency allotments are only partially
released.
17. Although the amount to be released may vary depending
upon cash availability, there is no uncertainty with regard to the
release schedule. Unfailingly, respondent ensures that cash
enters petitioners coffers every month. Such regularity is
required because several mandatory expenditures, the most
important being salaries, are paid monthly. Consequently, despite
the implementation of a cash release program, respondent
ensures 20
that the approved allotment of petitioner is regularly
released.
By this explanation, the DBM lamely excuses itself from,

compliance with the mandate of fiscal autonomy of the CSC
_______________
20
Comment of the DBM, p. 6.

147
VOL. 464, JULY 22, 2005
147

Management
on account of alleged lack of government funds. Certainly,

fiscal autonomy would be a meaningless term if there are
no funds with which to implement it. However, this
simplistic approach to the issue, which focuses narrowly on
the regularity of releases of funds for basic expenditures
such as monthly salaries, appears to constitute the entirety
of the DBMs total understanding of fiscal autonomy. It
betrays the DBMs lack of comprehension of the concept of
fiscal autonomy its adamant refusal to abide by that
constitutional mandate, a 21matter that was noted by the
Court in Bengzon v. Drilon, and its undisguised admission
that, in the releases of appropriated funds, the CSC is
treated similarly as other government agencies without
fiscal autonomy.
Fiscal autonomy means more than automatic and
regular release of appropriated funds. This is the intent of
the framers of the Constitution.
When the fiscal autonomy of constitutional commissions
was discussed by the Constitutional Commission,
Commissioner Christian Monsod emphasized that fiscal
autonomy is broader than just the automatic release of
appropriations. It includes other rights in the sense that
fiscal autonomy includes the nonimposition of any other
procedures like the preaudit system in bodies that enjoy
fiscal autonomy, although
_______________
21
G.R. No. 103524, 15 April 1992, 208 SCRA 133. In that case, the
Court observed:
The exercise of the veto power in this case may be traced back to the
efforts of the Department of Budget and Management (DBM) to ignore or
overlook the plain mandate of the Constitution on fiscal autonomy. The
OSG Comment reflects the same truncated view of the provision.
We have repeatedly in the past few years called the attention of DBM
that not only does it allocate less than one percent (1%) of the national
budget annually for the 22,769 Justices, Judges, and court personnel all
over the country but also examines with a finetoothed comb how we spend
the funds appropriated by Congress based on DBM recommendations.
148
148

Management
the inclusion of preaudit procedures would defeat the

objective of automatic and regular release. By such
explanation, Commissioner Crispino de Castro temporarily
withdrew his amendment that would have deleted the
22
sentence [t]he Commission shall enjoy fiscal autonomy
and hence, the provision has remained in the fundamental
law.
The same concept of fiscal autonomy as not limited to
automatic and regular release of funds has been espoused
by this Court. In Bengzon v. Drilon, the Court declared that
[t]he 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 . . . .
The same stand has been expressed by the
Constitutional Fiscal Autonomy Group (CFAG) composed of
the Judiciary and the constitutional bodies granted fiscal
autonomy when, on 3 April 1992, it issued Joint Resolution
No. 1 (Ensuring and Operationalizing the Fiscal Autonomy
Granted by the 1987 Constitution to the Judiciary, the Civil
Service Commission, the Commission on Audit, the
Commission on Elections, and the Office of the
Ombudsman) under these premises:
Lest the constitutional grant of fiscal autonomy remain a
meaningless, illusory platitude, there is an imperative need to
flesh it out, operationalize it, breathe life into it and give it
substance and vigor by translating it into practical realities. The
mere automatic and regular release of the approved
appropriations does not suffice to ensure fiscal autonomy.
In the very real sense, the fiscal autonomy contemplated
in the Constitution is enjoyed even before and, with
more reasons, after the release of the appropriations. There
is still a need to institutionalize adequate safeguards towards
vitalizing the constitutional mandate of fiscal autonomy.
_______________
22
1 RECORD OF THE CONSTITUTIONAL COMMISSION (15 July 1986) 559
561 1 JOURNAL OF THE CONSTITUTIONAL COMMISSION (15 July 1986)

258.
149
VOL. 464, JULY 22, 2005
149

Management
Thus, in keeping with the constitutional design, the

formulation, execution and implementation of the budgets of the
Judiciary, the Constitutional Commissions (CSC, COA and
COMELEC) and the Office of the Ombudsman should be within
the context of fiscal autonomy which they enjoy in order to further
safeguard, ensure and guarantee their independence. The
present budgetary policies and guidelines, as hereinabove
outlined, insofar as they apply to the Judiciary, the Constitutional
Commissions (CSC, COA and COMELEC) and the Office of the
Ombudsman tend to detract from the subject constitutional
vesture of fiscal autonomy. By virtue thereof, as earlier
seen, the DBM is able to exercise and wield a tight control
over the various phases of the budget process that the
budgets of said agencies undergo, thereby completely
negating and impairing the independence that is the very
essence of fiscal autonomy.
Control is anathema to fiscal autonomy. Viewed from the
constitutional standpoint, it is an anachronism of sorts. More
specifically, as is the present practice, the Judiciary, the
Constitutional Commissions and the Office of the
Ombudsman go through exactly the same budget process
as all the other regular agencies of government,
particularly the Executive Branch. Their budget proposals
are subjected to close scrutiny by the DBM or suffer
reductions/cuts. DBMs strict imposition of restrictions,
limitations or constraints on fund allocation and
utilization specified in the General Appropriations Act,
P.D. 1177 and administrative/executive issuances denies
these independent constitutional offices the desired
flexibility inherent in fiscal autonomy and considerably
stifles their initiative and effectiveness in the management
of their resources. Thereby, DBM assumes unwarranted
authority over these offices financial operations. Fiscal
autonomy is unduly infringed upon. (Emphasis supplied.)
It has been more than 13 years since CFAG Joint

Resolution No. 1 was issued. Unfortunately, the same
practices of the DBM that control the budget of fiscally
autonomous government agencies in defiance of the
Constitution are still being perpetrated. The instant
petition is indeed an opportune time for the CSC to assert
fiscal autonomy.
150
150

Management
The CSC appears to denounce only the irregular and

controlled releases of appropriated funds by the DBM in its
petition for mandamus. Nonetheless, a reading of the
petition would show that it is actually aimed at compelling
the DBM to respect, observe, and implement the
constitutional mandate of fiscal autonomy of the Judiciary
the Constitutional Commissions, and the Office of the
Ombudsman, which, in exercising its statutory
responsibilities, the DBM has cast aside. By imposing
National Budget Circular No. 478 on all government
agencies without qualification, the DBM has actually
subverted and weakened the very purpose for the grant of
fiscal autonomythe independence of the grantees.
Obviously, the DBM shrugged off and overlooked the very
reason for the grant of fiscal autonomyconstitutional
bodies vested with independent powers must be
23
insulated from interference by the political departments.
This is not to say that agencies vested with fiscal
autonomy have no reporting responsibility at all to the
DBM. This is precisely the reason why guideline No. 5
under the Resolution of 3 June 1992 states that the
Supreme Court, or constitutional commissions clothed with
fiscal autonomy for that matter, may submit reports
relative to its appropriation for
records purposes only.
24
The word may is permissive, as it is an auxiliary verb
manifesting opportunity or possibility and, under
ordinary circumstances,
implies the possible existence of
25
something. It is therefore incorrect for the DBM to state
that independence without interdependence is folly with
respect to reporting requirements. Interdependence will

_______________
23
See: Concurring Opinion of Justice Hugo E. Gutierrez, Jr. in
Cojuangco, Jr. v. PCGG, G.R. Nos. 9231920, 2 October 1990, 190 SCRA
226.
24
Dizon v. Encarnacion, 119 Phil. 20, 22 9 SCRA 714, 717 (1963).
25
Supangan, Jr v. Santos, G.R. No. 84663, 24 August 1990, 189 SCRA
56.
151
VOL. 464, JULY 22, 2005
151

Management
work only if it is undertaken within the parameters

prescribed by the Constitution.
As correctly pointed out by the CSC, reporting its
financial status to the DBM is not the endall and beall of
accountability. As constitutional bodies, the agencies
concerned must know the consequences of unmitigated and
reckless expenditure of public funds. Article II, Section 27
of the Constitution adopts the State policy to maintain
honesty and integrity in the public service and take
positive and
effective measures against graft and
26
corruption. Article XI, Section 1 provides that [p]ublic
office is a public trust and hence, [p]ublic officers and
employees must at all times be accountable to the people,
serve them with utmost responsibility, integrity, loyalty,
and efficiency, act with patriotism and justice, and lead
modest lives. Surely, these constitutional provisions must
mean more than mere platitudes to constitutional offices
vested with fiscal autonomy, a privilege denied other
government agencies, because those offices must be
independent in the exercise of their constitutional
functions. It bears emphasis that the same constitutional
offices and institutions themselves are not the only ones
accountable for illegal expenditures the officials running
the institutions
are equally and personally responsible
27
therefor.
_______________
26
CONST., ART. II, Sec. 27.
27
Chapter 5, Book VI of the Administrative Code of 1987 states:
SEC. 43. Liability for Illegal Expenditures.Every expenditure or obligation

authorized or incurred in violation of the provisions of this Code or of the general
and special provisions contained in the Annual General or other Appropriations
Act shall be void. Every payment made in violation of said provisions shall be
illegal and every official or employee authorizing or making such payment, or
taking part therein, and every person receiving such payment shall be jointly and
severally liable to the Government for the full amount so paid or received.
152
152

Management
With fiscal autonomy, the constitutional bodies may

allocate and disburse funds as may be provided by law or
prescribed 28by them in the course of the discharge of their
functions. In this regard, the experience of the CSC in
the manner by which the DBM treated its constitutional
mandate of fiscal autonomy is not unusual. This Court
itself has its share of experiences in asserting its fiscal
autonomy. These are manifest in Resolutions this Court
has issued relative to the exercise of its mandate of
administrative supervision over courts and personnel
29
thereof under Article VIII, Section 6 of the Constitution.
Worth mentioning is one administrative matter where the
DBM, claiming that the Court erroneously interpreted the
30
law, applied its own interpretation of the same law.
Indeed, like the CSC, this Court has been at the
_______________
Any official or employee of the Government knowingly incurring any obligation, or
authorizing any expenditure in violation of the provisions herein, or taking part
therein, shall be dismissed from the service, after due notice and hearing by the
duly authorized appointing official. If the appointing official is other than the
President and should he fail to remove such official or employee, the President
may exercise the power of removal.
28
29
Bengzon v. Drilon, G.R. No. 103524, 15 April 1992, 208 SCRA 133.
See: Resolutions in A.M. No. 021201SC, 443 SCRA 549 (Re:
Resolution Granting Automatic Permanent Total Disability Benefits to
Heirs of Justices and Judges who Die in Actual Service) dated 24

November 2004: A.M. No. 04705SC, 439 SCRA 509 (Re: Properties
Proposed to be Purchased by Associate Justice Jose C. Vitug) dated 30
September 2004 and A.M. No. 11238Ret. (Re: Expiration of the Fixed
Term of Office of Atty. Saaduddin A. Alauya, Office of the Jurisconsult,
Zamboanga City).
30
In the Resolution of 3 August 2004 in A.M. No. 11238Ret., the Court
held that the mandate of fiscal autonomy, read with Section 6, Article
VIII of the Constitution providing that the Supreme Court shall have
administrative supervision over all courts and personnel thereof, is the
foundation of the authority of the Supreme Court to prescribe
compensation or vest judicial ranking
153
VOL. 464, JULY 22, 2005
153

Management
receiving end of the DBMs arbitrary refusal to release

appropriated funds in derogation of the fiscal autonomy of
the Judiciary.
In Bengzon v. Drilon, this Court has observed that
constitutional bodies vested with fiscal autonomy have so
far limited their objections to the manner by which the
DBM interprets fiscal autonomy to constant reminders in
the interest of comity and cooperation that must pervade
the relationship of government agencies. But, in the same
Decision, the Court agreed with the petitioners that the
grant of fiscal autonomy should cease to be a meaningless
provision. Again, more than 13 years have passed since
the Court made that observation. Like recent admonitions
of the Court for the DBM to pay heed and implement the
constitutional provision on fiscal autonomy,31 that
pronouncement has apparently fallen on deaf ears.
This Court is not oblivious to the reality that there is a
budget deficit and the country as it were, is performing a
tight balancing act between economic recovery and
financial collapse. However, that situation is no reason for
the DBM to brush aside the constitutionally prescribed
fiscal autonomy of the CSC and the other constitutional
bodies vested with that mandate. The present fiscal
situation of this country is in fact a challenge to the
capability of the DBM to efficiently and
_______________
upon officials of the Judiciary. It added that neither has the DBM the
authority to implement its own interpretation of the law in disparagement
of Resolutions issued by the Court in the exercise of its constitutional
powers, without so much as a request for a reconsideration of such
Resolutions. By such unilateral acts, the DBM has unfortunately but
effectively fortified itself as a tribunal on financial matters higher than
this Court. By reviewing the Resolutions of the Court, passing judgment
on legal issues therein, and implementing its own conclusions in blatant
disregard of the principle of separation of powers, the DBM unwittingly
trampled on dangerous territory.
31
Resolution of 24 November 2004 in A.M. No. 021201SC, supra.

154
154

Management
effectively exercise its responsibility of managing

government budget while according due respect to the
Constitution and its provisions on fiscal autonomy.
ACCORDINGLY, I vote to GRANT the petition.
Respondent Department of Budget and Management
should be enjoined to respect and implement the
constitutional provision granting fiscal autonomy to the
Civil Service Commission.
Petition granted, withholding of subject funds from
petitioner by respondent unconstitutional. Respondent
directed to release P5,807,392.30 to petitioner.
Notes.The
Judiciary,
the
Constitutional
Commissions, and Office of the Ombudsman, which enjoy
fiscal autonomy, are not covered by the amount of
productivity incentive benefits fixed by the President.
(Blaquera vs. Alcala, 295 SCRA 366 [1998])
Fiscal autonomy means that local governments have the
power to create their own sources of revenue in addition to
their equitable share in the national taxes released by the
national government. Local fiscal autonomy does not,
however, rule out any manner of national government
intervention by way of supervision, in order to ensure that
local programs, fiscal and otherwise, are consistent with
national goals. (Pimentel, Jr. vs. Aguirre, 336 SCRA 201
[2000])
o0o
155
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CSC vs. DBM

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VOL.

464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

G.R. No. 158791. July 22, 2005.

the Civil Service Commission, a constitutional commission which

SUPREME COURT REPORTS ANNOTATED

6. Local government units shall have a just share, as determined

respondents justification for the withholding of funds from

VOL. 464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

Constitution has vested with fiscal autonomy should be given

(Constitutional Mandate on the Judiciarys Fiscal Autonomy [3

SUPREME COURT REPORTS ANNOTATED

fiscal autonomy. In such event, it would be practically

circumstances will the total revenue collections fall short of the

VOL. 464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

availed of only if the legal right to be enforced is welldefined,

clear and certain. It lies only to compel an officer to perform a

SUPREME COURT REPORTS ANNOTATED

discretion and exceeded its authority in including the CSC in the

exercising its statutory responsibilities, the DBM has cast aside.

VOL. 464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

No. 478 on all government agencies without qualification, the

SPECIAL CIVIL ACTION in the Supreme Court.

submission of the documents mentioned in Sections 3.8 to

SUPREME COURT REPORTS ANNOTATED

Civil Service Commission vs. Department of Budget and

Guidelines on the Release of the FY 2002 Funds, which

Statement of Allotment, Obligations and Balances

10 . Statement of Accounts Payable

Id., at pp. 2535.

VOL. 464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

of this Court in A.M. No. 929029SC (Constitutional

Respondent proffers at any rate that the delay in releasing

A direct invocation of this Courts original jurisdiction may

Id., at pp. 99100.

Manalo v. Gloria, 236 SCRA 130, 138 (1994).

SUPREME COURT REPORTS ANNOTATED

Civil Service Commission vs. Department of Budget and

preme Court can decide with authority and finality. To

In Province of Batangas v. Romulo, this Court, in

Websters Third New International Dictionary defines automatic

429 SCRA 736 (2004).

VOL. 464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

By parity of construction, automatic release of approved

If respondents theory were adopted, then the

Art. VIII, Section 3.

29 SCRA 617, 628 (1969).

Respondent states in its Comment: Consequently, every month, it

behooves upon the department to coordinate with the revenue collecting

SUPREME COURT REPORTS ANNOTATED

Civil Service Commission vs. Department of Budget and

emasculating to a significant degree, if not rendering

VOL. 464, JULY 22, 2005

Civil Service Commission vs. Department of Budget and

Sec. 63. Unmanageable National Government Budget

In contrast, the immediately succeeding provision of the

Year 2002 GAA, which specifically applied to offices vested

Clearly, while the retention or reduction of appropriations

SUPREME COURT REPORTS ANNOTATED