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BARRERA.

ARISSE JANNAH
PLM

#119
CSC VS DBM

FACTS: The CSC via the petition for mandamus seeks to compel the Department of Budget and
Management (DBM) 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.

CSC claims the amount of ₱215,270,000.00 that 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 considered, amount to ₱285,660,790.44. It complains, however, that the total fund releases by
respondent to its Central Office during the fiscal year 2002 was only ₱279,853,398.14, thereby leaving an
unreleased balance of ₱5,807,392.30.

The 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 certain documents
mentioned in National Budget Circular No. 478 on Guidelines on the Release of the FY 2002 Funds.

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 for failure to exhaust
administrative remedies. 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 of this Court in A.M. No. 92-9-029-SC (Constitutional Mandate on the Judiciary’s
Fiscal Autonomy) issued on June 3, 1993 and contending that it’s act of withholding the subject balance
was valid since it was due to revenue shortfall.

ISSUE: Whether the respondent’s act of withholding the subject balance of funds from petitioner is
unconstitutional. (YES)

Whether or not the Constitutional provision that Congress cannot issue budget lower than that it
issued the previous year for the Judiciary similarly applies to Constitutional Commissions such as CSC.
(NO)

HELD: The "no report, no release" 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.

In analogy, 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,

Webster’s 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
BARRERA. ARISSE JANNAH
PLM

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"

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 above-cited
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.

Respecting respondent’s 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 non-compliance with the mandate of the Constitution. If respondent’s theory were adopted, then
the constitutional mandate to automatically and regularly release approved appropriations would be
suspended every year, or even every month that there is a shortfall in revenues, thereby 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.

The provision of the Year 2002 GAA, 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.

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 petitioner’s funds without
violating not only the Constitution but also Section 64 of the General Provisions of the Year 2002 GAA.

This Court is not unaware that its June 3, 1993 Resolution also states as a guiding principle on the
Constitutional Mandate on the Judiciary’s Fiscal Autonomy that:

4. After approval by Congress, the appropriations for the Judiciary shall be automatically and regularly
released subject to availability of funds.
BARRERA. ARISSE JANNAH
PLM

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
Judiciary’s 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 was 2.53% of the total. In Year 2003 GAA, which was re-enacted in 2004, the budget
for the same agencies was 2.27% of the total appropriations. And in the Year 2005, the budget for the same
agencies was only 2.28% of the total appropriations.

(2) Finally, petitioner’s 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.

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. Respondent’s
act of withholding the subject funds from petitioner due to revenue shortfall is hereby
declared UNCONSTITUTIONAL.