Sounding Board

Fiscal autonomy

The controversy between the Supreme Court and the Department of Budget and Management over the unused appropriations for the judiciary is about fiscal autonomy. Fiscal autonomy is a guarantee given by the Constitution to certain units of the government.  It is intended as a guarantee of separation of powers and of independence from political agencies. The units that have been given fiscal autonomy are the constitutional commissions, the ombudsman and the judiciary. The language used in the grant of the guarantee is almost identical for all three units. The Supreme Court jealously guards fiscal autonomy.

The guarantee for the Constitutional Commissions says, “The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be automatically and regularly released.” For the Ombudsman it says, “The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved annual appropriations shall be automatically and regularly released.”  The provision for the judiciary has an addition not found in the other two: “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.”


There is a similar provision for local governments although the phrase fiscal autonomy is not used.  It says: “Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.”  The Supreme Court has had the opportunity to explain the meaning of the phrase “automatically and regularly released.”  When President Ramos issued an executive order saying that “Pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation, the amount equivalent to 10% of the internal revenue allotment to local government units shall be withheld,” this was challenged as an unconstitutional restriction on local autonomy.

The Supreme Court ruled: “Such withholding clearly contravenes the Constitution and the law.  Although temporary, it is equivalent to a holdback, which means ‘something held back or withheld, often temporarily.’ Hence, the ’temporary’ nature of the retention by the national government does not matter.  Any retention is prohibited.”


The phrase “automatically and regularly released” was also a subject of contention between the Civil Service Commission (CSC) and the budget secretary.  The controversy involved the “no report, no release” policy imposed by the DBM on funds appropriated for the CSC.

In resolving the issue the Court harked back to an earlier decision on the meaning of “automatic release” for local government units relying on the dictionary meaning of “automatic.”  “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 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”

The Court concluded: “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.”

The DBM tried to wiggle out of its predicament claiming that the “no report, no release” was due to a shortfall in revenues.  The Court said that such shortfall does not justify non-compliance with the Constitution and 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.”

Having said all that, one might ask how the current controversy on unspent funds of the judiciary will be resolved.  I anticipate that the resolution will be along the lines of a 1993 Supreme Court resolution on the judiciary’s fiscal autonomy.  The resolution says: “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.”

Related to all this, of course, is the issue of impoundment, that is, the holding of unspent appropriated funds. It is something done by presidents as a form of “executive veto.”  It was first used by Thomas Jefferson. There is no provision in the Constitution on the subject.  The concept has come up in local jurisprudence, but the Supreme Court has heretofore refrained from passing judgment on its constitutionality.

Finally, like it or not, the Constitution means what the Supreme Court says it means, until the Supreme Court changes its mind.  We know who will referee the controversy between the Supreme Court and the DBM.


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TAGS: DBM, fiscal autonomy, Supreme Court
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