[ANALYSIS] Fundamental constitutional requirements for confidential funds

Note: Remarks delivered by retired Supreme Court Justice Antonio T. Carpio during  the online Talakayan of 1sambayan on Confidential Funds held September 30, 2023.

The 1987 Constitution has specific requirements for the creation of confidential funds that will not be subject to open and full public scrutiny like ordinary public funds.

First, Section 28, Article II of the 1987 Constitution provides: “Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest.”

This means that the general rule is “full public disclosure of all transactions involving public interest.” The exception is if there is a law prescribing “reasonable conditions” allowing for limited public disclosure of certain specified transactions involving public interest.

At present, there is no law prescribing reasonable conditions for limited  public disclosure of disbursements and liquidation of confidential funds. It cannot be denied that the disbursement and liquidation of confidential funds involve public interest because the funds are public, and public funds, being raised through taxes paid by the public, can be spent only for a public purpose.

Thus, at present confidential funds are subject to “full public disclosure” of their disbursements and liquidation because there is no existing law, as required by the Constitution, prescribing reasonable conditions allowing for limited public disclosure of disbursements and liquidation of confidential funds. Consequently, the Filipino people have a constitutional right to demand “full public disclosure” of all disbursements and liquidation of confidential funds.

Second, Section 7, Article III of the 1987 Constitution provides: “The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.”

This means that the general rule is the people have a right to information on matters of public concern, which includes disbursements and liquidation of confidential funds. Thus, the people have a right to access official records, documents and papers relating to official acts, transactions or decisions relating to disbursements and liquidation of confidential funds.

This constitutional right of the people to information is “subject to such limitations as may be provided by law.” At present, however, there is no law providing for limitations on the exercise of the people’s right to information on disbursements and liquidation of confidential funds. Thus, at present the people have a right to full access, without any limitation whatsoever, to official records, documents and papers relating to the disbursements and liquidation of confidential funds.

The Commission on Audit, together with several departments and offices under the Executive branch, issued COA-DBM-DILG-GCG-DND Joint Circular No. 2015-01 dated January 8, 2015. This Joint Circular provides for the guidelines in the disbursement and liquidation of confidential funds. However, Congress did not enact a law delegating the legislative power to these agencies to issue the guidelines. There are no legislative parameters issued by Congress for these agencies to follow in issuing the guidelines. Such parameters are vital to make the delegation of legislative power constitutional.

The Constitution expressly requires Congress to enact a law prescribing the reasonable conditions and limitations in the disbursement and liquidation of confidential funds to exempt these funds from the “full public disclosure” requirement, and from the “right of the people to information” requirement, rights guaranteed under the Constitution to the people. Congress has never enacted such a law. 

Congress would be abdicating its constitutional duty to enact such a law if Congress recognizes as law Joint Circular No. 2015-01 issued by the Commission on Audit and departments and offices under the Executive branch. Congress cannot abdicate its legislative power but can only delegate through a law its legislative power to the Executive subject to well-defined parameters. There is no such delegation of legislative power with respect to the disbursement and liquidation of confidential funds.

If Joint Circular No. 2015-01 is deemed as the law allowing exceptions to the general rule in Section 28, Article II and Section 7, Article III of the Constitution, then the Joint Circular would be unconstitutional and void ab initio for being a usurpation of legislative power by COA and departments and offices under the Executive branch that issued the Joint Circular.  

The COA and these departments and offices of the Executive branch have no legislative power to issue Joint Circular No. 2015-01 as the law required by the Constitution to implement the exceptions in Section 28, Article II and Section 7, Article III of the Constitution. Being unconstitutional ab initio, the Joint Circular could not even be ratified.

The reference of Joint Circular No. 2015-01 in the 2022 General Appropriations Act did not make the Joint Circular a law when Section 85 of the GAA stated, “Implementation of this Section shall be subject to COA-DBM-DILG-GCG-DND J.C. No. 2015-01 dated January 8, 2015 and such other guidelines issued thereon.” 

Firstly, the text of the guidelines found in Joint Circular No. 2015-01 did not pass three readings in Congress, a constitutional requirement for a bill to become law. Secondly, joint circulars issued by COA and departments and offices of the Executive branch can be amended at any time by COA and the departments and offices that issued these joint circulars. However, a law cannot be amended by COA and the departments and offices under the Executive branch.

Thirdly, when Section 85 stated that the section shall be implemented in accordance with Joint Circular No. 2015-01 and “such other guidelines issued thereon,” Section 85 was obviously referring to implementing guidelines that are issued by executive departments and offices from time to time. Such implementing guidelines must conform to the Constitution and existing laws, and cannot supplant the Constitution or existing laws.

To preserve the validity of Joint Circular No. 2015-01, it must be interpreted merely as an exercise by the COA of its constitutional power under Section 2(2), Article IX  of the Constitution to define the scope of its audit. However, the Joint Circular cannot be interpreted as the law specified in Section 28, Article II and Section 7, Article III of the Constitution requiring Congress to enact a law should it desire to provide exceptions to the general rule prescribed by the Constitution for “full public disclosure” and for the “right of the people to information” on matters of public interest.

Section 28, Article II and Section 7, Article III of the Constitution provide for the general rule, and the exceptions will have to be embodied in a law to be enacted by Congress. Thus, Section 28 and Section 7, being the general rule, constitute the default operating provisions that must presently be followed by all government agencies.  

At present, therefore, there must be “full public disclosure” of all disbursements and liquidation of confidential funds. There must also be full respect for the “right of the people to information on matters of public concern,” including the right to access all official records, transactions and decisions relating to the disbursements and liquidation of confidential funds.

These constitutional rights shall continue unimpaired until Congress enacts a law providing for reasonable conditions and limitations on the full public disclosure, and on the right of the people to information, relating to the disbursements and liquidation of confidential funds. – Rappler.com

Antonio T. Carpio is a retired senior associate justice of the Philippine Supreme Court.