The Judiciary's constitutional fiscal autonomy grants it full flexibility to allocate and utilize its resources, including the authority to determine the manner and conditions for the disposal of its property, such as setting the appraisal formula for items purchased by retiring Justices, free from external interference or substitution of policy by the Commission on Audit.

The issue arose from a Commission on Audit (COA) Opinion finding an underpayment by five retired Supreme Court Justices who purchased personal properties (mostly vehicles) assigned to them during their tenure. The COA contested the valuation formula used by the Supreme Court's Property Division, which was based on the Constitutional Fiscal Autonomy Group (CFAG) Joint Resolution No. 35, insisting that a different COA formula should have been applied. This prompted the Supreme Court's Office of Administrative Services to seek clarification from the Court En Banc regarding the proper formula.

• The COA Legal Services Sector issued an opinion stating that five retired Supreme Court Justices (Chief Justice Panganiban, Justices Reyes, Gutierrez, Azcuna, and Austria-Martinez) underpaid a total of P221,021.50 when they purchased government properties (vehicles and a TV set) assigned to them upon retirement.
• The alleged underpayment resulted from the difference between the valuation computed by the Supreme Court's Property Division using the CFAG Joint Resolution No. 35 formula (as directed by a 2004 SC En Banc Resolution in A.M. No. 03-1201) and the valuation under COA Memorandum No. 98-569-A, which the COA insisted should have been applied.
• The Supreme Court's Office of Administrative Services (OAS), through Atty. Eden T. Candelaria, submitted memoranda recommending that the Court uphold its in-house computation based on the CFAG formula.
• The OAS noted that this was the first time COA questioned the Court's use of the CFAG formula since its adoption in 1997 and that COA had previously upheld similar in-house appraisals for retired Court of Appeals Justices based on CFAG guidelines.
• The sale of used properties to retiring Justices is a long-standing tradition recognized as a privilege and retirement benefit, partly intended to reward long and faithful service.

• (Implicitly, the position of the Supreme Court administration/OAS): The Court should respect the in-house computation based on the CFAG formula, consistent with previous practice and prior COA acceptance in similar cases involving appellate justices.
• The Judiciary's constitutionally guaranteed fiscal autonomy grants it full flexibility in allocating and utilizing its resources, including determining the policy for the disposal of its property.
• Applying the CFAG formula is an exercise of the Court's discretionary authority derived from its fiscal autonomy and administrative power to manage its internal affairs and retirement benefits.
• Allowing the COA to impose its preferred formula would constitute an encroachment on the Judiciary's independence and fiscal autonomy.
• Section 501 of the Government Accounting and Auditing Manual (GAAM) grants the head of the agency (the Chief Justice) full and sole authority for property disposal.

• (Implicitly, the position of the COA): The Supreme Court's Property Division used an erroneous formula (CFAG Joint Resolution No. 35) to appraise the vehicles purchased by the retired Justices.
• The correct formula that should have been applied is the one found in COA Memorandum No. 98-569-A dated August 5, 1998.
• The use of the wrong formula resulted in an underpayment by the retired Justices amounting to P221,021.50.
• COA has the authority to examine, audit, and settle accounts pertaining to government property, including those held by constitutional bodies like the Judiciary, even on a post-audit basis.

• Whether the Commission on Audit (COA) can compel the Supreme Court to use the COA's prescribed valuation formula (COA Memorandum No. 98-569-A) instead of the formula adopted by the Court (CFAG Joint Resolution No. 35) in appraising properties purchased by retiring Justices, considering the Judiciary's constitutional fiscal autonomy and independence.

• The Supreme Court En Banc ruled in favor of upholding its in-house computation, confirming the appraisal based on CFAG Joint Resolution No. 35 as legal and valid.
• The Court reasoned that while COA has the power to conduct post-audits under the Constitution (Art. IX-D, Sec. 2(1)), this power must be read in conjunction with the principles of judicial independence and fiscal autonomy (Art. VIII, Sec. 3).
• Fiscal autonomy guarantees the Judiciary "full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require," including the disposal of property "at will, free from any outside control or interference."
• The Court's adoption of the CFAG formula, through its En Banc Resolution A.M. No. 03-1201, is part of its exercise of discretionary authority to manage its internal affairs and determine the terms of retirement privileges and benefits it grants, derived from its fiscal autonomy and administrative supervision powers.
• Allowing COA to substitute its preferred formula would be an encroachment upon judicial independence and fiscal autonomy, tantamount to dictating how the Judiciary utilizes its funds and properties.
• The ruling also cited Section 501 of the GAAM, which vests the head of the agency (Chief Justice for the Judiciary) with "full and sole authority and responsibility for the divestment and disposal of property."
• The COA is to be advised of this Resolution for its guidance.

• Fiscal Autonomy (Art. VIII, Sec. 3, Constitution): Defined as the guarantee of full flexibility for the Judiciary to allocate and utilize its resources as needed, including freedom from outside control in the disposition of its funds and properties. It was invoked to justify the Court's authority to choose its own appraisal formula for property disposal without interference from COA.
• Judicial Independence (Institutional): Defined as the separation of the judicial branch from the executive and legislative branches, protecting the Judiciary as a body. The Court emphasized that interfering with its discretion in managing resources and benefits encroaches upon this independence.
• Separation of Powers: Explained as the principle dividing governmental powers among co-equal branches, each supreme within its own sphere, but subject to checks and balances. The Court held that COA dictating the appraisal method would violate this principle by interfering with the Judiciary's internal management prerogative derived from its constitutional functions and autonomy.
• Administrative Supervision over Courts (Art. VIII, Sec. 6, Constitution): While not explicitly named as a doctrine, the power of the Supreme Court to exercise administrative supervision over all courts and personnel was cited as the basis for its authority to manage internal affairs, including retirement benefits and property disposal policies.
• Authority for Property Disposal (GAAM, Title 7, Chap. 3, Sec. 501): This manual provision grants the head of a government agency the full and sole authority and responsibility for property disposal. It was cited to reinforce the Chief Justice's (in consultation with the Court En Banc) authority to determine the manner and conditions of disposing Judiciary assets.

• "Fiscal autonomy means freedom from outside control... 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." (Quoting Bengzon v. Drilon)
• "[R]eal fiscal autonomy covers the grant to the Judiciary of the authority to use and dispose of its funds and properties at will, free from any outside control or interference."
• "Thus, under the guarantees of the Judiciary's fiscal autonomy and its independence, the Chief Justice and the Court En Banc determine and decide the who, what, where, when and how of the privileges and benefits they extend to justices, judges, court officials and court personnel within the parameters of the Court's granted power; they determine the terms, conditions and restrictions of the grant as grantor."
• "Section 501. Authority or responsibility for property disposal/divestment. – The full and sole authority and responsibility for the divestment and disposal of property... owned by the national government agencies... shall be lodged in the heads of the departments, bureaus, and offices of the national government..." (Quoting GAAM, Vol. 1, Title 7, Chapter 3, Sec. 501)

• Angara v. Electoral Commission (63 Phil. 139 (1936)): Cited to explain the fundamental principle of separation of powers and the system of checks and balances in the Philippine government.
• In the Matter of the Allegations Contained in the Columns of Mr. Amado P. Macasaet... (A.M. No. 07-09-13-SC, August 8, 2008, 561 SCRA 395): Referenced for its delineation between individual judicial independence and institutional judicial independence.
• Bengzon v. Drilon (G.R. No. 103524, April 15, 1992, 208 SCRA 133): Extensively quoted and relied upon for defining the scope and extent of fiscal autonomy enjoyed by the Judiciary under the Constitution, emphasizing freedom from outside control and flexibility in resource allocation and use.
• Garcia v. Miro (G.R. No. 167409, March 20, 2009, 582 SCRA 127); Ampong v. Civil Service Commission (G.R. No. 167916, August 26, 2008, 563 SCRA 293); Judge Caoibes, Jr. v. Hon. Ombudsman (413 Phil. 717 (2001)); Fuentes v. Office of the Ombudsman-Mindanao (G.R. No. 124295, October 23, 2001, 368 SCRA 36): Cited collectively to support the exclusive nature of the Supreme Court's administrative supervision over judges and court personnel.
• Maceda v. Vasquez (G.R. No. 102781, April 22, 1993, 221 SCRA 464): Cited within the context of Ampong regarding the Court's exclusive administrative supervision.
• De La Llana v. Alba (198 Phil. 1 (1982)): Cited to illustrate that constitutional guarantees enable justices and judges to administer justice without fear of reprisals.
• Commission on Human Rights Employees' Association v. Commission on Human Rights (528 Phil. 658 (2006)): Cited to clarify that fiscal autonomy is more extensive than just the automatic release of appropriations.

• 1987 Constitution, Article IX-D, Section 2(1): Cited as the basis for COA's power to conduct post-audits on constitutional bodies with fiscal autonomy.
• 1987 Constitution, Article VIII, Section 1: Defines judicial power, including the power to determine grave abuse of discretion.
• 1987 Constitution, Article VIII, Section 2: Prohibits Congress from depriving the Supreme Court of its jurisdiction.
• 1987 Constitution, Article VIII, Section 3: The core provision granting the Judiciary fiscal autonomy and mandating automatic release of appropriations.
• 1987 Constitution, Article VIII, Section 5: Enumerates the jurisdiction of the Supreme Court.
• 1987 Constitution, Article VIII, Section 6: Grants the Supreme Court administrative supervision over all courts and personnel.
• 1987 Constitution, Article VIII, Section 10: Prohibits decreasing the salary of Justices and judges during their continuance in office.
• 1987 Constitution, Article VIII, Section 11: Provides for the security of tenure of members of the Judiciary.
• Government Accounting and Auditing Manual (GAAM), Volume 1, Title 7, Chapter 3, Section 501: Cited to support the authority of the head of the agency (Chief Justice) over property disposal.
• Constitutional Fiscal Autonomy Group (CFAG) Joint Resolution No. 35 (April 23, 1997): The valuation formula adopted by the Supreme Court.
• COA Memorandum No. 98-569-A (August 5, 1998): The valuation formula insisted upon by the COA.
• Supreme Court Resolution in A.M. No. 03-1201 (March 23, 2004): The resolution directing the use of the CFAG formula for properties purchased by retiring Justices.