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This report was prepared by consultants for the Asian Development Bank. The views expressed in this report are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.

CENTER FOR PUBLIC RESOURCE MANAGEMENT, INC.

THE ASIA FOUNDATION

NATIONAL CENTER FOR STATE COURTS

ASSOCIATION OF UNIVERSITIES AND COLLEGES OF CANADA

SUPREME COURT OF THE PHILIPPINES

ASIAN DEVELOPMENT BANK

REVISED FINAL REPORT

ADB TECHNICAL ASSISTANCE NO. 3693 - PHISTRENGTHENING THE INDEPENDENCE AND DEFINING THE ACCOUNTABILITY OF THE JUDICIARY

JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN

CYS 2006-2011

ADB TECHNICAL ASSISTANCE NO. 3693 - PHISTRENGTHENING THE INDEPENDENCE

AND DEFINING THE ACCOUNTABILITY OF THE JUDICIARY

REVISED FINAL REPORT

DECEMBER 2004

JUDICIARY MEDIUM-TERM

DEVELOPMENT PLAN

CYS 2006-2011

JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 i REVISED FINAL REPORT

ACRONYMS

AAC Appraisal and Auction Committee

AARR Accrual Accounting Rate of Return

ADB Asian Development Bank

ADR Alternative Dispute Resolution

AFP Armed Forces of the Philippines

ABM Agency Budget Matrix

AGDB Authorized Government Depository Bank

AJS American Judicature Society

APJR Action Plan for Judicial Reform

ARMM Autonomous Region Of Muslim Mindanao

ASEAN Association of South East Asian Nations

ATA Automatic Transfer Agreement

BAC Bids and Awards Committee

BCDA Bases Conversion Development Authority

BOT Build-Operate-Transfer

BTr Bureau of Treasury

DBM - BESF Department of Budget and Management - Budget of Expenditures and Source of Financing

CA Court of Appeals

CCAO Central Court Administration Office

CDA Cash Disbursement Authority

CFMO Central Financial Management Office

CIDA Canadian International Development Agency

COA Commission on Audit

COB Committee on Bids

COMELEC Commission on Election

CMO Court Management Office

CPI Consumer Price Index

CSC Civil Service Commission

CTA Court of Tax Appeals

DBM Department of Budget and Management

DCF Discounted Cash Flow

ADB TA NO. 3693-PHI – STRENGTHENING THE INDEPENDENCE AND DEFINING THE ACCOUNTABILITY OF THE JUDICIARY

JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 ii REVISED FINAL REPORT

DLS Department of Logistical Support

ENG L’Ecole Nationale des Greffes

FMBO Fiscal Management and Budget Office

FMO Financial Management Office

GSIS Government Service Insurance System

HOJ Halls of Justice

HRD Human Resource Development

IBP Integrated Bar of the Philippines

ICM Institute for Court Management

ICT Information and Communication Technology

IRA Internal Revenue Allocation

IRR Internal Rate of Return

ISSP Information Systems Strategic Plan

JBC Judicial & Bar Council

JDF Judicial Development Fund

JLSO Judicial Library Service Office

JSPC Judiciary Strategic Planning Committee

JTF Judicial Trust Fund

JTFD Judicial Development Trust Fund Division

JUSIP Judicial System Infrastructure Program

KPI Key Performance Indicators

KRA Key Reform Area

LAN Local Area Network

LEGO Legal Office

LDP Land Bank of the Philippines

LGU Local Government Unit

MCTC Municipal Circuit Trial Court

MCLE Mandatory Continuing Legal Education

MR Memorandum Receipt

MDS Modified Disbursement System

MDSO Medical and Dental Services Office

MISO Management Information System Office

MeTC Metropolitan Trial Court

MTC Municipal Trial Court


JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 iii REVISED FINAL REPORT

NCA Notice of Cash Allocation

NCC National Computer Center

NCR National Capital Region

NEDA National Economic Development Authority

NG National Government

NGAS New Government Accounting System

NPV Net Present Value

NSO National Statistics Office

OAS Office of Administrative Services

OCA Office of the Court Administrator

OCA - FMO Office of the Court Administrator – Financial Management Office

OCJ Office of the Chief Justice

ODA Official Development Assistance

OU Oversight Unit

PEAC Prequalification, Evaluation and Awards Committee for Consultancy

PERA Personnel Emergency Relief Allowance

PET Presidential Electoral Tribunal

PHILJA Philippine Judicial Academy

PO Purchase Order

PMO Program Management Office

RATA Representation and Transportation Allowance

RCAO Regional Court Administration Office

RIV Request for Issuance of Voucher

RMO Revenue Management Office

RMS Revenue Management System

RMSD Revenue Management System Database

RPC Regional Procurement Committee

RRR Required Rate of Return

RTC Regional Trial Court

SB Sandiganbayan

SC Supreme Court of the Philippines

SC-FMBO Supreme Court- Financial Management Office

SCHWP Supreme Court Health and Welfare Plan

SCPES Supreme Court Performance Evaluation System


JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 iv REVISED FINAL REPORT


SG Salary Grade

SHCC Shari’a Circuit Trial Court

SHDC Shari’a District Trial Court

SPAMS Supply, Property Accountability and Monitoring System

SPB-LC Selection and Promotion Board for the Lower Courts

SSL Salary Standardization Law

SWOT Strengths - Weaknesses – Opportunities – Threats

TA Technical Assistance

TACC Total Annual Cash Compensation

TS Technical Secretariat

TCAA Treasury and Cash Administration

TCPS Trial Court Performance Standards and Measurements Program

TOR Terms of Reference

TQM Total Quality Management

TWG Technical Working Group

WB World Bank

UN United Nations

UNDP United Nations Development Program

JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 v REVISED FINAL REPORT

CONTENTS Section 1 INTRODUCTION 1 Background ..................................................................................................................1

2 Background ..................................................................................................................1

Section 2 EXPENDITURE PLANNING METHODOLOGY 1 General Planning Procedure ........................................................................................3

2 Derivation of Expected Expenditure Trends .................................................................3 Section 3 PROPOSED ANNUAL EXPENDITURE ESTIMATES CYC 2006 - 20011 1 Assumptions.................................................................................................................7

2 Medium-Term Estimates (2006 – 2011) .....................................................................11

3 Annual Estimates .......................................................................................................13

LIST OF TABLES Table 1 National Government Budget CYs 1998 – 2003 (in thousand PhP) ....................................4 Table 2 Comparative Statement Of The Personal Services Budget Of The National Government And Judiciary’s Budget Share CYs 1998 – 2003 (in thousand PhP)................................................................................................................5 Table 3 Judiciary Budget Support From The National Government with PS, MOOE and CO Shares CYs 1998 – 2003 (in thousand PhP)................................................................................................................5 Table 4 Judiciary Proposed Expenditures CY 2005 National Expenditures Program in thousand PhP).................................................................................................................7 Table 5 Strategic Plan Budgetary Requirements CY 2006 – 2011 (in Thousand PhP) ...........................................................................................................11 Table 6 Computation Of Budgetary Requirements Enhancement Level, CYs 2006 – 2011 (Option 1) in thousand PhP...................................................................13 Table 7 Computation Of The CY 2006 Minimum Or Baseline Budget Level (in thousand PhP)..............................................................................................................14 Table 8 Computation Of The CY 2006 Current Level Expenditure Requirements (in thousand PhP)..............................................................................................................14 Table 9 Computation Of CY 2006 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................15


JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 vi REVISED FINAL REPORT

Table 10 Computation Of CY 2006 Expenditure Estimates (in thousand PhP).............................................................................................................16 Table 11 Revenue Estimates, Cy 2006 – 2011 (in thousand PhP)..............................................................................................................16 Table 12 Reconciliation Of CY 2006 Expenditure Estimates with CY 2006 Revenue Estimates .....................................................................................16 Table 13 Revised CY 2006 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................17 Table 14 Computation Of Revised CY 2006 Expenditure Estimates................................................18 Table 15 Computation Of Budgetary Requirements Enhancement Level, CYs 2006 – 2011, Option 2 (in thousand PhP)..............................................................................................................18 Table 16 CY 2006 Enhancement Level Expenditure Requirements, (Option 2) (in thousand PhP)..............................................................................................................19 Table 17 Computation Of Revised CY 2006 Expenditure Estimates (Option 2)...............................20 Table 18 Estimated Revenues For CY 2007 ....................................................................................21 Table 19 Computation Of CY 2007 Minimum Level Expenditure Requirements (in thousand PhP)..............................................................................................................21 Table 20 Computation Of CY 2007 Current Level Expenditure Requirements (in thousand PhP)..............................................................................................................22 Table 21 Computation Of CY 2007 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................22 Table 22 Computation Of CY 2007 Expenditure Estimates (in thousand PhP)..............................................................................................................23 Table 23 Reconciliation Of CY 2007 Expenditure Estimates with CY 2007 Revenue Estimates .....................................................................................23 Table 24 Revised CY 2007 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................23 Table 25 Computation Of Revised CY 2007 Expenditure Estimates (1st Iteration) .................................................................................24 Table 26 Computation Of CY 2008 Minimum Level Expenditure Requirements (in thousand PhP)..............................................................................................................24 Table 27 Computation Of CY 2008 Current Level Expenditure Requirements (in thousand PhP)..............................................................................................................25 Table 28 Computation Of CY 2008 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................25 Table 29 Computation Of CY 2008 Expenditure Estimates (in thousand PhP)..............................................................................................................25


JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 vii REVISED FINAL REPORT

Table 30 Reconciliation Of CY 2008 Expenditure Estimates with CY 2008 Revenue Estimates (in thousand PhP)..............................................................................................................26 Table 31 Revised CY 2008 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................26 Table 32 Computation Of Revised CY 2008 Expenditure Estimates (1st Iteration)............................... Table 33 Computation Of CY 2009 Minimum Level Expenditure Requirements (in thousand PhP)..............................................................................................................27 Table 34 Computation Of CY 2009 Current Level Expenditure Requirements (in thousand PhP)..............................................................................................................27 Table 35 Computation Of CY 2009 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................27 Table 36 Computation Of CY 2009 Expenditure Estimates (in thousand PhP)..............................................................................................................28 Table 37 Reconciliation Of CY 2009 Expenditure Estimates with CY 2009 Revenue Estimates (in thousand PhP)..............................................................................................................28 Table 38 Revised CY 2009 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................28 Table 39 Computation Of Revised CY 2009 Expenditure Estimates (1st Iteration)...........................29 Table 40 Computation Of CY 2010 Minimum Level Expenditure Requirements ..............................29 Table 41 Computation Of CY 2010 Current Level Expenditure Requirements (in thousand PhP)..............................................................................................................29 Table 42 Computation Of CY 2010 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................30 Table 43 Computation Of CY 2010 Expenditure Estimates (in thousand PhP)..............................................................................................................30 Table 44 Reconciliation Of CY 2010 Expenditure Estimates with CY 2010 Revenue Estimates (in thousand PhP)..............................................................................................................30 Table 45 Revised CY 2010 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................31 Table 46 Computation Of Revised CY 2010 Expenditure Estimates (1st Iteration)...........................31 Table 47 Computation Of CY 2011 Minimum Level Expenditure Requirements ..............................32 Table 48 Computation Of CY 2011 Current Level Expenditure Requirements (in thousand PhP)..............................................................................................................32 Table 49 Computation Of CY 2011 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................32


JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 viii REVISED FINAL REPORT


Table 50 Computation Of CY 2011 Expenditure Estimates (in thousand PhP)..............................................................................................................33 Table 51 Reconciliation Of CY 2011 Expenditure Estimates with CY 2011 Revenue Estimates (in thousand PhP)..............................................................................................................33 Table 52 Revised CY 2011 Enhancement Level Expenditure Requirements (in thousand PhP)..............................................................................................................33 Table 53 Computation Of Revised CY 2011 Expenditure Estimates (1st Iteration) (in thousand PhP)..............................................................................................................34 Table 54 Proposed Judiciary Six – Year Expenditure Program, CY 2006 - 2011 (in thousand PhP)..............................................................................................................35 Table 55 Judiciary Expenditure Program For CYs 2006 – 2011 (in thousand PhP)..............................................................................................................35

JUDICIARY MEDIUM-TERM DEVELOPMENT PLAN • CY 2006-2011 1 REVISED FINAL REPORT

1 INTRODUCTION

I BACKGROUND 1.1.1 The Action Plan on Judicial Reform (APJR) identifies and programs the various

reform initiatives that will be undertaken over a six-year period in order to achieve the Judiciary’s vision of a speedy, impartial and fair justice system, within the context of an independent and accountable Judiciary. Investments of an estimated amount of over PhP 3.4 billion will be required over the implementation period. These are one-time public investments and will be incurred in addition to the current budgetary levels of the Judiciary. The APJR comprises the strategic plan of the Judiciary which includes other projects funded locally or through technical assistance in the next 6 years.

1.1.2 Also the implementation reforms will have significant impacts on the annual

budgetary requirements of the Judiciary. Significant improvements in the overall levels and internal allocation in the annual Judiciary budget is critical to implementing quality reforms and in sustaining the gains over the long – term horizon.

1.1.3 It is on this broad approach that this medium-term expenditure program is presented

in this report. In particular, it presents annual expenditure level projections for the Judiciary in the next six years assuming full implementation of the APJR and considering the budgetary impacts of their implementation over the medium-term.

2 OBJECTIVES 2.1.1 The medium-term expenditure program has the following objectives:

a) To improve the prescience of the Judiciary budgeting system thereby providing reliable guidance in resource management as the Judiciary navigates through the medium-term change process.

b) To provide a medium-term budget perspective that will enable the Judiciary to

link plans with resource availabilities as well as requirements. c) To establish the basis for the annual monitoring, evaluation and update of the

plan implementation on the one hand, and resource generation and allocation on the other thereby support better reform management and regular operations within the context of a reforming organization.



2 EXPENDITURE PLANNING

METHODOLOGY 1 GENERAL PLANNING PROCEDURE

1.1.1 The medium-term or six –year expenditure program is an estimation of the cost of

plan implementation, with annual cost estimates for the six – year period. Its formulation is anchored on a set of objectives and strategies, as well as, annual performance targets and priorities as contained in the Judiciary Strategic Plan (with the Action Program for Judiciary Reform integrated therein) which is updated annually.

1.1.2 The preparation of the medium-term program is done annually, and involves a three-

step process, namely:

a) Determination of the recurring expenditures in the current year budget;

b) Making adjustments thereon for provisions for terminal leave, pensions for prospective retirees, and other mandatory or urgent budgetary requirements, and for percentage change in relevant macro-economic parameters; and

c) Determination of the annual budgetary requirements of the approved annual plans, priorities and performance targets for the plan period (in this specific case, six years) as set forth in the updated Judiciary Strategic Plan.

2 DERIVATION OF EXPECTED EXPENDITURE TRENDS 2.1.1 The magnitude of the budgetary requirements to be set up annually is a function of

the current year recurring expenditures and needed adjustments thereon, and the plans, priorities and performance targets approved by Judiciary top-level officials on the one hand, and the level of expected resources availability for the indicated budget year. The disaggregation of the resources expected to be generated during the years of the plan period into the various expenditure classes, functions, activities, programs and projects and decentralized units needs to be planned and targeted by the CFMO based on, among others, the above factors.



2.1.2 CY 2006 shall be the initial year of budget reform implementation. Because this will be the first year that the Judiciary will be preparing its budget within the context of operationalized judicial autonomy. Because it does not have yet a Judiciary-approved budget, the determination of the current year recurring expenditures and its budget disaggregations will be based on the proposed expenditures for the Judiciary of the national government under the CY 2005 National Expenditures Program. An analysis of such budget disaggregations shall be made as a starting point to enable the rational planning and the targeting of improvements to be made on the preparation of the Judiciary medium-term expenditure program.

2.1.3 Table 1 presents the national government budget for CYs 1998-2003. As can be

gleaned from Table 1, the budget has grown by an annual average of 8.51 percent. The Personal Services (PS) component, on the other hand, registered a slower growth, averaging 6.07 percent. As a percentage of the national government budget, Personal Services has displayed a decreasing trend, averaging an annual growth of 35.6 per cent for the six – year period from a higher 38.22 percent share in 1998.

TABLE 1 NATIONAL GOVERNMENT BUDGET

CYs 1998 – 2003 (in thousand PhP)

YEAR TOTAL NG BUDGET

Annual % Growth

TOTAL NG PS

Annual % Growth

PS % Share In NG

Budget

1998 537,433,273 205,430,213 38.22

1999 580,385,020 7.98 215,351,726 4.83 37.10

2000 682,459,835 117.60 235,248,659 9.24 34.47

2001 707,093,084 3.61 247,665,401 5.28 35.03

2002 769,804,730 8.87 265,497,127 7.20 34.49

2003 804,200,000 4.47 275,577,322 3.80 34.27

Average annual % growth 8.51 6.07 35.60

2.1.4 In contrast, national government budget support to the Judiciary for the same period

displayed an average annual growth of 3.4 percent as shown in Table 2, much lower than the average annual growth of 8.51 percent of the national government budget. The average annual growth of the budget support to the Judiciary represents only about 40 percent of the average annual growth of the national government budget.

2.1.5 Personal Services of the national government registered an average annual growth

of 6.07 percent for the six-year period. In the case of the Judiciary, national government budget support for personal services averaged an annual growth of only 4.57 percent, or 1.5 percent slower.

2.1.6 For the past six years, the national government’s personal services budget averaged

35.6 percent of its total budget. National government budget support for personal services in the Judiciary presents a stark contrast with personal services share in the total budget support registering an average of 85.28 percent. This signifies that the



bulk of the budget support goes to the payment of salaries and personnel benefits, with only a meager of less than 15 percent of the budget provided for maintenance and other operating expenses and capital outlays. This, however, does not mean that the salary rates and personnel benefits in the Judiciary are at ideal levels. It only means that the total budget support to the Judiciary can provide only the very basic requirements, such as the payment of legislated salaries and prescribed benefits in the civil service, and the barest of maintenance and other operating expenses.

TABLE 2

Comparative Statement of the Personal Services Budget of the National Government and Judiciary’s Budget Share

CYs 1998 – 2003 (in thousand PhP)

YEAR

NG BUDGET SUPPORT TO JUDICIARY

BS TO JUD

ANNUAL %

GROWTH

TOTAL NG PS BUDGET

ANNUAL %

GROWTH JUDICIARY PS BUDGET

ANNUAL %

GROWTH

JUD. % SHARE IN

NG PS BUDGET

1998 6,446,803 205,430,213 5,397,423 2.63

1999 6,713,681 4.14 215,351,726 4.83 5,708,179 5.76 2.65

2000 7,044,109 4.92 235,248,659 9.24 5,831,678 2.16 2.48

2001 7,433,798 5.53 247,665,401 5.28 6,118,818 4.92 2.47

2002 7,651,214 2.92 265,497,027 7.20 6,853,974 12.01 2.58

2003 7,611,626 -0.52 275,577,322 3.80 6,716,674 -2.00 2.44

Average Annual % Growth 3.40 6.07 4.57 2.54

TABLE 3 Judiciary Budget Support from the National Government

with PS, MOOE and CO Shares CYs 1998 – 2003

(in thousand PhP)

YEAR NG BUDGET SUPPORT TO JUDICIARY

TOTAL PS PS %

SHARE IN BUDGET

SUPPORT

TOTAL MOOE

MOOE % SHARE IN

BS

TOTAL CO

CO % SHARE IN

BS

1998 6,446,803 5,397,423 83.72 968,430 15.02 80,950 1.50

1999 6,713,681 5,708,179 85.02 922,970 13.75 82,532 1.23

2000 7,044,109 5,831,678 82.79 1,162,381 16.50 50,050 0.71

2001 7,433,798 6,118,818 82.31 1,246,660 16.77 68,320 0.92

2002 7,651,214 6,853,974 89.58 682,647 8.92 114,593 1.50

2003 7,611,626 6,716,674 88.24 754,461 9.91 140,491 1.85

Average Annual % Growth 85.28 13.48 1.28



2.1.7 The above analysis shows the minimal concern for the maintenance requirements and the improvement and upgrading of facilities, equipment and other capital assets of the various courts in the country. Given this budget disaggregation for expense classes, it is necessary at the outset for the CFMO to target improvements in budget allocation in tandem with the expected increases in revenue generation even prior to the translation of approved annual plans, priorities and performance targets into budgetary requirements, and the preparation and submission of budget proposals by decentralized units.

2.1.8 Given the above average breakdown by expense class of the Judiciary budget for

the past six (6) years, it is desirable to gradually introduce budget allocation improvements in its medium-term expenditure program for CYs 2006 - 2011. Granted that the total resource budgeting approach is adopted, the following budget disaggregation among expense classes is proposed for the six – year period:

1st 3 Years 2nd 3 Years

Personal Services 80.0% 75.0%

Maintenance and other Operating Expenses 15.0% 15.0%

Capital Outlays 5.0% 10.0% 2.1.9 The above budget disaggregation will serve to guide the allocation of annual

expenditures during the reform period, thus preventing the concentration of additionally-generated resources for increased Personal Services, but instead spread the same over the three expense classes to take care of the budgetary requirements for salary and personnel benefit increases, maintenance and other operating requirements and capital outlays.



3 PROPOSED ANNUAL EXPENDITURE

ESTIMATES CYS 2006 - 2011 1 ASSUMPTIONS 1.1 Base year 1.1.1 CY 2006 shall be considered as Year 1 or the initial year of budget reform

implementation. Thus, CY 2005 will represent the current year and will considered as the base year for purposes of estimating the ensuing 6-year requirements. However, in the absence of a Judiciary – approved budget and the CY 2005 General Appropriations Act (GAA), we shall consider the proposed Judiciary expenditures under the CY 2005 National Expenditures Program as basis for the computation of the recurring current year expenditures. For this design report and computation purposes, the summary of these Judiciary expenditures for CY 2005 are presented hereunder:

TABLE 4

Judiciary Proposed Expenditures CY 2005 National Expenditures Program

(in thousand PhP)

AGENCIES PS MOOE CO TOTAL

SCP/LCs 6,303,073 837,342 3,026 7,143,441

PET 37,897 11,971 132 50,000

Sandiganbayan 93,860 27,541 82,793 204,194

CA 437,182 106,879 2,527 546,588

CTA 32,784 16,599 11,600 60,983

TOTAL BUDGET 6,904,796 1,000,332 100,078 8,005,206



1.2 Judiciary Strategic Plans, APJR Programs and Priorities for the Medium-Term

1.2.1 The annual strategic plans, programs and priorities for the plan period (2006 – 2011)

contains the following programs and priorities inclusive of those contained in the Action Program for Judicial Reform (APJR) and the reform proposals of the ADB TA 3693 STRENGTHENING THE INDEPENDENCE AND DEFINING THE ACCOUNTABILITY OF THE JUDICIARY:

ACTION PROGRAM FOR JUDICIAL REFORM

a. Locally – funded Projects

b. GOP Peso-Counterpart of Foreign-assisted Projects

ADB TA 3693 REFORM PROPOSALS

a. Creation of new offices and required positions to implement the reforms

b. Improvement in compensation and personnel benefits of judicial personnel

c. Improvement in compensation and personnel benefits of non-judicial personnel based on specific personnel administration reform proposal and legislation

d. Provision of standard MOOE and equipment requirements for the offices to be created.

BUDGET ASSUMPTIONS

a. The various budgetary requirements for personal services, maintenance and other operating expenses and capital outlays shall be within the annual estimated revenues for the plan period, which for purposes of this medium-term expenditure projection will be at the average level.

b. Revenue generation efforts will be maximized and optimized to enable the generation of the projected estimated revenues. However, in case revenue and cash shortfalls occur, mechanisms which have been set-up in the proposed budgeting system shall be implemented during budget execution to ensure that obligations and disbursements will be made only with cash back-up.

c. In case the total estimated revenues cannot fully support the budgetary requirements of the approved annual plans, programs and priorities, the implementation pace of the reform proposals as recommended by concerned consultants will be adjusted to supportable levels but shall ensure completion of said reform proposals within the plan period. Budgetary allocation among the approved plans, programs and priorities shall be prioritized as follows:

c.1 GOP peso-counterpart requirements of APJR

c.2 Budgetary requirements for creation of new offices and positions, and improvements in compensation of judicial and non-judicial personnel, and



their corresponding personnel benefits. In this regard, budgetary requirements for impact mitigation of personnel to be adversely affected by reorganization/ restructuring is also a priority.

c.3 Budgetary requirements for maintenance and other operating expenses of offices to be created and lower courts

c.4 Provision of standard basic equipment to offices to be created and to court branches and court stations

c.5 APJR budgetary requirements of locally-funded projects

1.3 Specific budget assumptions PERSONAL SERVICES 1.3.1 The medium-term expenditure program estimates for personnel services are based

on the following assumptions:

a. The staffing pattern of the court stations, special courts and appellate courts and the attached agencies (JBC and PhilJA) will be maintained at present levels. At the Supreme Court Proper, however, the Office of the Court Administrator (OCA) and the Financial Management and Budget Office (FMBO) will be abolished. In place of these two (2) offices, the Central Court Administrator Office (CCAO) and the Central Financial Management Office will be created. At the regional level, the Regional Court Administrator Office will be created in each of the identified nineteen (19) regional decentralized units.

b. The corresponding personal services requirements of new offices shall be

computed based on the new positions to be created and their authorized salary grade and basic monthly salary. On the other hand, personnel benefits shall be computed based on the ratio and proportion of salaries and personnel benefits to the total personal services budget in CY 2002. The resulting percentage share of personnel benefits to authorized salaries shall be applied to the total authorized salaries of the offices to be created. (Refer to the section on Staffing of this detailed design report for the computation of the personal services requirements of the offices proposed to be created.)

c. The realization of savings in personal services and maintenance and other

operating expenses is assumed from the abolition of the two (2) offices in the Supreme Court, and the creation of the CCAO, CFMO and RCAOs. Savings shall be computed based on authorized salaries under the CY 2002 budget of the Supreme Court and Lower Courts. (Computation of savings is presented in Annex 1).

d. Improvement in compensation and personnel benefits of judicial personnel will

have as beneficiaries all personnel holding positions whose functions involve the direct performance or rendition of adjudication services such as judges and justices, and will not reckon with mere qualifications. (Refer to the section on Judicial Remuneration of this detailed design report.



e. Improvement in compensation and personnel benefits of non-judicial personnel

will be a two-tiered process. Non-judicial personnel performing adjudication support functions will be provided with improved compensation based on the proposed broad banding similar to the mode adopted for judicial personnel. (See Personnel Management section of this detailed design report). The implementation of improved levels of compensation for the rest of the non-judicial personnel will be subject to legislation. On the other hand, provision of additional or increased personnel benefits to all non-judicial personnel will also be subject to legislation, as well as , Judiciary action. In both cases, a lump sum amount shall be provided to cover the prospective requirements. The amount provided is not based on any formula but mere estimate.

f. Budgetary provisions for terminal leave and pensions will assume a 10 percent

increase over the CY 2005 level, and every year thereafter. Inflation is assumed to grow annually at 5 per cent from year 1 to year 6.

MAINTENANCE AND OTHER OPERATING EXPENSIES (MOOE) 1.3.2 Medium-term estimates for MOOE are based on the following assumptions;

a. Maintenance and other operating expenses will be provided for new offices and

court stations. This will be computed at 20 percent of the computed PS requirements as presented in the proposed staffing pattern. The same percentage shall be applied to the PS appropriation of lower courts under the CY 2002 General Appropriations Act (GAA) to derive the MOOE requirement of the lower courts. The 20 per cent MOOE allocation of these courts under this reform proposal shall exclude the proposed MOOE allocations under the CY 2005 National Expenditure Program (NEP). The rest of the agencies/offices not subjected to restructuring will maintain their respective NG proposed expenditure levels under the CY 2005 NEP.

CAPITAL OUTLAYS (CO) 1.3.3 Medium term estimates on CO were derived based on the following assumptions:

a. Except for the offices to be created and the lower courts, and the built-in requirements of programs and projects lined-up in the Strategic Plan programs and priorities, there will be no capital outlay provision under the plan period. Whatever capital outlays shall be provided will be in accordance with actual needs and criteria to be developed for the purpose. (See Physical Assets Management section of this detailed design report.)

b. Budgetary requirements of programs and projects included under the APJR

that will be provided in the medium-term expenditure program will be limited to the requirements of locally-funded projects and GOP peso-counterparts. Budgetary requirements for loan and grant proceeds were not included since these will be provided by financial institutions concerned through the national government. The amounts provided for each year of the plan period will reconcile with the annual program requirements as presented in the APJR.



2 MEDIUM-TERM ESTIMATES (2006-2011)

2.1.1 The translation of the proposed plans, programs and priorities for the Strategic Plan for CY 2006 - 2011 includes the following budgetary requirements. These will be presented under the enhancement level of budgetary requirements of the Judiciary for the plan period covered.

TABLE 5

STRATEGIC PLAN BUDGETARY REQUIREMENTS CY 2006 – 2011

(in thousand PhP)

BUDGETARY REQUIREMENTS PS MOOE CO TOTAL

ENHANCEMENT LEVEL:

1. Staffing of new offices: - Salaries of new positions - Personnel Benefits - Impact Mitigation

200,656 50,164 89,178

200,656 50,164 89,178

2. Increase in compensation: - Judicial personnel Salary adjustment Variable Pay Fund - Non-judicial personnel - Fund for Legislated Compensation

Increases of Non-Judicial personnel

543,976 133,224 162,500

500,000

543.976 133,224 162,500

500,000

3. Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel

562,921 132,551

562,921 132,551

4. Maintenance and other operating expenses: - New offices - Lower Courts - PHILJA Training Expenses

45,848 931,027

17,989

45,848 931,027

17,989

5. Equipment requirements: - New offices - Lower Courts

110,119 2,606,610

110,119 2,606,610

6. APJR Budgetary requirements: - Locally-funded projects - GOP Peso-counterpart

2,046,052

960,460

2,046,052

960,460

7. Infrastructure Program Budgetary requirements: - Renovation and refurbishing - New Construction (HOJ)

1,506,690 12,332,412

1,506,690 12,332,412

TOTAL, ENHANCEMENT LEVEL CY 2006 – 2011 2,375,170 994,864 19,562,343 22,932,377

2.1.2 Given the total budgetary requirements under the enhancement level, the next step

is to allocate the various budgetary requirements among the six years of the plan period (according to the ranking of these priorities as decided upon by top-level officials during strategic planning workshops conducted for the purpose) to enable the Judiciary to attain its goals, objectives priorities and performance targets. Without the benefit of such priority ranking as basis for allocation, it would be



advisable to venture on such priority ranking by taking into consideration the various issues and concerns observed in diagnostics exercises and dialogues.

2.1.3 Moreover, given the total budgetary requirements of more than P22.9B, and the

current level of resources available to the Judiciary, it would be rational to decide on staggered implementation of the various reform proposals as recommended by concerned consultants. The determination of the implementation pace will consider the need for the reform and the availability of resources, and the degree of certainty of collection of revenue estimates.

2.1.4 The increase in personal services and maintenance and other operating expenses

arising from the creation of new offices and positions will have to be provided in year 1. The provision of an Impact Mitigation Fund to shoulder terminal leave, retirement gratuity and other benefit requirements of personnel who will be adversely affected by reorganization will be provided in Year 1 since only eleven (11) months has been provided for employees to decide on whether to apply for the newly created positions in the new offices or to retire.

2.1.5 The pace of implementation of the improvement in compensation and personnel

benefits of both judicial and non-judicial personnel was staggered for three years as proposed, except for the lump sum funds provided for any legislated compensation and/or personnel benefit increases for non-judicial personnel.

2.1.6 Provision of the MOOE requirements of newly created offices will be provided in year

1 while the increased provision for lower courts was likewise staggered for three years.

2.1.7 The same principle was adopted in the programming of equipment requirements.

Requirements of new offices will be provided in year 1, while those of lower courts was staggered for 3 years.

2.1.8 The annual budgetary provision for the APJR faithfully complied with the earlier

computed annual requirements of locally-funded projects and the required GOP peso-counterparts of foreign-assisted projects (both for loans and grants).

2.1.9 Programming of the Budgetary Requirements under the Enhancement Level during

the 6-year plan period is presented as follows:



TABLE 6 Computation of Budgetary Requirements

Enhancement Level, CYs 2006 – 2011 (Option 1) (in thousand PhP)

PARTICULARS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 TOTAL

1. Increase in PS due to creation of offices and positions 250,820 0 0 0 0 0 250,820

2 Impact mitigation for personnel affected by restructuring/

reorganization

89,178 0 0 0 0 0 89,178

3 Improvement in compensation: - Judicial personnel Salary adjustment Variable Pay Fund - Non-judicial personnel - Fund for legislated

compensation Increases of Non-judicial personnel

181,326 44,408

54,251 125,000

181,325 44,408

54,251 125,000

181,325 44,408

54,251 125,000

0 0

0 125,000

0 0

0 0

0 0

0 0

543,976 133,224

162,753 500,000

4. Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel - Lump sum Fund for non-

judicial personnel

187,640 10,850

25,000

187,640 10,850

25,000

187,641 10,851

25,000

0 0

25,000

0 0

0

0 0

0

562,921 32,551

100,000

5. Requirements for MOOE: - New offices - Lower courts - PHILJA requirements for

training expenses

45,848 310,342 2,780

0 310,342

2,754

0 310,343

2,754

0 0 2,754

0 0 3,980

0 0 2,967

45,848 931,027 17,989

6. Requirements for equipment: - New offices - Lower courts

110,119 868,870

0 868,870

0 868,870

0 0

0 0

0 0

110,119 2,606,610

7. Budgetary Requirements of APJR: - Locally-funded projects - GOP Peso-counterparts

8,613 55,522

427,311 307,754

393,765 144,385

399,617 126,636

406,070 68,628

410,.677 57,536

2,046,053 760,461

8. Infrastructure Program Budget Requirements: - Renovation/Refurb - New HOJ Const.

502,230 2,222,069

502,230 2,222,069

502,230 2,222,069

0 2,222,069

0

2,222,068

0

2,222,068

1,506,690 13,332.412

Total Enhancement Level Budgetary Requirements 5,094, 866 5,279,804 5,062,892 2,901,076 2,700,746 2,693,248 23,732,632

Savings due to abolished and of unfilled positions 1,059 0 0 0 0 0 1,059

3 ANNUAL ESTIMATES 3.1 CY 2006 3.1.1 As previously discussed, the CY 2005 proposed expenditures of the Judiciary under

the CY 2005 NEP shall be the starting point for the calculation of the CY 2006 minimum level or baseline budget of the Judiciary. For the determination of its recurring expenses for the year, these expenditures shall net out expenses which are considered as non-recurring such terminal leave and pensions, as well as, provisions



for capital outlays. Savings due to abolished and unfilled/vacant positions will be deducted from the amount computed as recurring expenses. This consists of personal services and MOOE resulting from the proposed reorganization/ restructuring. Table 7 reflects such computation.

TABLE 7 Computation of the CY 2006 Minimum or Baseline Budget Level

(in thousand PhP)

PARTICULARS PS MOOE CO TOTAL

CY 2005 Budget per NEP as CY 2005 recurring expenditures

6,904,796 1,000,332 100,078 8,005,206

Less: Non-Recurring Expenses: - Terminal Leave - Pensions - Capital Outlays

221,450 334,194

100,078

221,450 334,194 100,078

CY 2006 Recurring Expenses 6,349,152 1,000,332 0 7,349,484

Less: Computed Savings due to abolished and unfilled positions

1,040,859 17,672 0 1,040,859

CY 2006 MINIMUM LEVEL 5,308,293 982,660 0 6,290,953

3.1.2 The next step is to compute the CY 2006 current level expenditure requirements.

This involves the provision of adjustments in the CY 2006 minimum level of expenditures for terminal leave and pensions for retiring employees/officials in CY 2006 and increase in the price of maintenance and other operating expenses due to inflation (5%).

TABLE 8 Computation of the CY 2006 Current Level Expenditure Requirements

(in thousand PhP)


CY 2006 Minimum Level 5,308,293 982,660 0 6,290,953

Add: Adjustments: - Terminal Leave - Pensions - 5% increase for Inflation

243,595 367,713

49,133

243,595 367,713

49,133

CY 2006 Current Level 5,919,601 1,031,793 0 6,951,394

3.1.3 The current level of expenditure requirements will then be adjusted for budgetary

requirements classified under the Enhancement Level. These will consist of the budgetary requirements of proposed reforms under the ADB TA No. 3693 inclusive of the creation of new offices and abolition/restructuring of some existing offices, improvements



in the compensation and personnel benefits of both judicial and non-judicial personnel, the provision of increased budgetary levels for maintenance and other operating expenses and equipment for new offices and lower courts, provisions for the Action Program for Judicial Reform and infrastructure program requirements of Judicial Regions with unorganized courts. Table 9 presents the CY 2006 expenditure requirements under the enhancement level.

TABLE 9

Computation of CY 2006 Enhancement Level Expenditure Requirements (in thousand PhP)


1 Increase in PS due to creation of offices and positions 250,820 250,820

2 Impact mitigation for personnel affected by restructuring 89,178 89,178

3 Improvement in compensation: - Judicial personnel : Salary Adjustment Variable Pay - Non-judicial personnel : Salary Adjustment Fund for legislated compensation increases

181,326 44,408

54,251

125,000

181,326 44,408

54,251

125,000

4 Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel : Lump sum Fund for any other increases

187,640

10,850 25,000

187,640

10,850 25,000

5 Requirements for MOOE: - New offices - Lower courts - PHILJA training expenses

45,848

310,342 2,780

45,848 310,342

2,780

6 Requirements for equipment: - New offices - Lower courts

110,119 868,870

110,119

868,870

7 Budgetary Requirements of APJR: - Locally-funded projects - GOP Peso-counterparts

8,613

55,522

8,613 55,522

8. Infrastructure Program requirements - Renovation,refurbishings - New Construction (HOJ)

502,230

2,222,069

502,230

2,222,069

CY 2006 Enhancement Level 968,473 358,970 3,767,423 5,094,866

3.1.4 The next step is to add the estimated expenditure requirements for each of the three

alternative levels (See Table 10) and compare and reconcile the total for personal services, maintenance and other operating expenses, and capital outlays with the target budget allocations of the projected revenues for the same period (See Table 12). For purposes of this exercise, the projections of annual revenue estimates for the six – year plan period are contained in Table 11.. (Refer to Revenue Management section of this detailed design report for discussion of computation, etc.)



TABLE 10 Computation of CY 2006 Expenditure Estimates

(in thousand PhP)


CY 2006 Current Level 5,919,601 1,031,793 0 6,951,394

CY 2006 Enhancement Level 968,473 358,970 3,767,423 5,094,866

CY 2006 Expenditure Estimates 6,888,074 1,390,763 3,767,423 12,046,260

Percentage Share 57.18 11.55 31.27 100.00

Table 11 REVENUE ESTIMATES, CY 2006 – 2011

(in thousand PhP)

LEVEL OF COLLECTION CERTAINLY

2006 2007 2008 2009 2010 2011

Minimum Level 13,457,342 14,062,924 14,695,754 15,357,058 16,048,126 16,770,292

Average Level 15,163,369 15,845,720 16,558,780 17,303,924 18,082,599 18,896,319

Maximum Level

20,221,575 21,131,553 22,082,473 23,076,183 24,114,608 25,199,768

TABLE 12 Reconciliation of CY 2006 Expenditure Estimates with CY 2006 Revenue Estimates

EXPENSE CLASS CY 2006 TARGET BUDGET ALLOCATION

EST. REQUIRED EXPENDITURE DIFFERENCE

Personal Services-80% 12,130,695 6,888,074 5,242,621

MOOE – 10% 1,516,337 1,390,763 125,574

CO – 10% 1,516,337 3,767,423 (2,251,086)

TOTAL BUDGET-100% 15,163,369 12,046,260 3,117,109

3.1.5 The target expense class allocations shall be used as allocation limits in the

calculation of the annual expenditure estimates for the six – year annual expenditure program. Said estimation shall be made at three alternative levels, namely; minimum or baseline budget level, current level and enhancement or capacity building level, each level of which has been described at earlier discussions of the detailed design report. For purposes of these tabular illustrations, the revenue estimates under average level has been used.

3.1.6 In case target budget allocations exceed the estimated expenditure requirements in

any expense class, the excess shall either be applied to the budgetary requirements of the other expense classes in the order of PS to MOOE to CO, or provided as reserves to buffer potential cash shortfalls. On the other hand, if projected revenue



estimates are not sufficient to cover the estimated expenditure requirements of each expense class, reconciliation of the revenue estimates and expenditure estimates shall be made through an iteration process with the use of prioritization criteria to be developed by CFMO. In such case, the revenue estimates may be projected upwards depending on the probability of collection certainty, or expenditure requirements will be prioritized in order to eliminate or drop those budgetary requirements with lower priority.

3.1.7 Any deviations between target budget allocations and estimated expenditure

requirements shall be reconciled. The final calculated estimates shall be inputted into the six – year expenditure program as the Year 1 or CY 2006 annual expenditures estimate. In the example above, the total projected revenue estimates exceed estimated expenditure requirements for the year by more than P3.1B. This may be attributed to the huge savings realized from the abolition of the OCA and FMBO in the Supreme Court and savings from unfilled/vacant positions that will no longer be filled up, and from some minimal amount of MOOE. However, expenditure requirements for capital outlays exceed their corresponding target budget allocations for the year by about P2.2B. In this specific case, the excess allocations for PS and MOOE shall be applied to cover the unfunded expenditure requirements of Capital Outlays. The net positive difference between target allocation of revenue estimates and expenditure estimates may further be utilized for either of the following: 1) to revise the pace of implementation of some of the budgetary items under the enhancement level, or 2) as a reserve for uncollected revenues and for other contingencies. (See Tables13 and 14).

TABLE 13

Revised CY 2006 Enhancement Level Expenditure Requirements (in thousand PhP)



2 Impact mitigation for personnel affected by restructuring 89,178

89,178

3 Improvement in compensation: - Judicial personnel : Salary Adjustment Variable pay - Non-judicial personnel : Salary Adjustment Fund for legislated compensation increases

181,326 44,408

54,251

125,000

181,326 44,408

54,251

125,000

4 Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel - Lump sum Fund for any other increases

187,640

10,850 25,000

187,640

10,850 25,000

5 Requirements for MOOE: - New offices - Lower courts - PHILJA requirements for training expenses

45.848 310,342 2,780

45,848 310,342

2,780


110,119

868,870

110,119 868,870





8,613

55,522

8,613

55,522

8. Infrastructure Program requirements - Renovation and refurbishings - New Construction (HOJ)

502,230

2,222,069

502,230

2,222,069

9. Reserve for Contingencies 3,117,109 3,117,109

Revised CY 2006 Enhancement Level 968,473 358,970 6,884,532 8,211,975

TABLE 14 Computation of Revised CY 2006 Expenditure Estimates


CY 2006 Current Level 5,919,601 1,031,793 0 6,951,394

Revised CY 2006 Enhancement Level

968,473 358,970 6,884,532 8,211,975

CY 2006 Expenditure Estimates, as revised

6,888,074 1,390,763 6,884,532 15,163,369


3.1.8 Table 15 presents the revised budgetary requirements under the enhancement level

for CYs 2006 – 2011 which improves the pace of implementation of improvements in compensation and personnel benefits for judicial and non-judicial personnel and MOOE provisions for lower courts. Table 16, on the other hand, presents the revised budgetary requirements under the enhancement level for CY 2006.

TABLE 15 Computation of Budgetary Requirements

Enhancement Level, CYs 2006 – 2011, Option 2 (in thousand PhP)


1. Increase in PS due to creation of offices and positions

250,820 0 0 0 0 0 250,820

2 Impact mitigation for personnel affected by restructuring/

reorganization

89,178 0 0 0 0 0 89,178

3 Improvement in compensation: - Judicial personnel Salary adjustment Variable pay - Non-judicial

personnel - Fund for

legislated compensation

271,988 66,612

81,377

250,000

271,988 66,612

81,376

250,000

0 0

0

0

0 0

0

0

0 0

0

0

0 0

0

0

543,976 133,224

162,753

500,000




4. Improvement in personnel benefits:

- Judicial personnel - Non-judicial

personnel - Lump sum Fund

for non-judicial personnel

281,461

16,276

50,000

281,460

16,275

50,000

0

0

0

0

0

0

0

0

0

0

0

0

562,921

32,551

100,000

5. Requirements for MOOE: - New offices - Lower courts - PHILJA

requirements for training expenses

45,848 465,514 2,780

0 465,513

2,754

0 0

2,754

0 0 2,754

0 0 3,980

0 0 2,967

45,848 931,027 17,989

6. Requirements for equipment: - New offices - Lower courts

110,119 868,870

0 868,870

0 868,870

0 0

0 0

0 0

110,119 2,606,610

7. Budgetary Requirements of APJR: - Locally-funded

projects - GOP Peso-

counterparts

8,613

55,522

427,311

307,754

393,765 144,385

399,617

126,636

406,070

68,628

410,.677

57,536

2,046,053

760,461

8. Infrastructure Program Budget Requirements:

- Renovation /Refurb

- New HOJ Const.

502,230

2,222,069

502,230

2,222,069

502,230

2,222,069

0

2,222,069

0

2,222,068

0

2,222,068

1,506,690

13,332.412

Total Enhancement Level Budgetary Rqmts 5,639,277 5,814, 212 4,134,073 2,751,076 2,700,746 2,693,248 23,732,632

Savings due to abolished and of unfilled positions 1,059 0 0 0 0 0 1,059

TABLE 16 CY 2006 Enhancement Level Expenditure Requirements, (Option 2)

(in thousand PhP)



2 Impact mitigation for personnel affected by restructuring 89,178

89,178

3 Improvement in compensation: - Judicial personnel : Salary Adjustment Variable pay - Non-judicial personnel : Salary Adjustment Fund for legislated compensation increases

271,988 66,612

81,377

250,000

271,988 66,612

81,377

250,000

4 Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel - Lump sum Fund for any other increases

281,461

16,276 50,000

281,461

16,276 50,000




5 Requirements for MOOE: - New offices - Lower courts - PHILJA requirements for training expenses

45.848 465,514 2,780

45,848 465,514

2,780


110,119

868,870

110,119 868,870


8,613

55,522

8,613

55,522

9. Infrastructure Program requirements - Renovation and refurbishings - New Construction (HOJ)

502,230

2,222,069

502,230

2,222,069

10.Reserve for Contingencies 2,572,698 2,572,698

Revised CY 2006 Enhancement Level 1,357,712 514,142 6,340,121 8,211,975

3.1.9 It will be noted from Table 17, that Personal Services has an increased percentage

share in total expenditure requirements as a result of the implementation of option 2. However, both options have not realized the target budget allocations among the three expense classes. This may be primarily attributed to the huge increase in revenue estimates to be used as the budget base which is almost twice the budget level in CY 2005.

TABLE 17 Computation of Revised CY 2006 Expenditure Estimates (Option 2)


CY 2006 Current Level 5,919,601 1,031,793 0 6,951,394


1,357,712 514,142 6,340,121 8,211,975


7,277,313 1,545,935 6,340,121 15,163,369




3.2 CY 2007 3.2.1 The estimated revenues for CY 2007 under the average level is Ph 15,845,720,000.

The target budget allocation by expense class based on this revenue estimate is as follows:

TABLE 18

Estimated Revenues for CY 2007

PARTICULARS % SHARE AMOUNT In thous PhP

Personal Services 80 12,676,576

Maintenance & Other Operating Expenses 10 1,584,572

Capital Outlays 10 1,584,572

Total 100 15,845,720

3.2.2 The estimation of Years 2 – 6 annual estimate of expenditures shall follow the same

procedures adopted in the computation of the Year 1 expenditure estimates. Provisions for personal services and maintenance and other operating expenses in year 1 that would recur in year 2 would not be netted out in the computation of the CY 2007 minimum or baseline budget level. The following tables present the computation of CY 2007 expenditure requirements under the three budget levels utilizing option 2.

TABLE 19

Computation of CY 2007 Minimum Level Expenditure Requirements (in thousand PhP)


CY 2006 total budget 7,277,313 1,545,935 6,340,121 15,163,369

Less: Non-recurring expenditures: Terminal Leave Pensions Lump sum for Impact Mitigation PHILJA Training Expenses Provision for Equipment: New offices Lower courts APJR budget requirements Locally-funded project GOP counterparts Infrastructure Program requirements Renovation and refurbishings New Construction (H)J) Reserve for Contingencies

243,595 367,713

89,178

2,780

110,119 868,870

8,613 55,522

502,230 2,222,069

2,572,698

243,595 367,713

89,178 2,780

110,119 868,870

8,613 55,522

502,230 2,222,069

2,572,698

CY 2007 Minimum Level 6,576,827 1,543,155 0 8,119,982



TABLE 20 Computation of CY 2007 Current Level Expenditure Requirements

(in thousand PhP)

Particulars PS MOOE CO Total

CY 2007 Minimum Level 6,576,827 1,543,155 0 8,119,982

Add: Adjustments: - Terminal Leave (10%

increase) - Pensions (10% increase) - Provision for Inflation (5%)

267,955 404,484

77,158

267,955 404,484

77,158

CY 2007 Current Level 7,249,266 1,620,313 0 8,869,579

TABLE 21 Computation of CY 2007 Enhancement Level Expenditure Requirements

(in thousand PhP)


1. Improvement in compensation: - Judicial personnel : Salary Adjustments Variable pay - Non-judicial personnel : Salary Adjustment - Fund for legislated compensation increases

271,988 66,612

81,376 250,000

271,988 66,612

81,376 250,000

2. Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel Fund for any other increases

281,460

16,275 50,000

281,460

16,275 50,000

3. Requirements for MOOE: - Lower courts - PHILJA requirements for training expenses

465,513

2,754

465,513

2,754

4. Requirements for equipment: - Lower courts

868,870

868,870


427,311

307,754

427,311 307,754

6. Infrastructure Program requirements: - Renovation and refurbishings - New Construction (HOJ)

502,230

2,222,069

502,230

2,222,069

CY 2007 Enhancement Level 1,017,711 468,267 4,328,234 5,814,212




(in thousand PhP)


CY 2007 Current Level 7,249,266 1,620,313 0 8,869,579

CY 2007 Enhancement Level 1,017,711 468,267 4,328,234 5,814,212

CY 2007 Expenditure Estimate

8,266,977 2,088,580 4,328,234 14,683,791



EXPENSE CLASS CY 2007 TARGET

BUDGET ALLOCATION

EST. REQUIRED EXPENDITURES DIFFERENCE

Personal Services-80% 12,676,576 8,266,977 4,409,599

MOOE – 10% 1,584,572 2,088,580 (504,,008)

CO – 10% 1,584,572 4,328,234 (2,743,662)

TOTAL BUDGET-100% 15,845,720 14,683,791 1,161,929

TABLE 24 Revised CY 2007 Enhancement Level Expenditure Requirements

(in thousand PhP)


1. Improvement in compensation: - Judicial personnel : Salary Adjustments Variable pay - Non-judicial personnel : Salary Adjustment - Fund for legislated compensation increases

271,988 66,612

81,376 250,000

271,988 66,612

81,376 250,000

2. Improvement in personnel benefits: - Judicial personnel - Non-judicial personnel Fund for any other increases

281,460

16,275 50,000

281,460

16,275 50,000

3. Requirements for MOOE: - Lower courts - PHILJA requirements for training expenses

465,513

2,754

465,513

2,754


868,870

868,870


427,311

307,754

427,311 307,754




6. Infrastructure Program requirements: - Renovation and refurbishings - New Construction (HOJ)

502,230 2,222,069

502,230

2,222,069



TABLE 25 Computation of Revised CY 2007 Expenditure Estimates (1st Iteration)


CY 2007 Current Level 7,249,266 1,620,313 0 8,869,579


CY 2007 Expenditure Estimates, as revised 8,266,977 2,088,580 5,490,163 15,845,720


3.3 CY 2008 3.3.1 The following tables present the computation of the expenditure requirements of CY

2008 in accordance with procedures adopted in the computation of CY 2006 expenditure requirements using option 2 of the enhancement level expenditure requirements.

TABLE 26

Computation of CY 2008 Minimum Level Expenditure Requirements (in thousand PhP)


CY 2007 total budget 8,266,977 2,088,580 5,490,163 15,845,720

Less: Non-recurring expenditures: - Terminal Leave - Pensions - PHILJA Training Exp - Capital Outlays Provisions

267,955 404,484

2,754

5,490,163

267,955 404,484

2,754

5,490,163

CY 2008 Minimum Level 7,594,538 2,085,826 0 9,680,364




(in thousand PhP)


CY 2008 Minimum Level 7,594,538 2,085,826 0 9,680,364

Add: Adjustments: - Terminal Leave (10%

increase) - Pensions (10% inc.) - Provision for inflation (5%)

294,750 444,932

104,291

294,750 444,932

104,291

CY 2008 Current Level 8,334,220 2,190,117 0 10,524,337


(in thousand PhP)


1. Requirements for MOOE: - Lower courts - PHILJA requirements for

training expenses

0

2,754

0

2,754


868,870

868,870


393,765 144,385

393,765 144,385

9. Infrastructure Program Requirements:

- Renovation/Refurbishings - New Construction )

502,230 2,222,069

502,230 2,222,069

CY 2008 8nhancement Level 0 2,754 4,131,319 4,134,073


(in thousand PhP)


CY 2008 Current Level 8,334,220 2,190,117 0 10,524,337

CY 2008 Enhancement Level

0

2,754 4,131,319 4,134,073

CY 2008 Expenditure Estimates

8,334,220 2,192,871 4,131,319 14,658,410




TABLE 30 Reconciliation of CY 2008 EXPENDITURE Estimates with CY 2008 Revenue Estimates

(in thousand PhP)


BUDGET ALLOCATION

ESTIMATED EXPENDITURES DIFFERENCE

Personal Expenses – 80% 13,247,024 8,334,220 4,912,804

Maintenance & Other Operating Expenses – 10% 1,655,878 2,192,871 (536,993)

Capital Outlays – 10% 1,655,878 4,131,319 (2,475,441)

TOTAL Budget – 100% 16,558,780 14,658,410 1,900,370


(in thousand PhP)


1. Requirements for MOOE: - PHILJA requirements for training expenses

2,754

2,754


868,870

868,870


393,765

144,385

393,765

144,385

4. Infrastructure Program Requirements - Renovation and refurbishings - New Construction (HOJ)

502,230

2,222,069

502,230 2,222,069


CY 2008 Enhancement Level, as revised 0 2,754 6,031,689 6,034,443



CY 2008 Current Level 8,334,220 2,190,117 0 10,524,337

Revised CY 2008 Enhancement Level 0 2,754 6,031,689 6,034,443

CY 2008 Expenditure Estimates, as revised 8,334,220 2,192,871 6,031,689 16,558,780




3.4 CY 2009 3.4.1 The computation of CY 2009 expenditure estimates is presented in Tables 33 – 39.

TABLE 33 Computation of CY 2009 Minimum Level Expenditure Requirements

(in thousand PhP)


CY 2008 total budget 8,334,220 2,192,871 6,031,689 16,558,780

Less: Non-recurring expenditures: - Terminal Leave - Pensions - PHILJA Training Exp - Capital Outlays Provisions

294,750 444,932

2,754

6,031,689

294,750 444,932

2,754 6,031,689

CY 2009 Minimum Level 7,594,538 2,190,117 0 9,784,655


(in thousand PhP)


CY 2009 Minimum Level 7,594,538 2,190,117 0 9,784,655

Add: Adjustments: Terminal Leave (10% increase) Pensions (10% inc.) Provision for inflation (5%)

324,225 489,425

109,506

324,225 489,425 109,506

CY 2009 Current Level 8,408,188 2,299,623 0 10,707,811


(in thousand PhP)


1. Requirements for MOOE: - PHILJA requirements for

training expenses

2,754

2,754


399,617 126,636

399,617 126,636

3. Infrastructure Program Requirements

- Renovation and refurbishings - New Construction (HOJ)

0 2,222,069

0 2,222,069

CY 2009 Enhancement Level 0 2,754 2,748,322 2,751,076




(in thousand PhP)


CY 2009 Current Level 8,408,188 2,299,623 0 10,707,811





(in thousand PhP)

EXPENSE CLASS CY 2009 TARGET BUDGET

ALLOCATION



Maintenance & Other Operating Expenses – 15% 2,595,589 2,302,377 293,212

Capital Outlays – 10% 1,730,392 2,748,322 (1,017,930)

TOTAL Budget – 100% 17,303,924 13,458,887 3,845,037


(in thousand PhP)



training expenses

2,754

2,754


399,617 126,636

399,617 126,636

3. Infrastructure Program Requirements - Renovation and

refurbishings - New Construction (HOJ)

0 2,222,069

0 2,222,069


CY 2009 Enhancement Level, as revised

0 2,754 6,593,359 6,596,113



Table 39 Computation of Revised CY 2009 Expenditure Estimates (1st Iteration)


CY 2009 Current Level 8,408,188 2,299,623 0 10,707,811


0 2,754 6,593,359 6,596,113


8,408,188 2,302,377 6,593,359 17,303,924


3.5 CY 2010 3.5.1 Tables 40 – 46 present the computation of CY 2010 expenditure estimates.



CY 2009 total budget 8,408,188 2,302,377 6,593,359 17,303,924

Less: Non-recurring expenditures: - Terminal Leave - Pensions - PHILJA Trng Exp - Capital Outlays

324,225 489,425

2,754

6,593,359

324,225 489,425

2,754 6,593,359

CY 2010 Minimum Level 7,594,538 2,299,623 0 9,894,161

Table 41 Computation of CY 2010 Current Level Expenditure Requirements

(in thousand PhP)


CY 2010 Minimum Level 7,594,538 2,299,623 0 9,894,161

Add: Adjustments: Terminal Leave (10%

increase) Pensions (10% inc.) Provision for inflation (5%)

356,648 538,368

114,981

356,648 538,368 114,981

CY 2010 Current Level 8,489,554 2,414,604 0 10,904,158



TABLE 42

Computation of CY 2010 Enhancement Level Expenditure Requirements (in thousand PhP)



training expenses

3,980

3,980


406,070 68,628

406,070 68,628


- Renovation/Refurb - New HOJ Const.

0 2,222,068

0 2,222,068


Table 43 Computation of CY 2010 Expenditure Estimates

(in thousand PhP)


CY 2010 Current Level 8,489,554 2,414,604 0 10,904,158


CY 2010 Expenditure Estimates

8,489,554 2,418,584 2,696,766 13,604,904



(in thousand PhP)

EXPENSE CLASS CY 2010 TARGET BUDGET

ALLOCATION

ESTIMATED EXPENDITURES

DIFFERENCE



Capital Outlays – 10% 1,808,260 2,696,766 (888,506)

TOTAL Budget – 100% 18,082,599 13,604,904 4,477,695




(in thousand PhP)



training expenses

3,980

3,980

2 Budgetary Requirements of APJR: - Locally-funded projects - GOP Peso-counterparts

406,070 68,628

406,070 68,628


- Renovation/Refurb - New Construction (HOJ)

0 2,222,068

0 2,222,068

4 Reserve for Contingencies 4,477,695 4,477,695


0 3,980 7,174,461 7,178,441



CY 2010 Current Level 8,489,554 2,414,604 0 10,904,158


0 3,980 7,174,461 7,178,441


8,489,554 2,418,584 7,174,461 18,082,599


3.6 CY 2011 3.6.1 The computation of the expenditure requirements for CY 2011 are presented in

Tables 47 – 53. It is noted that the change in percentage sharing of the three expense classes during the six year period is very minimal considering that improvements in PS and MOOE were concentrated only in Years 1 and 2 and no additional increases in MOOE except for inflation , were provided in succeeding years. While the increase in capital outlays has also gradually decreased during the six-year period, the level of its expenditure requirements under the enhancement level, however, was sustained by increases in the amounts provided for the reserve for contingencies.





CY 2010 total budget 8,489,554 2,418,584 7,174,461 18,082,599

Less: Non-recurring expenditures: - Terminal Leave - Pensions - PHILJA Training Expenses - Capital Outlays

356,648 538,368

3,980

7,174,461

356,648 538,368

3,980

7,174,461

CY 2011 Minimum Level 7,594,538 2,414,604 0 10,009,142


(in thousand PhP)


CY 2011 Minimum Level 7,594,538 2,414,604 0 10,009,142

Add: Adjustments:

Terminal Leave (10% increase) Pensions (10% inc.) Provision for inflation (5%)

392,313 592,205

120,730

392,313 592,205 120,730

CY 2011 Current Level 8,579,056 2,535,334 0 11,114,390


(in thousand PhP)



training expenses

2,967

2,967


410,677

57,536

410,677

57,536

3. Infrastructure Program Budget Requirements: - New Construction (HOJ)

2,222,068

2,222,068

CY 2011 Enhancement Level 0 2.967 2,690,281 2,693,248



Table 50 Computation of CY 2011 Expenditure Estimates

(in thousand PhP)


CY 2011 Current Level 8,579,056 2,535,334 0 11,114,390

CY 2011 Enhancement Level 0 2.967 2,690,281 2,693,248




(in thousand PhP)


BUDGET ALLOCATION




Capital Outlays – 10% 1,889,632 2,690,281 (800,649)

TOTAL Budget – 100% 18,896,319 13,807,638 5,088,681


(in thousand PhP)



training expenses

2,967

2,967


410,.677 57,536

410,677 57,536

3. Infrastructure Program Budget Requirements: - New Construction (HOJ)

2,222,068

2,222,068



0 2,967 7,778,962 7,781,929




(in thousand PhP)


CY 2011 Current Level 8,579,056 2,535,334 0 11,114,390


0 2,967 7,778,962 7,781,929


8,579,056 2,538,301 7,778,962 18,896,319


3.6.2 The reconciliation process during the six-year period was guided by the principle of

conservatism, principally because improved revenue generation efforts are expected not to firmly take ground in the initial years of reform implementation. Moreover, the national government financial position is projected to stay flat with very minimal improvements, if any. Thus, the calculation of the expenditure requirements under the enhancement level during these years, while having gone into the process of translating reform proposals into annual budgetary requirements, has faithfully and continually provided annually for reserve for contingencies covering projected revenue estimates in excess of computed expenditure requirements to serve as buffer just in case the revenue estimate projections do not materialize.

3.6.3 It is noteworthy mentioning that despite this conservative stance, the implementation

of all the reform proposals is expected to have been completed at the end of the plan period in CY 2011.

3.6.4 Tables 54 present the CY 2006 – 2011 expenditure requirements of the Judiciary by

expense class and by annual percentage growth.. Significant percentage increases were registered only in years 1 and 2 and only for PS and MOOE in year 2 where capital outlays expenditure requirements registered a decrease following a year 1 monumental increase. The succeeding years registered consistently minimal increases for all three expense classes.

3.6.5 Table 55 presents the CY 2006 – 2011 expenditure requirements of the Judiciary

broken down into regular operations and enhancement level requirements. What is observable in this table is the consistent increase in regular operations from CY 2006 to 2011. The enhancement level expenditure requirements, however, displayed a somewhat erratic trend, with decreases in CY 2007 to CY 2009, and increasing in CYs 2010 and 2011.

3.6.6 The hypothetical illustrations presented here are not considered ideal nor even

satisfactory situations, and much is to be desired, particularly in the case of expense class allocations. Any improvements thereon will have to consider the actual revenue situation and the actual needs of the various offices and courts.




Table 54 Proposed Judiciary Six – Year Expenditure Program, CY 2006 - 2011

(in thousand PhP)

AMOUNT ANNUAL GROWTH IN % YEAR

PS MOOE CO TOTAL PS MOOE CO TOTAL

CY 2005 6,904,796 1,000,332 100,078 8,005,206

CY 2006 7,277,313 1,545,935 6,340,121 15,163,369 5.40 54.54 6235.18 89.42

CY 2007 8,266,977 2,088,580 5,490,163 15,845,720 13.60 35.10 (13.41) 4.50

CY 2008 8,334,220 2,192,871 6,031,689 16,558,780 0.81 4.99 9.86 4.50

CY 2009 8,408,188 2,302,377 6,593,359 17,303,924 0.89 4.99 9.31 4.50

CY 2010 8,489,554 2,418,584 7,174,461 18,082,599 0.97 5.04 8.81 4.50

CY 2011 8,579,056 2,538,301 7,778,962 18,896,319 1.05 4.95 8.43 8.42

TABLE 55 Judiciary Expenditure Program for CYs 2006 – 2011

(in thousand PhP)

REGULAR OPERATIONS ENHANCEMENT OR

CAPACITY BUILDING P/P/AS

TOTAL

CY 2006 6,951,394 8,211,975 15,163,369

CY 2007 8,869,579 6,976,141 15,845,720

CY 2008 10,524,337 6,034,443 16,558,780

CY 2009 10,707,811 6,596,113 17,303,924

CY 2010 10,904,158 7,178,441 18,082,599

CY 2011 11,114,390 7,781,929 18,896,319

THE DESIGN TEAM

This design report is the product of the intensive discussions and team work, where individual contribution to the collective effort went far beyond one’s assigned area. Delineation of work blurred as the collective intelligence took over. The design team includes the following: CONSULTING TEAM International Consultants CARL BAAR, Ph.D. (in alphabetical order) RICHARD B. HOFFMAN SANDRA ELLEN OXNER Local Consultants VICKY A. ALINSUG (in alphabetical order) EMMANUEL L. BENITEZ NAZARIO S. CABUQUIT REYNALDO P. CHANG VIOLETA C. ESGUERRA BENJAMIN A.I. ESPIRITU, Ph.D. SALVADOR M. ENRIQUEZ, JR. MYRNA S. FELICIANO, Ph.D. CAROLYN O. MERCADO NARCISA O. SANTOS HECTOR D. SOLIMAN ORLANDO S. ZORILLA Contributing Consultants VIRGILIO A. DOMPOR VIRGINIA ROXAS VIENNA A. DIUCO ROSETTE C. LIBREA JEANETTE LUCIA CARIDAD A. ASENCIO GRETHEL T. LEDESMA Copy Editor REGINA A. SAMSON Project Team Leader SALVADOR M. ENRIQUEZ, JR Co Team Leader VICKY A. ALINSUG SUPPORT GROUP Technical and Administrative GRETHEL T. LEDESMA Support JEANETTE LUCIA CARIDAD A. ASENCIO JONATHAN O. CANILANG PAMELA ABALOS-CARRANZA

MARILYN S. MANAIT

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