COURAGE v. Abad

11/10/24, 2:24 PM G.R. No.
200418
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G.R. No. 200418, November 10, 2020,

♦ Decision, Leonen, [J]
♦ Separate Concurring Opinion, Perlas-Bernabe, [J]
♦ Concurring Opinion, Caguioa, [J]
EN BANC
[ G.R. No. 200418, November 10, 2020 ]
CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES

[COURAGE], REPRESENTED BY ITS NATIONAL PRESIDENT FERDINAND GAITE, SOCIAL WELFARE
EMPLOYEES ASSOCIATION OF THE PHILIPPINES [SWEAP-DSWD], REPRESENTED BY ITS NATIONAL
PRESIDENT RAMON FELIPE E. LOZA, NATIONAL FEDERATION OF EMPLOYEES ASSOCIATIONS IN THE
DEPARTMENT OF AGRICULTURE [NAFEDA], REPRESENTED BY ITS NATIONAL PRESIDENT SANTIAGO Y.
DASMARIÑAS, JR. AND DEPARTMENT OF AGRARIAN REFORM EMPLOYEES ASSOCIATION [DAREA],
REPRESENTED BY ITS NATIONAL PRESIDENT ANTONIA H. PASCUAL, PETITIONERS, VS. FLORENCIO B.
ABAD, IN HIS CAPACITY AS THE SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT
AND CORAZON J. SOLIMAN, IN HER CAPACITY AS SECRETARY OF THE DEPARTMENT OF SOCIAL
WELFARE AND DEVELOPMENT, RESPONDENTS.
DECISION
LEONEN, J.:
The grant of benefits to government employees under collective negotiation agreements is conditioned on all
applicable laws, rules, and regulations, including those issued by the Department of Budget and Management and
the Public Sector Labor-Management Council.
This Court resolves a Petition for Certiorari/Prohibition with Prayer for Issuance of a Temporary Restraining Order
and/or Writ of Preliminary/Mandatory Injunction1 seeking to declare Department of Budget and Management Circular
No. 2011-5 as unconstitutional, and to enjoin Social Welfare and Development Secretary Corazon Soliman
(Secretary Soliman) from enforcing the Circular in her department.
The Circular in question had placed a P25,000.00 ceiling on the amount of the Collective Negotiations Agreement
(CNA) incentive for 2011. The Department of Social Welfare and Development initially authorized the payment of
CNA incentives in two tranches for 2011, totaling P30,000.00. It later issued a January 20, 2012 Memorandum
directing its employees to refund the excess, prompting this Petition's filing.2
Petitioners before this Court pray that upon the filing of the Petition, a temporary restraining order and/or writ of
preliminary injunction be issued enjoining the implementation of Budget Circular No. 2011-5, the January 20, 2012
Memorandum, and other issuances to enforce the Circular. They seek that, after notice and hearing, the Circular, as
with the Memorandum, be declared void for being unconstitutional, contrary to law, or issued with grave abuse of
discretion.3
Among the petitioners is the Social Welfare Employees Association of the Philippines (SWEAP-DSWD) which, on
November 16, 2007, entered into a CNA with the Department of Social Welfare and Development's Management.
This CNA would last for three years or until a new agreement is signed.4 Article XI, Section 1 of the CNA grants a
yearly cash incentive, pursuant to Budget Circular No. 2006-1,5 which states:
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SECTION 1. The DEPARTMENT and the ASSOCIATION shall jointly institute cost-cutting measures to
generate savings for the grant of yearly Collective Negotiation Agreement (C.N.A.) Cash Incentives in
accordance with the provisions of Budget Circular No. 2006-1 dated February 1, 2006. For this
purpose, the parties herein shall work together to generate savings and aim to save at least 10% of its
MOOE from the regular programs/ projects/ activities of the Department.6 (Emphasis supplied)
On September 29, 2011, the Department of Budget and Management issued Circular Letter 2011-9, with subject
"Reminder on the Observance of the Guidelines on the Grant of the Collective Negotiation Agreement (CNA)
Incentive."7 Its Section 3.0 reiterates Budget Circular No. 2006-1 by mentioning the Senate and the House of
Representatives' Joint Resolution No. 4, series of 2009, approving the grant of CNA incentives to both management
and rank-and-file employees:
3.0. Pursuant to item (4)(h)(ii)(aa) of the Senate and House of Representatives Joint Resolution No. 4,
s. 2009, the CNA Incentive may be granted to both management and rank-and-file employees of
agencies with approved and successfully implemented CNAs in recognition of their joint efforts in
accomplishing performance targets at lesser cost, and in attaining more efficient and viable operations
through cost-cutting measures and systems improvement. (Emphasis supplied)
On October 26, 2011, Secretary Soliman issued a Memorandum authorizing the CNA incentive grant of ₱10,000.00,
"to be paid to existing regular, contractual and casual employees" and released not later than October 28, 2011.8 On
December 3, 2011, she issued another Memorandum for a second tranche of CNA incentive, worth ₱20,000.00, to
be released on or before the third week of December 2011.9
On December 26, 2011, the Department of Budget and Management issued the assailed Budget Circular No. 2011-
5, which provides the supplemental policy and procedural guidelines for the grant of CNA incentives.10 Among
others, it set a ₱25,000.00 ceiling on the amount of the CNA incentives for 2011:
3.5 The CNA Incentive for FY 2011 shall be determined based on the amount of savings generated by
an agency following the guidelines herein, but not to exceed P25,000 per qualified employee.
On December 28, 2011, Social Welfare and Development Assistant Secretary Ma. Chona O. David-Casis (Assistant
Secretary David-Casis) issued a Memorandum directing every employee to refund the CNA incentive received in
excess of ₱25,000.00 through salary deductions.11 Subsequently, she issued the assailed January 20, 2012
Memorandum, which directed the employees to refund the ₱5,000.00 received in excess, and to sign the conforme
form consenting to the refund, made through monthly salary deductions of ₱500.00 for 10 months beginning
February 2012.12
Aggrieved, the associations filed this Petition13 on February 21, 2012.
On March 28, 2012, petitioners filed an Urgent Motion for the Issuance of a Temporary Restraining Order/Writ of
Preliminary Injunction (with Compliance to the Resolution dated February 28, 2012).14 They cite cases15 on the
requisites of Rule 58, Section 3 of the Rules of Court for the issuance of a writ of preliminary injunction.16
In the same pleading, petitioners attached a copy of the Commission on Audit's March 14, 2002 Audit Observation
Memorandum, where it had been observed that the ₱35,500.00 worth of CNA incentives paid to employees of the
Protected Areas and Wildlife Bureau exceeded the ₱25,000.00 ceiling amount prescribed in Budget Circular No.
2011-5.17
In his Comment to the Urgent Motion, respondent Secretary Florencio Abad (Secretary Abad) of the Department of
Budget and Management discussed that CNAs create no vested rights, and the grant of 2011 CNA incentives
suffers from irregularities.18 He submits that Budget Circular No. 2011-5 enjoys the presumption of regularity, and
that this did not cause petitioners irreparable injury. 19
Respondent Secretary Soliman manifested that she adopts her Comment to the Petition, which she says has
extensively discussed the grounds to deny the prayer for injunctive relief. She reiterates the irrelevance of the refund
in the attached Audit Memorandum, since the Protected Areas and Wildlife Bureau is not a party to this case.20
This Court noted respondents' respective comments to the Petition21 and the Urgent Motion.22 Petitioners'
Consolidated Reply23 and the parties' respective memoranda24 were likewise noted.
In a February 10, 2015 Resolution,25 this Court included issues to be addressed for a complete resolution of the
case, and the parties filed the required supplemental memoranda.26
The issues for this Court's resolution are the following:
First, whether or not petitioners have legal standing;
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Second, whether or not petitioners violated the doctrine on the hierarchy of courts;
Third, whether or not petitioners availed the proper remedy, considering: (a) the doctrine on exhaustion of
administrative remedies; (b) the requisites for availing the writs of certiorari and prohibition; (c) the requisites when
invoking transcendental interest;
Fourth, whether or not the issuance of Budget Circular No. 2011-5 is within the jurisdiction and authority of
respondent Secretary Abad;
Fifth, whether or not Budget Circular No. 2011-5's provisions limiting the source and amount of the CNA incentive
are contrary to, or improperly amend, Administrative Order No. 135, series of 2005;
Sixth, whether or not Budget Circular No. 2011-5 modifies or nullifies provisions of validly executed CNAs and
violates the constitutional provision on the non-impairment of obligations;
Seventh, whether or not petitioners have a vested right to CNA incentives;
Eighth, whether or not the January 20, 2012 Memorandum directing the refund violates Section 43 of the General
Appropriations Act of 2011, which enumerates the allowed deductions from employees' salaries;
Ninth, whether or not Section 5 of Public Sector Labor-Management Council (PSLMC) Resolution No. 4, series of
2002, as well as subsequent issuances implementing this provision, is unconstitutional for violating Article VI,
Section 25(5) of the Constitution by:
a. authorizing the PSLMC to declare where savings are to be allocated; and/or
b. authorizing government agencies, instrumentalities, and offices other than the President, the Senate
President, the House of Representatives Speaker, the Supreme Court Chief Justice, and the heads of
constitutional commissions, to allocate savings by contract or collective negotiation agreements; and
Tenth, whether or not Section 15 of Executive Order No. 180, series of 1987, which created the PSLMC, is
unconstitutional in that:
a. it subsumes the Civil Service Commission or its Chair under the executive branch to implement this law, in
violation of Article IXA, Section 1 of the Constitution; or
b. it grants the Civil Service Commission or its Chair powers other than those enumerated under Article IX-B
of the Constitution.
Any determination of whether this Court may answer a question posed to it begins with the issue of jurisdiction.
Jurisdiction is the authority to hear and decide a case as conferred by the Constitution. Similarly, the Constitution
grants Congress the power to "define, prescribe, and apportion"27 the jurisdiction of various courts.28
The Constitution itself confers upon this Court original jurisdiction over petitions for certiorari, prohibition,
mandamus, quo warranto, and habeas corpus.29 In this regard, Rule 65 of the Rules of Court enumerates the
requisites of a petition for certiorari and prohibition. The rules require that the acts to be assailed were done in the
exercise of judicial, quasi-judicial, or ministerial functions:
SECTION 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require. . . .
SECTION 2. Petition for prohibition. – When the proceedings of any tribunal, corporation, board, officer
or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition in the proper court alleging the
facts with certainty and praying that judgment be rendered commanding the respondent to desist from
further proceedings in the action or matter specified therein, or otherwise granting such incidental
reliefs as law and justice may require[.] (Emphasis supplied)
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Quasi-judicial or adjudicatory functions refer to "the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing
and administering the same law."30 Quasi-legislative or rule-making functions refer to "the power to make rules and
regulations which results in delegated legislation that is within the confines of the granting statute and the doctrine of
non-delegability and separability of powers."31
The nature of the governmental functions affects the available remedies of those who seek to assail an act. Rule 65
specifies that the remedy of certiorari assails acts in the exercise of judicial and quasi-judicial functions, with the
addition of ministerial functions for the remedy of prohibition.
In several cases, this Court has dismissed petitions for certiorari and prohibition for being the wrong remedy to
assail the issuance of an executive order,32 department order,33 and a republic act,34 as these were not done in the
exercise of judicial or quasi-judicial functions. ℒαwρhi৷
Here, respondent Secretary Abad was exercising rule-making functions when he issued Budget Circular No. 2011-5.
Several laws enumerating the Department of Budget and Management's powers and functions include providing
guidelines for allowance grants to government employees.35 Yet, petitioners filed a petition for certiorari and
prohibition.
Nonetheless, beyond the conception of certiorari and prohibition under Rule 65 of the Rules of Court, the power of
judicial review in Article VIII, Section 1 of the Constitution contemplates the correction, by way of petitions for
certiorari and prohibition, of grave abuses of discretion by any governmental branch or instrumentality. This may lie
even if no judicial, quasi-judicial, or ministerial function was exercised.36
Article VIII, Section 1 of the Constitution states:
SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
In Kilusang Mayo Uno v. Aquino:37
This Court has discussed in several cases how the 1987 Constitution has expanded the scope of
judicial power from its traditional understanding. As such, courts are not only expected to "settle actual
controversies involving rights which are legally demandable and enforceable[,]" but are also
empowered to determine if any government branch or instrumentality has acted beyond the scope of its
powers, such that there is grave abuse of discretion.
This development of the courts' judicial power arose from the use and abuse of the political question
doctrine during the martial law era under former President Ferdinand Marcos. In Association of Medical
Clinics for Overseas Workers, Inc. v. GCC Approved Medical Centers Association, Inc., this Court held:
In Francisco v. The House of Representatives, we recognized that this expanded

jurisdiction was meant "to ensure the potency of the power of judicial review to curb grave
abuse of discretion by 'any branch or instrumentalities of government."' Thus, the second
paragraph of Article VIII, Section 1 engraves, for the first time in its history, into black letter
law the "expanded certiorari jurisdiction" of this Court, whose nature and purpose had
been provided in the sponsorship speech of its proponent, former Chief Justice
Constitutional Commissioner Roberto Concepcion[:]
....
The first section starts with a sentence copied from former Constitutions. It says:
The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.
I suppose nobody can question it.
The next provision is new in our constitutional law. I will read it first and explain.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether
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or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the government.
Fellow Members of this Commission, this is actually a product of our experience during
martial law. As a matter of fact, it has some antecedents in the past, but the role of the
judiciary during the deposed regime was marred considerably by the circumstance that in
a number of cases against the government, which then had no legal defense at all, the
solicitor general set up the defense of political question and got away with it. As a
consequence, certain principles concerning particularly the writ of habeas corpus, that is,
the authority of courts to order the release of political detainees, and other matters related
to the operation and effect of martial law failed because the government set up the
defense of political question. And the Supreme Court said: "Well, since it is political, we
have no authority to pass upon it." The Committee on the Judiciary feels that this was not
a proper solution of the questions involved. It did not merely request an encroachment
upon the rights of the people, but it, in effect, encouraged further violations thereof during
the martial law regime.
....
Briefly stated, courts of justice determine the limits of power of the agencies and offices of
the government as well as those of its officers. In other words, the judiciary is the final
arbiter on the question whether or not a branch of government or any of its officials has
acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an
abuse of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not
only a judicial power but a duty to pass judgment on matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot
hereafter evade the duty to settle matters of this nature, by claiming that such matters
constitute a political question. (Emphasis in the original, citations omitted)
Rule 65, Sections 1 and 2 of the Rules of Court provides remedies to address grave abuse of
discretion by any government branch or instrumentality, particularly through petitions for certiorari and
prohibition:
....
While these provisions pertain to a tribunal's, board's, or an officer's exercise of discretion in judicial,
quasi judicial, or ministerial functions, Rule 65 still applies to invoke the expanded scope of judicial
power. In Araullo v. Aquino III, this Court differentiated certiorari from prohibition, and clarified that Rule
65 is the remedy to "set right, undo[,] and restrain any act of grave abuse of discretion amounting to
lack or excess of jurisdiction by any branch or instrumentality of the Government, even if the latter does
not exercise judicial, quasi-judicial[,] or ministerial functions."
This Court further explained:
The present Rules of Court uses two special civil actions for determining and correcting
grave abuse of discretion amounting to lack or excess of jurisdiction. These are the
special civil actions for certiorari and prohibition, and both are governed by Rule 65. . . .
The ordinary nature and function of the writ of certiorari in our present system are aptly
explained in Delos Santos v. Metropolitan Bank and Trust Company:
....
The sole office of the writ of certiorari is the correction of errors of jurisdiction,
which includes the commission of grave abuse of discretion amounting to
lack of jurisdiction. In this regard, mere abuse of discretion is not enough to
warrant the issuance of the writ. The abuse of discretion must be grave,
which means either that the judicial or quasi-judicial power was exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, or
that the respondent judge, tribunal or board evaded a positive duty, or
virtually refused to perform the duty enjoined or to act in contemplation of
law, such as when such judge, tribunal or board exercising judicial or quasi-
judicial powers acted in a capricious or whimsical manner as to be equivalent
to lack of jurisdiction.
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Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is
to be distinguished from prohibition by the fact that it is a corrective remedy used for the
re-examination of some action of an inferior tribunal, and is directed to the cause or
proceeding in the lower court and not to the court itself, while prohibition is a preventative
remedy issuing to restrain future action, and is directed to the court itself. The Court
expounded on the nature and function of the writ of prohibition in Holy Spirit Homeowners
Association, Inc. v. Defensor:
A petition for prohibition is also not the proper remedy to assail an IRR issued
in the exercise of a quasi-legislative function. Prohibition is an extraordinary
writ directed against any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, ordering
said entity or person to desist from further proceedings when said
proceedings are without or in excess of said entity's or person's jurisdiction,
or are accompanied with grave abuse of discretion, and there is no appeal or
any other plain, speedy and adequate remedy in the ordinary course of law.
Prohibition lies against judicial or ministerial functions, but not against
legislative or quasi-legislative functions. Generally, the purpose of a writ of
prohibition is to keep a lower court within the limits of its jurisdiction in order
to maintain the administration of justice in orderly channels. Prohibition is the
proper remedy to afford relief against usurpation of jurisdiction or power by
an inferior court, or when, in the exercise of jurisdiction in handling matters
clearly within its cognizance the inferior court transgresses the bounds
prescribed to it by the law, or where there is no adequate remedy available in
the ordinary course of law by which such relief can be obtained. Where the
principal relief sought is to invalidate an IRR, petitioners' remedy is an
ordinary action for its nullification, an action which properly falls under the
jurisdiction of the Regional Trial Court. In any case, petitioners' allegation that
"respondents are performing or threatening to perform functions without or in
excess of their jurisdiction" may appropriately be enjoined by the trial court
through a writ of injunction or a temporary restraining order.
With respect to the Court, however, the remedies of certiorari and prohibition are
necessarily broader in scope and reach, and the writ of certiorari or prohibition may be
issued to correct errors of jurisdiction committed not only by a tribunal, corporation, board
or officer exercising judicial, quasi-judicial or ministerial functions but also to set right,
undo and restrain any act of grave abuse of discretion amounting to lack or excess of
jurisdiction by any branch or instrumentality of the Government, even if the latter does not
exercise judicial, quasi-judicial or ministerial functions. This application is expressly
authorized by the text of the second paragraph of Section 1, . . .
Thus, petitions for certiorari and prohibition are appropriate remedies to raise
constitutional issues and to review and/or prohibit or nullify the acts of legislative and
executive officials.38 (Citations omitted)
Thus, if any governmental branch or instrumentality is shown to have gravely abused its discretion amounting to
lack or excess of jurisdiction, and has overstepped the delimitations of its powers, courts may "set right, undo, or
restrain" such act by way of certiorari and prohibition.
But even as this Court is vested with judicial power, it does not follow that we should resolve every question we may
have the authority to answer. The Constitution grants the Judiciary the power to mediate the boundaries of the
government's powers, but this mediation is circumscribed by the will of the people, in whom sovereignty
resides,39 as expressed by their representatives in the executive and legislative branches.40 This Court's place in the
constitutional order requires that we "decide on legal principle only in concrete controversies":
This court is not the venue to continue the brooding and vociferous political debate that has already
happened and has resulted in legislation. Constitutional issues normally arise when the right and
obligations become doubtful as a result of the implementation of the statute. This forum does not exist
to undermine the democratically deliberated results coming from the Congress and approved by the
President. Again, there is no injury to a fundamental right arising from concrete facts established with
proof. Rather, the pleadings raise grave moral and philosophical issues founded on facts that have not
yet happened. They are the product of speculation by the petitioners.
To steeled advocates who have come to believe that their advocacy is the one true moral truth, their
repeated view may seem to them as the only factual possibility. Rabid advocacy of any view will be
intolerant of the nuanced reality that proceeds from conscious and deliberate examination of facts.
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This kind of advocacy should not sway us.
Our competence is to decide on legal principle only in concrete controversies. We should jealously and
rigorously protect the principle of justiciability of constitutional challenges. We should preserve our role
within the current constitutional order. We undermine the legitimacy of this court when we participate in
rulings in the abstract because there will always be the strong possibility that we will only tend to mirror
our own personal predilections. We should thus adopt a deferential judicial temperament especially for
social legislation.41 (Citation omitted)
For this reason, the requisites of justiciability, long established in our jurisprudence, must be present in the cases
this Court resolves:
As a rule, "the constitutionality of a statute will be passed on only if, and to the extent that, it is directly
and necessarily involved in a justiciable controversy and is essential to the protection of the rights of
the parties concerned." A controversy is said to be justiciable if: first, there is an actual case or
controversy involving legal rights that are capable of judicial determination; second, the parties raising
the issue must have standing or locus standi to raise the constitutional issue; third, the constitutionality
must be raised at the earliest opportunity; and fourth, resolving the constitutionality must be essential to
the disposition of the case.42 (Citations omitted)
I (A)
An actual case exists "when the act being challenged has had a direct adverse effect on the individual challenging
it."43 Thus, actual case means the presence of that concrete adverseness that can be drawn from the allegations
raised by the parties in their pleadings:
Jurisprudence provides that an actual case or controversy is one which "involves a conflict of legal
rights, an assertion of opposite legal claims, susceptible of judicial resolution as distinguished from a
hypothetical or abstract difference or dispute." In other words, "[t]here must be a contrariety of legal
rights that can be interpreted and enforced on the basis of existing law and jurisprudence." Related to
the requirement of an actual case or controversy is the requirement of "ripeness," meaning that the
questions raised for constitutional scrutiny are already ripe for adjudication. "A question is ripe for
adjudication when the act being challenged has had a direct adverse effect on the individual
challenging it. It is a prerequisite that something had then been accomplished or performed by either
branch before a court may come into the picture, and the petitioner must allege the existence of an
immediate or threatened injury to itself as a result of the challenged action." "Withal, courts will decline
to pass upon constitutional issues through advisory opinions, bereft as they are of authority to resolve
hypothetical or moot questions."44 (Emphasis supplied, citations omitted)
Laws are general in nature. The courts' constitutional duty is "to settle actual controversies involving rights which are
legally demandable and enforceable[.]"45 Courts cannot and will not decide hypothetical issues, render advisory
opinions, or engage academic questions.46 The parties must present concrete facts that demonstrate the problems
vis-à-vis a legal provision.47 The parties represented must show the contradicting considerations as a result of the
alleged facts. Absent such actual case anchored on concrete adverseness, no factual basis exists for giving a
petition due course.
In Falcis v. Civil Registrar General:48
This Court's constitutional mandate does not include the duty to answer all of life's questions. No
question, no matter how interesting or compelling, can be answered by this Court if it cannot be shown
that there is an "actual and an antagonistic assertion of rights by one party against the other in a
controversy wherein judicial intervention is unavoidable."
This Court does not issue advisory opinions. We do not act to satisfy academic questions or dabble in
thought experiments. We do not decide hypothetical, feigned, or abstract disputes, or those collusively
arranged by parties without real adverse interests. If this Court were to do otherwise and jump
headlong into ruling on every matter brought before us, we may close off avenues for opportune, future
litigation. We may forestall proper adjudication for when there are actual, concrete, adversarial
positions, rather than mere conjectural posturing:
Even the expanded jurisdiction of this Court under Article VIII, Section 1 does not provide
license to provide advisory opinions. An advisory opinion is one where the factual setting
is conjectural or hypothetical. In such cases, the conflict will not have sufficient
concreteness or adversariness so as to constrain the discretion of this Court. After all,
legal arguments from concretely lived facts are chosen narrowly by the parties. Those who
bring theoretical cases will have no such limits. They can argue up to the level of
absurdity. They will bind the future parties who may have more motives to choose specific
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legal arguments. In other words, for there to be a real conflict between the parties, there
must exist actual facts from which courts can properly determine whether there has been
a breach of constitutional text. . . .
As this Court makes "final and binding construction[s] of law[,]" our opinions cannot be mere counsel
for unreal conflicts conjured by enterprising minds. Judicial decisions, as part of the legal system, bind
actual persons, places, and things. Rulings based on hypothetical situations weaken the immense
power of judicial review.49 (Citations omitted)
I (B)
Legal standing means "personal and substantial interest in a case such that the party has sustained or will sustain
direct injury as a result of the governmental act that is being challenged."50 That the party must present a personal
stake in the case ensures the presence of concrete adverseness:
In public or constitutional litigations, the Court is often burdened with the determination of the locus
standi of the petitioners due to the ever-present need to regulate the invocation of the intervention of
the Court to correct any official action or policy in order to avoid obstructing the efficient functioning of
public officials and offices involved in public service. It is required, therefore, that the petitioner must
have a personal stake in the outcome of the controversy, for, as indicated in Agan, Jr. v. Philippine
International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have "alleged such a
personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court so
largely depends for illumination of difficult constitutional questions." Accordingly, it
has been held that the interest of a person assailing the constitutionality of a statute must
be direct and personal. He must be able to show, not only that the law or any government
act is invalid, but also that he sustained or is in imminent danger of sustaining some direct
injury as a result of its enforcement, and not merely that he suffers thereby in some
indefinite way. It must appear that the person complaining has been or is about to be
denied some right or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act complained
of.51 (Emphasis supplied)
Here, respondent Secretary Soliman submits that petitioners Confederation for Unity, Recognition, and
Advancement of Government Employees (COURAGE), National Federation of Employees Associations in the
Department of Agriculture (NAFEDA), and Department of Agrarian Reform Employees Association (DAREA) should
all be dropped as parties for having no legal standing.52 She, however, concedes that petitioner SWEAP-DSWD has
legal standing.53
Petitioners counter that COURAGE, NAFEDA, and DAREA "represent hundreds of government employees unions
and associations, composing of hundreds of thousands of employees in the civil service, whose validly executed
CNAs have been infringe[d] by the impugned budget circular."54
Nearly all of the petitioners here are organizations purporting to act on behalf of other organizations. Generally,
representative parties such as organizations cannot be surrogates for the real party in interest suffering the actual
injury. Should they desire to act as such, they must convincingly show that their representation through one voice
would be more efficient than just some of the members suing and defending on behalf of all the
members.55 In National Federation of Hog Farmers, Inc. v. Board of Investments:56
For organizations to become real parties in interest, the following criteria must first be met so that
actions may be allowed to be brought on behalf of third parties:
[F]irst, "the [party bringing suit] must have suffered an 'injury-in-fact,' thus giving him or her
a 'sufficiently concrete interest' in the outcome of the issue in dispute"; second, "the party
must have a close relation to the third party"; and third, "there must exist some hindrance
to the third party's ability to protect his or her own interests."
Organizations may possess standing to sue on behalf of their members if they sufficiently show that
"the results of the case will affect their vital interests" and that their members have suffered or will stand
to suffer from the application of the assailed governmental acts. The petition must likewise show that a
hindrance exists, preventing the members from personally filing the complaint.
In White Light Corporation v. City of Manila, hotel and motel operators protested the implementation of
the City of Manila's Ordinance No. 7774, which prohibited short-time admission, or the admittance of
guests for less than 12 hours in motels, inns, hotels, and similar establishments within the city. The
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petitioners argued, among others, that the Ordinance violated their clients' right to privacy, freedom of
movement, and equal protection of the laws.
In White Light, the petitioners were allowed to represent their clients based on third-party standing. This
Court noted the close relationship between hotel and motel operators and their clients, as the former
"rely on the patronage of their customers for their continued viability." On the requirement of hindrance,
this Court stated that "[t]he relative silence in constitutional litigation of such special interest groups in
our nation such as the American Civil Liberties Union in the United States may also be construed as a
hindrance for customers to bring suit."57 (Citations omitted)
The Petition does not allege whether petitioners COURAGE, NAFEDA, and DAREA have existing CNAs, nor does it
allege the amount granted to them as CNA incentives. The Petition fails to show that these three petitioners
"sustained or will sustain direct injury" from the issuance of Budget Circular No. 2011-5. Not all government
employees are similarly situated. Some have existing CNAs, while others do not. Some government offices have
yearend savings resulting from efficiency and lesser costs, but this may not be true for all. Decisions cannot cut
across different contexts. Those who fail to raise an actual case should not be covered by a decision that
considered the factual milieu alleged by those with legal standing.
Nonetheless, labor organizations occupy a unique position in that they have the constitutional and statutory right
and duty to represent the workers within their membership.
Article XIII, Section 3 of the Constitution states:
SECTION 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to
its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth. (Emphasis supplied)
Article 242 of the Labor Code, as amended, provides that a labor organization has the right to represent its
members in collective bargaining, and to undertake all activities to benefit the organization and its members:
ARTICLE 242. Rights of legitimate labor organizations. A legitimate labor organization shall have the
right:
a. To act as the representative of its members for the purpose of collective bargaining;
b. To be certified as the exclusive representative of all the employees in an appropriate bargaining unit
for purposes of collective bargaining;
c. To be furnished by the employer, upon written request, with its annual audited financial statements,
including the balance sheet and the profit and loss statement, within thirty (30) calendar days from the
date of receipt of the request, after the union has been duly recognized by the employer or certified as
the sole and exclusive bargaining representative of the employees in the bargaining unit, or within sixty
(60) calendar days before the expiration of the existing collective bargaining agreement, or during the
collective bargaining negotiation;
d. To own property, real or personal, for the use and benefit of the labor organization and its members;
e. To sue and be sued in its registered name; and
f. To undertake all other activities designed to benefit the organization and its members, including
cooperative, housing, welfare and other projects not contrary to law.
Notwithstanding any provision of a general or special law to the contrary, the income and the properties
of legitimate labor organizations, including grants, endowments, gifts, donations and contributions they
may receive from fraternal and similar organizations, local or foreign, which are actually, directly and
exclusively used for their lawful purposes, shall be free from taxes, duties and other assessments. The
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exemptions provided herein may be withdrawn only by a special law expressly repealing this provision.
(Emphasis supplied)
Labor organizations also ensure that workers participate in decision-making processes that affect their rights, duties,
and welfare. In Samahan ng Manggagawa sa Hanjin Shipyard v. Bureau of Labor Relations:58
As Article 246 (now 252) of the Labor Code provides, the right to self-organization includes the right to
form, join or assist labor organizations for the purpose of collective bargaining through representatives
of their own choosing and to engage in lawful concerted activities for the same purpose for their mutual
aid and protection. This is in line with the policy of the State to foster the free and voluntary
organization of a strong and united labor movement as well as to make sure that workers participate in
policy and decision-making processes affecting their rights, duties and welfare.
The right to form a union or association or to self-organization comprehends two notions, to wit: (a) the
liberty or freedom, that is, the absence of restraint which guarantees that the employee may act for
himself without being prevented by law; and (b) the power, by virtue of which an employee may, as he
pleases, join or refrain from joining an association.
In view of the revered right of every worker to self-organization, the law expressly allows and even
encourages the formation of labor organizations. A labor organization is defined as "any union or
ℒαwρhi৷
association of employees which exists in whole or in part for the purpose of collective bargaining or of
dealing with employers concerning terms and conditions of employment." A labor organization has two
broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and
conditions of employment. To bargain collectively is a right given to a union once it registers itself with
the DOLE. Dealing with the employer, on the other hand, is a generic description of interaction between
employer and employees concerning grievances, wages, work hours and other terms and conditions of
employment, even if the employees' group is not registered with the DOLE.
A union refers to any labor organization in the private sector organized for collective bargaining and for
other legitimate purpose, while a workers' association is an organization of workers formed for the
mutual aid and protection of its members or for any legitimate purpose other than collective bargaining.
Many associations or groups of employees, or even combinations of only several persons, may qualify
as a labor organization yet fall short of constituting a labor union. While every labor union is a labor
organization, not every labor organization is a labor union. The difference is one of organization,
composition and operation.
Collective bargaining is just one of the forms of employee participation. Despite so much interest in and
the promotion of collective bargaining, it is incorrect to say that it is the device and no other, which
secures industrial democracy. It is equally misleading to say that collective bargaining is the end-goal of
employee representation. Rather, the real aim is employee participation in whatever form it may
appear, bargaining or no bargaining, union or no union. Any labor organization which may or may not
be a union may deal with the employer. This explains why a workers' association or organization does
not always have to be a labor union and why employer-employee collective interactions are not always
collective bargaining.59 (Citations omitted)
As discussed above, though not to the same extent as private employees, the right to self-organize is likewise
granted to government employees. Petitioner SWEAP-DSWD is one such organization. It may act to protect its
members' interests in CNAs, which includes acting to contest issuances that may jeopardize these interests. It has
the legal standing to bring their Petition to this Court.
I (C)
As for the third requisite: "A case is ripe for adjudication when the challenged governmental act is a completed
action such that there is a direct, concrete, and adverse effect on the petitioner."60
Closely linked with the requisite of an actual case, ripeness pertains to the challenged governmental
act having reached the state where it is neither anticipatory nor too late, but rather, necessary for the
Judiciary to intervene:
Both these concepts relate to the timing of the presentation of a controversy before the Court —
ripeness relates to its prematurity, while mootness relates to a belated or unnecessary judgment on the
issues. The Court cannot preempt the actions of the parties, and neither should it (as a rule) render
judgment after the issue has already been resolved by or through external developments.
The importance of timing in the exercise of judicial review highlights and reinforces the need for an
actual case or controversy — an act that may violate a party's right. Without any completed action or a
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concrete threat of injury to the petitioning party, the act is not yet ripe for adjudication. It is merely a
hypothetical problem. The challenged act must have been accomplished or performed by either branch
or instrumentality of government before a court may come into the picture, and the petitioner must
allege the existence of all immediate or threatened injury to itself as a result of the challenged action.61
Ripeness must be viewed in light of the doctrine on exhaustion of administrative remedies. Before judicial
intervention, the challenged act must fulfill the prerequisite that another governmental branch or instrumentality has
already performed the act; the petitioner has immediately suffered or is threatened to suffer injury due to the act;
and no more succor is found in another branch or instrumentality.62 The doctrine "does not warrant a court to
arrogate unto itself the authority to resolve, or interfere in, a controversy the jurisdiction over which is lodged initially
with an administrative body";63 rather, it is anchored on comity, respect, and convenience:
This Court has also said in a number of cases that —
When an adequate remedy may be had within the Executive Department of the government, but
nevertheless, a litigant fails or refuses to avail himself of the same, the judiciary shall decline to
interfere. This traditional attitude of the courts is based not only on convenience but likewise on
respect: convenience of the party litigants and respect for a coequal office in the government. If a
remedy is available within the administrative machinery, this should be resorted to before the resort can
be made to (the) courts.64
Our Constitution should also be read by the executive branch. The doctrine demands deference to co-equal
departments, allowing the appropriate authorities the opportunity "to act and correct the errors committed in the
administrative forum."65
Petitioners here failed to exhaust all the administrative remedies before coming to this Court.
Aside from Budget Circular No. 2011-5, petitioners also question the constitutionality of the January 20, 2012
Memorandum signed by Assistant Secretary David-Casis.66 The Memorandum does not show any signature of
approval or conforme by respondent Secretary Soliman.67
Petitioners should have allowed the administrative process to run its course by first questioning the validity of the
Memorandum, along with the Assistant Secretary's authority, before respondent Secretary Soliman. The Secretary's
action may, in turn, be appealed to the Office of the President.68
True, the doctrine on exhaustion of administrative remedies does not apply when the assailed act was done in the
exercise of quasi-legislative or rule-making functions.69 Yet, the January 20, 2012 Memorandum, which directs the
refund of excess CNA incentive, cannot be an exercise of quasi legislative functions only when it created an
imperative obligation upon the affected employees.
This Court has dismissed petitions, explaining that "liberality and the transcendental doctrine cannot trump blatant
disregard of procedural rules," more so when "the petitioner had other available remedies[.]"70
The mere issuance of a regulation does not justify an immediate resort to this Court. Petitioner DSWD-SWEAP
could have availed of administrative remedies before respondent Secretary Soliman, and then before the Office of
the President.
I (D)
When the unconstitutionality of a governmental act is raised as a ground for judicial review, the constitutional issue
must be properly presented, and its resolution must be necessary for a complete determination of the case.71 In
other words, the constitutional question must be the lis mota of the case; otherwise, the issues may be resolved and
reliefs may be granted on some other ground.72
In Parcon-Song v. Song:73
The requirement that a constitutional issue seasonably raised should be the lis mota of the case is an
aspect of judicial review that is rooted on two constitutional principles. First, the principle of deference.
Second, the principle of reasonable caution in striking down an act by a co-equal political branch of
government.
Article VIII, Section 1 of the Constitution which now specifies that this Court may now act on any grave
abuse of discretion by any organ or department or branch of government, should never be interpreted
as providing license for the Court to issue advisory opinions. Apart from an actual case or controversy,
the Court must satisfy itself that the reliefs prayed for by the parties requires the resolution of a
constitutional issue. The exceptions are (i) when a facial review of the statute is allowed as in cases of
actual or clearly imminent violation of the sovereign rights to free expression and its cognate rights, or
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(ii) when there is a clear and convincing showing that a fundamental constitutional right has been
actually violated in the application of a statute, which are of transcendental interest. That is, that the
violation is so demonstrably and urgently egregious that it outweighs a reasonable policy of deference
in such specific instance.
The facts constituting the demonstrable and egregious violation of a fundamental constitutional right
must either be uncontested or established in a trial court for this court to take cognizance of the
constitutional issue and rule upon it. The basis for ruling on the Constitutional issue must also be
clearly alleged and traversed by the parties.
The relief of the party in this case can be granted simply by examining the statute applicable. It has not
pleaded nor demonstrably shown a constitutional violation that is so urgently egregious that it should
outweigh our reasonable policy of deference to the two other constitutional branches of government.74
I (E)
On the alleged violation of the rule on hierarchy of courts raised by respondents,75 petitioners take exception by
invoking transcendental importance of the constitutional questions involved.76
The regional trial courts, the Court of Appeals, and this Court all have original jurisdiction to issue writs of certiorari
and prohibition.77 The doctrine on hierarchy of courts ensures that every level of the Judiciary can focus on
effectively and efficiently performing its designated functions within the judicial system: Territorially organized trial
courts weigh evidence and rule on factual issues; the Court of Appeals reviews these findings as a collegiate body;
and this Court leads the Judiciary by resolving constitutional questions and promulgating doctrinal devices.78
Nevertheless, exceptions exist. This Court can exercise its discretionary power and assume jurisdiction over
petitions filed directly before it when warranted. For one, a direct resort to this Court requires the existence of
serious and important reasons:
The Supreme Court is a court of last resort, and must so remain if it is to satisfactorily perform
the functions assigned to it by the fundamental charter and immemorial tradition. It cannot and
should not be burdened with the task of dealing with causes in the first instance. Its original
jurisdiction to issue the so-called extraordinary writs should be exercised only where
absolutely necessary or where serious and important reasons exist therefor. Hence, that
jurisdiction should generally be exercised relative to actions or proceedings before the Court of
Appeals, or before constitutional or other tribunals, bodies or agencies whose acts for some reason or
another are not controllable by the Court of Appeals. Where the issuance of an extraordinary writ is
also within the competence of the Court of Appeals or a Regional Trial Court, it is in either of
these courts that the specific action for the writ's procurement must be presented. This is and
should continue to be the policy in this regard, a policy that courts and lawyers must strictly
observe.79 (Emphasis in the original)
These important reasons include the following: "(1) when dictated by the public welfare and the advancement of
public policy; (2) when demanded by the broader interest of justice; (3) when the challenged orders were patent
nullities; or (4) when analogous exceptional and compelling circumstances called for and justified the immediate and
direct handling of the case."80
This Court has allowed petitions raising genuine issues of constitutionality against actions done by other branches of
government81 and constitutional bodies.82 It has also assumed jurisdiction over cases of first impression83 and those
of transcendental interest.84
Benefits awarded to government employees come from public funds. The challenged Budget Circular No. 2011-5
affects all government employees with valid CNAs, allowing the grant of CNA incentives.
Concededly, no facts are disputed in this case that would burden this Court with the task of exhaustively examining
evidentiary matters, for which it is ill-equipped.85 In the interest of judicial economy,86 preventing further delay in the
disposition of this case,87 we consider the merits.
II
To put in context the substantive issues, a recall of the history of collective negotiations in the public sector is
needed.
The Constitution and applicable laws, evolving through the years, provide the right of government employees to self-
organize and engage in collective negotiation.
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As early as 1953, Republic Act No. 875 or the Industrial Peace Act stated that employment terms and conditions of
those in government service are governed by law:
SECTION 11. Prohibition Against Strikes in the Government. — The terms and conditions of
employment in the Government, including any political subdivision or instrumentality thereof, are
governed by law and it is declared to be the policy of this Act that employees therein shall not strike for
the purpose of securing changes or modification in their terms and conditions of employment. Such
employees may belong to any labor organization which does not impose the obligation to strike or to
join in strike: Provided, however, That this section shall apply only to employees employed in
governmental functions and not to those employed in proprietary functions of the Government including
but not limited to government corporations.
The 1983 case of Alliance of Government Workers v. Minister of Labor and Employment88 raised whether the
requirement under Presidential Decree No. 851 for employers "to pay all their employees receiving a basic salary of
not more than ₱1,000.00 a month, a thirteenth (13th month pay not later than December 24 of every year" included
government employees.89
This Court dismissed the petition. It found that Section 3 of the Implementing Rules and Regulations, which
excluded government employers from the coverage, was the correct interpretation of the decree. This Court then
distinguished between private and public employees insofar as taking collective action as bargaining power in
seeking concessions:
The workers in the respondents institutions have not directly petitioned the heads of their respective
offices nor their representatives in the Batasang Pambansa. They have acted through a labor
federation and its affiliated unions. In other words, the workers and employees of these state firms,
college, and university are taking collective action through a labor federation which uses the bargaining
power of organized labor to secure increased compensation for its members.
Under the present state of the law and pursuant to the express language of the Constitution, this resort
to concerted activity with the ever present threat of a strike can no longer be allowed.
The general rule in the past and up to the present is that "the terms and conditions of employment in
the Government, including any political subdivision or instrumentality thereof are governed by law"
(Section 11, the Industrial Peace Act, R.A. No. 875, as amended and Article 277, the Labor Code, P.D.
No. 442, as amended). Since the terms and conditions of government employment are fixed by law,
government workers cannot use the same weapons employed by workers in the private sector to
secure concessions from their employers. The principle behind labor unionism in private industry is that
industrial peace cannot be secured through compulsion by law. Relations between private employers
and their employees rest on an essentially voluntary basis. Subject to the minimum requirements of
wage laws and other labor and welfare legislation, the terms and conditions of employment in the
unionized private sector are settled through the process of collective bargaining. In government
employment, however, it is the legislature and, where properly given delegated power, the
administrative heads of government which fix the terms and conditions of employment. And this is
effected through statutes or administrative circulars, rules, and regulations, not through collective
agreements.90 (Emphasis supplied)
The 1973 Constitution included in its declaration of principles and state policies that "[t]he State shall assure the
rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of
work."91
In 1974, Presidential Decree No. 442, or the Labor Code of the Philippines, was signed into law. It excluded
"government employees, including employees of government-owned and/or controlled corporations" from the right
to self-organization for purposes of collective bargaining.92 Even the employment terms and conditions for
government-owned and controlled corporations' employees are governed by the Civil Service Law, rules, and
regulations:
ARTICLE 276. Government employees. The terms and conditions. of employment of all government
employees, including employees of government-owned and controlled corporations, shall be governed
by the Civil Service Law, rules and regulations. Their salaries shall be standardized by the National
Assembly as provided for in the new constitution. However, there shall be no reduction of existing
wages, benefits and other terms and conditions of employment being enjoyed by them at the time of
the adoption of this Code.93
Further qualification for employees of government corporations was made in 1986 when former President Corazon
C. Aquino (President Aquino) issued Executive Order No. 111. In amending the Labor Code, it granted employees
"of government corporations established under the Corporation Code . . . the right to organize and to bargain
collectively with their respective employers."94
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The 1987 Constitution followed, stating that "[t]he right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be
abridged."95 The State "shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law."96 Article IX-B on
the Civil Service Commission also states that "[t]he right to self organization shall not be denied to government
employees."97
Nonetheless, in the 1990 case of Arizala v. Court of Appeals,98 this Court reiterated that the right of government
employees to self-organize is not as extensive as in the private sector:
However, the concept of the government employees' right of self-organization differs significantly from
that of employees in the private sector. The latter's right of self-organization, i.e., "to form, join or assist
labor organizations for purposes of collective bargaining," admittedly includes the right to deal and
negotiate with their respective employers in order to fix the terms and conditions of employment and
also, to engage in concerted activities for the attainment of their objectives, such as strikes, picketing,
boycotts. But the right of government employees to "form, join or assist employees organizations of
their own choosing" under Executive Order No. 180 is not regarded as existing or available for
"purposes of collective bargaining," but simply "for the furtherance and protection of their interests."
In other words, the right of Government employees to deal and negotiate with their respective
employers is not quite as extensive as that of private employees. Excluded from negotiation by
government employees are the "terms and conditions of employment ... that are fixed by law," it being
only those terms and conditions not otherwise fixed by law that "may be subject of negotiation between
the duly recognized employees' organizations and appropriate government authorities." And while EO
No. 180 concedes to government employees, like their counterparts in the private sector, the right to
engage in concerted activities, including the right to strike, the executive order is quick to add that
those activities must be exercised in accordance with law, i.e., ire subject both to "Civil Service Law
and rules" and "any legislation that may be enacted by Congress," that "the resolution of complaints,
grievances and cases involving government employees" is not ordinarily left to collective bargaining or
other related concerted activities, but to "Civil Service Law and labor laws and procedures whenever
applicable;" and that in case "any dispute remains unresolved after exhausting all available remedies
under existing laws and procedures, the parties may jointly refer the dispute to the (Public Sector
Labor-Management) Council for appropriate action." What is more, the Rules and Regulations
implementing Executive Order No. 180 explicitly provide that since the "terms and conditions of
employment in the government, including any political subdivision or instrumentality thereof and
government-owned and controlled corporations with original charters are governed by law, the
employees therein shall not strike for the purpose of securing changes thereof."
On the matter of limitations on membership in labor unions of government employees, Executive Order
No. 180 declares that "high level employees whose functions are normally considered as policy making
or managerial, or whose duties are of a highly confidential nature shall not be eligible to join the
organization of rank-and-file government employees.["] A "high level employee" is one "whose functions
are normally considered policy determining, managerial or one whose duties are highly confidential in
nature. A managerial function refers to the exercise of powers such as: 1. To effectively recommend
such managerial actions; 2. To formulate or execute management policies and decisions; or 3. To hire,
transfer, suspend, lay off, recall, dismiss, assign or discipline employees."99 (Citations omitted)
Exercising her legislative powers,100 on June 1, 1987, then President Aquino issued Executive Order No. 180,
entitled Providing Guidelines for the Exercise of the Right to Organize of Government Employees, Creating a Public
Sector Labor-Management Council and For Other Purposes.101
Executive Order No. 180 created a Public Sector Labor-Management Council (PSLMC), which was composed of
officers who shall implement Executive Order No. 180:
SECTION 15. A Public Sector Labor-Management Council, hereinafter referred to as the Council, is
hereby constituted to be composed of the following:
1) Chairman, Civil Service Commission Chairman
2) Secretary, Department of Labor and Employment Vice-Chairman
3) Secretary, Department of Finance Member
4) Secretary, Department of Justice Member
5) Secretary, Department of Budget and Management Member
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The Council shall implement and administer the provisions of this Executive Order. For this
purpose, the Council shall promulgate the necessary rules and regulations to implement this
Executive Order. (Emphasis supplied)
Subsequently, PSLMC issued the Implementing Rules and Regulations of Executive Order No. 180.102
On November 14, 2002, PSLMC issued Resolution No. 4, series of 2002, entitled Grant of Collective Negotiation
Agreement (CNA) Incentive for National Government Agencies, State Universities and Colleges and Local
Government Units. It also issued Resolution No. 2, series of 2003, entitled Grant of Collective Negotiation
Agreement (CNA) Incentive for Government Owned or Controlled Corporations (GOCCs) and Government Financial
Institutions (GFIs).103
PSLMC Resolution No. 4, which covers national government agencies, provides that "CNA Incentive can be paid
every year that savings are generated during the life of the CNA,"104 and "[s]hould the grant of CNA Incentive be
disallowed by the Commission on Audit, the management shall be held personally responsible for the payment
thereof."105 The Resolution defined "savings,"106 and provided for its apportionment as follows:
SECTION 5. Total Savings, as defined in Section 3 and net of the priorities in Section 4, generated
after the signing of the CNA shall be apportioned, as follows:
Fifty percent (50%) for CNA Incentive
Thirty percent (30%) for improvement of working conditions and other programs and/or to be added as
part of the CNA Incentive, as may be agreed upon in the CNA
Twenty percent (20%) to be reverted to the General Fund for the national government agencies or to
the General Fund of the constitutional commissions, state universities and colleges, and local
government units concerned, as the case may be.
On August 31, 2004, former President Gloria Macapagal-Arroyo (President Arroyo) issued Administrative Order No.
103, entitled Directing the Continued Adoption of Austerity Measures in the Government. CNA incentive falls under
the exceptions from the direction to suspend grants of new or additional benefits:
SECTION 3. All NGAs, SUCs, GOCCs, GFIs and OGCEs, whether exempt from Salary
Standardization Law or not, are hereby directed to:
....
(b) Suspend the grant of new or additional benefits to full-time officials and employees and officials,
except for (i) Collective Negotiation Agreement (CNA) Incentives which are agreed to be given in strict
compliance with the provisions of the Public Sector Labor-Management Council Resolutions No. 04, s.
2002 and No. 2, s. 2003, and (ii) those expressly provided by presidential issuance[.]
On September 28, 2004, PSLMC issued Resolution No. 2, series of 2004, entitled Approving and Adopting the
Amended Rules and Regulations Governing the Exercise of the Right of Government Employees to
Organize.107 The amended rules and regulations lists CNA incentive under negotiable matters:
RULE XII
COLLECTIVE NEGOTIATIONS
SECTION 1. Subject of negotiation. – Terms and conditions of employment or improvements thereof,

except those that are fixed by law, may be the subject of negotiation.
SECTION 2. Negotiable matters. – The following concerns may be the subject of negotiation between
the management and the accredited employees' organization:
....
(m) CNA incentive pursuant to PSLMC Resolution No. 4, s. 2002 and Resolution No. 2, s.
2003;108 and,
(n) such other concerns which are not prohibited by law and CSC rules and regulations. (Emphasis
supplied)
....
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SECTION 5. Other matters. — Nothing herein shall be construed to prevent any of the parties from
submitting proposals regarding other matters to Congress and the proper authorities to improve the
terms and conditions of their employment.
On December 27, 2005, President Arroyo issued Administrative Order No. 135, authorizing the grant of CNA
incentives to government employees and mandating the Department of Budget and Management to issue its
implementing guidelines.109 This reads:
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by virtue of the

powers vested in me by law, do hereby order:
SECTION 1. Grant of Incentive. — The grant of the Collective Negotiation Agreement (CNA) incentive
to national government agencies (NGAs), local government units (LGUs), state universities and
colleges (SUCs), government-owned or controlled corporations (GOCCs), and government financial
institutions (GFIs), if provided in their respective CNAs and supplements thereto executed between the
management and employees' organizations accredited by the Civil Service Commission, is hereby
authorized.
Furthermore, the grant of the CNA incentive pursuant to CNAs entered into on or after the effectivity of
PSLMC Resolution No. 4, series of 2002, and PSLMC Resolution No. 2, series of 2003, and in strict
compliance therewith, is confirmed.
SECTION 2. Limitation. — The CNA incentive shall be granted only to rank-and-file employees. The
existing CNA incentive shall be rationalized to simplify its administration and to preclude duplication
with incentives granted through the Program on Awards and Incentives for Service Excellence
(PRAISE).
SECTION 3. Cost-Cutting Measures and Systems Improvement. — The management and the
accredited employees' organization shall identify in the CNA the cost-cutting measures and systems
improvement to be jointly undertaken by them so as to achieve effective service delivery and agency
targets at lesser costs.
SECTION 4. Savings as Source. — The CNA Incentive shall be sourced only from the savings
generated during the life of the CNA.
SECTION 5. Release of Incentive. — The CNA Incentive may be paid every year that savings are
generated during the life of the CNA.
SECTION 6. Implementation. — The Department of Budget and Management shall issue the policy
and procedural guidelines to implement this Administrative Order.
SECTION 7. Effectivity. — This Administrative Order shall take effect immediately.
DONE in the City of Manila, this 27th day of December in the year of Our Lord, Two Thousand Five.
Following this, on February 1, 2006, the Department of Budget and Management issued Budget Circular No. 2006-
1, which provided the policy and procedural guidelines in the grant and funding of CNA incentive. Under these
guidelines, the incentive shall be paid as a one-time benefit after the end of the year; it shall be sourced solely from
savings from released Maintenance and Other Operating Expenses allotments, subject to conditions; and the
amount of CNA incentive shall not be pre-determined in the CNA.110
Arizala discussed Executive Order No. 180 on the scope of government employees' constitutional right to self-
organization:
However, the concept of the government employees' right to self-organization differs significantly from
that of employees in the private sector. The latter's right of self-organization, i.e., "to form, join or assist
labor organizations for purposes of collective bargaining," admittedly includes the right to deal and
negotiate with their respective employers in order to fix the terms and conditions of employment and
also, to engage in concerted activities for the attainment of their objectives, such as strikes, picketing,
boycotts. But the right of government employees to "form, join or assist employees organizations of
their own choosing" under Executive Order No. 180 is not regarded as existing or available for
"purposes of collective bargaining," but simply "for the furtherance and protection of their interests."
In other words, the right of Government employees to deal and negotiate with their respective
employers is not quite as extensive as that of private employees. Excluded from negotiation by
government employees are the "terms and conditions of employment . . . that are fixed by
law," it being only those terms and conditions not otherwise fixed by law that "may be subject of
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negotiation between the duly recognized employees' organizations and appropriate government
authorities."111 (Emphasis supplied)
Laws fixing employment terms and conditions include Republic Act No. 6758, or the Salary Standardization Law.
In Social Security System v. Commission on Audit,112 this Court affirmed the Commission on Audit decision
disallowing the payment of ₱5,000.00 as signing bonus to Social Security System employees pursuant to their CNA.
This Court cited Executive Order No. 180, Republic Act No. 6758, and Philippine Ports Authority v. Commission on
Audit113 for its ruling that "no financial or non-financial incentive could be awarded to employees of government
owned and controlled corporations aside from benefits which were being received by incumbent officials and
employees as of 1 July 1989."114 This Court discussed:
On the basis of the foregoing pronouncement, we do not find the signing bonus to be a truly reasonable
compensation. The gratuity was of course the SSC's gesture of good will and benevolence for the
conclusion of collective negotiations between SSC and ACCESS, as the CNA would itself state, but for
what objective? Agitation and propaganda which are so commonly practiced in private sector labor-
management relations have no place in the bureaucracy and that only a peaceful collective negotiation
which is concluded within a reasonable time must be the standard for interaction in the public sector.
This desired conduct among civil servants should not come, we must stress, with a price tag which is
what the signing bonus appears to be.115
In 2012, this Court decided Manila International Airport Authority v. Commission on Audit,116 which also involved the
grant of CNA "contract signing bonus" worth ₱30,000.00.
The grant was found to be in the nature of a signing bonus, and thus, an illegal disbursement. This Court noted that
"even assuming that the subject benefit is a CNA Incentive, [Manila International Airport Authority]'s non-compliance
with the requirements under PSLMC Resolution No. 2 and DBM Budget Circular No. 2006-1 rendered the same
illegal[.]"117 This Court then discussed that Budget Circular No. 2006-1 is consistent with and germane to the
purpose of PSLMC Resolution No. 2 and Administrative Order No. 135:
Interestingly, MIAA claimed that the subject benefit is a CNA Incentive but refused to comply with DBM
Budget Circular No. 2006-1, raising the unconstitutionality thereof as the reason for its non-submission
of its COB for the DBM's approval and the release of the benefit prior to the end of 2003. Allegedly,
there is a conflict between DBM Budget Circular No. 2006-1 and A.O. No. 135 as there is nothing in the
latter, which requires the COB to be submitted for DBM's validation and the payment of the CNA
Incentive at the end of the year.
However, the said conflict is more imagined than real. A cursory reading of DBM Budget Circular No.
2006-1 shows that its provisions are consistent with those of PSLMC Resolution No. 2 and A.O. No.
135. There is no clear showing that the former secretary of DBM transcended the demarcations fixed
by A.O. No. 135 in the exercise of her rule-making power.
Particularly, the requirement that the COB should be submitted to the President through the DBM for
approval is already a pre-existing requirement under Section 4, PSLMC Resolution No. 2. Such
requirement is likewise consistent with Section 5, Presidential Decree No. 1597 and Memorandum
Order No. 20 dated June 25, 2001 mentioned in the 5th and 6th Whereas Clauses of A.O. No. 135.
With respect to the requirement that the CNA Incentive be released after the end of the year, this does
not contravene any provision of A.O. No. 135 and PSLMC Resolution No. 2. By specifying the time
when the CNA Incentive may be released to the rank and-file employees, the former DBM Secretary
was merely supplying a detail necessary for the proper implementation of A.O. No. 135. The assailed
provisions of DBM Budget Circular No. 2006-1 are germane to the purposes and objectives of A.O. No.
135 and PSLMC Resolution No. 2 and not much is required to appreciate its rationale: to ensure that
the CNA Incentive will be paid only if the actual operating income meets or exceeds the target fixed in
COB and will be funded by the savings generated from cost-reducing measures and no other. Without
further extrapolation, these amounts remain to be mere approximations until the end of the
year.118 (Emphasis supplied, citation omitted)
The following guidelines on the basic concept of CAN negotiations take into account the relevant provisions of the
Constitution, statutes, their implementing rules and regulations, as well as jurisprudence on the matter:
a) The right to collective negotiation in the public sector is a constitutionally protected right subject to the
conditions stated in the Constitution and as may be provided supplementarily by law;
b) All CNAs negotiated must be consistent with law and implementing regulations;
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c) The flexibilities of government agencies are limited by law. Wage benefits are subject to the Salary
Standardization Law. Non-wage benefits are subject to regulations issued by the Civil Service Commission;
d) The grant of wage benefits is also subject to the constitutional and statutory authorizations for the use of
appropriations and savings;
e) Unlike in the private sector, negotiations in the public sector must always consider the public interest and
take the governmental role of the agency or office into primordial concern;
f) All employees are public officers and are thus subject to public trust and statutory limitations on matters
including their conduct;
g) Incumbent heads of offices are temporary; and
h) Members of Congress, representing their constituents, including union members, can change the law.
III
Here, petitioners assail Budget Circular No. 2011-5 for constituting legislation.119 They say that respondent Secretary
Abad has no power to "issue guidelines, to disallow [or] set limit or conditions in the grant of [CNA incentives]."120
Petitioners submit that Sections 3.2,121 3.3,122 and 3.4123 of the Circular are unconstitutional for limiting the sources
of the CNA incentive. This, they contend, makes the Circular contrary to and effectively amending Section 4 of
Administrative Order No. 135, which neither limits the source of the savings nor fixes a maximum amount of CNA
incentive.124
Respondent Secretary Abad counters that the Circular IS valid and consistent with laws and jurisprudence.125
He cites provisions of Presidential Decree No. 985, the Administrative Code, and Republic Act No. 6758 in support
of the argument that the Department of Budget and Management "has the sole power and discretion to administer
the Compensation and Position Classification System of the National Government, which includes the rules on the
grant of CNA incentive."126 Administrative Order No. 135 also specifically authorizes the Department to issue the
policy and procedural guidelines on the grant of CNA incentives.127
Respondent Secretary Abad adds that the Circular is consistent with the policy and principles of Administrative
Order No. 135, quoting this Court's ruling in Manila International Airport Authority.128 The ₱ 25,000.00 cap, he says,
"ensure[s] that the planned targets, programs and projects are not hampered by the observed perverse tendency of
agencies of scrimping on vital expenditures or bloating their budgets just so as to accumulate savings for payment
of the CNA incentive."129
For her part, respondent Secretary Soliman argues that the circular's issuance is a lawful exercise of executive and
administrative power.130 She quotes Blaquera v. Alcala,131 which differentiated private from government employees
in that the latter's employment terms and conditions are "effected through statutes or administrative circulars, rules,
and regulations, not through collective bargaining agreements."132 She adds that the Budget Secretary, as the
President's alter ego, has rule-making powers to issue policies and procedural guidelines to implement
Administrative Order No. 135.133
To rule on this issue, we consider the relevant laws and regulations on government employees' right to organize and
negotiate, specifically for CNA incentives.
Executive Order No. 180 created the PSLMC as the body to implement and administer government employees' right
to organize. Section 15 provides for its creation, stating that the PSLMC "shall promulgate the necessary rules and
regulations to implement this Executive Order."134
Former President Aquino issued Executive Order No. 180 on June 1, 1987, after the 1987 Constitution had been
ratified but before the first Congress convened. Thus, this order is in the nature of a statute.
The Department of Budget and Management recognizes that Administrative Order No. 135, issued in 2005, merely
"confirmed the grant of the CNA Incentive in strict compliance with the said PSLMC Resolutions[.]"135
Pursuant to Section 15 of Executive Order No. 180, PSLMC issued several resolutions including PSLMC Resolution
No. 4, series of 2002.
PSLMC Resolution No. 4 recognized this Court's ruling in Social Security System, which prohibited the grant of
signing bonus by stating that, "during the negotiation, the parties may agree on some other kinds and forms of
incentive to those who have contributed either in productivity or cost savings which are referred herein as CNA
Incentive."136
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PSLMC Resolution No. 4 clearly limited the sources of the CNA incentive such that "only savings generated after
the signing of the CNA may be used" for it.137 The Resolution defined "savings" as "such balances of the agency's
released allotment for the year, free from any obligation or encumbrance and which are no longer intended for
specific purpose/s[.]"138 It even provided for its apportionment as follows:
Section 5. Total Savings, as defined in Section 3 and net of the priorities in Section 4, generated after
the signing of the CNA shall be apportioned, as follows:
Fifty percent (50%) for CNA Incentive
Thirty percent (30%) for improvement of working conditions and other programs and/or to be added as
part of the CNA Incentive, as may be agreed upon in the CNA
Twenty percent (20%) to be reverted to the General Fund for the national government agencies or to
the General Fund of the constitutional commissions, state universities and colleges, and local
government units concerned, as the case may be.139
PSLMC Resolution No. 4 also provides that CNA incentives "can be paid every year that savings are generated
during the life of the CNA."140 If the grant of CNA Incentive is disallowed, "the management shall be held personally
responsible for the payment thereof."141
Thus, Section 3.2 of Budget Circular No. 2011-5—which limits the sources of CNA incentives "solely from agency
savings from released Maintenance and Other Operating Expenses (MOOE) allotments for the year under review,
limited to the MOOE Items in 3.3 hereof, still valid for obligation during the same year, subject to the following
conditions"142—is consistent with PSLMC Resolution No. 4.
Incidentally, Budget Circular No. 2006-1 is also consistent with PSLMC Resolution No. 4. It limited the sources of
CNA incentives such that the amount "[s]hall not be pre-determined in the CNAs or in the supplements thereto since
it is dependent on savings generated from cost-cutting measures and systems improvement, and also from
improvement of productivity and income in [government-owned and controlled corporations] and [government
financial institutions.]"143 It also provided that CNA incentives "[m]ay vary every year during the term of the CNA, at
rates depending on the savings generated after the signing and ratification of the CNA[.]"144 It even included the
apportionments of savings in Section 5 of PSLMC Resolution No. 4. 145
Notably, the ₱25,000.00 ceiling amount under Section 3.5 of Budget Circular No. 2011-5 cannot be found in PSLMC
Resolution No. 4. On this score, respondent Secretary Abad cites three laws as basis for the ceiling amount. Section
17 of Presidential Decree No. 985146 states:
SECTION 17. Powers and Functions. — The Budget Commission, principally through the OCPC shall,
in addition to those provided under other Sections of this Decree, have the following powers and
functions:
a. Administer the compensation and position classification system established herein and revise it as
necessary; (as amended by Republic Act No. 6758)
....
g. Provide the required criteria and guidelines, in consultation with agency heads as may be deemed
necessary and subject to the approval of the Commissioner of the Budget, for the grant of all types of
allowances and additional forms of compensation to employees in all agencies of the government;
Meanwhile, Book IV, Title XVII, Chapter 1, Section 3 of the Administrative Code of 1987 provides the Department of
Budget and Management's powers and functions:
SECTION 3. Powers and Functions. — The Department of Budget and Management shall assist the
President in the preparation of a national resources and expenditures budget, preparation, execution
and control of the National Budget, preparation and maintenance of accounting systems essential to
the budgetary process, achievement of more economy and efficiency in the management of
government operations, administration of compensation and position classification systems,
assessment of organizational effectiveness and review and evaluation of legislative proposals having
budgetary or organizational implications.
Section 6 of Administrative Order No. 135, for its part, authorizes the grant of CNA incentives:
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147
Following the mandate of Administrative Order No. 135, the Department of Budget and Management issued
Budget Circular No. 2006-1, Circular Letter No. 2011-9, and the assailed Budget Circular No. 2011-5.
Respondent Secretary Abad adds that a CNA incentive ceiling is consistent with Administrative Order No. 135 by
guarding against tendencies to manipulate the budget to accumulate savings:
Indeed, a delegated authority to issue guidelines must not go beyond the limits of the authority given. In
all the issuances i.e., the pertinent PSLMC issuances and AO No. 135, the driving force in the grant of
the CNA Incentive is the recognition of the joint efforts of labor and management to achieve all planned
targets, programs and services approved in the budget of the agency at a lesser cost. Consistent
therewith, the provisions of Budget Circular No. 2011-5 were crafted along this policy consideration,
thus, the need to put a cap on the grant of CNA Incentive, as with other forms of compensation and
benefits.
To elucidate, the necessary and logical consequence of implementing this policy of efficiency is to
provide limitations such as the identification of specific MOOE items and the P25,000 cap per entitled
employee. Moreover, the funding source for the CNA Incentive is the savings generated from cost-
efficiency measures adopted by the labor and management. Unlike basic salary which is provided in
the national budget, the payment of CNA Incentive is dependent on the amount of allowable agency
savings. If there are no limits, both as to the savings that may be utilized as well as to the amount of
incentive to be granted, public funds originally intended for programs and projects which for one reason
or the other was not implemented, would be fully spent as payment of incentive without said funds
being the byproduct of efficiency in agency operations, the very heart and soul in the grant of CNA
Incentive. Hence, the need for DBM to be circumspect and reflect these policy considerations through
the guidelines.
....
On the other hand, the provision of the P25,000 cap per employee is to ensure that the planned
targets, programs and projects are not hampered by the observed perverse tendency of agencies of
scrimping on vital expenditures or bloating their budgets just so as to accumulate savings for payment
of the CNA Incentive. These factors – scrimping on vital expenditures or bloating of budgets – if present
run counter to the policy behind the grant of CNA Incentive i.e., recognizing the efforts of efficient use of
government resources by labor and management of the different government agencies.148 (Emphasis
supplied)
This Court agrees. The ₱25,000.00 CNA incentive ceiling in Budget Circular No. 2011-5 is in consonance with law
and existing rules.
Indeed, Executive Order No. 180 vested PSLMC with the power to promulgate rules to implement it. This, however,
did not deprive the Department of Budget and Management of its power to issue rules on compensation as a result
of collective negotiations between government employees' organizations and their employers.
As the governmental body that administers the national government's compensation and position classification
system,149 the Department of Budget and Management controls the payment of compensation to all appointive and
elective positions in government, including government-owned or controlled corporations and government financial
institutions.150 In Commission on Human Rights Employees Association v. Commission on Human Rights:151
This power to "administer" is not purely ministerial in character as erroneously held by the Court of
Appeals. The word to administer means to control or regulate in behalf of others; to direct or
superintend the execution, application or conduct of; and to manage or conduct public affairs, as to
administer the government of the state.
The regulatory power of the DBM on matters of compensation is encrypted not only in law, but in
jurisprudence as well. In the recent case of Philippine Retirement Authority (PRA) v. Jesusito L. Buñag,
this Court, speaking through Mr. Justice Reynato Puno, ruled that compensation, allowances, and other
benefits received by PRA officials and employees without the requisite approval or authority of the DBM
are unauthorized and irregular. In the words of the Court —
Despite the power granted to the Board of Directors of PRA to establish and fix a
compensation and benefits scheme for its employees, the same is subject to the review of
the Department of Budget and Management. However, in view of the express powers
granted to PRA under its charter, the extent of the review authority of the Department of
Budget and Management is limited. As stated in Intia, the task of the Department of
Budget and Management is simply to review the compensation and benefits plan of the
government agency or entity concerned and determine if the same complies with the
prescribed policies and guidelines issued in this regard. The role of the Department of
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Budget and Management is supervisorial in nature, its main duty being to ascertain that
the proposed compensation, benefits and other incentives to be given to PRA officials and
employees adhere to the policies and guidelines issued in accordance with applicable
laws.
In Victorina Cruz v. Court of Appeals, we held that the DBM has the sole power and discretion to
administer the compensation and position classification system of the national government.
In Intia, Jr. v. Commission on Audit, the Court held that although the charter of the Philippine Postal
Corporation (PPC) grants it the power to fix the compensation and benefits of its employees and
exempts PPC from the coverage of the rules and regulations of the Compensation and Position
Classification Office, by virtue of Section 6 of P.D. No. 1597, the compensation system established by
the PPC is, nonetheless, subject to the review of the DBM. This Court intoned:
It should be emphasized that the review by the DBM of any PPC resolution affecting the
compensation structure of its personnel should not be interpreted to mean that the DBM
can dictate upon the PPC Board of Directors and deprive the latter of its discretion on the
matter. Rather, the DBM's function is merely to ensure that the action taken by the Board
of Directors complies with the requirements of the law, specifically, that PPC's
compensation system "conforms as closely as possible with that provided for under R.A.
No. 6758."152 (Citations omitted)
Administrative Order No. 135 authorizes the grant of CNA incentives to "national government agencies (NGAs),
local government units (LGUs), state universities and colleges (SUCs), government-owned or controlled
corporations (GOCCs), and government financial institutions (GFIs), if provided in their respective CNAs and
supplements thereto executed between the management and employees' organization accredited by the Civil
Service Commission[.]"153 Its Section 6 grants the power to issue the policy and procedural guidelines to the
Department of Budget and Management:
In this regard, as pointed out by Associate Justice Estela Perlas-Bernabe in her Separate Concurring Opinion,
government appropriations acts have over the years included provisions that limited approved CNA incentives to
reasonable rates as determined by the Department of Budget and Management.154
Republic Act No. 10155, or the General Appropriations Act of 2012, states:
SECTION 56. Rules in the Realignment of Funds. — Realignment of funds from one allotment class to
another shall require prior approval of the DBM.
Departments, agencies and offices are authorized to augment any item of expenditure within Personal
Services and MOOE except confidential and intelligence funds which require prior approval of the
President of the Philippines. However, realignment of funds among objects of expenditures within
Capital Outlays shall require prior approval of the DBM.
Notwithstanding the foregoing, realignment of any savings for the payment of magna carta benefits
authorized under Section 41 hereof shall require prior approval of the DBM. Moreover, the use of
savings for the payment of Collective Negotiation Agreement (CNA) incentives by agencies with
approved and successfully implemented CNAs pursuant to DBM Budget Circular No. 2006-1 dated
February 1, 2006 shall be limited to such reasonable rates as may be determined by the DBM.
Republic Act No. 10352, or the General Appropriations Act of 2013, states:
SECTION 55. Rules in the Realignment of Savings for the Payment of Collective Negotiation
Agreement Incentives. — Savings from allowable MOOE allotments generated out of cost-cutting
measures identified in the Collective Negotiation Agreements (CNAs) and supplements thereto may be
used for the grant of CNA incentive by agencies with duly executed CNAs: PROVIDED, That the one-
time annual payment of CNA incentives must be made through a written resolution signed by
representatives of both labor and management, and approved by the agency head: PROVIDED,
FURTHER, That the funding sources and amount of CNA incentives shall, in all cases, be limited to the
allowable MOOE allotments and rates determined by the DBM, respectively.
Implementation of this provision shall be governed by DBM Budget Circular Nos. 2006-1 and 2011-5
and such other issuances that may be issued by the DBM for the purpose.
Republic Act No. 10633, or the General Appropriations Act for 2014, states:
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Agreement Incentives. — Savings from allowable MOOE allotments, generated out of cost-cutting
measures undertaken by the agencies of the government and their respective personnel, which are
identified in their respective Collective Negotiation Agreements (CNAs) and supplements thereto may
be used for the grant of CNA Incentives by agencies with duly executed CNAs: PROVIDED, That the
one-time annual payment of CNA Incentive shall be made through a written resolution signed by
agency representatives from both labor and management, and approved by the agency head:
PROVIDED, FURTHER, That the funding sources and amount of CNA Incentive shall in all cases be
limited to the allowable MOOE allotments and rates determined by the DBM, respectively: PROVIDED,
FINALLY, That the realignment of savings from the allowable MOOE allotments shall be subject to
approval by the DBM.
Implementation of this provision shall be subject to guidelines issued by the DBM.
Clearly, in imposing a ₱25,000.00 budget ceiling for CNA incentives, the Department of Budget and Management
acted within its authority granted by law and existing rules.
IV
The issues raised by the parties opened questions on the validity of Section 15 of Executive Order No. 180, which
created the PSLMC, and the effect of this issue on PSLMC's acts and issuances, such as PSLMC Resolution No. 4,
series of 2002.
In their Supplemental Memorandum, respondents discussed that Executive Order No. 180 was issued when then
President Aquino could lawfully exercise legislative powers.155 As such, respondents submit that "she may delegate
to the PSLMC the power to fill in the details in the execution, enforcement or administration of Executive Order No.
180, including the power to issue guidelines for the exercise of public sector unionism and to determine the
apportionment of incentives to government employees, as provided in Resolution No. 4 series of 2002."156 The
Administrative Code157 reiterates, under the umbrella of the Civil Service Commission, PSLMC's role in the exercise
of the government employees' right to organize.158
Respondents contend that the details in PSLMC Resolution No. 4 are "guideposts germane to the objective of the
Constitution, Executive Order No. 180 and the Administrative Code of 1987 to promote and improve the terms and
conditions of employment of government employees, subject only to the limitations that are already fixed by law."159
Respondents submit that as the government's central personnel agency, the Civil Service Commission's role
"necessarily includes the power to ensure that the statutory provisions relating to the terms and conditions of
employment of civil servants are implemented."160 This means that when Executive Order No. 180 designated the
Civil Service Commission Chair as PSLMC Chair, the Civil Service Commission "was simply performing its mandate
to 'perform all functions properly belonging to a central personnel agency and such other functions as may be
provided by law."' 161
Moreover, respondents note that Section 15 of Executive Order No. 180 did not subsume the Civil Service
Commission under the executive branch, but even strengthened its independence as a constitutional commission by
empowering its Chair and other PSLMC members to set the guidelines for government employees' right to
organize.162 Neither did Executive Order No. 180 grant the Commission powers other than those in Article IX-B of
the Constitution, considering the proviso that it "shall perform . . . such other functions as may be provided by law."
Such law includes Section 45 of the Administrative Code.163 In other words, respondents argue that the PSLMC
issuances implement and detail the broad policies in the Constitution and laws on the government employees' right
to self-organization.164
This Court reiterates that for a constitutional question to be traversed, the alleged violation "must be so
demonstrably and urgently egregious that it outweighs a reasonable policy of deference in such specific
instance."165 Nonetheless, Section 15 of Executive Order No. 180, which designated the Civil Service Commission
Chair as the PSLMC Chair, seemingly conflicts with the prohibitions imposed upon members of constitutional bodies
designed to protect their independence. If such designation is unconstitutional, it puts into serious doubt the legality
of PSLMC's acts.
For this reason, this Court resolves and confirms the validity of the designation of the Chair of the Civil Service
Commission as the Chair of the PSLMC for being consistent with the Constitution.
The Civil Service Commission is an independent166 constitutional body governed by Article IX-B of the Constitution.
It is composed of a Chairperson and two Commissioners,167 appointed by the President with the consent of the
Commission on Appointments.168 Section 3 provides its powers and functions:
SECTION 3. The Civil Service Commission, as the central personnel agency of the Government, shall
establish a career service and adopt measures to promote morale, efficiency, integrity, responsiveness,
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progressiveness, and courtesy in the civil service. It shall strengthen the merit and rewards system,
integrate all human resources development programs for all levels and ranks, and institutionalize a
management climate conducive to public accountability. It shall submit to the President and the
Congress an annual report on its personnel programs.169
In Funa v. Chairman, Civil Service Commission,170 this Court held that Article IX-A, Section 2 of the Constitution
must be read in conjunction with Article IX-B, Section 7, paragraph 2:
The underlying principle for the resolution of the present controversy rests on the correct application of
Section 1 and Section 2, Article IX-A of the 1987 Constitution, which provide:
Section 1. The Constitutional Commissions, which shall be independent, are the Civil
Service Commission, the Commission on Elections, and the Commission on Audit.
Section 2. No Member of a Constitutional Commission shall, during his tenure, hold any
other office or employment. Neither shall he engage in the practice of any profession or in
the active management or control of any business which in any way may be affected by
the functions of his office, nor shall he be financially interested, directly or indirectly, in any
contract with, or in any franchise or privilege granted by the Government, any of its
subdivisions, agencies, or instrumentalities, including government-owned or controlled
corporations or their subsidiaries.
Section 1, Article IX-A of the 1987 Constitution expressly describes all the Constitutional Commissions
as "independent." Although their respective functions are essentially executive in nature, they are not
under the control of the President of the Philippines in the discharge of such functions. Each of the
Constitutional Commissions conducts its own proceedings under the applicable laws and its own rules
and in the exercise of its own discretion. Its decisions, orders and rulings are subject only to review on
certiorari by the Court as provided by Section 7, Article IX-A of the 1987 Constitution. To safeguard the
independence of these Commissions, the 1987 Constitution, among others, imposes under Section 2,
Article IX-A of the Constitution certain inhibitions and disqualifications upon the Chairmen and
members to strengthen their integrity, to wit:
(a) Holding any other office or employment during their tenure;
(b) Engaging in the practice of any profession;
(c) Engaging in the active management or control of any business which in any way may
be affected by the functions of his office; and
(d) Being financially interested, directly or indirectly, in any contract with, or in any
franchise or privilege granted by the Government, any of its subdivisions, agencies or
instrumentalities, including government-owned or — controlled corporations or their
subsidiaries.
The issue herein involves the first disqualification abovementioned, which is the disqualification from
holding any other office or employment during Duque's tenure as Chairman of the CSC. The Court
finds it imperative to interpret this disqualification in relation to Section 7, paragraph (2), Article IX-B of
the Constitution and the Court's pronouncement in Civil Liberties Union v. Executive Secretary.
Section 7, paragraph (2), Article IX-B reads:
Section 7. . . .
Unless otherwise allowed by law or the primary functions of his position, no appointive
official shall hold any other office or employment in the Government or any subdivision,
agency or instrumentality thereof, including government-owned or controlled corporations
or their subsidiaries.
In Funa v. Ermita, where petitioner challenged the concurrent appointment of Elena H. Bautista as
Undersecretary of the Department of Transportation and Communication and as Officer-in-Charge of
the Maritime Industry Authority, the Court reiterated the pronouncement in Civil Liberties Union v. The
Executive Secretary on the intent of the Framers on the foregoing provision of the 1987 Constitution, to
wit:
Thus, while all other appointive officials in the civil service are allowed to hold other office
or employment in the government during their tenure when such is allowed by law or by
the primary functions of their positions, members of the Cabinet, their deputies and
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assistants may do so only when expressly authorized by the Constitution itself. In other
words, Section 7, Article IX-B is meant to lay down the general rule applicable to all
elective and appointive public officials and employees, while Section 13, Article VII is
meant to be the exception applicable only to the President, the Vice-President, Members
of the Cabinet, their deputies and assistants.
....
Since the evident purpose of the framers of the 1987 Constitution is to impose a stricter
prohibition on the President, Vice-President, members of the Cabinet, their deputies and
assistants with respect to holding multiple offices or employment in the government during
their tenure, the exception to this prohibition must be read with equal severity. On its face,
the language of Section 13, Article VII is prohibitory so that it must be understood as
intended to be a positive and unequivocal negation of the privilege of holding multiple
government offices or employment. Verily, wherever the language used in the constitution
is prohibitory, it is to be understood as intended to be a positive and unequivocal negation.
The phrase "unless otherwise provided in this Constitution" must be given a literal
interpretation to refer only to those particular instances cited in the Constitution itself, to
wit: the Vice President being appointed as a member of the Cabinet under Section 3, par.
(2), Article VII; or acting as President in those instances provided under Section 7, pars.
(2) and (3), Article VII; and, the Secretary of Justice being ex-officio member of the Judicial
and Bar Council by virtue of Section 8 (1), Article VIII.
Being an appointive public official who does not occupy a Cabinet position (i.e., President, the Vice-
President, Members of the Cabinet, their deputies and assistants), Duque was thus covered by the
general rule enunciated under Section 7, paragraph (2), Article IX-B. He can hold any other office or
employment in the Government during his tenure if such holding is allowed by law or by the primary
functions of his position.171 (Citations omitted)
Read together, the two constitutional provisions mean that the appointment of a member of a constitutional
commission to any governing body must depend on the functions of the government entity on which that member
sits. For the Civil Service Commission Chair, it must involve the career development, employment status, rights,
privileges, and welfare of government officials and employees. Funa elaborates:
Section 3, Article IX-B of the 1987 Constitution describes the CSC as the central personnel agency of
the government and is principally mandated to establish a career service and adopt measures to
promote morale, efficiency, integrity, responsiveness, progressiveness, and courtesy in the civil service;
to strengthen the merit and rewards system; to integrate all human resources development programs
for all levels and ranks; and to institutionalize a management climate conducive to public accountability.
Its specific powers and functions are as follows:
(1) Administer and enforce the constitutional and statutory provisions on the merit system
for all levels and ranks in the Civil Service;
(2) Prescribe, amend and enforce rules and regulations for carrying into effect the
provisions of the Civil Service Law and other pertinent laws;
(3) Promulgate policies, standards and guidelines for the Civil Service and adopt plans
and programs to promote economical, efficient and effective personnel administration in
the government;
(4) Formulate policies and regulations for the administration, maintenance and
implementation of position classification and compensation and set standards for the
establishment, allocation and reallocation of pay scales, classes and positions;
(5) Render opinion and rulings on all personnel and other Civil Service matters which shall
be binding on all heads of departments, offices and agencies and which may be brought
to the Supreme Court on certiorari;
(6) Appoint and discipline its officials and employees in accordance with law and exercise
control and supervision over the activities of the Commission;
(7) Control, supervise and coordinate Civil Service examinations. Any entity or official in
government may be called upon by the Commission to assist in the preparation and
conduct of said examinations including security, use of buildings and facilities as well as
personnel and transportation of examination materials which shall be exempt from
inspection regulations;
11/10/24, 2:24 PM G.R. No. 200418
(8) Prescribe all forms for Civil Service examinations, appointments, reports and such
other forms as may be required by law, rules and regulations;
(9) Declare positions in the Civil Service as may properly be primarily confidential, highly
technical or policy determining;
(10) Formulate, administer and evaluate programs relative to the development and
retention of qualified and competent work force in the public service;
(11) Hear and decide administrative cases instituted by or brought before it directly or on
appeal, including contested appointments, and review decisions and actions of its offices
and of the agencies attached to it. Officials and employees who fail to comply with such
decisions, orders, or rulings shall be liable for contempt of the Commission. Its decisions,
orders, or rulings shall be final and executory. Such decisions, orders, or rulings may be
brought to the Supreme Court on certiorari by the aggrieved party within thirty (30) days
from receipt of a copy thereof;
(12) Issue subpoena and subpoena duces tecum for the production of documents and
records pertinent to investigation and inquiries conducted by it in accordance with its
authority conferred by the Constitution and pertinent laws;
(13) Advise the President on all matters involving personnel management in the
government service and submit to the President an annual report on the personnel
programs;
(14) Take appropriate action on all appointments and other personnel matters in the Civil
Service including extension of Service beyond retirement age;
(15) Inspect and audit the personnel actions and programs of the departments, agencies,
bureaus, offices, local government units and other instrumentalities of the government
including government-owned or controlled corporations; conduct periodic review of the
decisions and actions of offices or officials to whom authority has been delegated by the
Commission as well as the conduct of the officials and the employees in these offices and
apply appropriate sanctions when necessary;
(16) Delegate authority for the performance of any functions to departments, agencies and
offices where such functions may be effectively performed;
(17) Administer the retirement program for government officials and employees, and
accredit government services and evaluate qualifications for retirement;
(18) Keep and maintain personnel records of all officials and employees in the Civil
Service; and
(19) Perform all functions properly belonging to a central personnel agency and such other
functions as may be provided by law.
On the other hand, enumerated below are the specific duties and responsibilities of the CSC Chairman,
namely:
(1) Direct all operations of the Commission;
(2) Establish procedures for the effective operations of the Commission;
(3) Transmit to the President rules and regulations, and other guidelines adopted by the
Chairman which require Presidential attention including annual and other periodic reports;
(4) Issue appointments to, and enforce decisions on administrative discipline involving
officials and employees of the Commission;
(5) Delegate authority for the performance of any function to officials and employees of the
Commission;
(6) Approve and submit the annual and supplemental budget of the Commission; and
(7) Perform such other functions as may be provided by law.
11/10/24, 2:24 PM G.R. No. 200418
Section 14, Chapter 3, Title I-A, Book V of EO 292 is clear that the CSC Chairman's membership in a
governing body is dependent on the condition that the functions of the government entity where he will
sit as its Board member must affect the career development, employment status, rights, privileges, and
welfare of government officials and employees. Based on this, the Court finds no irregularity in Section
14, Chapter 3, Title I-A, Book V of EO 292 because matters affecting the career development, rights
and welfare of government employees are among the primary functions of the CSC and are
consequently exercised through its Chairman. The CSC Chairman's membership therein must,
therefore, be considered to be derived from his position as such. Accordingly, the constitutionality of
Section 14, Chapter 3, Title I-A, Book V of EO 292 is upheld.172 (Citations omitted)
Executive Order No. 180, which creates the PSLMC, and is reiterated in Book V, Title I, Chapter 6, Section 45 of the
Administrative Code of 1987, is a law within the contemplation of the phrase "otherwise allowed by law or the
primary functions of his position" in Article IX-B, Section 7, paragraph 2 of the Constitution. Book V, Title I-A, Chapter
3, Section 14 of the Administrative Code of 1987, as upheld in Funa, states that the Civil Service Commission Chair
may be appointed to "governing bodies of government entities whose functions affect the career development,
employment status, rights, privileges, and welfare of government officials and employees, . . . and such other similar
boards as may be created by law."
Section 15 of Executive Order No. 180 envisioned a coordination body, considering its composition of Civil Service
Commission Chair, along with the Secretaries of the Department of Labor and Employment, Department of Finance,
Department of Justice, and Department of Budget and Management.173 Coordination between a constitutional
commission and departments of the executive branch, so long as the coordination is not controlled by the executive
branch, is not proscribed. With the Civil Service Commission Chair as PSLMC Chair, the PSLMC is not
subordinated to the executive branch, and the independence of the Civil Service Commission is not undermined.
Moreover, the work of the PSLMC, through guidelines and other resolutions that implement Executive Order No.
180, enhances the protection of government employees' right to self-organize. Its mandate is well within the Civil
Service Commission's primary functions, which encompass "the career development, employment status, rights,
privileges, and welfare of government officials and employees"174 as contemplated in Funa. Since these primary
functions are exercised through the Civil Service Commission Chair, the designation as PSLMC Chair, to oversee
the implementation of Executive Order No. 180, does not violate Article IX-A, Section 2 in relation to Article IX-B,
Section 7 of the Constitution.
This case also raised the question of whether Section 5 of PSLMC Resolution No. 4 violated Article VI, Section
25(5) of the Constitution, which proscribes the transfer of appropriations. Respondents claim:
The apportionment of government savings is not included in said proscription because this money has
not been "realigned" from its intended use, as envisioned under Article VI, Section 25 (5) of the 1987
Constitution, but had already been set apart from the public treasury by Congress as unutilized funds,
through the General Appropriations Act (GAA). To be sure, Republic Act No. 10352 or the General
Appropriations Act of 2012 allows the utilization of savings, including payment of CNA incentives,
subject only to compliance with certain conditions. The pertinent provisions of Republic Act No. 10352
states:
....
Considering that the savings is a particular fund that was already set apart from the public treasury as
unutilized funds, the President, in the performance of the mandate to faithfully execute the laws, had
sufficient discretion to fill in the details as regards its execution, enforcement or administration.
Specifically, in issuing Executive Order No. 180 authorizing the PSLMC the power to determine where
savings should be allocated (which is now under Administrative Code of 1987), the President was not
just exercising legislative power but her executive power to ensure that the laws are faithfully executed.
This power necessarily includes the power to administer laws, which means carrying them into practical
operation and enforcing their due observance. It is a power borne by the President's duty to preserve
and defend the Constitution and execute the laws. Stated otherwise, under the Faithful Execution
Clause, the President has the power to take "necessary and proper steps" to carry into execution the
law. Truly, once the appropriations bill is signed into law, its implementation becomes the exclusive
function of the President.175 (Emphasis supplied, citations omitted)
Article VI, Section 25(5) of the Constitution reads:
(5) No law shall be passed authorizing any transfer of appropriations; however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment
11/10/24, 2:24 PM G.R. No. 200418
any item in the general appropriations law for their respective offices from savings in other items of
their respective appropriations. (Emphasis supplied)
The proviso that the enumerated persons "may, by law, be authorized to augment" means that their discretion to
augment appropriations may be limited by law. Thus, Section 55 of the General Appropriations Act of 2012, on the
"Rules in the Realignment of Savings for the Payment of Collective Negotiation Agreement Incentives," validly limits
the President's discretion:
SECTION 53. Meaning of Savings and Augmentation. — Savings refer to portions or balances of any
programmed appropriation in this Act free from any obligation or encumbrance which are: (i) still
available after the completion or final discontinuance or abandonment of the work, activity or purpose
for which the appropriation is authorized; (ii) from appropriation balances arising from unpaid
compensation and related costs pertaining to vacant positions and leaves of absence without pay; and
(iii) from appropriation balances realized from the implementation of measures resulting in improved
systems and efficiencies and thus enabled agencies to meet and deliver the required or planned
targets, programs and services approved in this Act at a lesser cost.
Augmentation implies the existence in this Act of a program, activity, or project with an appropriation,
which upon implementation or subsequent evaluation of needed resources, is determined to be
deficient. In no case shall a non-existent program, activity, or project, be funded by augmentation from
savings or by the use of appropriations otherwise authorized in this Act.
SECTION 54. Rules in the Realignment of Savings. — Realignment of Savings from one allotment
class to another shall require prior approval of the DBM.
Departments, bureaus and offices, including SUCs, are authorized to augment any item of expenditure
within Personal Services and MOOE, except intelligence funds which require prior approval from the
President of the Philippines. However, realignment of savings among objects of expenditures within
Capital Outlays shall require prior approval of the DBM.
Notwithstanding the foregoing, realignment of any savings for the payment of magna carta benefits
authorized under Section 41 hereof shall require prior approval of the DBM.
Agreement Incentives. — Savings from allowable MOOE allotments generated out of cost-cutting
measures identified in the Collective Negotiation Agreements (CNAs) and supplements thereto may be
used for the grant of CAN incentive by agencies with duly executed CNAs: PROVIDED, That the one-
time annual payment of CNA incentives must be made through a written resolution signed by
representatives of both labor and management, and approved by the agency head: PROVIDED,
FURTHER, That the funding sources and amount of CNA incentives shall, in all cases, be limited to
the allowable MOOE allotments and rates determined by the DBM, respectively.
Implementation of this provision shall be governed by DBM Budget Circular Nos. 2006-1 and 2011-5
and such other issuances that may be issued by the DBM for the purpose.176 (Emphasis supplied)
However, those with political functions, such as the President, should be distinguished from those with fiscal
autonomy177 and governed by separate constitutional provisions.
Article VI, Section 25(5) must be interpreted in light of the provisions for those that enjoy fiscal autonomy. Article VIII,
Section 3 of the Constitution, for example, provides for the Judiciary's fiscal autonomy in that its appropriations "may
not be reduced by the legislature below the amount appropriated for the previous year and, after approval, shall be
automatically and regularly released."178 This provision is unique to the Judiciary, and creates a different scenario for
its budget and any consequent savings.
VI
Petitioners argue that Budget Circular No. 2011-5 modifies and altogether nullifies specific provisions of validly
executed CNAs in violation of the constitutional provision on non-impairment of obligations.179 They discuss that the
Constitution guarantees the right of government employees to collective bargaining and negotiation, and that these
government employees have vested rights in validly consummated CNAs.180
Respondents counter that no vested rights to CNA incentives exist. For respondent Secretary Abad, these
incentives depend on several conditions such as the generation of savings,181 and are different from collective
bargaining agreements in that government employees have no right to bargain collectively.182 Respondent Secretary
Soliman submits that a CNA grant "is not a contract within the purview of the non-impairment clause";183 instead, it
depends on compliance with budget policies and guidelines.184
11/10/24, 2:24 PM G.R. No. 200418
This Court rules that petitioners have no vested rights to CNA incentives. Nonetheless, under the circumstances of
this case, the order to return the excess ₱5,000.00 received by the affected employees was erroneous.
As early as 1928, Balboa v. Farrales185 defined "vested right" as "some right or interest in property which has
become fixed and established and is no longer open to doubt or controversy." 186
In 1956, Benguet Consolidated Mining Company v. Pineda187 discussed that "[t]he right must be absolute, complete,
and unconditional, independent of a contingency, and a mere expectancy of future benefit, or a contingent interest in
property founded on anticipated continuance of existing laws, does not constitute a vested right."188
Several factors may be considered in determining when rights "vest." We consider the source of the right—the
Constitution, a statute, or a regulation. The right must have a legal basis. The nature of the prestation must also be
examined. The right must be absolute; otherwise, conditional rights vest once compliance with all conditions is
shown. The prestation should also be clear; it cannot be broad, or subject to further implementation or clarification.
As to the effect of the right, public good outweighs private interest. In any event, laws generally only create
expectations.
The concept of "vested right" has been used in cases on employee benefits. In Boncodin v. NAPOCOR Employees
Consolidated Union,189 which involved salary step increments, this Court discussed:
A vested right is one that is absolute, complete and unconditional; to its exercise, no obstacle exists;
and it is immediate and perfect in itself and not dependent upon any contingency. To be vested, a right
must have become a title — legal or equitable — to the present of future enjoyment of
property.190 (Citations omitted)
Labor cases have held that "where there is an established employer practice of regularly, knowingly and voluntarily
granting benefits to employees over a significant period of time, despite the lack of a legal or contractual obligation
on the part of the employer to do so, the grant of such benefits ripens into a vested right of the employees and can
no longer be unilaterally reduced or withdrawn by the employer."191
Government Service Insurance System v. Montesclaro192 discussed:
In a pension plan where employee participation is mandatory, the prevailing view is that employees
have contractual or vested rights in the pension where the pension is part of the terms of employment. .
..
Thus, where the employee retires and meets the eligibility requirements, he acquires a vested right to
benefits that is protected by the due process clause.193
Employees in the private sector have the right to self-organize for purposes of collective bargaining, among
others.194 The Labor Code governs collective bargaining for private employees. Collective bargaining agreements
include grants of employee benefits.
Employees in the public sector also have the right to self-organize.195 Executive Order No. 180 governs their right to
organize "for the furtherance and protection of their interests."196 However, collective negotiation agreements include
employment terms and conditions not fixed by law:
SECTION 13. Terms and conditions of employment or improvements thereof, except those that are
fixed by law, may be the subject of negotiations between duly recognized employees' organizations
and appropriate government authorities.197 (Emphasis supplied)
Thus, it is "the legislative and — when properly given delegated power — the administrative heads of government
that fix the terms and conditions of employment through statutes or administrative circulars, rules, and
regulations."198 Also, "the process of collective negotiations in the public sector does not encompass terms and
conditions of employment requiring the appropriation of public funds."199
Petitioners now invoke their CNA, raising the non-impairment clause under the Constitution.200
As contracts create the law between the parties,201 they produce binding juridical rights and obligations. The power
of private individuals to enter into contracts is protected by their autonomy implicit in the constitutional guarantee of
due process,202 among others, but subject to reasonable limitations by valid law.
This case involves the CNA incentive. CNA incentive is not compensation since Congress passed Republic Act No.
6758.203 It is not a signing bonus, since Social Security System v. Commission on Audit204 disallowed the grant of
signing bonuses for government employees. It is not an award for service excellence since Civil Service
Commission Memorandum No. 01, series of 2001, established the Program on Awards and Incentives for Service
Excellence (PRAISE).205
11/10/24, 2:24 PM G.R. No. 200418
PSLMC Resolution No. 4 provides that "CNA Incentive is linked with agency performance and
productivity,"206 "intended to be charged against free unencumbered savings of the agency, which are no longer
intended for any specific purpose."207 It is an incentive to produce efficiently by meeting targets and generating
savings:
Thus, a CNA incentive is not per se vested. Its grant is conditioned on the applicable laws, rules, and regulations
that govern it, including the assailed Budget Circular No. 2011-5 insofar as its provisions are consistent with PSLMC
resolutions implementing Executive Order No. 180. For one, PSLMC Resolution No. 4 requires the existence of
"savings generated after the signing of the CNA."208 Savings also depend on constitutional prerogatives.
However, we agree with petitioners' position against the retroactive application of Budget Circular No. 2011-5 to
CNA incentives already released to the employees.209
While the Department of Budget and Management can generally impose conditions for the grant of CNA incentives,
in this case, the conditions were imposed after the benefits had already been released and received by the
employees. The Department had not put in place a ceiling on CNA incentives when the ₱30,000.00 CNA incentive—
the total amount from the October 26, 2011 and December 3, 2011 memoranda issued by respondent Secretary
Soliman—was granted. Budget Circular No. 2011-5, which contains the ₱25,000.00 ceiling, was issued only on
December 26, 2011 and published only on February 25, 2012.210 Thus, the benefits had already been vested in the
employees' behalf. Likewise, we confirm petitioners' argument that the January 20, 2012 Memorandum directing the
refund of CNA incentives paid violated Section 43 of the General Appropriations Act of 2011.211
Section 43 enumerates the authorized deductions from employees' salaries as follows:
SECTION 43. Authorized Deductions. Deductions from salaries, emoluments or other benefits accruing
to any government employee chargeable against the appropriations for Personal Services may be
allowed for the payment of individual employee's contributions or obligations due the following:
(a) The BIR, GSIS, HDMF and PHILHEALTH;
(b) Mutual benefits associations, thrift banks and non-stock savings and loan associations
duly operating under existing laws which are managed by and/or for the benefit of
government employees;
(c) Associations/cooperatives/provident funds organized and managed by government

employees for their benefit and welfare;
(d) Duly licensed insurance companies accredited by national government agencies; and
(e) Organizations or companies such as banks, non-bank financial institutions, financing

companies and other similar entities that have authority to engage in lending and mutual
benefits or mutual aid system as stated in their respective constitutions and by-laws
approved by government regulating bodies such as the Securities and Exchange
Commission (SEC), Insurance Commission (IC), Bangko Sentral ng Pilipinas (BSP) and
Cooperative Development Authority (CDA).
PROVIDED, That such deductions shall not reduce the employee's monthly net take home pay to an
amount lower than Three Thousand Pesos (P3,000), after all authorized deductions: PROVIDED,
FURTHER, That in the event total authorized deductions shall reduce net take home pay to less than
Three Thousand Pesos (P3,000), authorized deductions under item (a) shall enjoy first preference,
those under item (b) shall enjoy second preference, and so forth.
As petitioners had argued, the list of allowable salary deductions in the General Appropriations Act does not include
excess CNA incentives. We also note that the Memorandum should not have been authorized only by the Assistant
Secretary, but must also bear the signature of approval and conforme of respondent Secretary Soliman.
Thus, the January 20, 2012 Memorandum, which required employees of the Department of Social Welfare and
Development to refund the ₱5,000.00 excess through deductions from their salaries, is void.
VII
Unlike private sector employees whose employment terms and conditions are governed by collective bargaining
agreements entered by labor federations through collective bargaining,212 the employment terms and conditions of
public sector employees are fixed through statutes, rules, and regulations.213 The right of government employees to
organize is only "for the furtherance and protection of their interests."214
11/10/24, 2:24 PM G.R. No. 200418
It is true that Republic Act No. 6758, or the Salary Standardization Law, applies to "all positions, appointive or
elective, on full or part-time basis, now existing or hereafter created in the government, including government-owned
or controlled corporations and government financial institutions."215 Nevertheless, not all government employees are
similarly situated or share the same interest.
Traditional classifications distinguish between governmental functions and proprietary functions.216 The Philippine
Charity Sweepstakes Office, for example, can engage in profit-oriented activities as "the principal government
agency for raising and providing for funds for health programs, medical assistance and services, and charities of
national character[.]"217 Government owned and controlled corporations perform both governmental and proprietary
functions.218 Developments in modem society later rendered such distinctions outdated.219
Even within a government body, its employees are not necessarily similarly situated. The University of the
Philippines Charter grants its Board of Regents the power "to receive and appropriate all sums as may be provided
by law for the support of the national university to the ends specified by law, and all other sums in the manner it may,
in its discretion, determine to carry out the purposes and functions of the national university[.]"220 Those holding
academic positions such as faculty members have different interests and opportunities from those holding non-
academic positions.
There are also those that enjoy fiscal autonomy, such as the constitutional commissions.221
Perhaps, lobbying before Congress and the proper authorities for more benefits, such as compensation increase,
may be the better course for those in the public sector.222 For other labor matters not fixed by law, government
employees can course their concerns through their labor organization with members sharing similar interests.
WHEREFORE, the Petition is PARTIALLY GRANTED. The January 20, 2012 Memorandum requiring employees of
the Department of Social Welfare and Development to refund the ₱5,000.00 excess through deductions from their
salaries is VOID.
SO ORDERED.
Peralta, C.J., Gesmundo, Hernando, Carandang, Lopez, Delos Santos, Gaerlan, and Rosario, JJ., concur.
Perlas-Bernabe, and Caguioa, JJ., please see separate concurring opinions.
Lazaro-Javier, Inting, and Zalameda, JJ., on official leave.
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on November 10, 2020 a Decision copy attached herewith, was rendered by the Supreme
Court in the above-entitled case, the original of which was received by this Office on May 27, 2021 at 11:05 a.m.
Very truly yours,
EDGAR O. ARICHETA
Clerk of Court
By:
(Sgd.) ANNA-LI R. PAPA-GOMBIO

Deputy Clerk of Court En Banc
Footnotes
1
Id. at 3-38. This Petition was filed under Rule 65 of the Rules of Court.
2
Rollo, pp. 10-11.
3
Id. at 33-34.
4
Id. at 111, Comment by respondent Secretary Florencio B. Abad; and rollo, p. 142, Comment by respondent
Secretary Corazon Soliman.

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11/10/24, 2:24 PM G.R. No.

Today is Sunday, November 10, 2024

G.R. No. 200418, November 10, 2020,

[ G.R. No. 200418, November 10, 2020 ]

CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES

Aggrieved, the associations filed this Petition13 on February 21, 2012.

The issues for this Court's resolution are the following:

First, whether or not petitioners have legal standing;

Seventh, whether or not petitioners have a vested right to CNA incentives;

a. authorizing the PSLMC to declare where savings are to be allocated; and/or

Article VIII, Section 1 of the Constitution states:

In Kilusang Mayo Uno v. Aquino:37

In Francisco v. The House of Representatives, we recognized that this expanded

I suppose nobody can question it.

This Court further explained:

In Falcis v. Civil Registrar General:48

Article XIII, Section 3 of the Constitution states:

e. To sue and be sued in its registered name; and

This Court has also said in a number of cases that —

1) Chairman, Civil Service Commission Chairman

2) Secretary, Department of Labor and Employment Vice-Chairman

3) Secretary, Department of Finance Member

4) Secretary, Department of Justice Member

5) Secretary, Department of Budget and Management Member

Fifty percent (50%) for CNA Incentive

SECTION 1. Subject of negotiation. – Terms and conditions of employment or improvements thereof,

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by virtue of the

SECTION 7. Effectivity. — This Administrative Order shall take effect immediately.

g) Incumbent heads of offices are temporary; and

Fifty percent (50%) for CNA Incentive

Implementation of this provision shall be subject to guidelines issued by the DBM.

(a) Holding any other office or employment during their tenure;

(b) Engaging in the practice of any profession;

Section 7, paragraph (2), Article IX-B reads:

(1) Direct all operations of the Commission;

(2) Establish procedures for the effective operations of the Commission;

(7) Perform such other functions as may be provided by law.

Article VI, Section 25(5) of the Constitution reads:

Government Service Insurance System v. Montesclaro192 discussed:

Section 43 enumerates the authorized deductions from employees' salaries as follows:

(a) The BIR, GSIS, HDMF and PHILHEALTH;

(c) Associations/cooperatives/provident funds organized and managed by government

(e) Organizations or companies such as banks, non-bank financial institutions, financing

Perlas-Bernabe, and Caguioa, JJ., please see separate concurring opinions.

Lazaro-Javier, Inting, and Zalameda, JJ., on official leave.

Very truly yours,

(Sgd.) ANNA-LI R. PAPA-GOMBIO

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