Blaquera v.

Alcala

Petitioners are officials and employees of several government departments and agencies who were paid
incentive benefits for the year 1992, pursuant to Executive Order No. 292, otherwise known as the
Administrative Code of 1987, and the Omnibus Rules Implementing Book V 2 of EO 292. Subsequently,
President Ramos issued Administrative Order No. 29 authorizing the grant of productivity incentive
benefits for the year 1992 in the maximum amount of P1,000.00 3 and reiterating the prohibition 4
under Section 75 of Administrative Order No. 268 ("AO 268"), enjoining the grant of productivity
incentive benefits without prior approval of the President. Said order also called for the refund of the
incentives in excess of the limit.

Also, the Association of Dedicated Employees of the Philippine Tourism Authority received incentives in
1992 pursuant to Republic Act No. 6971 ("RA 6971"), otherwise known as the Productivity Incentives Act
of 1990. Subject bonus was, however, disallowed by the Corporate Auditor on the ground that it was
"prohibited under Administrative Order No. 29 dated January 19, 1993."

The disallowance of the bonus in question was finally brought on appeal to the Commission an Audit
(COA) which denied the appeal in its Decision 7 of March 6, 1995. Said body reasoned RA #6971 insofar
as the coverage is concerned refer to business enterprises including government owned and/or
controlled corporations performing proprietary functions and that PTA does not satisfy said
requirement. Furthermore, the IRR of said statute excludes entities created, maintained or acquired in
pursuance of a policy of the State enunciated in the Constitution, or by law and those whose officers
and employees are covered by the Civil Service.

With its exclusion from RA 6971, PTA is deemed as within the ambit if AO 29 and is susceptible to the
refunds of incentives in excess of the limit prescribe in said issuance.

Issues:

1. WON the PTA is within the ambit of RA 6971

2. WON AO 29 and AO 268 were issued in the valid exercise of presidential control over the executive
departments

Held:

1. No, the PTA is not within the ambit of RA 6971.

RA 6971 covers business enterprises including government owned and/or controlled corporations
performing proprietary functions. Furthermore, its IRR only includes government-owned and
controlled corporations performing proprietary functions which are established solely for business or
profit or gain and accordingly excluding those created, maintained or acquired in pursuance of a
policy of the state, enunciated in the Constitution or by law, and those whose officers and employees
are covered by the Civil Service.

Government-owned and controlled corporations may perform governmental or proprietary functions

or both, depending on the purpose for which they have been created. If the purpose is to obtain
special corporate benefits or earn pecuniary profit, the function is proprietary. If it is in the interest of
health, safety and for the advancement of public good and welfare, affecting the public in general, the
function is governmental. Powers classified as “proprietary” are those intended for private advantage
and benefit.

Petitioners claim that they are within the ambit of RA 6971 because PTA is performing proprietary
functions. A perusal of PTA’s functions yields that the same performs both proprietary and
governmental functions. The Supreme Court deemed it insufficient to rule upon the matter based from
the functions of PTA and the same court delved into the legislative intent of the statute in question.

A certain Chairman Veloso, during the deliberation of the statute in question, states that the intent of
the law is to include GOCC’s that have the benefits like that of ordinary private enterprises such as the
right to organize or bargain. The Supreme Court, based from Chairman Veloso’s statement, held that the
coverage of the statute is limited to GOCC’s incorporated under the general corporation law because the
same has the right to bargain. In contrast, GOCC’s with special charter and subject to the Civil Service
Law has no right to bargain except where the terms and conditions of employment are not fixed by law.
PTA is a GOCC with an original charter. Consequently, not being covered by RA 6971, AO 29 applies to
the petitioner.

2. Yes, AO 29 and AO 268 were issued in the valid exercise of presidential control over the executive
departments

The Pres. is the head of the government. Governmental power and authority are exercised and
implemented through him. His power includes the control of executive departments as provided
under Sec. 17, Art. VII of the Constitution.

Control means the power of an officer to alter or modify or set aside what a subordinate officer had
done in the performance of his duties and to substitute the judgment of the former for that of the
latter. The Pres. can, by virtue of his power of control, review, modify, alter or nullify any action or
decision of his subordinate in the executive departments, bureau or offices under him.

When the Pres. issued AO 29 limiting the amount of incentive benefits, enjoining heads of government
agencies from granting incentive benefits without approval from him and directing the refund of the
excess over the prescribed amount, the Pres. was just exercising his power of control over executive
departments.

The Pres. issued subject AOs to regulate the grant of productivity incentive benefits and to prevent
discontent, dissatisfaction and demoralization among government personnel by committing limited
resources of government for the equal payment of incentives and awards. The Pres. was only exercising
his power of control by modifying the acts of the heads of the government agencies who granted
incentive benefits to their employees without appropriate clearance from the Office of the Pres.,
thereby resulting in the uneven distribution of government resources.

The President’s duty to execute the law is of constitutional origin. So, too, is his control of executive
departments.

The Conference of Maritime Manning Agencies, et al. v. POEA

Petitioner Conference of Maritime Manning Agencies, Inc., an incorporated association of licensed

Filipino manning agencies, and its co-petitioners, all licensed manning agencies which hire and recruit
Filipino seamen for and in behalf of their respective foreign shipowner-principals, urge us to annul
Resolution No. 01, series of 1994, of the Governing Board" of the Philippine Overseas Employment
Administration (POEA) and POEA Memorandum Circular No. 05, series of 1994.

They posit that POEA does not have the power and authority to fix and promulgate rates affecting death
and workmen's compensation of Filipino seamen working in ocean-going vessels; only Congress can,
that POEA violated the standards for its exercise, that the resolution and the memorandum circular are
unconstitutional because they violate the equal protection and non-impairment of obligation of
contracts clauses of the Constitution and the resolution and the memorandum circular are not, valid
acts of the Governing Board because the private sector representative mandated by law has not been
appointed by the President since the creation of the POEA.

Both the Resolution No. 01, series of 1994, of the Governing Board" of the Philippine Overseas
Employment Administration (POEA) and POEA Memorandum Circular No. 05, series of 1994 increases
the compensation and benefits Filipino seamen working in ocean-going vessels.

Issue:

1. WON the POEA can promulgate rules by virtue of delegation of legislative power.

2. WON POEA violated the equal protection and contract clauses of the Constitution.

Held:

1. Yes, the POEA can promulgate rules by virtue of delegation of legislative power.

The constitutional challenge of the rule-making power of the POEA based on impermissible delegation
of legislative power had been, as correctly contented by the public respondents, brushed aside by this
Court in Eastern Shipping Lines, Inc. vs. POEA.

The governing Board of the Administration (POEA) shall promulgate the necessary rules and
regulations to govern the exercise of the adjudicatory functions of the Administration (POEA).

The legislature may not have the competence to provide the required direct and efficacious solutions for
the many of the problems attendant upon present-day undertakings. These solutions may, however, be
expected from its delegates, who are supposed to be experts in the particular fields assigned to them.

While the making of laws is a non-delegable power that pertains exclusively to Congress, nevertheless,
the latter may constitutionally delegate the authority to promulgate rules and regulations to implement
a given legislation and effectuate its policies, for the reason that the legislature finds it impracticable, if
not impossible, to anticipate situations that may be met in carrying the law into effect. All that is
required is that the regulation should be germane to the objects and purposes of the law; that the
regulation be not in contradiction to but in conformity with the standards prescribed by the law.

That the challenged resolution and memorandum circular, which merely further amended the previous
Memorandum Circular No. 02, strictly conform to the sufficient and valid standard of "fair and equitable
employment practices" prescribed in E.O. No. 797 can no longer be disputed.

2. No, POEA did not violate the equal protection and contract clauses of the Constitution.
There is, as well, no merit to the claim that the assailed resolution and memorandum circular violate the
equal protection and contract clauses of the Constitution. To support its contention of inequality, the
petitioners claim discrimination against foreign shipowners and principals employing Filipino seamen
and in favor of foreign employers employing overseas Filipinos who are not seamen. It is an established
principle of constitutional law that the guaranty of equal protection of the laws is not violated by
legislation based on reasonable classification. And for the classification to be reasonable, it (1) must
rest on substantial distinctions; (2) must be germane to the purpose of the law; (3) must not be
limited to existing conditions only; and (4) must apply equally to all members of the same class. There
can be no dispute about the dissimilarities between land-based and sea-based Filipino overseas
workers in terms of, among other things, work environment, safety, dangers and risks to life and limb,
and accessibility to social, civic, and spiritual activities.

Nor is there-merit; in the claim that the resolution and memorandum circular violate the contract clause
of the Bill of Rights. The executive order creating the POEA was enacted to further implement the social
justice provisions of the 1973. Constitution, which have been greatly enhanced and expanded in the
1987 Constitution by placing them under a separate Article.

The constitutional prohibition against impairing contractual obligations is not absolute and is not to
be read with literal exactness. It is restricted to contracts with respect to property or some object of
value and which confer rights that maybe asserted in a court of justice; it has no application to
statutes relating to public subjects within the domain of the general legislative powers of the State
and involving the public rights and public welfare of the entire community affected by it. It does not
prevent a proper exercise by the State of its police power by enacting regulations reasonably
necessary to secure the health, safety, morals; comfort, or general welfare of the community, even
though contracts may thereby be affected, for such matters cannot be placed by contract beyond the
power of the State to regulate and control them.

Note: The last issue concerns the contention that without the appointment by the President of the third
member of the governing board, the POEA cannot legally function and exercise its powers. This
contention merits scant consideration. Section 4 of E.O. No. 797 indubitably declares the immediate
creation of the POEA. Thus upon the effectivity of E.O. No. 797, the POEA attained its juridical
personality. The appointment of the third member "who shall be well versed, in the field of overseas
employment," provided for in paragraph (b) of the said Section, was not meant to be a sine qua non to
the birth of the POEA, much less to the validity of the acts of the Board. As a matter of fact, in the same
paragraph the President is given the "discretion [to] designate a Deputy Administrator as the third
member of the Board."