G.R. No. 110315 - Cudia vs. Court of Appeals

Whether RA 6971 covers PTA, a GOCC with original charter subject to civil service law.
Whether AOs 268 and 29 exceeded EO 292 or usurped the Civil Service Commission’s rule-making authority.
Whether mandated refund of incentive pay impairs contractual obligations.
Whether officials enforcing AO 29/268 incur personal liability under AO 268, Section 9.

Coverage of RA 6971

RA 6971 defines “business enterprises” to include GOCCs performing proprietary functions but its implementing rules (Section 1, Rule II, as supplemented) exclude GOCCs created by special charter and whose employees are under civil service law.
PTA’s charter (PD 189, as amended by PD 564) establishes predominantly governmental functions (surveys, planning, ecological preservation) alongside some proprietary powers, but it is a special-charter GOCC subject to civil service coverage.
Legislative history and statutory context (references to collective bargaining, strikes) confirm RA 6971 was aimed at private-sector enterprises and GOCCs under the Corporation Code, not special-charter GOCCs like PTA.
Omnibus Rules under EO 292 already require special-charter GOCCs to maintain their own incentive systems. COA correctly ruled RA 6971 does not apply to PTA.

Presidential Authority vs. Civil Service Commission

EO 292 (Book V, Secs. 31–36) empowers the Commission to promulgate rules for a government-wide incentive system, but authorizes the President or heads of agencies to incur expenses and grant awards pursuant to those rules.
AOs 268 and 29 were valid exercises of the President’s constitutional power of control over executive departments (Art. VII, Sec. 17), modifying subordinate actions to ensure uniformity, fiscal prudence, and morale.
These Orders do not repeal EO 292 nor strip the Commission of its rule-making function; they regulate timing, amount, and presidential prior approval for incentive grants. Sound management of public funds is an executive function.

Contractual Impairment and Personal Liability

Petitioners are officials and employees of various government departments and agencies who received productivity incentive benefits for calendar year 1992 pursuant to Executive Order No. 292 (the Administrative Code of 1987) and the Omnibus Rules implementing Book V of EO 292.
On January 19, 1993, President Ramos issued Administrative Order No. 29, authorizing grants of productivity incentives for 1992 in a maximum amount of ₱1,000 each and reiterating the prohibition under Section 7 of Administrative Order No. 268 against granting such benefits without prior presidential approval.
Section 4 of AO 29 directed heads of departments or agencies to refund any amount in excess of ₱1,000 within six months. In compliance, respondents (agency heads) deducted alleged overpayments from petitioners’ salaries or allowances.
Petitioners filed petitions with the Supreme Court to enjoin further deductions and challenge the validity of AO 29 and AO 268.

Petitioner Association of Dedicated Employees of the Philippine Tourism Authority (ADEPT) represents PTA employees who were granted a calendar-year 1992 productivity incentive bonus under Republic Act No. 6971 (the Productivity Incentives Act of 1990).
The PTA Corporate Auditor disallowed the bonus on the ground that it was prohibited by AO 29. On appeal, the Commission on Audit denied ADEPT’s claim, holding that RA 6971 excludes government-owned or ‑controlled corporations performing governmental functions and that AO 29 expressly prohibited similar benefits for 1992.
ADEPT then filed G.R. No. 119597 before the Supreme Court seeking relief from the COA decision.

Executive Order No. 292 (Administrative Code of 1987), Chapters 5 and 12 of Book V (Sec. 31 on career plans; Sec. 35 on employee suggestions and incentive awards; Sec. 36 on personnel relations).
Omnibus Rules Implementing Book V of EO 292 (Rule X, Secs. 1, 2, 7(c) on productivity incentives).
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