G.R. No. 109406 September 11, 1998
REMEDIOS T. BLAQUERA, ET AL. vs. HON. ALBERTO G. ROMULO, ET AL.

FACTS

The case involves a large group of petitioners, employees of the Philippine Heart Center, who are challenging the validity of Administrative Order No. 268 issued by the Office of the President. The order directed the withholding of payment of the Productivity Incentive Bonus for the year 1992 to employees of government-owned or controlled corporations and financial institutions. The petitioners contend that this administrative order is unconstitutional and void. The text references provisions concerning the resolution of disputes arising from the interpretation or implementation of a productivity incentives program through a labor-management committee and, if unresolved, voluntary arbitration under the Labor Code. It also cites various legal precedents and statutory provisions, including Presidential Decree No. 564, the 1987 Constitution , and the Administrative Code of 1987, which outline policies on the management of government financial resources and the national budget.

ISSUE

The primary issue is the validity and constitutionality of Administrative Order No. 268, which withheld the payment of the Productivity Incentive Bonus for 1992 to employees of certain government entities.

RULING

The Supreme Court declared Administrative Order No. 268 void and unconstitutional. The Court ruled that the President has no authority to withhold the payment of benefits which have already been appropriated by law. The Productivity Incentive Bonus was a validly appropriated benefit, and its release was mandatory. The withholding of the bonus constituted an encroachment on the legislative power of the purse and violated the constitutional principle that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law. The order was also deemed to have been issued with grave abuse of discretion.