G.R. No.

193978
Case Title: Jelbert B. Galicto v. H.E. President Benigno Simeon C. Aquino III, et al.
Date: February 28, 2012

Topic: Power of the President

Summary of Facts:
President Benigno Aquino III issued Executive Order No. 7 (EO 7) on September 8, 2010, responding to
reported excessive allowances, bonuses, and benefits of government-owned and controlled corporations
(GOCCs) and government financial institutions (GFIs). The petitioner, Jelbert B. Galicto, a PhilHealth
employee, challenged the constitutionality of EO 7, claiming it exceeded presidential powers and violated
existing laws. EO 7 aimed to rationalize the compensation and position classification system in GOCCs and
GFIs.

The Senate issued a resolution urging the president to suspend excessive allowances and bonuses in GOCCs
and GFIs, leading to the issuance of EO 7. The petitioner argued that EO 7 lacked legal basis, violated laws,
divested the GOCC boards of their power to fix compensation, and constituted an invalid exercise of legislative
power by the executive.

Issues:
1. Whether EO 7 lacked legal basis.
2. Whether GOCCs needed presidential approval for their compensation plans.
3. Whether Joint Resolutions (J.R.) No. 1, Series 2004, and J.R. No. 4, Series 2009, provided a valid legal
basis.
4. Whether EO 7 divested the GOCC boards of their power to fix compensation.
5. Whether EO 7 was an unconstitutional exercise of legislative power.
6. Whether the acts of suspending and imposing a moratorium were ultra vires.
7. Whether EO 7 lacked sufficient standards and violated substantive due process.
8. Whether EO 7 involved an invalid usurpation of legislative power.

Ruling and Decision:

1. Certiorari Not Proper Remedy: Certiorari was deemed an incorrect remedy as EO issuance is not a judicial,
quasi-judicial, or mandatory act. A petition for declaratory relief should have been filed with the Regional Trial
Court.

2. Lack of Locus Standi: The petitioner lacked standing as his interest in future salary increases and benefits
was speculative and did not constitute a direct injury. His claim to represent PhilHealth was unsupported by a
Board Resolution or Secretary's Certificate.

3. Defective Jurat: The defective jurat in the Verification/Certification of Non-Forum Shopping was noted but
considered not fatal, as the verification is a formal requirement that the Court may waive.

4. Mootness: The enactment of Republic Act No. 10149, the GOCC Governance Act of 2011, rendered the
petition moot. The new law authorized the President to fix the compensation framework for GOCCs and GFIs,
making any further discussion on the constitutionality of EO 7 academic.

Given these reasons, the Court did not rule on the other issues raised in the petition.
The power of the president highlighted by this case is the authority to fix the compensation framework of
Government-Owned or -Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs). In
particular, Executive Order No. 7 (EO 7) issued by President Benigno Simeon C. Aquino III on September 8,
2010, directed the rationalization of the compensation and position classification system in GOCCs and GFIs.
It provided guiding principles and a framework to establish a fixed compensation and position classification
system for these entities.

The case underscores the president's power to address issues related to excessive allowances, bonuses, and
other benefits granted to officials and members of the governing boards of GOCCs and GFIs. EO 7 imposed a
moratorium on salary increases and suspended allowances, bonuses, and incentives of board members,
aiming to control and rationalize compensation practices in these government entities.

Furthermore, the subsequent enactment of Republic Act No. 10149, known as the "GOCC Governance Act of
2011," explicitly authorizes the president to fix the compensation framework of GOCCs and GFIs. This
legislative act affirms and expands the president's authority over the compensation systems of these
government entities.

In summary, the case highlights the president's power to regulate and determine the compensation structures
of GOCCs and GFIs, with the aim of ensuring fiscal responsibility, preventing abuse, and promoting good
governance in these government-owned corporations.

The key points in Chief Justice Corona's opinion on the constitutionality of Executive Order No. 7 (EO
7) are as follows:

1. Financial Challenges of GOCCs: Chief Justice Corona begins by highlighting the financial challenges faced
by Government-Owned and -Controlled Corporations (GOCCs), underscoring significant deficits and
operational inefficiencies. He stresses the importance of accountability in public office, advocating for the
responsible use of public funds to promote transparency, accountability, and prudence.

2. Factual Antecedents Leading to EO 7: The opinion outlines the factual antecedents that led to the issuance
of EO 7, including anomalies in the financial management of certain GOCCs exposed by President Aquino.
The Chief Justice notes that the President's action was prompted by Senate Resolution No. 17, which urged
the suspension of excessive allowances, bonuses, and incentives of GOCC and GFI board members.

3. Constitutionality of EO 7: Chief Justice Corona argues in favor of the constitutionality of EO 7, asserting the
President's legal authority to issue such an order. He contends that the petitioner lacks standing to challenge
EO 7 and that subsequent events, including the enactment of Republic Act No. 10149, have rendered the
petition moot.

4. Standing Issue: The Chief Justice addresses the issue of standing, asserting that the petitioner failed to
demonstrate a direct and personal interest in the case. He dismisses concerns about future salary increases,
stating that such increases are not guaranteed rights and are subject to presidential approval.
5. Mootness: Corona argues that the expiration of the suspension on allowances and bonuses, as well as the
enactment of RA 10149, has resolved the issues raised by the petitioner. He emphasizes the importance of
judicial restraint in such matters to avoid unnecessary invalidation of government actions.

6. Consistency with Existing Laws: Chief Justice Corona discusses the consistency of EO 7 with existing laws,
refuting the petitioner's claims that it violates specific sections of RA 7875 and Joint Resolution No. 4. He
contends that EO 7 aligns with the provisions of these laws and reinforces the President's authority to set
guidelines for compensation and position classification in GOCCs and GFIs.

7. Due Process Claims: The opinion addresses due process claims, asserting that the suspension of bonuses
and the moratorium on salary increases under EO 7 do not deprive employees of property rights. It argues that
a bonus is not a demandable obligation, and the President's actions were within the bounds of executive
power.

8. Importance of Public Accountability: Chief Justice Corona concludes by emphasizing the importance of
public accountability and the President's role in protecting public interest through rationalizing the
compensation and position classification system. He argues that, in the absence of grave abuse of discretion,
the Court should recognize the President's authority in this matter.

Based on Chief Justice Corona's opinion, the President's power, as highlighted in the context of
Executive Order No. 7 (EO 7), includes the following:

1. Legal Authority to Address Financial Challenges: The President has the legal authority to address financial
challenges faced by Government-Owned and -Controlled Corporations (GOCCs) and Government Financial
Institutions (GFIs). This includes the power to issue executive orders, such as EO 7, to strengthen the
supervision of compensation levels in these entities.

2. Supervision of Compensation Levels: The President has the authority to regulate and supervise
compensation levels in GOCCs and GFIs. EO 7 specifically aimed to control excessive salaries, allowances,
incentives, and other benefits of individuals serving in these entities.

3. Response to Anomalies and Inefficiencies: The President can take executive action in response to
anomalies and operational inefficiencies in the financial management of certain GOCCs. In the case
discussed, EO 7 was portrayed as a response to financial inefficiencies and anomalies exposed by the
President in his State of the Nation Address.

4. Presidential Authority in Setting Guidelines: The President holds the authority to set guidelines for
compensation and position classification in GOCCs and GFIs. This includes the power to approve or
disapprove any grant of or increase in salaries, allowances, and other fringe benefits for entities exempt from
salary standardization laws.

5. Protection of Public Interest: The President has a role in protecting public interest through rationalizing the
compensation and position classification system. This involves ensuring that public funds are used responsibly
and transparently to promote fiscal responsibility and accountability in public office.
6. Executive Power in Matters of Financial Management: The President's executive power extends to matters
of financial management, including the suspension of excessive allowances, bonuses, and incentives of GOCC
and GFI board members, as prompted by legislative resolutions.

In summary, Chief Justice Corona's opinion supports the view that the President has the legal authority and
executive powers to address financial challenges, regulate compensation levels, and take actions to ensure
accountability and transparency in the financial management of GOCCs and GFIs.