EN BANC

[G.R. No. L-4043. May 26, 1952.]

CENON S. CERVANTES , petitioner, vs . THE AUDITOR GENERAL ,

respondent.

Cenon Cervantes in his own behalf.

Solicitor General Pompeyo Diaz and Solicitor Felix V. Makasiar for respondent.

SYLLABUS

1. CORPORATIONS; GOVERNMENT CONTROLLED CORPORATION. — With its

controlling stock owned by the Government and the power of appointing its directors
vested in the President of the Philippines there can be no question that the National
Abaca and other Fibers Corporation, otherwise known as the NAFCO, is a government
controlled corporation subject to the provisions of Republic Act No. 51 and the
executive order (No. 93) promulgated in accordance therewith.
2. ID.; ID.; OFFICERS; SALARY QUARTERS ALLOWANCE; POWER OF CONTROL
COMMITTEE TO APPROVE OR DISAPPROVE RESOLUTION OF NAFCO BOARD OF
DIRECTORS. — The National Abaca and other Fibers Corporation (NAFCO) was subject
to the powers of the Control Committee, created in Executive Order No. 93
promulgated in accordance with the provisions of Republic Act No. 51, among which is
the power of supervision for the purpose of insuring e ciency and economy in the
operations of the corporation and also the power to pass upon the program of
activities and the yearly budget of expenditures approved by its board of directors.
Under these powers the Control Committee had the right to pass upon, and
consequently to approve or disapprove, the resolution of the NAFCO board of directors
granting quarters allowance to the manager of the NAFCO as such allowance
necessarily constituted an item of expenditure in the corporation's budget. The granting
of the allowance amounted to an illegal increase of the Manager's salary beyond the
limit fixed in the Corporate Charter.
3. STATUTE; TIME, COMPUTATION OF. — In the computation of the time for
doing an act, the rst day is excluded and the last day included (Section 13, Rev. Ad.
Code.) As the act was approved on October 4, 1946, and the President was given a
period of one year within which to promulgate his executive order and that order was in
fact promulgated on October 4, 1947, it is obvious that under the above rule the said
executive order was promulgated within the period given.
4. CONSTITUTIONAL LAW; DELEGATION OF LEGISLATIVE POWER. — The
rule is that so long as the Legislature "lays down a policy and a standard is established
by the statute" there is no undue delegation. (11 Am. Jur. 957). Republic Act No. 51, in
authorizing the President of the Philippines to make reforms and changes in
government-controlled corporations, lays down a standard and policy that the purpose
shall be to meet the exigencies attendant upon the establishment of the free and
independent Government of the Philippines and to promote simplicity, economy and
e ciency in their operations. The standard was set and the policy xed. The President
had to carry out the mandate, and this he did by promulgating Executive Order (No. 93)
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 in accordance with Republic Act No. 51, which, tested by the said rule, does not
constitute an undue delegation of legislative power.
5. PUBLIC OFFICER; SALARY; QUARTERS ALLOWANCE CONSIDERED
ADDITIONAL COMPENSATION. — Executive Order No. 332 of 1941, which prohibits the
payment of additional compensation to those working for the Government and its
instrumentalities, including government-controlled corporations, was, in 1945,
amended by Executive Order No. 77 by expressly exempting from the prohibition the
payment of quarters allowance "in favor of local government o cials and employees
entitled to this under existing law." The amendment is a clear indication that quarters
allowance was meant to be included in the term "additional compensation", for
otherwise the amendment would not have expressly excepted it from the prohibition.
For the purposes of the executive order just mentioned, quarters allowance is
considered additional compensation and, therefore, prohibited.

DECISION

REYES , J : p

This is a petition to review a decision of the Auditor General denying petitioner's

claim for quarters allowance as manager of the National Abaca and Other Fibers
Corporation, otherwise known as the NAFCO.
It appears that petitioner was in 1949 the manager of the NAFCO with a salary of
P15,000 a year. By a resolution of the Board of Directors of this corporation approved
on January 19 of that year, he was granted quarters allowance of not exceeding P400 a
month effective the rst of that month. Submitted to the Control Committee of the
Government Enterprises Council for approval, the said resolution was on August 3,
1949, disapproved by the said Committee on the strength of the recommendation of
the NAFCO auditor, concurred in by the Auditor General, (1) that quarters allowance
constituted additional compensation prohibited by the charter of the NAFCO, which
xes the salary of the general manager thereof at a sum not to exceed P15,000 a year,
and (2) that the precarious nancial condition of the corporation did not warrant the
granting of such allowance.
On March 16, 1949, the petitioner asked the Control Committee to reconsider its
action and approve his claim for allowance for January to June 15, 1949, amounting to
P1,650. The claim was again referred by the Control Committee to the Auditor General
for comment. The latter, in turn referred it to the NAFCO auditor, who rea rmed his
previous recommendation and emphasized that fact that the corporation's nances
had not improved. In view of this, the Auditor General also reiterated his previous
opinion against the granting of petitioner's claim and so informed both the Control
Committee and the petitioner. But as the petitioner insisted on his claim the Auditor
General informed him on June 19, 1950, of his refusal to modify his decision. Hence
this petition for review.
The NAFCO was created by Commonwealth Act No. 332, approved on June 18,
1939, with a capital stock of P20,000,000, 51 per cent of which was to be subscribed
by the National Government and the remainder to be offered to provincial, municipal,
and city governments and to the general public. The management of the corporation
was vested in a board of directors of not more than 5 members appointed by the
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 President of the Philippines with the consent of the Commission on Appointments. But
the corporation was made subject to the provisions of the corporation law in so far as
they were compatible with the provisions of its charter and the purposes for which it
was created and was to enjoy the general powers mentioned in the corporation law in
addition to those granted in its charter. The members of the board were to receive each
a per diem of not to exceed P30 for each day of meeting actually attended, except the
chairman of the board, who was to be at the same time the general manager of the
corporation and to receive a salary not to exceed P15,000 per annum.
On October 4, 1946, Republic Act No. 51 was approved authorizing the President
of the Philippines, among other things, to effect such reforms and changes in
government-owned and controlled corporations for the purpose of promoting
simplicity, economy and e ciency in their operation. Pursuant to this authority, the
President, on October 4, 1947, promulgated Executive Order No. 93 creating the
Government Enterprises Council to be composed of the President of the Philippines as
chairman, the Secretary of Commerce and Industry as vice-chairman, the chairman of
the board of directors and managing heads of all such corporations as ex-o cio
members, and such additional members as the President might appoint from time to
time with the consent of the Commission on Appointments. The council was to advise
the President in the exercise of his power of supervision and control over these
corporations and to formulate and adopt such policy and measures as might be
necessary to coordinate their functions and activities. The Executive Order also
provided that the council was to have a Control Committee composed of the Secretary
of Commerce and Industry as chairman, a member to be designated by the President
from among the members of the council as vice-chairman and the secretary as ex-
officio member, and with the power, among others —
"(1) To supervise, for and under the direction of the President, all the
corporations owned or controlled by the Government for the purpose of insuring
efficiency and economy in their operations;
"(2) To pass upon the program of activities and the yearly budget of
expenditures approved by the respective Boards of Directors of the said
corporations; and
"(3) To carry out the policies and measures formulated by the
Government Enterprises Council with the approval of the President". (Sec. 3,
Executive Order No. 93.).
With its controlling stock owned by the Government and the power of appointing
its directors vested in the President of the Philippines, there can be no question that the
NAFCO is a Government controlled corporation subject to the provisions of Republic
Act No. 51 and the executive order (No. 93) promulgated in accordance therewith.
Consequently, it was also subject to the powers of the Control Committee created in
said executive order, among which is the power of supervision for the purpose of
insuring e ciency and economy in the operations of the corporation and also the
power to pass upon the program of activities and the yearly budget of expenditures
approved by the board of directors. It can hardly be questioned that under these
powers the Control Committee had the right to pass upon, and consequently to
approve or disapprove, the resolution of the NAFCO board of directors granting
quarters allowance to the petitioners as such allowance necessarily constituted an item
of expenditure in the corporation's budget. That the Control Committee had good
grounds for disapproving the resolution is also clear, for, as pointed out by the Auditor
General and the NAFCO auditor, the granting of the allowance amounted to an illegal
increase of petitioner's salary beyond the limit xed in the corporate charter and was
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 furthermore not justified by the precarious financial condition of the corporation.

It is argued, however, that Executive Order No. 93 is null and void, not only
because it is based on a law that is unconstitutional as an illegal delegation of
legislative power to the executive, but also because it was promulgated beyond the
period of one year limited in said law.
The second ground ignores the rule that in the computation of the time for doing
an act, the rst day is excluded and the last day included (Section 13 Rev. Ad. Code.) As
the act was approved on October 4, 1946, and the President was given a period of one
year within which to promulgate his executive order and that order was in fact
promulgated on October 4, 1947, it is obvious that under the above rule the said
executive order was promulgated within the period given.
As to the rst ground, the rule is that so long as the Legislature "lays down a
policy and a standard is established by the statute" there is no undue delegation. (11
Am. Jur. 957). Republic Act No. 51 in authorizing the President of the Philippines,
among others, to make reforms and changes in government-controlled corporations,
lays down a standard and policy that the purpose shall be to meet the exigencies
attendant upon the establishment of the free and independent Government of the
Philippines and to promote simplicity, economy and e ciency in their operations. The
standard was set and the policy xed. The President had to carry the mandate. This he
did by promulgating the executive order in question which, tested by the rule above
cited, does not constitute an undue delegation of legislative power.
It is also contended that quarters allowance is not compensation and so the
granting of it to the petitioner by the NAFCO board of directors does not contravene the
provisions of the NAFCO charter that the salary of the chairman of said board who is
also to be general manager shall not exceed P15,000 per annum. But regardless of
whether quarters allowance should be considered as compensation or not, the
resolution of the board of directors authorizing payment thereof to the petitioner
cannot be given effect since it was disapproved by the Control Committee in the
exercise of the powers granted to it by Executive Order No. 93. And in any event,
petitioner's contention that quarters allowance is not compensation, a proposition on
which American authorities appear divided, cannot be insisted on behalf of o cers and
employees working for the Government of the Philippines and its instrumentalities,
including, naturally, government-controlled corporations. This is so because Executive
Order No. 332 of 1941, which prohibits the payment of additional compensation to
those working for the Government and its instrumentalities, including government-
controlled corporations, was in 1945 amended by Executive Order No. 77 by expressly
exempting from the prohibition the payment of quarters allowance "in favor of local
government o cials and employees entitled to this under existing law." The
amendment is a clear indication that quarters allowance was meant to be included in
the term "additional compensation", for otherwise the amendment would not have
expressly excepted it from the prohibition. This being so, we hold that, for the purposes
of the executive order just mentioned, quarters allowance is considered additional
compensation and, therefore, prohibited.
In view of the foregoing, the petition for review is dismissed, with costs.
Paras, C.J., Feria, Pablo, Bengzon, Tuason, Montemayor and Bautista Angelo, JJ.,
concur.

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