CENON S. CERVANTES vs. THE AUDITOR GENERAL, G.R. No. L-4043

The NAFCO is Government controlled corporation was created by the Commonwealth Act No. 332, approved on June 18, 1939, subject to the provisions of Republic Act No. 51 and the executive order No. 93 with a capital stock of P20,000,000, 51 per cent of which was to be able to be subscribed by the National Government and the remainder to be offered to provincial, municipal, and the city governments and to the general public.

FACTS:

The petition was in 1949, Cenon Cervantes is the manager of the National Abaca and Other Fibers (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 first of that month. Submitted the Control Committee of the Government Enterprises Council for approval, but has been disapproved on strenght 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 fixes the salary of the general manager thereof at the sum not to exceed P15,000 a year, and (2) that the precarious financial 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 reaffirmed his previous recommendation and emphasized that the fact that the corporation's finances had not improved.

In view of this, the auditor General also reiterated his previous opinion against the granting of the 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.

ISSUE:

1. Whether or not petitioner’s proposed quarters allowance should be granted.

2. Whether or not petitioner’s proposed quarters allowance be also considered compensation.

HELD:

No. 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 officials 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.

Yes.  The purpose 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.

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                  Digested by: Clark Roxas Amante III/UC-Banilad/JD-1/M11