Cervantes vs Auditor General

 Separation of Powers, Non-delegability of legislative powers, Completeness and Sufficient Standard

Test

Facts:

Petitioner was the manager of NAFCO, a GOCC, with salary of P15,000 a year. By resolution of the
Board of Directors, he was granted “quarters allowance” of not exceeding P400 a month. Submitted to
Control Committee of the Government Enterprise Council for approval, the said resolution was denied by
the said Committee with the recommendation from NAFCO auditor and Auditor General:

(1) That quarters allowance constituted additional compensation prohibited by the charter of the
NAFCO, which fixes salary of the general manager thereof not to exceed P 15,000 a year; and
(2) That the precarious financial condition of the corporation did not warrant the granting of such
allowance,

The petitioner asked the Committee to reconsider but the same was denied. Hence the petition for
review.

Government Enterprise Council

RA No. 51 was approved authorizing the President, among other things, to effect such reforms and
changes in the GOCCs for the purpose of simplicity, economy and efficiency in their operation.

Pursuant to this, the President promulgated EO No. 93 creating the Government Enterprise Council. The
council was to advise the President in the exercise of his power of supervision and control over GOCCs
and to formulate and adopt such policy and measures as might be necessary to coordinate their functions
and activities.

The EO also provided that the council was to have a Control Committee with the power, among others:

"(1) To supervise, for and under the direction of the President, all the corporations owned ar
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.)

The Petitioner contends that the EO is null and void because it was based on a law (RA No. 51) that is
unconstitutional as it violates non-delegation of legislature power to executive.

Issues:

Whether EO No. 93 is unconstitutional in violation of non-delegability of legislative powers

Rule:

The Court ruled that RA No. 51 and EO No. 93 are constitutional.

RA No. 51 lays down a standard and policy that the purpose shall be to meet the exigencies attendant
upon the establishment of free and independent government of the Philippines and to promote simplicity,
economy and efficiency in their operations. The standard was set (Sufficient Standard test) and the
policy fixed (Completeness Test).
Cervantes vs Auditor General
 Separation of Powers, Non-delegability of legislative powers, Completeness and Sufficient Standard
Test

NAFCO is a GOCC subject to the provisions of RA No. 51 and EO No. 93. Consequently, it was also
subject to the powers of the Control Committee created in the said EO, among which is the power of
supervision for the purpose of insuring efficiency 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. The Committee had the right to pass upon, and consequently approve or disapprove, the
resolution of the NAFCO Board granting quarters allowance to the petitioners as such allowance
constitute an item of expenditure in the corporation’s budget. That the Committee had good grounds for
disapproving the resolution is also clear, as pointed by the Auditor General and NAFCO Auditor the
granting of the allowance amounted to an illegal increase of petitioner’s salary beyond the limit fixed in
the corporate charter and was furthermore not justified by the precarious financial condition of the
corporation.