G.R. No. L-17656; May 30, 1962
EDUARDO TAYLOR, petitioner, vs. PEDRO M. GIMENEZ, in his capacity as Auditor General of the Philippines and JUAN O. CHIOCO, in his capacity as Administrator of Economic Coordination, respondents.

FACTS

Petitioner Eduardo Taylor, after approximately 30 years of government service culminating as manager of the government-owned Cebu Portland Cement Company (CEPOC), was retired on January 31, 1955. The CEPOC Board of Directors passed two resolutions: Resolution No. 734 granted him a retirement pay equivalent to one year’s salary under the Company Retirement Plan, and Resolution No. 735 granted him, “as a special gesture of appreciation for his long and efficient service,” a separate bonus of P12,000.00 payable upon retirement.
The respondent Administrator of Economic Coordination, with the concurrence of the Auditor General, disapproved Resolution No. 735. The grounds for disapproval were that the grant constituted an excessive gratuity prohibited under Section 28(b) of Commonwealth Act No. 186 , as amended, and that it represented an injudicious and extravagant expenditure of corporate funds that would set a bad precedent. Petitioner countered that the amount was a bonus paid for services rendered, not a gratuitous benefit, and was a modest sum compared to the company’s profits and intangible benefits accrued through his management.

ISSUE

Whether the Administrator of Economic Coordination acted within his authority and without grave abuse of discretion in disapproving the CEPOC Board’s resolution granting an appreciation bonus to the retired manager.

RULING

Yes, the Administrator acted within his lawful authority. The legal logic centers on the statutory powers granted to the Administrator of Economic Coordination over government corporations. Under Republic Act No. 422 (Reorganization Act of 1950) and the implementing Executive Orders, particularly Executive Order No. 399, the Administrator is empowered to supervise government corporations “for the purpose of insuring efficiency and economy in their operation.” Specifically, the Board of Directors’ power to approve budgets and appropriations is made “subject to the final action of the Administrator of Economic Coordination.”
The Court found that the Administrator’s disapproval of the bonus resolution was an exercise of this supervisory discretion, aimed at preventing what he deemed an injudicious and extravagant expenditure. The Court explicitly declined to rule on the characterization of the payment as a bonus or a gratuity under Commonwealth Act No. 186 , as the case was resolved on the basis of the Administrator’s review power. Judicial review does not extend to overturning executive actions involving policy and discretion in the absence of a clear showing of grave abuse of discretion. Since no such abuse was demonstrated, and the President did not reverse the Administrator’s decision, the Court upheld the disapproval as a valid exercise of executive function to promote economy in government corporate operations. The petition was dismissed.