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Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 172144              

PEZA BOARD OF DIRECTORS and LILIA B. DE LIMA, Petitioners,
vs.
GLORIA J. MERCADO, Respondent.

D E C I S I O N

CARPIO MORALES, J.:

Being assailed is the Court of Appeals 1) Decision¹ of December 14, 2005 which reversed² that of the Regional Trial Court (RTC) of Pasay City, Branch 108, 2) Amended Decision³ dated March 31, 2006 by awarding back salaries to Gloria J. Mercado (respondent) computed from the time of her alleged dismissal until her reinstatement as Philippine Economic Zone Authority (PEZA) Deputy Director General for Policy and Planning, and 3) Resolution⁴ of March 31, 2006 which denied petitioners’ motion for reconsideration of the December 14, 2005 Decision.

The antecedent facts of the present controversy are as follows:

Respondent was appointed as Group Manager for Policy and Planning of PEZA on September 16, 1998. Her appointment was temporary in nature.

On May 16, 1999, respondent was promoted to the position of Deputy Director General for Policy and Planning. Her appointment indicated the same as on permanent basis, but with the following annotation: NO SECURITY OF TENURE UNLESS HE/SHE OBTAINS CESO OR CSEE ELIGIBILITY. CESO is the acronym for Career Exercutive Service Officer, while CSEE is the acronym for Career Service Executive Eligibility.

On June 1, 2000, petitioner Lilia B. de Lima, in her capacity as PEZA Director General, by letter of even date, advised respondent of the termination of her appointment effective on the closing hours of the day. On even date, petitioner PEZA Board convened in an executive session and passed a Resolution appointing Wilhelm G. Ortaliz (Ortaliz), a CESO eligible, as Deputy Director General for Policy and Planning effective immediately.

Respondent thereupon filed on June 7, 2000 with the RTC of Pasay City a petition for prohibition, quo warranto and damages with preliminary prohibitory /mandatory injunction and/or temporary restraining order against herein petitioners and Ortaliz, docketed as Civil Case No. 00-0172, questioning the June 1, 2000 PEZA Board Resolution appointing Ortaliz as Deputy Director General for Policy and Planning.

In the main, respondent alleged in her complaint that her degree in Master in National Security Administration (MNSA) automatically conferred upon her Career Executive Service (CES) eligibility; that Republic Act No. (R.A.) 8748, which amended R.A. 7916 or the PEZA Charter, did away with the CES eligibility requirement for the position of Deputy Director General; and that the termination of her appointment was actuated with bad faith to entitle her to moral and exemplary damages.

Petitioners countered that respondent’s MNSA degree at best merely granted her a CESO rank, not eligibility, and since she had not acquired CES eligibility, she had no security of tenure with respect to her position and could, therefore, be replaced at any time by Ortaliz who is a CES eligible.

Respecting respondent’s contention that R.A. 8748 removed the CES eligibility requirement, petitioners asserted that based on the records of the deliberations on Senate Bill No. 1136 which eventually became R.A. 8748, the lawmakers never really intended to do away with the CES eligibility requirement for the position of Deputy Director General; and that assuming arguendo that that was the intention, R.A. 8748 took effect only on June 20, 1999 after the appointment of respondent on May 16, 1999.

By Decision of December 4, 2001, the trial court dismissed respondent’s petition. It held that the passage of R.A. 8748 notwithstanding, the CES eligibility requirement for the position of Deputy Director General remains, in light of 1) the certification from the CES Board that respondent was not a CES eligible, 2) R.A. 7916 (An Act Providing For The Legal Framework And Mechanisms For The Creation, Operation, Administration, And Coordination Of Special Economic Zones In The Philippines, Creating For This Purpose, The Philippine Economic Zone Authority (Peza), And For Other Purposes) which provides that appointment to the three PEZA Deputy Director General positions requires CES eligibility, and 3) the Senate deliberations on the bill which eventually became R.A. 8748.

The trial court further held that, contrary to respondent’s contention, her MNSA degree did not automatically confer on her CES eligibility for, under Executive Order No. 771 (Amending Executive Order No. 696 Granting Career Executive Service Officer Rank To Graduates Of The National Defense College Of The Philippines And Other Related Purposes), the recommendation of the Ministry or Agency concerned and the evaluation of the Career Executive Service Board (CESB) were still needed; and that absent these additional requirements, what was granted to MNSA degree holders was merely the salary corresponding to the CESO rank and not the rank itself.

The trial court went on to state that per CESB Resolution No. 204 dated December 21, 1998, MNSA graduates are deemed only to have passed the Management Aptitude Test Battery which is merely the first stage in the four-stage CES eligibility conferment process.

The trial court, concluding that since respondent did not have the required eligibility for the position, held that her appointment was merely temporary and had no security of tenure thereto, and that, therefore, it was deemed to have expired upon the appointment of Ortaliz.

The trial court denied respondent’s claim for damages, it finding that she failed to substantiate the same and, in any event, petitioners acted in accordance with law.

Respondent appealed to the Court of Appeals, raising substantially the same arguments she raised before the trial court.

As stated early on, the appellate court, by the assailed Decision of December 14, 2005, reversed the trial court’s decision. It held that since respondent was promoted to the position of Deputy Director General for Policy and Planning on a permanent status, she cannot be summarily removed; and that respondent’s MNSA degree obtained on July 12, 1993 automatically conferred on her a CES eligibility pursuant to Executive Order No. 696, as amended by Executive Order No. 771.

The appellate court went on to hold that even if respondent was not a CES eligible, she is still qualified for the position as the requirement under Sec. 11 of Republic Act No. 7916 that appointees to Deputy Director General positions must "have career executive service eligibility" is no longer found under Sec. 11 of Republic Act No. 8748. It ratiocinated that the deletion of such requirement indicated that the legislature intended to do away with the eligibility requirement.

At all events, the appellate court held that respondent subsequently qualified to the position as she was conferred a CES eligibility by the Civil Service Commission in December 2000.

Albeit the appellate court held that respondent was illegally removed from and ordered her reinstatement to her position, it did not find her entitled to damages as there was no proof that the termination of her services was tainted with bad faith on the part of petitioners. Thus, the appellate court disposed:

WHEREFORE, premises considered, the appeal is GRANTED. The Decision dated 04 December 2001 of the Regional Trial Court of Pasay City, Branch 108 in Civil Case No. 00-172 is REVERSED and SET ASIDE. PEZA Board Resolution No. 00-187 is declared NULL and VOID; appellee WILHELM G. ORTALIZ is OUSTED and altogether EXCLUDED from exercising, holding or occupying the position of PEZA Deputy Director General for Policy and Planning; and appellant GLORIA J. MERCADO is hereby REINSTATED to her position as PEZA Deputy Director General for Policy and Planning. Costs against appellees.

SO ORDERED.⁵ (emphasis in the original)

Petitioners moved for reconsideration of the appellate court’s decision. Respondent too moved for a partial motion for reconsideration of the decision.

The appellate court, by the Amended Decision of March 31, 2006, acting on respondent’s motion for reconsideration, denied her claim for damages and attorney’s fees but granted her claim for back salaries, computed from the time of her removal until her reinstatement to the position as PEZA Deputy Director General for Policy and Planning.

By Resolution also dated March 31, 2006, the appellate court denied petitioners’ motion for reconsideration, hence, their present recourse, they raising the same defenses and arguments proffered during the proceedings before the trial and appellate courts.

The petition is impressed with merit.

Section 27 (1), of the Civil Service Law provides:

(1) Permanent status. – A permanent appointment shall be issued to a person who meets all the requirements for the position to which he is being appointed, including the appropriate eligibility prescribed, in accordance with the provisions of law, rules and standards promulgated in pursuance thereof. (emphasis and underscoring supplied)

In the CES under which the position of PEZA Deputy Director General for Policy and Planning is classified, the acquisition of security of tenure which presupposes a permanent appointment is governed by the Rules and Regulations promulgated by the CES Board. As the recent case of Amores vs. Civil Service Commission explains:⁶

Security of tenure in the career executive service, which presupposes a permanent appointment, takes place upon passing the CES examinations administered by the CES Board. It is that which entitles the examinee to conferment of CES eligibility and the inclusion of his name in the roster of CES eligibles. Under the rules and regulations promulgated by the CES Board, conferment of the CES eligibility is done by the CES Board through a formal board resolution after an evaluation has been done of the examinee’s performance in the four stages of the CES eligibility examinations. Upon conferment of CES eligibility and compliance with the other requirements prescribed by the Board, an incumbent of a CES position may qualify for appointment to a CES rank. Appointment to a CES rank is made by the President upon the Board’s recommendation. It is this process which completes the official’s membership in the CES and confers on him security of tenure in the CES. Petitioner does not seem to have gone through this definitive process. (emphasis, italics and underscoring supplied)

Clearly, for an examinee or an incumbent to be a member of the CES and be entitled to security of tenure, she/he must pass the CES examinations, be conferred CES eligibility, comply with the other requirements prescribed by the CES Board, and be appointed to a CES rank by the President.

Admittedly, before and up to the time of the termination of her appointment, respondent did not go through the four stages of CES eligibility examinations.

The appellate court’s ruling that respondent became CES eligible upon earning the MNSA degree, purportedly in accordance with Executive Order No. 696, as amended by Executive Order No. 771, does not lie.

The pertinent portions of Executive Order No. 696 issued on May 27, 1981 which granted CESO rank to graduates of the National Defense College of the Philippines read:

x x x x

WHEREAS, Article IV, Chapter I, Part III of the Integrated Reorganization Plan provides for a Career Executive Service to constitute a continuing pool of well-selected and development-oriented career administrators of the government;

WHEREAS, the pre-qualification requirements for admission at NDCP as well as the training obtained there fully satisfy the training and pre-qualification requirements for appointment to the Career Executive Service; and

x x x x

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by law, do hereby order that:

Sec. 1. holders of the degree of Master of National Security Administration shall be given preference in promotion to existing vacant positions, as well as assignments to higher responsibility, particularly those involving policy formulation in their respective units, ministries, agencies, offices or entities.

Sec. 2. Initially, NDCP graduates belonging to the government service shall be granted the rank of CESO III with corresponding compensation and other privileges in the Career Executive Service.

x x x x (emphasis and underscoring supplied)

Upon the other hand, the pertinent portions of Executive Order No. 771 issued more than eight months later or on February 4, 1982, which amended Executive Order No. 696, read:

WHEREAS, Section 2 of the Executive Order No. 696 dated May 27, 1981, provides that graduates of the National Defense College of the Philippines belonging to the government service shall be granted the rank of CESO III with corresponding compensation and other privileges in the Career Executive Service;

WHEREAS, graduates of the Career Executive Service Development Program who are equally deserving have not been extended the same or similar benefits;

WHEREAS, the automatic grant of CESO Rank III with corresponding compensation and privileges to NDCP graduates has caused salary inequities in some agencies; and

WHEREAS, there is a need to harmonize the conferment of ranks, compensation and other benefits to graduates of both institutions or programs in order to maintain a high level or morale in the Career Executive Service.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by law, do hereby order that:

Sec. 1. Section 2 of Executive Order No. 696 is hereby amended, to read as follows:

Sec. 2. Graduates of the National Defense College of the Philippines belonging to the civil service, and graduates of the Career Executive Service Development Program who have not yet been appointed to a CESO rank shall be granted initially CESO Rank, V, or higher, depending on the recommendation of the Ministry or Agency head concerned and the evaluation of the Career Executive Service Board, with corresponding compensation and other benefits. The Career Executive Service Board, in consultation with the National Defense College of the Philippines shall promulgate rules and regulations to implement this Order.

x x x x (emphasis and underscoring supplied)

Pursuant to this amendatory Executive Order, the CESB issued on December 21, 1998 Resolution No. 204, "Accrediting the Master of National Security Administration (MNSA) Degree Conferred by the National Defense College of the Philippines and Master of Public Safety Administration (MPSA) Degree Conferred by the Philippine Public Safety College as Equivalent to the Management Aptitude Test Battery for Possible Conferment of CES Eligibility," the pertinent portions of which read:

x x x x

WHEREAS, the Board evaluated the curriculum and screening requirements of the two masteral programs and found these to approximate the rigid requirements and standards of the Management Aptitude Test Battery;

NOW THEREFORE, be it RESOLVED as it is hereby RESOLVED that the Master of National Security Administration (MNSA) degree conferred by NDCP and the Master of Public Safety Administration (MPSA) degree conferred by PPSC be accredited as equivalent to passing the Management Aptitude Test Battery (MATB) and that graduates of both programs interested to acquire CES eligibility and CES rank be allowed to proceed to the second stage of the CES eligibility examination process which is the Assessment Center and the other stages of the examination thereafter in accordance with existing policies and regulations; PROVIDED, however, that all expenses that will be incurred in participating in the Assessment Center shall be shouldered by the agency and/or the graduates.

RESOLVED FURTHER that MNSA and MPSA graduates who pass the three other stages of the CES eligibility examinations and are conferred CES eligibility and who are incumbents of CES positions may qualify for appointment to CES ranks; PROVIDED that they meet and comply with the other requirements prescribed by the CES Board and the Office of the President to qualify for rank appointment. (emphasis, italics and underscoring supplied)

By respondent’s attainment of an MNSA degree, she was not conferred automatic CES eligibility. It was, as above-quoted portions of CESB Resolution No. 204 state, merely accredited as "equivalent to passing the Management Aptitude Test Battery." For respondent to acquire CES eligibility and CES rank, she could "proceed to the second stage of the eligibility examination process . . . and the other stages of the examination . . . in accordance with existing policies and regulations"; and that if respondent as MNSA degree holder passed the three other stages of the CES eligibility examinations and is conferred CES eligibility, she could "qualify for appointment to CES ranks," PROVIDED that she meets and complies "with other requirements of the CES Board and the Office of the President to qualify for rank appointment."

Since, it is admitted that respondent, who acquired an MNSA degree in 1993, had not undergone the second, third and fourth stages of the CES eligibility examinations prior to her appointment or during her incumbency as Deputy Director General up to the time her appointment was terminated, she was not a CES eligible, as indeed certified to by the CES Board. Not being a CES eligible, she had no security of tenure, hence, the termination by the PEZA Board on June 1, 2000 of her appointment, as well as the appointment in her stead of CES eligible by Ortaliz, were not illegal.1avvphi1

Respecting the contention that the promulgation of R.A. 8748 on June 1, 1999 removed the CES eligibility qualification for the position of Deputy Director General, hence, respondent, albeit not a CES-eligible, could only be terminated for cause, the same is untenable. The relevant portion of said law reads:

Section 1. Chapter II, Section 11 of Republic Act No. 7916 is hereby amended to read as follows:

Section 11. The Philippine Economic Zone Authority (PEZA) Board. — There is hereby created a body corporate to be known as the Philippine Economic Zone Authority (PEZA) attached to the Department of Trade and Industry. The Board shall have a director general with the rank of department undersecretary who shall be appointed by the President. The director general shall be at least forty (40) years of age, of proven probity and integrity, and a degree holder in any of the following fields: economics, business, public administration, law, management or their equivalent, and with at least ten (10) years relevant working experience preferably in the field of management or public administration.

The director general, shall be assisted by three (3) deputy directors general each for policy and planning, administration and operations, who shall be appointed by the PEZA Board, upon the recommendation of the director general. The deputy directors general shall be at least thirty-five (35) years old, with proven probity and integrity and a degree holder in any of the following fields: economics, business, public administration, law, management or their equivalent. (emphasis supplied)

As correctly held by the trial court, removing the CES eligibility requirement for the Deputy Director General position could not have been the intention of the framers of the law. It bears noting that the position is a high-ranking one which requires specialized knowledge and experience in certain areas including law, economics, public administration and similar fields, hence, to remove it from the CES would be absurd.

The Civil Service Commission CESB in fact has certified that the position requires the appropriate CES eligibility. It is settled that the construction given to a statute by an administrative agency charged with the interpretation and application of that statute is entitled to great respect and should be accorded great weight by the courts.⁷

Respondent’s subsequent passing in late 2000 of the CES examinations did not retroact to consider her a CESO at the time her appointment was terminated on June 1, 2000.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of December 14, 2005, Amended Decision of March 31, 2006 and Resolution of March 31, 2006 are REVERSED AND SET ASIDE. The December 4, 2001 Decision of the Regional Trial Court of Pasay City, Branch 108 is REINSTATED.

SO ORDERED.

CONCHITA CARPIO MORALES
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO Associate Justice

ARTURO D. BRION* Associate Justice

MARTIN S. VILLARAMA, JR.
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

* Additional member per Raffle dated March 1, 2010 in lieu of Associate Justice Lucas P. Bersamin.

¹ CA rollo, pp. 69-124. Penned by Associate Justice Celia Librea-Leagogo and concurred in by Associate Justices Lucas Bersamin (now Associate Justice of this Court) and Renato Dacudao.

² Annex "H" of Petition, rollo, pp. 150-163. Penned by Judge Priscilla Mijares.

³ CA rollo, pp. 239-244. Penned by Associate Justice Celia Librea-Leagogo and concurred in by Associate Justices Lucas Bersamin (now Associate Justice of this Court) and Renato Dacudao.

⁴ Id. at 246-247. Penned by Associate Justice Celia Librea-Leagogo and concurred in by Associate Justices Lucas Bersamin (now Associate Justice of this Court) and Renato Dacudao.

⁵ Id. at 122.

⁶ G.R. No. 170093, April 29, 2009.

⁷ Bagatsing v. Committee on Privatization, G.R. No. 112399, July 14, 1995, 246 SCRA 334; Nestle Philippines, Inc. v. Court of Appeals, G.R. No. 86738, November 13, 1991, 203 SCRA 505, 510.

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