EN BANC

[G.R. No. 123708. June 19, 1997]

CIVIL SERVICE COMMISSION and PHILIPPINE AMUSEMENT AND GAMING CORPORATION, petitioners, vs.
RAFAEL M. SALAS, respondent.

DECISION
REGALADO, J.:

The present petition for review on certiorari seeks to nullify the decision of the Court of Appeals, dated
September 14, 1995, in CA-G.R. SP No. 38319 which set aside Resolution No. 92-1283 of the Civil Service
Commission (CSC) and ordered the reinstatement of herein private respondent Rafael M. Salas with full back wages
for having been illegally dismissed by the Philippine Amusement and Gaming Corporation (PAGCOR), but without
prejudice to the filing of administrative charges against him if warranted. [1]
The records disclose that on October 7, 1989, respondent Salas was appointed by the PAGCOR Chairman as
Internal Security Staff (ISS) member and assigned to the casino at the Manila Pavilion Hotel. However, his
employment was terminated by the Board of Directors of PAGCOR on December 3, 1991, allegedly for loss of
confidence, after a covert investigation conducted by the Intelligence Division of PAGCOR. The summary of
intelligence information claimed that respondent was allegedly engaged in proxy betting as detailed in the affidavits
purportedly executed by two customers of PAGCOR who claimed that they were used as gunners on different
occasions by respondent. The two polygraph tests taken by the latter also yielded corroborative and unfavorable
results.
On December 23, 1991, respondent Salas submitted a letter of appeal to the Chairman and the Board of
Directors of PAGCOR, requesting reinvestigation of the case since he was not given an opportunity to be heard, but
the same was denied. On February 17, 1992, he appealed to the Merit Systems Protection Board (MSPB) which
denied the appeal on the ground that, as a confidential employee, respondent was not dismissed from the service but
his term of office merely expired. On appeal, the CSC issued Resolution No. 92-1283 which affirmed the decision of
the MSPB.[2]
Respondent Salas initially went to this Court on a petition for certiorari assailing the propriety of the questioned
CSC resolution. However, in a resolution dated August 15, 1995, [3] the case was referred to the Court of Appeals
pursuant to Revised Administrative Circular No. 1-95 which took effect on June 1, 1995.
On September 14, 1995, the court of Appeals rendered its questioned decision with the finding that herein
respondent Salas is not a confidential employee, hence he may not be dismissed on the ground of loss of
confidence. In so ruling, the appellate court applied the "proximity rule" enunciated in the case of Grio, et al. vs. Civil
Service Commission, et al.[4]. It likewise held that Section 16 of Presidential Decree No. 1869 has been superseded
and repealed by Section 2(1), Article IX-B of the 1987 Constitution.
Hence this appeal, which is premised on and calls for the resolution of the sole determinative issue of whether
or not respondent Salas is a confidential employee.
Petitioners aver that respondent Salas, as a member of the Internal Security Staff of PAGCOR, is a confidential
employee for several reasons, viz.:

(1) Presidential Decree No. 1869 which created the Philippine Amusement and Gaming Corporation expressly provides under
Section 16 thereof that all employees of the casinos and related services shall be classified as confidential appointees;

(2) In the case of the Philippine Amusement and Gaming Corporation vs. Court of Appeals, et al.,[5] The Supreme Court has
classified PAGCOR employees as confidential appointees;

(3) CSC Resolution No. 91-830, dated July 11, 1991, has declared employees in casinos and related services as confidential
appointees by operation of law; and
(4) Based on his functions as a member of the ISS, private respondent occupies a confidential position.

Whence, according to petitioners, respondent Salas was not dismissed from the service but, instead, his term of
office had expired. They additionally contend that the Court of Appeals erred in applying the "proximity rule" because
even if Salas occupied one of the lowest rungs in the organizational ladder of PAGCOR, he performed the functions
of one of the most sensitive positions in the corporation.
On the other hand, respondent Salas argues that it is the actual nature of an employee's functions, and not his
designation or title, which determines whether or not a position is primarily confidential, and that while Presidential
Decree No. 1869 may have declared all PAGCOR employees to be confidential appointees, such executive
pronouncement may be considered as a mere initial determination of the classification of positions which is not
conclusive in case of conflict, in light of the ruling enunciated in Tria vs. Sto. Tomas, et al.[6]
We find no merit in the petition and consequently hold that the same should be, as it is hereby, denied.
Section 2, Rule XX of the Revised Civil Service Rules, promulgated pursuant to the provisions of Section 16(e)
of Republic Act No. 2260 (Civil Service Act of 1959), which was then in force when Presidential Decree No. 1869
creating the Philippine Amusement and Gaming Corporation was passed, provided that "upon recommendation of the
Commissioner, the President may declare a position as policy-determining, primarily confidential, or highly technical
in nature." It appears that Section 16 of Presidential Decree No. 1869 was predicated thereon, with the text thereof
providing as follows:

"All positions in the corporation, whether technical, administrative, professional or managerial are exempt from the provisions of
the Civil Service Law, rules and regulations, and shall be governed only by the personnel management policies set by the Board
of Directors. All employees of the casinos and related services shall be classified as 'confidential' appointees."

On the strength of this statutory declaration, petitioner PAGCOR terminated the services of respondent Salas
for lack of confidence after it supposedly found that the latter was engaged in proxy betting. In upholding the
dismissal of respondent Salas, the CSC ruled that he is considered a confidential employee by operation of law,
hence there is no act of dismissal to speak of but a mere expiration of a confidential employee's term of office, such
that a complaint for illegal dismissal will not prosper in this case for lack of legal basis.
In reversing the decision of the CSC, the Court of Appeals opined that the provisions of Section 16 of
Presidential Decree No. 1869 may no longer be applied in the case at bar because the same is deemed to have been
repealed in its entirety by Section 2(1), Article IX-B of the 1987 Constitution.[7] This is not completely correct. On this
point, we approve the more logical interpretation advanced by the CSC to the effect that "Section 16 of PD 1869
insofar as it exempts PAGCOR positions from the provisions of Civil Service Law and Rules has been amended,
modified or deemed repealed by the 1987 Constitution and Executive Order No. 292 (Administrative Code of 1987)."
However, the same cannot be said with respect to the last portion of Section 16 which provides that "all
employees of the casino and related services shall be classified as 'confidential appointees.'" While such executive
declaration emanated merely from the provisions of Section 2, Rule XX of the implementing rules of the Civil Service
Act of 1959, the power to declare a position as policy-determining, primarily confidential or highly technical as defined
therein has subsequently been codified and incorporated in Section 12(9), Book V of Executive Order No. 292 or the
Administrative Code of 1987.[8] This later enactment only serves to bolster the validity of the categorization made
under Section 16 of Presidential Decree No. 1869. Be that as it may, such classification is not absolute and all-
encompassing.
Prior to the passage of the aforestated Civil Service Act of 1959, there were two recognized instances when a
position may be considered primarily confidential: Firstly, when the President, upon recommendation of the
Commissioner of Civil Service, has declared the position to be primarily confidential; and, secondly in the absence of
such declaration, when by the nature of the functions of the office there exists "close intimacy" between the appointee
and appointing power which insures freedom of intercourse without embarrassment or freedom from misgivings of
betrayals of personal trust or confidential matters of state.[9]
At first glance, it would seem that the instant case falls under the first category by virtue of the express mandate
under Section 16 of Presidential Decree No. 1869. An in-depth analysis, however, of the second category evinces
otherwise.
When Republic Act No. 2260 was enacted on June 19, 1959, Section 5 thereof provided that "the non-
competitive or unclassified service shall be composed of positions expressly declared by law to be in the non-
competitive or unclassified service or those which are policy-determining, primarily confidential, or highly technical in
nature." In the case of Piero, et al. vs. Hechanova, et al., [10] the Court obliged with a short discourse there on how the
phrase "in nature" came to find its way into the law, thus:

"The change from the original wording of the bill (expressly declared by law x x x to be policy-determining, etc.) to that finally
approved and enacted ('or which are policy-determining, etc. in nature') came about because of the observations of Senator
Taada, that as originally worded the proposed bill gave Congress power to declare by fiat of law a certain position as primarily
confidential or policy-determining, which should not be the case. The Senator urged that since the Constitution speaks of
positions which are 'primarily confidential, policy-determining, or highly technical in nature', it is not within the power of
Congress to declare what positions are primarily confidential or policy-determining. 'It is the nature alone of the position that
determines whether it is policy-determining or primarily confidential.' Hence, the Senator further observed, the matter should be
left to the 'proper implementation of the laws, depending upon the nature of the position to be filled', and if the position is 'highly
confidential' then the President and the Civil Service Commissioner must implement the law.

To a question of Senator Tolentino, 'But in positions that involved both confidential matters and matters which are routine, x x x
who is going to determine whether it is primarily confidential?' Senator Taada replied:

'SENATOR TAADA: Well, at the first instance, it is the appointing power that determines that: the nature of the position. In case
of conflict then it is the Court that determines whether the position is primarily confidential or not" (Italics in the original text).

Hence the dictum that, at least since the enactment of the Civil Service Act of 1959, it is the nature of the
position which finally determines whether a position is primarily confidential, policy-determining or highly technical.
And the court in the aforecited case explicitly decreed that executive pronouncements, such as Presidential Decree
No. 1869, can be no more than initial determinations that are not conclusive in case of conflict. It must be so, or else
it would then lie within the discretion of the Chief Executive to deny to any officer, by executive fiat, the protection of
Section 4, Article XII (now Section 2[3], Article IX-B) of the Constitution.[11] In other words, Section 16 of Presidential
Decree No. 1869 cannot be given a literally stringent application without compromising the constitutionally protected
right of an employee to security of tenure.
The doctrinal ruling enunciated in Piero finds support in the 1935 Constitution and was reaffirmed in the 1973
Constitution, as well as in the implementing rules of Presidential Decree No. 807, or the Civil Service Decree of the
Philippines.[12] It may well be observed that both the 1935 and 1973 Constitutions contain the provision, in Section 2,
Article XII-B thereof, that "appointments in the Civil Service, except as to those which are policy-determining, primarily
confidential, or highly technical in nature, shall be made only according to merit and fitness, to be determined as far
as practicable by competitive examination." Corollarily, Section 5 of Republic Act No. 2260 states that "the non-
competitive or unclassified service shall be composed of positions expressly declared by law to be in the non-
competitive or unclassified service or those which are policy-determining, primarily confidential, or highly technical in
nature."Likewise, Section 1 of the General Rules in the implementing rules of Presidential Decree No. 807 states that
"appointments in the Civil Service, except as to those which are the policy-determining, primarily confidential, or
highly technical in nature, shall be made only according to merit and fitness to be determined as far as practicable by
competitive examination." Let it here be emphasized, as we have accordingly italicized them, that these fundamental
laws and legislative or executive enactments all utilized the phrase "in nature" to describe the character of the
positions being classified.
The question that may now be asked is whether the Piero doctrine -- to the effect that notwithstanding any
statutory classification to the contrary, it is still the nature of the position, as may be ascertained by the court in case
of conflict, which finally determines whether a position is primarily confidential, policy-determining or highly technical -
- is still controlling with the advent of the 1987 Constitution and the Administrative Code of 1987, [13] Book V of which
deals specifically with the Civil Service Commission, considering that from these later enactments, in defining
positions which are policy-determining, primarily confidential or highly technical, the phrase "in nature" was
deleted.[14]
We rule in the affirmative. The matter was clarified and extensively discussed during the deliberations in the
plenary session of the 1986 Constitutional Commission on the Civil Service provisions, to wit:

"MR. FOZ. Which department of government has the power or authority to determine whether a position is policy-determining or
primarily confidential or highly technical?

FR. BERNAS: The initial decision is made by the legislative body or by the executive department, but the final decision is done
by the court. The Supreme Court has constantly held that whether or not a position is policy-determining, primarily confidential
or highly technical, it is determined not by the title but by the nature of the task that is entrusted to it. For instance, we might
have a case where a position is created requiring that the holder of that position should be a member of the Bar and the law
classifies this position as highly technical. However, the Supreme Court has said before that a position which requires mere
membership in the Bar is not a highly technical position. Since the term 'highly technical' means something beyond the ordinary
requirements of the profession, it is always a question of fact.

MR. FOZ. Does not Commissioner Bernas agree that the general rule should be that the merit system or the competitive system
should be upheld?

FR. BERNAS. I agree that that it should be the general rule; that is why we are putting this as an exception.

MR. FOZ. The declaration that certain positions are policy-determining, primarily confidential or highly technical has been the
source of practices which amount to the spoils system.

FR. BERNAS. The Supreme Court has always said that, but if the law of the administrative agency says that a position is
primarily confidential when in fact it is not, we can always challenge that in court. It is not enough that the law calls it primarily
confidential to make it such; it is the nature of the duties which makes a position primarily confidential.

MR. FOZ. The effect of a declaration that a position is policy-determining, primarily confidential or highly technical as an
exception is to take it away from the usual rules and provisions of the Civil Service Law and to place it in a class by itself so that
it can avail itself of certain privileges not available to the ordinary run of government employees and officers.

FR. BERNAS. As I have already said, this classification does not do away with the requirement of merit and fitness. All it says is
that there are certain positions which should not be determined by competitive examination.

For instance, I have just mentioned a position in the Atomic Energy Commission. Shall we require a physicist to undergo a
competitive examination before appointment? Or a confidential secretary or any position in policy-determining administrative
bodies, for that matter? There are other ways of determining merit and fitness than competitive examination. This is not a denial
of the requirement of merit and fitness" (Italics supplied).[15]

It is thus clearly deducible, if not altogether apparent, that the primary purpose of the framers of the 1987
Constitution in providing for the declaration of a position as policy-determining, primarily confidential or highly
technical is to exempt these categories from competitive examination as a means for determining merit and fitness. It
must be stressed further that these positions are covered by security of tenure, although they are considered non-
competitive only in the sense that appointees thereto do not have to undergo competitive examinations for purposes
of determining merit and fitness.
In fact, the CSC itself ascribes to this view as may be gleaned from its questioned resolution wherein it stated
that "the declaration of a position is primarily confidential if at all, merely exempts the position from the civil service
eligibility requirement." Accordingly, the Piero doctrine continues to be applicable up to the present and is hereby
maintained. Such being the case, the submission that PAGCOR employees have been declared confidential
appointees by operation of law under the bare authority of CSC Resolution No. 91-830 must be rejected.
We likewise find that in holding that herein private respondent is not a confidential employee, respondent Court
of Appeals correctly applied the "proximity rule" enunciated in the early but still authoritative case of De los Santos vs.
Mallare, et al.,[16] which held that:

"Every appointment implies confidence, but much more than ordinary confidence is reposed in the occupant of a position that
is primarily confidential. The latter phrase denotes not only confidence in the aptitude of the appointee for the duties of the office
but primarily close intimacy which ensures freedom of intercourse without embarrassment or freedom from misgivings of
betrayals of personal trust or confidential matters of state. x x x" (Emphasis supplied).

This was reiterated in Piero, et al. vs. Hechanova, et al., supra, the facts of which are substantially similar to the
case at bar, involving as it did employees occupying positions in various capacities in the Port Patrol Division of the
Bureau of Customs. The Court there held that the mere fact that the members of the Port Patrol Division are part of
the Customs police force is not in itself a sufficient indication that their positions are primarily confidential. After
quoting the foregoing passage from De los Santos, it trenchantly declared:

"As previously pointed out, there are no proven facts to show that there is any such close intimacy and trust between the
appointing power and the appellees as would support a finding that confidence was the primary reason for the existence of the
positions held by them or for their appointment thereto. Certainly, it is extremely improbable that the service demands any such
closed trust and intimate relation between the appointing official and, not one or two members alone but the entire Customs
patrol (Harbor Police) force, so that every member thereof can be said to hold 'primarily confidential' posts". (Stress supplied).

It can thus be safely determined therefrom that the occupant of a particular position could be considered a
confidential employee if the predominant reason why he was chosen by the appointing authority was, to repeat, the
latter's belief that he can share a close intimate relationship with the occupant which ensures freedom of discussion,
without fear of embarrassment or misgivings of possible betrayal of personal trust or confidential matters of
state. Withal, where the position occupied is remote from that of the appointing authority, the element of trust
between them is no longer predominant.[17]
Several factors lead to the conclusion that private respondent does not enjoy such "close intimacy" with the
appointing authority of PAGCOR which would otherwise place him in the category of a confidential employee, to wit:
1. As an Internal Security Staff member, private respondent routinely

a. performs duty assignments at the gaming and/or non-gaming areas to prevent irregularities, misbehavior, illegal transactions
and other anomalous activities among the employees and customers,

b. reports unusual incidents and related observations/information in accordance with established procedures for
infractions/mistakes committed on the table and in other areas;

c. coordinates with CCTV and/or external security as necessary for the prevention, documentation or suppression of any
unwanted incidents at the gaming and non-gaming areas;

d. acts as witness/representative of Security Department during chips inventory, refills, yields, card shuffling and final shuffling;

e. performs escort functions during the delivery of table capital boxes, refills and shoe boxes to the respective tables, or during
transfer of yields to Treasury.[18]

Based on the nature of such functions of herein private respondent and as found by respondent Court of
Appeals, while it may be said that honesty and integrity are primary considerations in his appointment as a member
of the ISS, his position does not involve "such close intimacy" between him and the appointing authority, that is, the
Chairman of PAGCOR, as would ensure "freedom from misgivings of betrayals of personal trust." [19]
2. Although appointed by the Chairman, ISS members do not directly report to the Office of the Chairman
in the performance of their official duties. An ISS members is subject to the control and supervision of an Area
Supervisor who, in turn, only implements the directives of the Branch Chief Security Officer. The latter is himself
answerable to the Chairman and the Board of Directors.Obviously, as the lowest in the chain of command,
private respondent does not enjoy that "primarily close intimacy" which characterizes a confidential employee.
3. The position of an ISS member belongs to the bottom level of the salary scale of the corporation, being
in Pay Class 2 level only, whereas the highest level is Pay Class 12.
Taking into consideration the nature of his functions, his organizational ranking and his compensation level, it is
obviously beyond debate that private respondent cannot be considered a confidential employee. As set out in the job
description of his position, one is struck by the ordinary, routinary and quotidian character of his duties and
functions. Moreover, the modest rank and fungible nature of the position occupied by private respondent is
underscored by the fact that the salary attached to it is a meager P2,200.00 a month. There thus appears nothing to
suggest that private respondents's position was "highly" or much less, "primarily" confidential in nature. The fact that,
sometimes, private respondent may handle ordinarily "confidential matters" or papers which are somewhat
confidential in nature does not suffice to characterize his position as primarily confidential. [20]
In addition, the allegation of petitioners that PAGCOR employees have been declared to be confidential
appointees in the case of Philippine Amusement and Gaming Corporation vs. Court of Appeals, et al., ante, is
misleading. What was there stated is as follows:

"The record shows that the separation of the private respondent was done in accordance with PD 1869, which provides that the
employees of the PAGCOR hold confidential positions. Montoya is not assailing the validity of that law. The act that he is
questioning is what he calls the arbitrary manner of his dismissal thereunder that he avers entitled her to damages under the Civil
Code." (Italics ours).
 Thus, the aforecited case was decided on the uncontested assumption that the private respondent therein was
a confidential employee, for the simple reason that the propriety of Section 16 of Presidential Decree No. 1869 was
never controverted nor raised as an issue therein. That decree was mentioned merely in connection with its provision
that PAGCOR employees hold confidential positions. Evidently, therefore, it cannot be considered as controlling in
the case at bar. Even the fact that a statute has been accepted as valid in cases where its validity was not challenged
does not preclude the court from later passing upon its constitutionality in an appropriate cause where that question is
squarely and properly raised. Such circumstances merely reinforce the presumption of constitutionality of the law.[21]
WHEREFORE, the impugned judgment of respondent Court of Appeals is hereby AFFIRMED in toto.
SO ORDERED.
Narvasa, C.J., Padilla, Davide, Jr., Romero, Melo, Puno, Kapunan, Mendoza, Hermosisima, Jr.,
Panganiban and Torres, Jr., JJ., concur.
Bellosillo, and Francisco, JJ., on leave.
Vitug, J., see separate opinion.

[1] Penned by Associate Justice Delilah Vidallon-Magtolis, with Associate Justices Gloria C. Paras and Quirino D.
Abad Santos, Jr., concurring: Annex A, Petition, Rollo, 26.
[2] Original Record, 22.
[3] Ibid., 148.
[4] G.R. No. 91602. February 26, 1991. 194 SCRA 548.
[5] G.R. No. 93396, September 30, 1991, 202 SCRA 191.
[6] Infra, fn. 20.
[7] This provision reads as follows: "The Civil Service embraces all branches, subdivisions, instrumentalities and
agencies of the Government, including government-owned or controlled corporations with original charters."
[8] Sec. 12. Powers and functions. The Commission shall have the following powers and functions:
xxx
(9) Declare positions in the Civil Service as may be primarily confidential, highly technical or policy-determining; x x x
[9] Salazar vs. Mathay, Sr., et al., L-44061, September 20, 1976, 73 SCRA 275.
[10] L-22562, October 22, 1966, 18 SCRA 417.
[11] "No officer or employee of the civil service shall be removed or suspended except for cause provided by law"
(Sec. 2[3], Art. IX-B, 1987 Constitution).
[12] Approved, October 6, 1975.
[13] Executive Order No. 292 took effect on November 23, 1989 pursuant to Proclamation No. 495 of the Office of the
President of even date.
[14]
"Appointments in the civil service shall be made only according to merit and fitness to be determined as far as
practicable, and, except to positions which are policy-determining, primarily confidential, or highly technical by
competitive examination." (Sec. 2[2], Art. IX-B, 1987 Constitution).
"The Commission shall have the following powers and functions: x x x Declare positions in the Civil Service as may
properly be primarily confidential, highly technical or policy-determining." (Sec. 12[9] Book V. E.O. No. 292).
[15] Record of the Constitutional Commission, Vol. I, 571-572.
[16] 87 Phil. 289 (1950).
[17] Grio, et al. vs. Civil Service Commission, et al., supra., fn. 4.
[18] Petition, 12-13, Rollo, 19-20.
[19] Borres, et al. vs. Court of Appeals, et al., L-36845, August 21, 1987, 153 SCRA 120.
[20]
Tria vs. Sto. Tomas, et al., G.R. No. 85670 July 31, 1991, 199 SCRA 833.
[21] Pamil vs. Teleron, L-34854, November 20, 1978, 86 SCRA 413.

FACTS:
On 07 Oct 1989, respondent Salas was appointed by the PAGCOR chairman as internal security staff
member and assigned to the casino at the Manila Pavilion Hotel. His employment was terminated by the
Board of Directors of PAGCOR on 03 Dec 1991, allegedly for loss of confidence.

ISSUE(S):
Whether or not Salas is a confidential employee.

HELD:
NO. It is the nature of the position which finally determines whether a position is primarily confidential,
policy-determining or highly technical. The occupant of a particular position could be considered a
confidential employee if the predominant reason why he was chosen by the appointing authority was the
latter’s belief that he can share a close relationship with the occupant. Where the position occupied is
remote from that of the appointing authority, the element of trust between them is no longer predominant.

CIVIL SERVICE COMMISSION v. SALAS

FACTS:

On October 7, 1989, Rafael M. Salas was appointed by the PAGCORChairman as Internal Security Staff Member (ISS) and
assigned to the Casinoat the Manila Pavilion Hotel.ISS members do not directly report to the Office of the Chairman, and
issubject to the control and supervision of an Area Supervisor who onlyimplements the directives of the Branch Chief Security
Officer. The BOD of PAGCOR terminated him on Dec. 3, 1991 grounds: loss of confidence.Salas was allegedly engaged in proxy
betting – in affidavits of 2 customers,claiming to have been used as gunners.CA reversed finding that Salas is not a confidential
employee and cannot bedismissed on that ground, applying the“proximily rule” enunciated in Case 63: Grino V. CSC & Case 60:
De los Santos V. Mallare 10. CA also held that PD 1869 Section 16 has been repealed by Section 2 (1),Article IX-B of the Consti.

ISSUE/S:

1.Whether Salas is a confidential employee?

2. Whether the Pinero doctrine is still applicable?

HELD:

Every appointment implies confidence, but more more than ordinary confidence is reposed in theoccupant of a position that is
primarily confidential. The latter phrase denotes not only confidence in the aptitude of the appointee for the duties of the
office,but primarily close intimacy which insures freedom of intercourse without embarrassment or freedom frommisgivings of
betrayals of personal trust or confidential matters of the State.
In Pinero, et. al. V. Hechanova, et. al. “since the enactment of RA 2260: the 1959 Civil Service Act, it is the nature of the position
which finally determines whether a position is:a.)primarily confidential,b.)policy determining orc.)highly technical.Senator
Tanada: “in the 1st

instance, it is the appointing power that determines the nature of the position.In case of conflict, then it is the Court that
determines whether the position is primarily confidential ornot.”-Employees occupying various positions in the Port Patrol
Division of the Bureau of Customs, whichis part of the Customs police force, is not in itself sufficient indication that there
positions areprimarily confidential.

1. No.Salas’ position is the lowest in the chain of command. His job description isordinary, routinary and quotidian in character.
His pay is only P2,200 permonth.He does not enjoy that “primarily close intimacy” which characterizes aconfidential
employee.Where the position occupied is remote from that of the appointing authority,the element of trust between them is
no longer predominant.Citing Case Tria V. Sto. Tomas, “the fact that sometimes, private respondentmay handle ordinarily
confidential matters or papers which are somewhatconfidential in nature does not suffice to characterize his position as
primarilyconfidential.”

2. Yes. PD 1869 can be no more than initial determinations that are not conclusive incases of conflict.1986 Constitutional
Commission Records The primary purpose of the framers of the 1987 Constitution in providing forthe declaration of a position
asa.)primarily confidential,b.)policy determining orc.)highly technicalis to exempt these categories from competitive
examinations as a means fordetermining merit and fitness.It must be stressed further that these positions are covered by the
security of tenure, although they are considered non-competitive only in the sense thatappointees thereto do not have to
undergo competitive examinations forpurposes of determining merit and fitness.CSC Resolution 91-830 does not make
PAGCOR employees confidential,merely reiterates exemption from civil service eligibility requirement.In reversing the decision
of the CSC, the CA opined that the provisions of Section 16, PD 1869 may no longer be applied in the case at bar because
thesame is deemed to have been repealed in its entirety by Section 2 (1), ArticleIX-B of the 1987 COnsti. This is not completely
correct. On this point, we approve the more logicalinterpretation advanced by the CSC to the effect that “Section 16 of PD
1869insofar as it exempts PAGCOR positions from the provisions of the CivilService Law & Rules has been amended, modified or
deemed repealed by the1987 Consti & EO 292: Administrative Code of 1987.

However, the same cannot be said with respect to the last portion of Section16 which provides that “All employees of the
casinos and related servicesshall be classified as “Confidential” appointees.” While such executivedeclaration emanated merely
from the provisions of Implementing Rules of the Civil Service Act of 1959

Rule XXSection 2 The power to declare a position as:a.)primarily confidential,b.)policy determining orc.)highly technical,as
defined therein has subsequently been codified and incorporated in EO 292: Administrative Code of 1987Book V. Civil Service
CommissionSection 12. The Commission shall have the ff powers and functions: (9). Declare positions in the Civil Service as may
properly be primarilyconfidential, highly technical or policy determining. This later enactment only serves to bolster the validity
of the categorizationmade under Section 16 PD 1869.Be that as it may, such classification is not absolute and all-
encompassing.Prior to the passage of the Civil Service Act of 1959, there were

2 recognized instances when a position may be declared primarilyconfidential:

1:when the President, upon recommendation of the Commissioner of CivilService, has declared the position to be primarily
confidential;2:in the absence of such declaration, when by the nature of the functions of the office, there exists “close
intimacy” between the appointing powerwhich ensures freedom of intercourse without embarrassment of freedomfrom
misgivings of betrayals of personal trust or confidential matters of the State.

RA 2260: Civil Service Act (June 19, 1959)

Section 5.
“The non-competitive or unclassified service shall be composed of positions expressly declared by law to be in the non-
competitive orunclassified service or those which are policy determining, primarilyconfidential or highly technical in nature.”

General Rules Implementing PD 807: Civil Service RulesSection 1. “appointments to the Civil Service, except as to those which
are policy determining, primarilyconfidential, or highly technical in nature, shall be made only according to merit and fitness to
bedetermined as far as practicable by competitive examinations.”

SEPARATE OPINIONS

VITUG, J ., concurring:

- Highlighted the phrase, "without prejudice to the filing of administrativecharges against (Salas) if warranted," found in the
dispositive portion of thedecision of the appellate court. It would seem to me that the adverse findingsarrived at by the
Intelligence Division of PAGCOR which the Board of Directors relied upon to terminate the services of Salas on ground of loss of
confidence could well be constitutive of the administrative infractions thatthe appellate court must have had in mind. The case
should be remanded to the CSC to specifically meet head-onPAGCOR's foregoing findings and to thereby fully ventilate, as well
as passupon, the appeal to it (CSC) on the basis with an opportunity for a hearingadequately accorded to Salas

ISSUE/S:

1) Whether the term “compensation” in P. D. No. 198, §13, asamended by P. D. No. 768 and P. D. No. 1479 does not include the
allowancesand per diems which had been disallowed in this case, considering §2(i) of P.D. No. 1146 as amended by RA 8291,
which provides that “compensation”means “the basic pay or salary by an employee, pursuant to hisemployment/appointment,
excluding per diems, bonuses, overtime pay,allowances and any other emoluments received in addition to the basic paywhich
are not integrated into the basic pay under existing laws.”2) Whether the prohibition in PD 198, §13 against the grant of
additionalcompensation to board members must be deemed repealed by virtue of §22of R. A. No. 6758, otherwise known as
the Salary Standardization Law, whichtook effect on July 1, 1989.* If yes to 1 and 2, then the members of the board of directors
of waterdistricts are entitled to receive benefits in addition to those authorized to bepaid pursuant to their charter and the
guidelines of the LWUA after theeffectivity of R. A. No. 67583) Whether the disallowance of duplication of claims of
transportationallowance of various BWD employees, as well as the grant of RATA, riceallowance, and excessive per diems to
members of the board of directors of BWD, would impair vested rights, violate any rule against diminution of benefits, and
undermine the management prerogative of water districts; and

HELD:

1) NO. The definitions of the term “compensation” in the statutesrelied on by petitioners are for limited purposes only and
cannot be deemedto comprehend such other purposes not specifically included in theprovisions thereof.

Words and phrases in a statute must be given their natural, ordinary, andcommonly-accepted meaning, due regard being given
to the context in whichthe words and phrases are used. The provision petitioners cite as basis refers to the basis for the
computationof employer and employee contributions to the GSIS as well as the benefits towhich such employees are entitled.
In the same manner, under §32 of theNIRC, “compensation” includes fees, salaries, wages, commissions, andsimilar items for
purposes of recognizing taxable income. The definitions of the term “compensation” in these statutes are for limitedpurposes
only and cannot be deemed to comprehend such other purposesnot specifically included in the provisions thereof.Under P. D.
No. 198, §13, per diem is precisely intended to be thecompensation of members of board of directors of water districts.By
specifying the compensation which a director is entitled to receive and bylimiting the amount he/she is allowed to receive in a
month, and, in the sameparagraph, providing “No director shall receive other compensation” than the amount provided for per
diems, the law quite clearly indicates that directorsof water districts are authorized to receive only the per diem authorized
bylaw and no other compensation or allowance in whatever form.2) NO. The Salary Standardization Law does not apply to
petitioners becausedirectors of water districts are in fact limited to policy-making and areprohibited from the management of
the districts, as provided by §18 thereof.R. A. No. 6758, §4 specifically provides that the Salary Standardization Lawapplies to
“positions, appointive or elective, on full or part-time basis, nowexisting or hereafter created in the government, including
GOCCs and GFIs.” The Salary Standardization Law adopts a Position Classification Systemclassifying positions into four main
categories, namely: professionalsupervisory, professional non-supervisory, sub-professional supervisory, andsub-professional
non-supervisory, and the rules and regulations for itsimplementation.A review of the provisions of the Salary Standardization
Law will reveal thatthe Salary Standardization Law does not apply to petitioners becausedirectors of water districts are in fact
limited to policy-making and areprohibited from the management of the districts. The fact that §12 and §17 of the Salary
Standardization Law speak of allowances as “benefits” paid in addition to the salaries incumbents arepresently receiving makes
it clear that the law does not refer to thecompensation of board of directors of water districts as these directors do notreceive
salaries but per diems for their compensation.3) NO. The erroneous application and enforcement of the law by publicofficers
does not estop the Government from making a subsequent correctionof such errors – practice, without more, no matter how
long continued, cannotgive rise to any vested right if it is contrary to law.Management prerogative refers to the right of an
employer to regulate allaspects of employment, such as the freedom to prescribe work assignments,working methods,
processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and
dismissal andrecall of work. Clearly, the existence of such right presupposes the existenceof an employer-employee
relationship.

As to the BWD board of directors:

The BWD board of directors are notemployees of BWD. As already noted, their function, as defined by P. D. No.198, is limited
to policy-making.Moreover, as also noted before, the right of directors of water districts to thepayment of compensation is
expressly provided for in PD 198, thus pre-empting the exercise of any discretion by the water districts.

CSC VS SALAS Salas was an employee of PAGCOR, a GOCC with an original charter. He was a supervisor of the dealers in the
casino. He was suspected in engaging in proxy betting. There was a discreet investigation conducted of his act. He was later
removed on the ground of loss of trust and confidence. His defense was that he cannot be removed from office on the ground
that under the Constitution, no employee of the Civil Service shall be removed except for causes provided by law. On the other
hand, PAGCOR contends that under its charter, all positions are primarily confidential and hence may be removed in the ground
of loss of confidence. CSC affirmed his dismissal. On appeal, CA reversed and applied the proximity rule. SC: Applying the
proximity rule, Salas cannot be removed on the said ground. The position of Salas as a supervisor is too remote from the
appointing authority, the Chairman. There are so many intermediaries between them. The occupant of a particular position
could be considered a confidential employee if the predominant reason why he was chosen by the appointing authority was the
latter’s belief that he can share a close intimacy with the occupant which ensures freedom of discussion without fear of
embarrassment or misgivings of possible betrayal of personal trust or confidential matters of the State. Art. IX-B sec. 2 par. 2 –
Appointment in the Civil Service shall be made only according to merit and fitness to be determined as far as practicable and
except to positions which are policy-determining, primarily confidential or highly technical, by competitive examination. (It has
nothing to do with the classification of his position as career on non-career)