1
G.R. Nos. 183200-01, June 29, 2016
PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT
CORPORATION AND/OR PAUL AQUINO AND ESTER R.
GUERZON, Petitioners, v. AMELYN A. BUENVIAJE, Respondent.
G.R. Nos. 183253 & 183257
AMELYN A. BUENVIAJE, Petitioner, v. PHILIPPINE NATIONAL OIL
COMPANY-ENERGY DEVELOPMENT CORPORATION, PAUL A. AQUINO
AND ESTER R. GUERZON, Respondents.
DECISION
JARDELEZA, J.:
1 2
Before us are consolidated petitions for review on certiorari of the Decision dated
October 31, 2007 and Resolution 3 dated June 3, 2008 of the Court of Appeals (CA) in
CA-G.R. S.P. Nos. 94359 and 94458. The CA partially modified the Resolutions 4 of the
National Labor Relations Commission (NLRC) dated September 27, 2005 and January
31, 2006, which in turn partially modified the Decision 5 of the Labor Arbiter dated
December 10, 2004.
The Facts
Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) hired
Amelyn Buenviaje (Buenviaje) as Assistant to the then Chairman/President and Chief
Executive Officer Sergio A.F. Apostol (Apostol), her father. Buenviaje's employment
contract provided that she will serve until June 30, 2004 or co-terminous with the tenure
of Apostol, whichever comes first.6.
On August 4, 2003, Apostol approved the creation of PNOC-EDC's new Marketing
Division composed of thirty (30) positions. Seven (7) of these thirty (30) positions were
also newly created,7 one of which was that of a Marketing Division Manager.8 Buenviaje
assumed this position as early as the time of the creation of the Marketing Division. 9.
On January 5, 2004, Apostol filed his Certificate of Candidacy as Governor for the
province of Leyte, yet continued to discharge his functions as President in PNOC-
EDC.10 Buenviaje also continued to perform her duties as Assistant to the
Chairman/President and Marketing Division Manager in PNOC-EDC. 11.
On February 2, 2004, Paul Aquino (Aquino), the new President of PNOC-EDC,
appointed Buenviaje to the position of Senior Manager for Marketing Division effective
February 1, 2004.12 The appointment letter partly provides:.
By copy of this letter, HRMD [Human Resources Management Division] is instructed to
amend your present employment status from your present position as Assistant to the
President (co-terminus) to regular status and as such you will be entitled to all the rights
and privileges granted to your new position under the company's benefit policies subject
to existing rules and regulations. This appointment is subject to confirmation by your
immediate superior based on your performance during the next six months. x x x For
record purposes, please take note that your regular status is retroactive to July 1, 2001.
This date will be used for the computation of your service credits, retirement and other
company benefits allowed under company policy.13.
Pursuant to the instructions in the appointment letter, Buenviaje affixed her signature to
the letter, signifying that she has read and understood its contents. 14.
In line with PNOC-EDCs policies, Buenviaje was subjected to a performance appraisal
during the first week of May 2004. 15 She received a satisfactory grade of three (3). 16 In
her subsequent performance appraisal covering the period of May 1, 2004 to June 30,
2004, she received an unsatisfactory grade of four (4). 17 Thus, Ester Guerzon (Guerzon),
Vice President for Corporate Affairs of PNOC-EDC, informed Buenviaje that she did
not qualify for regular employment. 18 PNOC-EDC, through Guerzon, communicated in
writing to Buenviaje her non-confirmation of appointment as well as her separation from
the company effective July 31, 2004. 19 On July 2, 2004, Buenviaje gave her written
comments on the results of her second performance appraisal. 20 In reply, PNOC-EDC
sent her two (2) more letters reiterating her non-confirmation and separation from the
company.21 Aquino also issued a Memorandum to Buenviaje instructing her to prepare a
turnover report before her physical move-out. 22.
Buenviaje responded by filing a complaint before the Labor Arbiter for illegal dismissal,
unpaid 13thmonth pay, illegal deduction with claim for moral as well as exemplary
damages, including attorney's fees and backwages.23.
The Ruling of the Labor Arbiter
The Labor Arbiter rendered a decision in favor of Buenviaje, the dispositive portion of
which states:.
WHEREFORE, premises considered, judgment is hereby rendered declaring
complainant a regular employee. As a consequence thereof, her dismissal without any
basis is hereby deemed illegal. Respondents PNOC-Energy Development Corporation,
and/or Paul Aquino and Ester R. Guerzon are hereby ordered to reinstate complainant to
her former position without loss of seniority rights and other benefits and with full

backwages reckoned from August 1, 2004 up to her actual or payroll reinstatement,
which as of this date is in the amount of P718,260.40.
Further, for having acted with manifest bad faith and given the extent of the damage
done to complainant who occupies a high managerial position, respondents are jointly
and severally ordered to pay complainant moral damages in the amount of
P1,000,000.00 and exemplary damages in the amount of P500,000.00.
Finally, respondents are hereby ordered to return to complainant the amount of
P51,692.72, which they illegally deducted from her last salary and to pay the sum
equivalent to ten percent of the judgment award as and by way of attorney's fees.
SO ORDERED.24 (Emphasis in the original.).
The Labor Arbiter held that Buenviaje was a regular employee because her appointment
letter clearly says so. Any doubt caused by the statement in the appointment letter that
Buenviaje's appointment was subject to confirmation must be resolved against PNOC-
EDC. In addition, PNOC-EDC failed to prove that reasonable standards were explained
to Buenviaje at the time of her engagement, thusly negating PNOC-EDC's claim that she
was merely a probationary employee. The Labor Arbiter noted that PNOC-EDC even
admitted that the alleged standards were only set and discussed with Buenviaje more
than a month after her actual appointment.25.
The Labor Arbiter further ruled that PNOC-EDC also failed to explain why Buenviaje
was allowed to enjoy benefits that were supposed to be exclusive for regular employees.
As a regular employee, therefore, Buenviaje could only be dismissed for any of the just
or authorized causes under Articles 282 and 28326 of the Labor Code. Since the cause for
Buenviaje's dismissal was not included in any of the grounds enumerated in either
Article, she was considered illegally dismissed. The Labor Arbiter found Guerzon and
Aquino to have acted in bad faith due to their failure to explain the standards to
Buenviaje, as well as why the evaluation form for regular employees was used in her
evaluation. They also failed to respond to Buenviaje's allegation that the second
evaluation was done in bad faith to serve as an excuse in dismissing her. The Labor
Arbiter noted that the second evaluation appeared irregular because it did not bear the
signature and approval of Aquino. Consequently, for lack of the required approval, the
second evaluation could not serve as a valid basis to remove Buenviaje. 27.
Both parties appealed to the NLRC.
The Ruling of the National Labor Relations Commission
2
In its Resolution28 dated September 27, 2005, the NLRC ruled:.
WHEREFORE, premises considered, the appeal is partly GRANTED and the Decision
dated 10 December 2004 is hereby MODIFIED ordering respondent-appellant PNOC-
Energy Development Corporation to pay complainant-appellee financial assistance in
the amount of P229,681.35 only and her accrued wages in the amount of P1,224,967.28
for the period covering December 2004, the date of the decision ordering her
reinstatement until the date of this Resolution. The order to return to complainant-
appellee the amount of P51,692.72, which represents deduction from her salary and not
raised on appeal, STANDS. Finally, the award of moral and exemplary damages and
attorney's fees, as well as the joint and solidarily (sic) liability of individual respondents
Paul A. Aquino and Ester R. Guerzon are hereby DELETED.
SO ORDERED.29 (Emphasis in the original.).
The NLRC agreed with the Labor Arbiter that Buenviaje was a regular employee of
PNOC-EDC, noting that the terms of her appointment expressly grants a regular status
of employment.30 The NLRC also found that PNOC-EDC admitted that Buenviaje has
been performing the functions of a Marketing Division Manager for more than six (6)
months before she was formally appointed to the said position. 31 Nevertheless, the
NLRC ruled that she was not illegally dismissed because she did not enjoy security of
tenure.32 The NLRC noted that the condition in Buenviaje's appointment letter, which
provided that her appointment is subject to confirmation by her immediate superior
based on her performance during the next six (6) months, was clear and understood by
her when she affixed her signature to the appointment letter.33 The NLRC concluded that
only upon confirmation of her appointment will Buenviaje enjoy the right to security of
tenure.34 As it was, PNOC-EDC found her performance unsatisfactory and Buenviaje
failed to disprove these findings. Therefore, Buenviaje failed to complete her
appointment as a regular employee and her non-confirmation cannot be considered as an
illegal dismissal.35.
With respect to Buenviaje's prayer for moral and exemplary damages, and attorney's
fees, the NLRC found no basis to grant the same. The NLRC also found no basis for the
solidary liability of Aquino and Guerzon.36.
Both parties asked the NLRC to reconsider its Resolution, but the NLRC denied their
motions. Thus, both parties filed their petitions for certiorari with the CA.
The Ruling of the Court of Appeals
The CA partially modified the Resolution of the NLRC. The dispositive portion of the
CA Decision37dated October 31, 2007 reads:.

WHEREFORE, in view of all the foregoing, the September 27, 2005 and January 31,
2006 Resolutions of the NLRC are MODIFIED as follows:
For having been illegally dismissed, petitioner Amelyn Buenviaje is entitled to receive a
separation pay equivalent to 1/2 month pay for every year of service (with a fraction of
at least 6 months considered one whole year) in lieu of reinstatement. In addition she is
also to receive full backwages inclusive of allowances and other benefits or their
monetary equivalent, computed from the time the compensation was withheld up to the
finality of this decision.
The other awards in the NLRC decision as well as the deletion of the joint and solidary
liabilities of Paul A. Aquino and Ester R. Guerzon are hereby AFFIRMED.
SO ORDERED.38 (Emphasis in the original.).
The CA found no reason to disturb the findings of both the Labor Arbiter and the NLRC
that Buenviaje was a regular employee of PNOC-EDC. However, it disagreed with the
NLRC's ruling that Buenviaje failed to acquire security of tenure. The CA stated that
where an employee has been engaged to perform activities which are usually necessary
or desirable in the usual business of the employer, such employee is deemed a regular
employee and is entitled to security of tenure notwithstanding the contrary provisions of
his contract of employment.39 As a regular employee, Buenviaje may only be dismissed
if there are just or authorized causes. Thus, PNOC-EDC's reasoning that she failed to
qualify for the position cannot be countenanced as a valid basis for her dismissal. 40.
Both parties filed their respective motions for reconsideration, which the CA denied.
Hence, these consolidated petitions, which present the following issues:.
I. Whether Buenviaje was a permanent employee;
II. Whether Buenviaje was illegally dismissed;
III. Whether Buenviaje is entitled to moral and exemplary damages as well as
attorney's fees;
IV. Whether Buenviaje should be given separation pay in lieu of reinstatement;
and
V. Whether Aquino and Guerzon should be held jointly and severally liable to
Buenviaje.
3
Our Ruling
Buenviaje was a permanent employee
Buenviaje was hired as a Marketing Division Manager, a position that performs
activities that are usually necessary and desirable to the business of PNOC-EDC and is
thusly, regular. As an employer, PNOC-EDC has an exclusive management prerogative
to hire someone for the position, either on a permanent status right from the start or
place him first on probation. In either case, the employee's right to security of tenure
immediately attaches at the time of hiring.41 As a permanent employee, he may only be
validly dismissed for a just42 or authorized43 cause. As a probationary employee, he may
also be validly dismissed for a just or authorized cause, or when he fails to qualify as a
regular employee in accordance with reasonable standards made known to him by the
employer at the time of his engagement.44 Apart from the protection this last ground in
the dismissal of a probationary employee affords the employee, it is also in line with the
right or privilege of the employer to choose who will be accorded with regular or
permanent status and who will be denied employment after the period of probation. It is
within the exercise of this right that the employers may set or fix a probationary period
within which it may test and observe the employee's conduct before hiring him
permanently.45.
Here, PNOC-EDC exercised its prerogative to hire Buenviaje as a permanent employee
right from the start or on February 1, 2004, the effectivity date of her appointment. In
her appointment letter, PNOC-EDC's President expressly instructed the HRMD to
amend Buenviaje's status from co-terminous to regular. He also informed her that her
regular status shall be retroactive to July 1, 2001. Nowhere in the appointment letter did
PNOC-EDC say that Buenviaje was being hired on probationary status. Upon evaluation
on two (2) occasions, PNOC-EDC used a performance appraisal form intended for
permanent managerial employees, even if the company had a form for probationary
employees. The intention, therefore, all along was to grant Buenviaje regular or
permanent employment. As correctly observed by the CA:.
Accordingly, at the time of her formal appointment to the position on February 2, 2004,
Amelyn Buenviaje has been performing the functions of a Senior Manager of the
Marketing Division for almost six months. After having had the opportunity to observe
her performance for almost six months as Senior Marketing Manager, PNOC should not
have formally appointed her if she appeared to have been unqualified for the position.
But as it is, Amelyn Buenviaje was formally appointed and given a regular status. x x
x46.
This intention was clear notwithstanding the clause in the appointment letter saying that
Buenviaje's appointment was subject to confirmation by her immediate superior based
on her performance during the next six (6) months. This clause did not make her

regularization conditional, but rather, effectively informed Buenviaje that her work
performance will be evaluated later on. PNOC-EDC, on the other hand, insists that this
clause demonstrates that Buenviaje was merely a probationary employee. Consequently,
when she failed to meet the standards set by PNOC-EDC, the latter was well within its
rights not to confirm her appointment and to dismiss her.
We are not persuaded.
Firstly, if the clause in the appointment letter did cause an ambiguity in the employment
status of Buenviaje, we hold that the ambiguity should be resolved in her favor. This is
in line with the policy under our Labor Code to afford protection to labor and to construe
doubts in favor of labor.47 We upheld this policy in De Castro v. Liberty Broadcasting
Network, Inc.,48 ruling that between a laborer and his employer, doubts reasonably
arising from the evidence or interpretation of agreements and writing should be resolved
in the former's favor.49 Hence, what would be more favorable to Buenviaje would be to
accord her a permanent status.
But more importantly, apart from the express intention in her appointment letter, there is
substantial evidence to prove that Buenviaje was a permanent employee and not a
probationary one.
A probationary employee is defined as one who is on trial by an employer during which
the employer determines whether or not he is qualified for permanent employment. 50 In
general, probationary employment cannot exceed six (6) months, otherwise the
employee concerned shall be considered a regular employee.51 It is also indispensable in
probationary employment that the employer informs the employee of the reasonable
standards that will be used as a basis for his or her regularization at the time of his or her
engagement.52 If the employer fails to comply with this, then the employee is considered
a regular employee.53.
In their reply to Buenviaje dated July 28, 2004, PNOC-EDC reminded Buenviaje that
the standards "were thoroughly discussed with [her] separately soon alter [she] signed
[her] contract, as well as that which was contained in the job description attached
thereto."54 PNOC-EDC maintained this position in its appeal memorandum, 55 asserting
that Buenviaje was apprised of the reasonable standards for regularization by virtue of
the job description attached to her appointment.56 They also alleged that the standards
were discussed with Buenviaje prior to her first and second appraisals. 57We, however, do
not find these circumstances sufficient to categorize Buenviaje as a probationary
employee.
In Abbott Laboratories, Philippines v. Alcaraz,58 we were confronted with the similar
question of whether Alcaraz was sufficiently informed of the reasonable standards that
4
would qualify her as a regular employee. In affirming that she was, we enumerated the
details and circumstances prior to, during the time of her engagement, and the incipient
stages of her employment that show she was well-apprised of her employer's
expectations that would, in turn, determine her regularization. These were:.
(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of
its need for a Regulatory Affairs Manager, indicating therein the job description for as
well as the duties and responsibilities attendant to the aforesaid position; this prompted
Alcaraz to submit her application to Abbott on October 4, 2004;
(b) In Abbott's December 7, 2004 offer sheet, it was stated that Alcaraz was to be
employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract which specifically
stated, inter alia, that she was to be placed on probation for a period of six (6) months
beginning February 15, 2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbott's employment offer, Bernardo sent her copies of
Abbott's organizational structure and her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed
her that she had to implement Abbott's Code of Conduct and office policies on human
resources and finance and that she would be reporting directly to Walsh;
(f) Alcaraz was also required to undergo a training program as part of her orientation;
(g) Alcaraz received copies of Abbott's Code of Conduct and Performance Modules from
Misa who explained to her the procedure for evaluating the performance of probationary
employees; she was further notified that Abbott had only one evaluation system for all of
its employees; and
(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and
had admitted to have an "extensive training and background" to acquire the necessary
skills for her job.59.
We concluded that "[c]onsidering the totality of the above-stated circumstances, it
cannot, therefore, be doubted that Alcaraz was well-aware that her regularization would
depend on her ability and capacity to fulfill the requirements of her position as
Regulatory Affairs Manager and that her failure to perform such would give Abbott a
valid cause to terminate her probationary employment." 60.
We stress here that the receipt by Buenviaje of her job description does not make this
case on all fours with Abbott. The receipt of job description and the company's code of
conduct in that case was just one of the attendant circumstances which we found

equivalent to being actually informed of the performance standards upon which a
probationary employee should be evaluated. What was significant in that case was that
both the offer sheet and the employment contract specifically stated that respondent was
being employed on a probationary status. Thus, the intention of Abbott was to hire
Alcaraz as a probationary employee. This circumstance is not obtaining in this case and
the opposite, as we have already discussed, is true.
Of equal significance, the job description attached to Buenviaje's appointment letter
merely answers the question: "what duties and responsibilities does the position entail?",
but fails to provide the answer/s to the question: "how would the employer gauge the
performance of the probationary employee?". The job description merely contains her
job identification, her immediate superior and subordinates, a list of her job objectives,
duties and responsibilities, and the qualification guidelines required of her position (i.e.,
minimum education, minimum experience, and special skills). There is no question that
performance of duties and responsibilities is a necessary standard for qualifying for
regular employment. It does not stop on mere performance, however. There must be a
measure as to how poor, fair, satisfactory, or excellent the performance has been. PNOC-
EDC, in fact, used an appraisal form when it evaluated the performance of Buenviaje
twice. A copy of this appraisal form, unlike in Abbot, was not given to Buenviaje at any
time prior to, during the time of her engagement, and the incipient stages of her
employment. A comparison of the job description and the standards in the appraisal form
reveals that they are distinct. The job description is just that, an enumeration of the
duties and responsibilities of Buenviaje. To better illustrate, the job objectives, duties
and responsibilities of Buenviaje are set out below:.
III. JOB OBJECTIVE
1. To set the overall marketing objectives and directions of EDC, in coordination
with EDC Operations, through the Department Managers and Corporate
Services units.
2. To initiate the preparation of detailed/specific short (annual) and medium to
long term (2-5 years) marketing plans and programs.
3. To monitor the implementation of the work performance and execution of the
plans and programs of Public & Marketing Relations, Power & Energy
Services, and Market Development.
4. To manage the functional and administrative requirements of the managers for
Public & Marketing Relations, Power & Energy Services, and Market
Development.
IV. DUTIES AND RESPONSIBILITIES
5
1. Ensures that a survey of potential markets and customers in relation to newly
developed or soon-to-be- completed power projects are regularly initiated.
2. Develops marketing plans and strategies with Managers and staff, relevant to
new and/or uncommitted power and/or resources for both contracted and
through the Wholesale Electricity Spot Market (WESM).
3. Develops marketing plans and strategies with managers on new opportunities
for Energy Services (Drilling, Geoscientific, Design and Engineering, etc.).
4. Ensures and oversees the development of a business networking system and
database.
5. Establishes business contacts (domestic and overseas) and oversees market
development and opportunities through the subordinate managers.
6. Ensures and oversees the development of an effective advertising program,
annually and as needed (print, publication, etc.), to propagate and enhance
EDC's public image and awareness of its marketable products and services.
7. Develops new marketable products and services, in coordination with
Operations and Corporate Services.
8. Represents Top Management in various fora, conventions, etc. for
business/marketing opportunities domestically and internationally.
9. Ensures that an effective system of customer after-sales and service monitoring
is in place.
10. Approves all expense disbursements, contracts, and other corporate documents
in accordance with the approval limits specified in the EDC Approvals Policy.
11. Issues instructions on marketing matters to the subordinate managers in
accordance with decisions from Top Management/Board and/or as coordinated
with Operations and Corporate Services.
12. Initiates and conducts check-up meetings and conferences with the subordinate
managers and their staff.
13. Functions as budget administrator of the Senior Manager's Office.

14. Oversees the preparation of the consolidated annual capital and operating
expense budget for the division.
15. Lixecutes EDC's marketing/contracts, in accordance with approvals policy.
16. Oversees the preparation and consolidation of all the personnel performance
appraisals of the division and effectively administers the forced-ranking
program, consistent with company guidelines.
17. Administers the personnel performance appraisal of office staff and managers.
18. Oversees the preparation of the training requirements of the subordinate
managers and their staff.
19. Performs other duties which may be assigned from time to time. 61
The foregoing, however, invite the question as to what are the specific qualitative and/or
quantitative standards of PNOC-EDC. With respect to the first job objective listed
above, for instance, one may ask: "how will PNOC-EDC measure the performance of
Buenviaje as to whether she has adequately set the overall marketing objectives and
directions of PNOC-EDC, in coordination with PNOC-EDC Operations, through the
Department Managers and Corporate Service units?". The same is true with the first
duty: "how will PNOC-EDC measure the performance of Buenviaje as to whether she
has ensured that a survey of potential markets and customers in relation to newly
developed or soon-to-be-completed power projects are regularly initiated?".
On the other hand, the appraisal form appraises the elements of performance, which are
categorized into results-based factors, individual effectiveness and co-worker
effectiveness.62 Pertinently, the results-based factors, which are broken down into output
indicators of: 1.) quality, 2.) quantity, 3.) timeliness, 4.) cost effectiveness, 5.)
safety/housekeeping/environmental consciousness, and 6.) profit objectives, are rated
according to expected outputs or key result areas, performance standards, and actual
accomplishments. Clearly, the form specifies the performance standards PNOC-EDC
will use, which demonstrates that PNOC-EDC expected a certain manner, level, or
extent by which she should perform her job. PNOC-EDC knew the job description and
the performance appraisal form are not one and the same, having specifically used the
latter when it evaluated Buenviaje and not the job description attached to the
appointment letter. The fact, therefore, that PNOC-EDC used a performance appraisal
form with standards expected from Buenviaje further negates any assumption that these
standards were of basic knowledge and common sense, 63 or that Buenviaje's position
was self-descriptive such that there was no need to spell out the standards at the time of
6
her engagement.64.
Buenviaje was illegally dismissed
The foregoing discussion proves Buenviaje was hired as a permanent employee on
February 1, 2004. As a permanent employee, she may only be dismissed by PNOC-EDC
after observing the following substantive and procedural requirements:.
1. The dismissal must be for a just or authorized cause;
2. The employer must furnish the employee with two (2) written notices before
termination of employment can be legally effected. The first notice states the
particular acts or omissions for which dismissal is sought while the second
notice states the employer's decision to dismiss the employee; and
3. The employee must be given an opportunity to be heard. 65
PNOC-EDC failed to observe these requirements because it operated on the wrong
premise that Buenviaje was a probationary employee. But even if we were to assume
that she was, she would still be illegally dismissed in light of PNOC-EDC's violation of
the provisions of the Labor Code in dismissing a probationary employee.
A probationary employee also enjoys security of tenure, although it is not on the same
plane as that of a permanent employee. 66 This is so because aside from just and
authorized causes, a probationary employee may also be dismissed due to failure to
qualify in accordance with the standards of the employer made known to him at the time
of his engagement.67 PNOC-EDC dismissed Buenviaje on this latter ground; that is,
Buenviaje allegedly failed to meet the standards set by the company. In dismissing
probationary employees on this ground, there is no need for a notice and hearing. 68 The
employer, however, must still observe due process of law in the form of: 1) informing
the employee of the reasonable standards expected of him during his probationary period
at the time of his engagement;69 and 2) serving the employee with a written notice within
a reasonable time from the effective date of termination. 70 By the very nature of a
probationary employment, the employee needs to know from the very start that he will
be under close observation and his performance of his assigned duties and functions
would be under continuous scrutiny by his superiors. It is in apprising him of the
standards against which his performance shall be continuously assessed where due
process lies.71 Likewise, probationary employees are entitled to know the reason for their
failure to qualify as regular employees. 72.
As we have previously settled, PNOC-EDC failed to inform Buenviaje of the reasonable
standards for her regularization at the time of her engagement. The unfairness of this
 7

failure became apparent with the results of Buenviaje's appraisals. In her first appraisal Cost Effectiveness Observed in general Cost Effectiveness Some
covering a three-month period from February 1, 2004 to April 30, 2004, Buenviaje the proper use of operating and capital recommendations tended to be expensive
received a satisfactory rating. It was in her second appraisal covering a two-month budgets. and demonstrated non-optimization of
period from May 1, 2004 to June 30, 2004 where she received an unsatisfactory rating funds, methods and manpower.
that led to her dismissal. There was no proof, however, that per PNOC-EDC's standards,
receiving an unsatisfactory rating of four (4) from a satisfactory rating of three (3) will Judgment Able to come up with good Judgment Needed to come up with
result to failure to qualify for regularization. decisions but has to arrive at more more sound decisions. Examples: x x x
complete and conclusive
Neither would PNOC-EDC's reason for dismissing Buenviaje qualify as a just cause. recommendations. Examples: x x x
Under Article 297 of the Labor Code, an unsatisfactory rating can be a just cause for Leadership She has a strong Leadership x x x Not much supervision
dismissal only if it amounts to gross and habitual neglect of duties. 73 Analogous to this personality and able to influence others and direction is given to her various
ground, an unsatisfactory performance may also mean gross inefficiency. "Gross specially the subordinates to accomplish departments as can be gleaned from the
inefficiency" is closely related to "gross neglect," for both involve specific acts of their tasks diligently.77 quality of work produced particularly in
omission on the part of the employee resulting in damage to the employer or to his Market Development where results are
business.74 Failure to observe prescribed standards of work or to fulfill reasonable work mere researchers (sic) without firm
assignments due to inefficiency may constitute just cause for dismissal. Such recommendations where applicable.78
inefficiency is understood to mean failure to attain work goals or work quotas, either by
Gross negligence implies a want or absence of or failure to exercise slight care or
failing to complete the same within the allotted reasonable period, or by producing
diligence, or the entire absence of care. It evinces a thoughtless disregard of
unsatisfactory results. This management prerogative of requiring standards may be
consequences without exerting any effort to avoid them. 79 As a just cause, it also has to
availed of so long as they are exercised in good faith for the advancement of the
be habitual, which implies repeated failure to perform one's duties for a period of time,
employer's interest.75.
depending upon the circumstances. A single or isolated act of negligence, as was shown
here, does not constitute a just cause for the dismissal of the employee. 80.
The fact that an employee's performance is found to be poor or unsatisfactory does not
necessarily mean that the employee is grossly and habitually negligent of or inefficient
PNOC-EDC would also be in violation of procedural due process if Buenviaje were
in his duties.76Buenviaje's performance, poor as it might have been, did not amount to
dismissed on the purported ground of gross negligence or inefficiency. For termination
gross and habitual neglect of duties or gross inefficiency. The markedly different results
of employees based on just causes, the employer must furnish the employee with two (2)
of several factors in the appraisals in a span of five (5) months prove this. To illustrate:.
written notices before termination of employment can be effected: a first written notice
February 1, 2004 - April 30, 2004 May 1, 2004 - June 30, 2004 that informs the employee of the particular acts or omissions for which his or her
Quantity x x x Completed the public Quantity While several marketing dismissal is sought, and a second written notice which informs the employee of the
relations programs scheduled within the programs have been undertaken, no employer's decision to dismiss him. In considering whether the charge in the first notice
period including those directed on special submissions were made on the projects is sufficient to warrant dismissal under the second notice, the employer must afford the
assignment basis like the Dr. Alcaraz required by immediate superior x x x. employee ample opportunity to be heard. 81 Although Buenviaje indeed received two (2)
lounge. letters from PNOC-EDC regarding her termination, these letters fall short of the two (2)
notices required under the law. The first letter sent to Buenviaje failed to apprise her of
Timeliness Timely submission of Timeliness Mas not met organizational the particular acts or omissions on which her dismissal was based. It was merely a bare
reports and processed invoices. PR needs as the required projects on statement that Buenviaje's performance failed to meet PNOC-EDC's minimum
programs were responsive to company's Tongonan I and Bacman deemed requirements. True, Buenviaje replied to the first letter, but considering that it did not
call. important for the formulation of strategies specify the acts or omissions warranting her dismissal but only served to inform her of
have not been submitted. x x x Priorities her termination, Buenviaje was not afforded a reasonable and meaningful opportunity to
have not been set so as to be responsive to explain her side.
company needs.
Buenviaje is entitled to separation pay and attorney's fees
 8

An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement.82 However, there are instances when reinstatement is no longer feasible,
such as when the employer-employee relationship has become strained. In these cases,
separation pay may be granted in lieu of reinstatement, the payment of which favors
both parties. As we have previously stated in Bank of Lubao, Inc. v. Manabat:83
x x x On one hand, such payment [of separation pay] liberates the employee from what
could be a highly oppressive work environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of maintaining in its employ a worker
it could no longer trust.84.
Separation pay or financial assistance may also be granted to a legally terminated
employee as an act of social justice and equity when the circumstances so warrant. 85 In
awarding financial assistance, the interests of both the employer and the employee must
be tempered, if only to approximate what Justice Laurel calls justice in its secular
sense.86 As the term suggests, its objective is to enable an employee to get by after he
has been stripped of his source of income from which he relies mainly, if not, solely.87.
convincing evidence. This is because bad faith and fraud are serious accusations that can
be so conveniently and casually invoked, and that is why they are never presumed. They
amount to mere slogans or mudslinging unless convincingly substantiated by whoever is
alleging them.93.
Exemplary damages, on the other hand, may be granted when the dismissal of the
employee was done in a wanton, oppressive or malevolent manner.94.
Buenviaje argues that she is entitled to an award of these damages because PNOC-EDC,
Aquino, and Guerzon acted in bad faith.95 To Buenviaje's mind, the following acts of
PNOC-EDC, Aquino, and Guerzon prove that they acted in bad faith:.
1. They used the evaluation form for regular employees in evaluating Buenviaje;
2. Buenviaje was evaluated using the standards for regular employees;
3. Unlike the first evaluation, Aquino did not sign the second evaluation; and
4. The second evaluation was conducted without Buenviaje's knowledge. 96

We agree with the CA that the reinstatement of Buenviaje is no longer viable given the
We agree that there was manifest bad faith when Buenviaje was evaluated using the
irreconcilable differences and strained relations between her and PNOC-EDC. In light of
standards and performance appraisal form for regular employees, yet, in dismissing her,
this, separation pay with full backwages, in lieu of Buenviaje's reinstatement, is
she was treated as a probationary employee. To reiterate, the clear intention of PNOC-
warranted.
EDC from the start was to grant Buenviaje a permanent status. She was evaluated in a
short span of five (5) months, in which her previous satisfactory outputs turned
Moreover, it is a well-settled rule that in actions for recovery of wages, or where an
unsatisfactory. There were also factors or variables that showed PNOC-EDC initially
employee was forced to litigate and, thus, incur expenses to protect his rights and
found as her strengths but were now inexplicably viewed as negative. For example,
interests, attorney's fees may be granted pursuant to Article 111 of the Labor
PNOC-EDC found Buenviaje's political connections helpful in pushing for marketing
Code.88 Considering, therefore, that she was forced to litigate in order to assert her
programs; yet, PNOC-EDC criticized her for flaunting her strong political connections
rights,89 Buenviaje is entitled to attorney's fees in the amount often percent (10%) of the
as an instrument in achieving the company's objectives. 97.
total award of backwages.90.

With regard to the third and fourth acts, though, we find no malice or bad faith against
Buenviaje is entitled to moral and exemplary damages
PNOC-EDC. PNOC-EDC was able to refute the allegation that Aquino did not sign the
second evaluation by annexing a signed one in its appeal memorandum. 98 As to the
The claim for moral damages cannot be justified solely upon the premise that the
allegation that her second evaluation was conducted without her knowledge, we find the
employer fired his employee without just cause or due process. Additional facts must be
same inconsequential. To repeat, Buenviaje's appointment letter apprised her of
pleaded and proven to warrant the grant of moral damages under the Civil Code, these
performance evaluations in the horizon for the next six (6) months. Even if it weren't
being, that the act of dismissal was attended by bad faith or fraud, or was oppressive to
expressly communicated to her, it would have certainly been reasonable for Buenviaje to
labor, or done in a manner contrary to morals, good customs, or public policy; and, of
expect that her performance would be gauged and appraised at any given time.
course, that social humiliation, wounded feelings, grave anxiety, etc., resulted
therefrom.91 Bad faith "implies a conscious and intentional design to do a wrongful act
Thus, the Labor Arbiter's award of moral and exemplary damages is proper. We are
for a dishonest purpose or moral obliquity." 92 Bad faith must be proven through clear and
wont, however, to reduce the amounts he fixed by reason alone of the "extent of the
 9

damage done to [Buenviaje] who occupies a high managerial position." 99 We find his are AFFIRMED with the MODIFICATIONthat PNOC-EDC is ordered to pay Amelyn
award excessive in the absence of evidence to prove the degree of moral suffering or Buenviaje moral damages in the amount of P30,000, exemplary damages in the amount
injury that Buenviaje suffered.100 In line with our ruling in Magsaysay Maritime of P25,000, and attorney's fees equivalent to ten percent (10%) of the total award of
Corporation v. Chin, Jr.,101 we hold that an award of P30,000 as moral damages and backwages.
P25,000 as exemplary damages is more fair and reasonable. We explained:.
x x x It has been held that in order to arrive at a judicious approximation of emotional or SO ORDERED..
moral injury, competent and substantial proof of the suffering experienced must be laid
before the court. It is worthy to stress that moral damages are awarded as compensation
for actual injury suffered and not as a penalty. The Court believes that an award of
P30,000.00 as moral damages is commensurate to the anxiety and inconvenience that
Chin suffered.

As for exemplary damages, the award of P25,000.00 is already sufficient to discourage

petitioner Magsaysay from entering into iniquitous agreements with its employees that
violate their right to collect the amounts to which they are entitled under the law.
Exemplary damages are imposed not to enrich one party or impoverish another but to
serve as a deterrent against or as a negative incentive to curb socially deleterious
actions.102 (Citations omitted.).
However, the extent of liability of the respondents should not be solidary.

A corporation, as a juridical entity, may act only through its directors, officers and
employees. Obligations incurred as a result of the directors' and officers' acts as
corporate agents, are not their personal liability but the direct responsibility of the
corporation they represent. As a rule, they are only solidarity liable with the corporation
for the illegal termination of services of employees if they acted with malice or bad
faith.103.

To hold a director or officer personally liable for corporate obligations, two (2)
requisites must concur: (1) it must be alleged in the complaint that the director or officer
assented to patently unlawful acts of the corporation or that the officer was guilty of
gross negligence or bad faith; and (2) there must be proof that the officer acted in bad
faith.104.

While the position paper of Buenviaje alleges that the respondents acted in bad faith and
that Aquino and Guerzon, in particular, conspired with each other to terminate her
illegally, we find these allegations were not clearly and convincingly proved. To our
mind, there was insufficient evidence that Aquino and Guerzon were personally
motivated by ill-will in dismissing Buenviaje. 105.

WHEREFORE, the petition in G.R. Nos. 183200-01 is DENIED while the petition
in G.R. Nos. 183253 and 183257 is PARTIALLY GRANTED. The October 31, 2007
Decision and June 3, 2008 Resolution of the CA in CA-G.R. S.P. Nos. 94359 and 94458

G.R. No. 185740 July 23, 2013
THE PROVINCIAL GOVERNMENT OF CAMARINES NORTE, represented by
GOVERNOR JESUS O. TYPOCO, JR., Petitioner,
vs.
BEATRIZ O. GONZALES, Respondent.
DECISION
BRION, J.:
We resolve the Provincial Government of Camarines Norte's (petitioner) petition for
review on certiorari1 assailing the Decision2 dated June 25, 2008 and the
Resolution3 dated December 2, 2008 of the Court of Appeals (CA) in CA-G.R. SP No.
97425, reinstating respondent Beatriz O. Gonzales as the Province of Camarines Nortes
provincial administrator, or to an equivalent position.
Factual Antecedents
Gonzales was appointed as the provincial administrator of the Province of Camarines
Norte by then Governor Roy A. Padilla, Jr. on April 1, 1991. Her appointment was on a
permanent capacity. On March 8, 1999, Governor Jess B. Pimentel sent Gonzales a
memorandum directing her to explain in writing why no administrative charges should
be filed against her for gross insubordination/gross discourtesy in the course of official
duties, and conduct grossly prejudicial to the best interest of the service; this was later
on captioned as Administrative Case No. 001. After Gonzales submitted her comment,
an Ad Hoc Investigation Committee found her guilty of the charges against her, and
recommended to Governor Pimentel that she be held administratively liable. 4 On
September 30, 1999, Governor Pimentel adopted the Ad Hoc Investigation Committees
recommendation and dismissed Gonzales.5
Proceedings before the Civil Service Commission
Gonzales appealed Governor Pimentels decision to the Civil Service Commission
(CSC). The CSC issued Resolution No. 0014186 modifying Governor Pimentels
decision, finding Gonzales guilty of insubordination and suspending her for six months.
This decision was appealed by Governor Pimentel, which the CSC denied in its
Resolution No. 001952.7
10
Gonzales then filed a motion for execution and clarification of Resolution No. 001418,
in which she claimed that she had already served her six-month suspension and asked to
be reinstated. The CSC issued Resolution No. 002245, 8 which directed Gonzales
reinstatement.
Governor Pimentel reinstated Gonzales as provincial administrator on October 12, 2000,
but terminated her services the next day for lack of confidence. He then wrote a letter 9 to
the CSC reporting his compliance with its order, and Gonzales subsequent dismissal as
a confidential employee. In his letter, Governor Pimentel cited Resolution No.
0001158,10 where the CSC ruled that the provincial administrator position is highly
confidential and is coterminous in nature.
The CSC responded through Resolution No. 030008, 11 which again directed Gonzales
reinstatement as provincial administrator. It clarified that while the Local Government
Code of 1991 (Republic Act No. RA 7160) made the provincial administrator position
coterminous and highly confidential in nature, this conversion cannot operate to
prejudice officials who were already issued permanent appointments as administrators
prior to the new laws effectivity. According to the CSC, Gonzales has acquired a vested
right to her permanent appointment as provincial administrator and is entitled to
continue holding this office despite its subsequent classification as a coterminous
position. The conversion of the provincial administrator position from a career to a non-
career service should not jeopardize Gonzales security of tenure guaranteed to her by
the Constitution. As a permanent appointee, Gonzales may only be removed for cause,
after due notice and hearing. Loss of trust and confidence is not among the grounds for a
permanent appointees dismissal or discipline under existing laws.
In a letter12 dated February 17, 2005, Gonzales wrote the CSC alleging that Governor
Jesus O. Typoco, Jr., Camarines Nortes incumbent governor, refused to reinstate her.
The CSC responded with Resolution No. 061988, 13 which ordered Gonzales
reinstatement to the provincial administrator position, or to an equivalent position.Thus,
the petitioner, through Governor Typoco, filed a petition for review before the CA,
seeking to nullify the CSCs Resolution No. 030008 and Resolution No. 061988.
The Appellate Courts Ruling
The CA supported the CSCs ruling that reinstated Gonzales as provincial administrator
or to an equivalent position.14
Citing Aquino v. Civil Service Commission, 15 the CA emphasized that an appointee
acquires a legal right to his position once he assumes a position in the civil service under
a completed appointment. This legal right is protected both by statute and the

Constitution, and he cannot be removed from office without cause and previous notice
and hearing. Appointees cannot be removed at the mere will of those vested with the
power of removal, or without any cause.
The CA then enumerated the list of valid causes for a public officers removal under
Section 46,16 Book V, Title I, Subtitle A of the Revised Administrative Code
(Administrative Code), and noted that lack of confidence was not in the list. Thus, the
CA concluded that Gonzales dismissal on the ground of loss of confidence violated her
security of tenure, and that she has the right to be reinstated with payment of backwages.
The CA further held that Gonzales dismissal was illegal because it was done without
due process. The proceedings under Administrative Case No. 001 cannot be the basis for
complying with the requirements of due process because they are separate and distinct
from the proceedings in the present controversy. Thus, Gonzales was illegally terminated
when she was dismissed for lack of confidence, without any hearing, the day after she
was reinstated.
Lastly, the CA noted that Resolution No. 002245, which modified Governor Pimentels
decision, has long been final and executory. The petitioner did not file any petition for
reconsideration against Resolution No. 002245, and hence, it is no longer alterable.
The petitioner sought a reconsideration 17 of the CAs Decision, which the CA denied in a
Resolution18 dated December 2, 2008.
The Present Petition
In its present petition for review on certiorari, the petitioner argues that the provincial
administrator position has been converted into a highly confidential, coterminous
position by RA 7160. Hence, Gonzales no longer enjoyed security of tenure to the
position she held prior to RA 7160s enactment.
In her Comment19 and Memorandum,20 Gonzales maintained that the provincial
administrator remained a career service position. Section 7 21 of Presidential Decree No.
807, which was one of the bases of the Court in Laurel V v. Civil Service
Commission22 to declare the provincial administrator as a career service position, is a
verbatim copy of Section 7,23 Chapter 2 of the Administrative Code. This classification,
established by law and jurisprudence, cannot be altered by the mere implementing rules
and regulations of RA 7160. And assuming arguendo that the provincial administrator
position has indeed become a primarily confidential position, this reclassification should
not apply retroactively to Gonzales appointment on a permanent capacity prior to RA
7160s effectivity.
11
Issues
The parties arguments, properly joined, present to us the following issues:
1) Whether Congress has re-classified the provincial administrator position
from a career service to a primarily confidential, non-career service position;
and
2) Whether Gonzales has security of tenure over her position as provincial
administrator of the Province of Camarines Norte.
The Courts Ruling
We find the petition meritorious.
Congress has reclassified the provincial administrator position as a primarily
confidential, non-career position
We support the CSCs conclusion that the provincial administrator position has been
classified into a primarily confidential, non-career position when Congress, through RA
7160, made substantial changes to it. First, prior to RA 7160, Batas Pambansa Blg. 337,
the old Local Government Code (LGC), did not include a provincial administrator
position among the listing of mandatory provincial officials, 24 but empowered the
Sangguniang Panlalawigan to create such other offices as might then be necessary to
carry out the purposes of the provincial government. 25 RA 7160 made the position
mandatory for every province.26 Thus, the creation of the provincial administrator
position under the old LGC used to be a prerogative of the Sangguniang Panlalawigan.
Second, in introducing the mandatory provincial administrator position, RA 7160 also
amended the qualifications for the provincial administrator position. While Section
48027 of RA 7160 retained the requirement of civil service eligibility for a provincial
administrator, together with the educational requirements, it shortened the six-year work
experience requirement to five years.28 It also mandated the additional requirements of
residence in the local government concerned, and imposed a good moral character
requirement.
Third, RA 7160 made the provincial administrator position coterminous with its
appointing authority, reclassifying it as a non-career service position that is primarily
confidential.

Before RA 7160 took effect, Laurel classified the provincial administrator position as an
open career position which required qualification in an appropriate examination prior to
appointment. Laurel placed the provincial administrator position under the second major
level of positions in the career service under Section 7 of Presidential Decree No. 807.
This provision reads:
Section 7. Classes of Positions in the Career Service.
(a) Classes of positions in the career service appointment to which requires examinations
shall be grouped into three major levels as follows:
xxxx
2. The second level shall include professional, technical, and scientific positions which
involve professional, technical, or scientific work in a non-supervisory or supervisory
capacity requiring at least four years of college work up to Division Chief level.
Section 480 of RA 7160 made the provincial administrators functions closely related to
the prevailing provincial administration by identifying the incumbent with the provincial
governor to ensure the alignment of the governors direction for the province with what
the provincial administrator would implement. In contrast with the general direction
provided by the provincial governor under the Manual of Position Descriptions cited in
Laurel, Section 480(b) of RA 7160 now mandates constant interaction between the
provincial administrator and the provincial governor, to wit:
(b) The administrator shall take charge of the office of the administrator and shall:
(1) Develop plans and strategies and upon approval thereof by the governor or
mayor, as the case may be, implement the same particularly those which have
to do with the management and administration-related programs and projects
which the governor or mayor is empowered to implement and which the
sanggunian is empowered to provide for under this Code;
(2) In addition to the foregoing duties and functions, the administrator shall:
(i) Assist in the coordination of the work of all the officials of the local government unit,
under the supervision, direction, and control of the governor or mayor, and for this
purpose, he may convene the chiefs of offices and other officials of the local government
unit;
xxxx
12
(4) Recommend to the sanggunian and advise the governor and mayor, as the case may
be, on all other matters relative to the management and administration of the local
government unit. [emphases and italics ours]
As the CSC correctly noted in Resolution No. 0001158, 29 the administrator position
demands a close intimate relationship with the office of the governor (its appointing
authority) to effectively develop, implement and administer the different programs of the
province. The administrators functions are to recommend to the Sanggunian and to
advise the governor on all matters regarding the management and administration of the
province, thus requiring that its occupant enjoy the governors full trust and confidence.
To emphasize the close relations that the provincial administrators functions have with
the office of the governor, RA 7160 even made the provincial administrator position
coterminous with its appointing authority.30 This provision, along with the interrelations
between the provincial administrator and governor under Section 480, renders clear the
intent of Congress to make the provincial administrator position primarily confidential
under the non-career service category of the civil service.
Congress reclassification of the provincial administrator position in RA 7160 is a valid
exercise of legislative power that does not violate Gonzales security of tenure
Having established that Congress has changed the nature of the provincial administrator
position to a primarily confidential employee, the next question to address would be its
impact on Gonzales security of tenure. According to the petitioner, Gonzales lost her
security of tenure when the provincial administrator position became a primarily
confidential position. Gonzales, on the other hand, retorted that the conversion of the
position should not be retroactively applied to her, as she is a permanent appointee. Both
the CA and the CSC ruled in favor of the latter, and gave premium to Gonzales original
permanent appointment under the old LGC. They posit that Gonzales acquired a vested
legal right over her position from the moment she assumed her duties as provincial
administrator. Thus, she cannot be removed from office except for cause and after due
hearing; otherwise such removal would amount to a violation of her security of tenure.
The arguments presented by the parties and ruled upon by the CA reflect a conceptual
entanglement between the nature of the position and an employees right to hold a
position. These two concepts are different. The nature of a position may change by law
according to the dictates of Congress. The right to hold a position, on the other hand, is a
right that enjoys constitutional and statutory guarantee, but may itself change according
to the nature of the position.

Congress has the power and prerogative to introduce substantial changes in the
provincial administrator position and to reclassify it as a primarily confidential, non-
career service position. Flowing from the legislative power to create public offices is the
power to abolish and modify them to meet the demands of society; 31 Congress can
change the qualifications for and shorten the term of existing statutory offices. When
done in good faith, these acts would not violate a public officers security of tenure, even
if they result in his removal from office or the shortening of his term. 32 Modifications in
public office, such as changes in qualifications or shortening of its tenure, are made in
good faith so long as they are aimed at the office and not at the incumbent. 33
In Salcedo and Ignacio v. Carpio and Carreon, 34 for instance, Congress enacted a law
modifying the offices in the Board of Dental Examiners. The new law, RA 546, raised
the qualifications for the board members, and provided for a different appointment
process. Dr. Alfonso C. Salcedo and Dr. Pascual Ignacio, who were incumbent board
members at the time RA 546 took effect, filed a special civil action for quo warranto
against their replacements, arguing that their term of office under the old law had not yet
expired, and neither had they abandoned or been removed from office for cause. We
dismissed their petition, and held that Congress may, by law, terminate the term of a
public office at any time and even while it is occupied by the incumbent. Thus, whether
Dr. Salcedo and Dr. Ignacio were removed for cause or had abandoned their office is
immaterial.
More recently, in Dimayuga v. Benedicto II,35 we upheld the removal of Chona M.
Dimayuga, a permanent appointee to the Executive Director II position, which was not
part of the career executive service at the time of her appointment. During her
incumbency, the CSC, by authority granted under Presidential Decree No. 1, classified
the Executive Director II position to be within the career executive service. Since
Dimayuga was not a career executive service officer, her initially permanent
appointment to the position became temporary; thus, she could be removed from office
at any time.
In the current case, Congress, through RA 7160, did not abolish the provincial
administrator position but significantly modified many of its aspects. It is now a
primarily confidential position under the non-career service tranche of the civil service.
This change could not have been aimed at prejudicing Gonzales, as she was not the only
provincial administrator incumbent at the time RA 7160 was enacted. Rather, this
change was part of the reform measures that RA 7160 introduced to further empower
local governments and decentralize the delivery of public service. Section 3(b) of RA
7160 provides as one of its operative principles that:
13
(b) There shall be established in every local government unit an accountable, efficient,
and dynamic organizational structure and operating mechanism that will meet the
priority needs and service requirements of its communities.
Thus, Gonzales permanent appointment as provincial administrator prior to the
enactment of RA 7160 is immaterial to her removal as provincial administrator. For
purposes of determining whether Gonzales termination violated her right to security of
tenure, the nature of the position she occupied at the time of her removal should be
considered, and not merely the nature of her appointment at the time she entered
government service.
In echoing the CSC and the CAs conclusion, the dissenting opinion posits the view that
security of tenure protects the permanent appointment of a public officer, despite
subsequent changes in the nature of his position.
Citing Gabriel v. Domingo,36 the dissenting opinion quotes our categorical declaration
that "a permanent employee remains a permanent employee unless he is validly
terminated," and from there attempts to draw an analogy between Gabriel and the case at
hand.
The very first sentence of Gabriel spells out its vast difference from the present case.
The sole and main issue in Gabriel is whether backwages and other monetary benefits
could be awarded to an illegally dismissed government employee, who was later ordered
reinstated. From this sentence alone can be discerned that the issues involved related to
the consequences of illegal dismissal rather than to the dismissal itself. Nowhere in
Gabrielwas there any mention of a change in the nature of the position held by the public
officer involved.
Further, key factual differences make Gabriel inapplicable to the present case, even if
only by analogy: first, the public officer in Gabriel received a Memorandum stating that
he would be appointed as Transportation District Supervisor III under their office
reorganization. Second, the Court in Gabriel clearly pointed out that the reason for his
eventual appointment as a casual employee, which led to his termination from service,
was due to a pending protest he filed before the CSC indicating that there was no
ground for him to not receive the appointment earlier promised. In contrast, the issue of
Gonzales is whether the appointing authoritys lack of trust and confidence in the
appointee was sufficient cause for the termination of employment of a primarily
confidential employee. And third, there was a change in the position held by the public
officer in Gabriel. He was a permanent employee who was extended a different
appointment, which was casual in nature, because of a protest that he earlier filed. In
contrast, the current case involves a public officer who held the same position whose
nature changed because of the passage of RA 7160.

The dissent also quotes the penultimate paragraph of Civil Service Commission v.
Javier37 to support its contention that permanent appointees could expect protection for
their tenure and appointments in the event that the Court determines that the position is
actually confidential in nature:
The Court is aware that this decision has repercussions on the tenure of other corporate
secretaries in various GOCCs. The officers likely assumed their positions on permanent
career status, expecting protection for their tenure and appointments, but are now re-
classified as primarily confidential appointees. Such concern is unfounded, however,
since the statutes themselves do not classify the position of corporate secretary as
permanent and career in nature. Moreover, there is no absolute guarantee that it will not
be classified as confidential when a dispute arises. As earlier stated, the Court, by legal
tradition, has the power to make a final determination as to which positions in
government are primarily confidential or otherwise. In the light of the instant
controversy, the Court's view is that the greater public interest is served if the position of
a corporate secretary is classified as primarily confidential in nature. 38
The quoted portion, however, even bolsters our theory. Read together with its
succeeding paragraph, the quoted portion in Civil Service Commission v.
Javier39 actually stands for the proposition that other corporate secretaries in
government-owned and controlled corporations cannot expect protection for their
tenure and appointments upon the reclassification of their position to a primarily
confidential position. There, the Court emphasized that these officers cannot rely on the
statutes providing for their permanent appointments, if and when the Court determines
these to be primarily confidential. In the succeeding paragraph after the portion quoted
by the dissent, we even pointed out that there is no vested right to public office, nor is
public service a property right. Thus:
Moreover, it is a basic tenet in the country's constitutional system that "public office is a
public trust," and that there is no vested right in public office, nor an absolute right to
hold office. No proprietary title attaches to a public office, as public service is not a
property right. Excepting constitutional offices which provide for special immunity as
regards salary and tenure, no one can be said to have any vested right in an office. The
rule is that offices in government, except those created by the constitution, may be
abolished, altered, or created anytime by statute. And any issues on the classification for
a position in government may be brought to and determined by the courts. 40 (emphases
and italics ours)
Executive Order No. 503 does not grant Gonzales security of tenure in the provincial
administrator position on a permanent capacity
14
In extending security of tenure to Gonzales permanent appointment as provincial
administrator, the dissenting opinion cites as authority Executive Order No. (EO) 503
which provided certain safeguards against the termination of government employees
affected by the implementation of RA 7160. According to the dissenting opinion, EO
503 is an obvious indication of the executive departments intent to protect and uphold
both the national government and the local government employees security of tenure. It
cites Section 2(a), paragraph 8 (providing for the tenure of an administrator) to prove its
point:
8. Incumbents of positions, namely administrator, legal officer, and information officer
declared by the Code as coterminous, who hold permanent appointments, shall continue
to enjoy their permanent status until they vacate their positions.
At first glance, EO 503 does seem to extend the provincial administrators security of
tenure in their permanent appointments even beyond the effectivity of RA 7160. EO 503,
however, does not apply to employees of the local government affected by RA 7160s
enactment. The title of EO 503 clearly provides for its scope of application, to wit:
Executive Order No. 503. Providing for the Rules and Regulations Implementing the
Transfer of Personnel and Assets, Liabilities and Records of National Government
Agencies whose Functions are to be Devolved to the Local Government Units and for
other Related Purposes. [underscore, italics and emphases ours]
A reading of EO 503s whereas clauses confirms that it applies only to national
government employees whose functions are to be devolved to local governments:
WHEREAS, Republic Act No. 7160, otherwise known as the Local Government Code
of 1991, hereinafter referred to as the Code, transfers the responsibility for the delivery
of basic services and facilities from the national government agencies (NGAs)
concerned to the local government units (LGUs);
WHEREAS, the Code stipulated that the transfer of basic services and facilities shall be
accompanied by the transfer of the national personnel concerned and assets to ensure
continuity in the delivery of such services and facilities;
WHEREAS, responsive rules and regulations are needed to affect the required transfer
of national personnel concerned and assets to the LGUs. [underscores, italics and
emphases ours]
Thus, paragraph 8, section 2(a) of EO 503 cannot apply to Gonzales, a provincial
administrator. As explained earlier, the existence of the provincial administrator position

was a prerogative of the Sanggunian Panlalawigan, and was not even a mandatory public
office under the old LGC. It is clearly not a national government position whose
functions are to be devolved to the local governments.
The dissenting opinion, on the other hand, argues that EO 503 does not apply to national
government employees only. According to the dissent, the phrase "and for related
purposes" in EO 503s title could encompass personnel not necessarily employed by
national government agencies but by local government units such as the administrator,
the legal officer and the information officer, as enumerated in Section 2(a), paragraph 8
thereof. This provision, according to the dissent, fills the crucial gap left by RA 7160
which did not provide whether the term of an incumbent provincial administrator would
automatically become coterminous with that of the appointing authority upon RA 7160s
effectivity.
This kind of construction effectively adds to EO 503s object matters that it did not
explicitly provide for. The phrase "and for other related purposes" can only add to EO
503 matters related to the devolution of personnel, basic services and facilities to local
government units. The impact of the change in a local government positions nature is
clearly different from the implementation of devolution and its ancillary effects: the
former involves a change in a local government positions functions and concept of
tenure, while the latter involves (among other things) the transfer of national
government employees to local government units. This difference is highlighted by the
fact that EO 503, as reflected by its whereas clauses, was issued to implement Section
17 of RA 7160. In contrast, the change in the nature of the provincial administrator
position may be gleaned from Section 480 of RA 7160. Hence, by no stretch of
reasonable construction can the phrase "and for other related purposes" in EO 503s title
be understood to encompass the consequences of the change in the local government
positions nature.
Furthermore, construing that the administrator position in Section 2(a), paragraph 8
pertains to city, municipal and/or provincial administrators would result in a legal
infirmity. EO 503 was issued pursuant to the Presidents ordinance powers to provide for
rules that are general or permanent in character for the purpose of implementing the
Presidents constitutional or statutory powers. 41 Exercising her constitutional duty to
ensure that all laws are faithfully executed, then President Corazon Aquino issued EO
503 to ensure the executives compliance with paragraph (i), Section 17 of RA 7160,
which requires local government units to absorb the personnel of national agencies
whose functions shall be devolved to them. 42 This is reflected in EO 503s title and
whereas clauses, and its limited application as discussed earlier.
Thus, the dissenting opinions interpretation would result in the judicial recognition of
an act of the Executive usurping a legislative power. The grant of permanent status to
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incumbent provincial administrators, despite the clear language and intent of RA 7160 to
make the position coterminous, is an act outside the Presidents legitimate powers. The
power to create, abolish and modify public offices is lodged with Congress. 43 The
President cannot, through an Executive Order, grant permanent status to incumbents,
when Congress by law has declared that the positions they occupy are now confidential.
Such act would amount to the Presidents amendment of an act of Congress an act that
the Constitution prohibits. Allowing this kind of interpretation violates the separation of
powers, a constitutionally enshrined principle that the Court has the duty to uphold. 44
The dissent counters this argument by pointing out that Section 2(a), paragraph 8 of EO
503 enjoys the legal presumption of validity. Unless the law or rule is annulled in a
direct proceeding, the legal presumption of its validity stands. The EOs validity,
however, is not in question in the present case. What is at issue is a proper interpretation
of its application giving due respect to the principle of separation of powers, and the
dissenting opinions interpretation does violence to this principle.
Gonzales has security of tenure, but only as a primarily confidential employee
To be sure, both career and non-career service employees have a right to security of
tenure.1wphi1 All permanent officers and employees in the civil service, regardless of
whether they belong to the career or non-career service category, are entitled to this
guaranty; they cannot be removed from office except for cause provided by law and
after procedural due process.45 The concept of security of tenure, however, labors under
a variation for primarily confidential employees due to the basic concept of a "primarily
confidential" position. Serving at the confidence of the appointing authority, the
primarily confidential employees term of office expires when the appointing authority
loses trust in the employee. When this happens, the confidential employee is not
"removed" or "dismissed" from office; his term merely "expires" 46 and the loss of trust
and confidence is the "just cause" provided by law that results in the termination of
employment. In the present case where the trust and confidence has been irretrievably
eroded, we cannot fault Governor Pimentels exercise of discretion when he decided that
he could no longer entrust his confidence in Gonzales.
Security of tenure in public office simply means that a public officer or employee shall
not be suspended or dismissed except for cause, as provided by law and after due
process. It cannot be expanded to grant a right to public office despite a change in the
nature of the office held. In other words, the CSC might have been legally correct when
it ruled that the petitioner violated Gonzales right to security of tenure when she was
removed without sufficient just cause from her position, but the situation had since then
been changed. In fact, Gonzales was reinstated as ordered, but her services were
subsequently terminated under the law prevailing at the time of the termination of her
service; i.e., she was then already occupying a position that was primarily confidential

and had to be dismissed because she no longer enjoyed the trust and confidence of the
appointing authority. Thus, Gonzales termination for lack of confidence was lawful. She
could no longer be reinstated as provincial administrator of Camarines Norte or to any
other comparable position. This conclusion, however, is without prejudice to Gonzales
entitlement to retirement benefits, leave credits, and future employment in government
service.
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WHEREFORE, all premises considered, we hereby GRANT the petition, and
REVERSE and SET ASIDE the Decision dated June 25, 2008 and the Resolution dated
December 2, 2008 of the Court of Appeals in CAG.R. SP No. 97425.
SO ORDERED.