LUIS B. DOMINGO, PETITIONER, VS. DEVELOPMENT BANK OF THE PHILIPPINES AND CIVIL SERVICE COMMISSION, RESPONDENTS.

This special civil action impugns the resolution^[1]
of respondent Civil Service Commission (CSC) promulgated on April 10, 1990 in CSC Case No. 473
setting aside its earlier resolution of November 27, 1989 and affirming the separation of
petitioner Luis B. Domingo as Senior Training and Career Development Officer of
the Development Bank of the Philippines (DBP).

Petitioner was employed by DBP as Senior Training and Career
Development Officer on permanent status from February, 1979 to December, 1986.

On December 3, 1986,
Executive Order No. 81 (The Revised Charter of DBP) was passed authorizing the
reorganization of DBP in this wise:

“Sec. 32.  Authority
to Reorganize. – In view of the new scope of operations of the Bank, a
reorganization of the Bank and a reduction in force are hereby authorized to
achieve simplicity and economy in operations, including adopting a new staffing
pattern to suit the reduced operations envisioned.  The formulation of the program of
reorganization shall be completed within six months after the approval of this
Charter, and the full implementation of the reorganization program within
thirty months thereafter.”

Further, Sections 33 and 34 thereof provide:

“Sec. 33.  Implementing
Details; Organization and Staffing of the Bank. –

x x
x

“In the implementation of the reorganization of the Bank, as
authorized under the preceding section, qualified personnel of the Bank may be
appointed to appropriate positions in the new staffing pattern thereof and
those not so appointed are deemed separated from the service.  No preferential or priority rights shall be
given to or enjoyed by any officer or personnel of the Bank for appointment to
any position in the new staffing pattern nor shall any officer or personnel be
considered as having prior or vested rights with respect to retention in the
Bank or in any position as may have been created in its new staffing pattern,
even if he should be the incumbent of a similar position therein.

x x
x

“Sec. 34.  Separation
Benefits. – All those who shall retire from the service or are separated therefrom on account of the reorganization of the Bank
under the provisions of this Charter shall be entitled to all gratuities and
benefits provided for under existing laws and/or supplementary retirement plans
adopted by and effective in the Bank:  x x x.”

Pursuant thereto, DBP issued Board Resolution No. 304-87 allowing
the issuance of temporary appointments to all DBP personnel in order to fully
implement the reorganization.  The
resolution states in part:

“It is understood that pursuant to Section 32 of the new DBP Charter full
implementation of the reorganization program shall be completed within a period
of thirty-six (36) months from the approval of this Charter.  In this connection, the plantilla
approved and appointments issued are purely interim and the Bank is reserving
its right to put in place the permanent structure of the Bank as well as the
permanent appointments thereto until the end of the 36-month period.”^[2]

In effect, said resolution authorized the issuance of temporary
appointments to all DBP personnel to allow maximum flexibility in the
implementation of the reorganization. 
Such temporary appointments issued had a maximum period of twelve (12)
months during which period the performance of the incumbents were assessed on
the basis of the results of their evaluation.

With the passage of Executive Order No. 81 and Board Resolution
No. 304-87.  DBP undertook the
evaluation and comparative assessment of all its personnel under the
CSC-approved New Performance Appraisal System, a peer and control rating
process which served as an assessment tool of DBP’s
screening process.

Petitioner Domingo was issued a temporary appointment on January 2,1987 for a period of one (1)
year, which was renewed for another period up to November 30, 1988. 
Thereafter, in a memorandum^[3]
dated November 23, 1988 issued by the Final Review Committee, petitioner got a
performance rating of “below average,” by reason of which his
appointment was “made to lapse.”

Consequently, petitioner, together with a certain Evangeline
Javier, filed with the CSC a joint verified complaint^[4]
against DBP for illegal dismissal.  The
complainants therein alleged that their dismissal constituted a violation of
the Civil Service Law against the issuance of temporary appointments to
permanent employees, as well as of their right to security of tenure and due
process.

On November 27, 1989,
CSC issued a resolution^[5]
in CSC Case No. 473 directing “the reappointment of Mr. Domingo and Ms.
Javier as Senior Training and Career Development Officer and Research Analyst
or any such equivalent rank under the staffing pattern of DBP.” The order
for reappointment was premised on the findings of the CSC that “(t)he
action of the DBP to issue temporary appointments to all DBP personnel in order
to allow for the ‘maximum flexibility’ in evaluating the performance of
incumbents is not in accord with civil service law and rules,” in that
“(t)o issue a temporary appointment to one who has been on permanent
status before will deprive the employee of benefits accorded permanent employees
and will adversely affect his security of tenure,” aside from the fact
that such an act is contrary to Section 25 (a) of Presidential Decree No. 807.

DBP filed a motion for reconsideration^[6]
on December 27, 1989 alleging, inter alia,
that the issuance of temporary appointments to all the DBP employees was purely
an interim arrangement; that in spite of the temporary appointment, they
continued to enjoy the salary, allowances and other benefits corresponding to
permanent employees; that there can be no impairment of herein petitioner’s
security of tenure since the new DBP charter expressly provides that
“qualified personnel of the bank may be appointed to appropriate positions
in the new staffing pattern and those not so appointed are deemed separated
from the service;” that petitioner was evaluated and comparatively assessed
under a rating system approved by the respondent commission; and that
petitioner cannot claim that he was denied due process of law considering that,
although several appeals were received by the Final Review Committee from other
employees similarly situated, herein petitioner never appealed his rating or
the extension of his temporary appointment although he was advised to do so by
his direct supervisor.

On April 10, 1990,
CSC rendered the questioned resolution setting aside its previous decision and
affirming the separation of herein petitioner. 
In so ruling, CSC explained that:

“While it is true that this Commission ruled that the issuance
of temporary appointment to all DBP personnel in order to allow ‘for maximum
flexibility’ in evaluating the performance of incumbents is not in accord with
civil service laws and rules, however it cannot lose sight of the fact that
appellants are among those who indeed got a below average rating (unsatisfactory)
when their performance were reevaluated and comparatively reassessed by the
Final Review Committee of the Bank approved by the Vice Chairman.

x x
x

“In effect, the determinative factor for retention and the
separation from the service is the individual performance rating.

“While the Commission supports the principle of merit and
fitness and strongly protects the security of tenure of civil service officials
and employees which are the essence of careerism in the civil service, it does
not however, sanction the reappointment of said officials and employees who
have fallen short of the performance necessary in order to maintain at all
times efficiency and effectiveness in the Office.

“It bears stressing that the DBP submitted the records and
documents in support of its allegations that Mr. Domingo and Ms. Javier have
indeed got (ten) a below average rating (unsatisfactory) during the filing of
the instant motion for reconsideration. 
Had DBP promptly submitted the records/documents supporting its allegations,
this Commission at the outset should have sustained the separation of the
appellants from the service on ground of poor performance (below average
rating, unsatisfactory) after the reassessment and re-evaluation by the Bank
through the Final Review Committee.  The
CSC could not have guessed that such was the basis of the DBP’s
termination of Domingo and Javier until the papers were submitted to it.  x x x.

“It must be pointed out that appellants’ separation from the
service was the lapse of their temporary appointment.  The non-extension or non-issuance of
permanent appointments were principally based on their below average rating
(unsatisfactory) performance after they were reevaluated and comparatively
reassessed by the Final Review Committee of the Bank.  After all, the 1986 DBP Revised Charter (E.O.
NO. 81) gives the Bank a wide latitude of discretion in the reappointment of
its personnel, subject to existing civil service laws, rules and regulations.

“There is no doubt that the DBP conducted a reevaluation and
comparative reassessment of its employees for placement/retention (for
permanent) and for separation from the service and found out that appellants
are wanting of performance, having been rated as ‘Below Average’.” ^[7]

Hence this petition, whereby petitioner raises the following
issues:

1.  Petitioner’s tenure of
office was violated by respondents;

2.  Petitioner was not
afforded a day in court and was denied procedural due process in the unilateral
evaluation by his peers of his efficiency ratings for the years 1987 and 1988;

3.  Average and below average
efficiency ratings are not valid grounds for termination of the service of
petitioner;

4.  Section 5 of the rules
implementing Republic Act No. 6656 is repugnant to the constitutional mandate that
“no officer or employee of the Civil Service shall be removed or suspended
except for cause provided by law;” and

5.  Section 16, Article
XVIII.  Transitory Provisions of the New
Constitution was also violated by respondents.^[8]

I.  Petitioner puts
in issue the validity of the reorganization implemented by DBP in that the same
violates his right to security of tenure. 
He contends that government reorganization cannot be a valid ground to
terminate the services of government employees, pursuant to the ruling in the
case of Dario vs. Mison, et al.^[9]

This statement of petitioner is  incomplete
and inaccurate, if not outright erroneous. 
Either petitioner misunderstood or he totally overlooked what was stated
in the aforecited decision which held that
“reorganizations in this jurisdiction have been regarded as valid provided
they are pursued in good faith.” As we said in Dario:

“Reorganizations in this jurisdiction have been regarded as
valid provided they are pursued in good faith. 
As a general rule, a reorganization is carried out in ‘good faith’ if it
is for the purpose of economy or to make bureaucracy more efficient.  In that event, no dismissal (in case of
dismissal) or separation actually occurs because the position itself ceases to
exist.  And in that case, security of
tenure would not be a Chinese wall.”

Clearly, from our pronouncements in Dario, reorganization
is a recognized valid ground for separation of civil service employees, subject
only to the condition that it be done in good faith.  No less than the Constitution itself in
Section 16 of the Transitory Provisions, together with Sections 33 and 34 of
Executive Order No. 81 and Section 9 of Republic Act No. 6656, support this
conclusion with the declaration that all those not so appointed in the implementation
of said reorganization shall be deemed separated from the service with the
concomitant recognition of their entitlement to appropriate separation benefits
and/or retirement plans of the reorganized government agency.

The facts of this case, particularly the evaluation process
adopted by DBP, bear out the existence of good faith in the course of
reorganization.

As a tool in the assessment process, a bank-wide peer and control
rating process was implemented.  Under
this process, the peers and supervisors rated the DBP employees.^[10]

To make the reorganization as open, representative and fair as
possible, two principal groups were formed: 
(1) the Group Placement Screening Committee (GPSC) and (2) the Central
Placement Screening Committee (CPSC), to review all recommendations (for
retention or separation) prior to submissions to the Chairman and the Board of
Directors.  The members of the two
screening committees were the Department and Group Heads and representatives
from the Career Officials Association and the DBP Employees Union.  The CPSC was further represented by the DBP
Civil Service Officer, who sat as consultant to help resolve questions on Civil
Service rules and regulations.

As an assessment tool to the Bank’s screening process, a peer and
control rating process was implemented bank-wide, the results of which were
used as a gauge to determine the suitability of an employee to stay in the
Bank.  Through this rating, the Bank
determines the value of the individual employee to the Bank with the help of
his peers (peer rating) and his supervisors (control rating).^[11]

Also, as part of the evaluation process, a Final Review
Committee, composed of the group, department or unit head, the heads of the
Human Resource Center and of the Personnel Services, and representatives from
the Career Officials Association and the Employees Union, was created to screen
further and to recommend the change in status of the employee’s appointment
from temporary to permanent beginning 1988. 
For the rank and file level, the committee was chaired by the
Vice-Chairman while the officer level was presided over by the Chairman of the
Bank.^[12]

The performance rating system used and adopted by DBP was duly
approved by the Civil Service Commission. 
Herein petitioner was evaluated and comparatively assessed under this
approved rating system.  This is shown by
the memorandum to the DBP Vice-Chairman from the DBP Final Review Committee
wherein petitioner, among other DBP employees, was evaluated and rated on his
performance, and was shown to have gotten a rating of “below
average.”^[13]

In the Comment^[14]
filed by DBP with the CSC, respondent bank explained the procedure it adopted
in the evaluation of herein petitioner, together with one Evangeline Javier, to
wit:

x x
x

“4. During the second phase of the screening process, the Bank used
several instruments for determining proficiency or skills on the job.  More than skills, however, the evaluation
also covered trait factors to determine a positive work attitude.  The Bank placed a premium on work attitude
because it believes that technical and professional skills can easily be
acquired by an ordinary normal individual as long as he has the right attitude
towards learning.

“5. These attitudes are part of the new corporate culture outlined
in the corporate philosophy instituted for the Bank and disseminated thru the
various corporate culture seminars, monthly tertulias,
speeches of the Chairman and numerous various internal communications and
bulletins.  One of the most important
values emphasized was TEAMWORK due to the very lean personnel force that the
Bank was left with and the competition it has to contend with in the industry.

“6. Mr. Domingo and Miss Javier were sub­jected to this rating
process as all other employees of the Bank were.

x x x

“8. Mr. Domingo and Miss Javier were recom­mended for a renewal of
temporary status after assessment of their performance because of several
indications of lack of skill and their inability to work with others in the
department where they were stationed.
 In a compassionate stance, it was
considered in the Central Personnel Committee to transfer them to another
department or unit of the Bank where they may be more effective and productive,
but they expressed preference to stay in the training unit of the Bank, the Human
Resource Center.

“9. Along with others whose performance for 1987 was found wanting,
Mr. Domingo and Miss Javier were recommended for reappointment as temporary for
another period from January to November 1988 to give the Bank sufficient time
to consider their cases.  However, in an
evaluation of performance for all extendees in
November 1988, Mr. Domingo and Miss Javier were again found wanting having both
acquired a rating of ‘Below Average’.”

In addition, it is not disputed that DBP now has less than 2,000
employees from a former high level of around 4,000 employees in 1986.  And, under Section 27 of Presidential Decree
No. 807, the Government is authorized to lay off employees in case of a
reduction due to reorganization, thus:

“Sec. 27.  Reduction
in Force.  – Whenever it becomes
necessary because of lack of work or funds or due to a change in the scope or
nature of an agency’s program, or as a result of reorganization, to reduce the
staff of any department or agency, those in the same group or class of
positions in one or more agencies within the particular department or agency
wherein the reduction is to be effected shall be reasonably compared in terms
of relative fitness, efficiency and length of service, and those found to be
least qualified for the remaining positions shall be laid off.”

Lastly, petitioner failed to invoke the presence of any of the
circumstances enumerated under Section 2 of Republic Act No. 6656 which would
show or tend to show the existence of bad faith in the implementation of the
reorganization.

Quintessentially, the reorganization having been conducted in
accordance with the mandate of Dario, it can safely be concluded that
indeed the reorganization was attended by good faith, ergo, valid.  The dismissal of herein petitioner is a
removal for cause which, therefore, does not violate his security of tenure.

As a final note on this issue, we quote with approval the
statement of Mme. Justice Ameurfina A. Melencio-Herrera in her dissenting opinion in the
above-cited case:

“To be sure, the reorganization could affect the tenure of
members of the career service as defined in Section 5, Article IV of
Presidential Decree No. 807, and may even result in the separation from office
of some meritorious employees.  But even
then, the greater good of the greatest number and the right of the citizenry to
a good government, and as they themselves have mandated through the vehicle of
Proclamation No. 3, provide the justification for the said injury to the
individual.  In terms of values, the
interest of an employee to security of tenure must yield to the interest of the
entire populace and to an efficient and honest government.”

II. Petitioner also maintains that “average” and
“below average” efficiency ratings are not valid grounds for his
termination from the service.

It has become a basic and primordial concern of the State to
insure and promote the constitutional mandate that appointments in the civil
service shall be made only according to merit and fitness pursuant to its
adopted policy of requiring public officers and employees to serve with the
highest degree of responsibility, integrity, loyalty and efficiency.^[15]
As a matter of fact, the development and retention of a competent and efficient
work force in the public service is considered as a primary concern of the
Government.^[16]
Hence, employees are selected on the basis of merit and fitness to perform the
duties and assume the responsibilities of the position to which they are
appointed.^[17]
Concomitantly, the government has committed itself to engender a continuing
program of career and personnel development for all government employees,^[18]
by establishing a performance evaluation system to be administered in such
manner as to continually foster the improvement of individual employee
efficiency and organizational effectiveness.^[19]

All these abundantly show that the State puts a premium on an
individual’s efficiency, merit and fitness before one is accepted into the
career service.  A civil service employee’s
efficiency rating, therefore, is a decisive factor for his continued service
with the Government.  The inescapable
conclusion is that a “below average” efficiency rating is sufficient
justification for the termination of a government employee such as herein
petitioner.  This is the reason why,
painful as it may be, petitioner’s separation must be affirmed if public good
is to be subserved. 
In the words of respondent commission in its questioned resolution, it
cannot “sanction the reappointment of said officials and employees who
have fallen short of the performance necessary in order to maintain at all
times efficiency and effectiveness in the Office.”^[20]

III. Petitioner finally contends that where the purpose of
the evaluation proceeding is to ascertain whether he should be retained or
separated from the service, it is a proceeding to determine the existence of a
ground for his termination and, therefore, he should be afforded a day in
court, pursuant to the requirements of procedural due process, to defend
himself against any adverse findings in the process of evaluation of his
performance.

Petitioner’s contention cannot be sustained.

Section 2 of Republic Act No. 6656 provides that “no officer
or employee in the career service shall be removed except for a valid cause and
after due notice and hearing.” Thus, there is no question that while
dismissal due to a bona fide reorganization is recognized as a
valid cause, this does not justify a detraction from the mandatory requirement
of notice and hearing.  However, it is
equally true and it is a basic rule of due process that “what the law
prohibits is not the absence of previous notice but the absolute absence
thereof and the lack of opportunity to be heard.”^[21]
There is no violation of procedural due process even where no hearing was
conducted for as long as the party was given a chance to present his evidence
and defend himself.

The records show that petitioner had the opportunity to present
his side and/or to contest the results of the evaluation proceedings.  In DBP’s motion for
the reconsideration of the original decision of respondent commission,
respondent bank averred:

“It may be stated that although several appeals were received
by the Final Review Committee from other employees similarly situated (i.e.,
also given temporary appointments for 1988), Mr. Domingo and Miss Javier never
appealed their ratings or the extension of their temporary appointments in
1988.  Even at this writing, the Bank has
not received any formal appeal from them although they were advised to do so by
their direct supervisor.”^[22]

The fact that petitioner made no appeal to the Final Review
Committee was duly considered by respondent commission in resolving said motion
for reconsideration and in affirming the separation of petitioner from the
service, noting that “appellants Mr. Domingo and Miss Javier did not file
or submit their opposition to the motion for reconsideration.”
Consequently, petitioner cannot, by his own inaction, legally claim that he was
denied due process of law.

Considering petitioner’s years of service, despite the
unfortunate result of the reorganization insofar as he is concerned, he should
be allowed separation and other retirement benefits accruing to him by reason
of his termination, as provided for in Section 16, Article XVIII of the 1987 Constitution, as well as in
Section 9 of Republic Act No. 6656 and Section 34 of Executive Order No. 81.

WHEREFORE, no grave abuse of discretion having
been committed by respondent Civil Service Commission, its challenged resolution
of April 10, 1990 is hereby
AFFIRMED.

SO ORDERED.

Melencio-Herrera, (Acting C.J.),
Cruz, Paras, Padilla, Bidin,
Grino-Aquino, Medialdea, Davide, Jr., Romero, and
Nocon, JJ., concur.

Narvasa, C.J., Feliciano, and Bellosillo, JJ.,
on leave.

Gutierrez, Jr., J., I base my
concurrence solely on the reduction in force argument.

^[1]
Annex A. Petition; Rollo, 18-21.

^[2] Rollo, 35.

^[3]
Original Record, 26.

^[4]
Annex C, Petition; Rollo, 23-28.

^[5]
Annex D, id.; ibid., 30-33.

^[6]
Annex E, id.; ibid., 34-45.

^[7] Rollo, 19-21.

^[8] Ibid.,
4.

^[9]
176 SCRA 84 (1989).

^[10] Rollo, 113.

^[11] Ibid.,
39.

^[12] Ibid.,
42.

^[13] Ibid.,
40-41.

^[14]
Original Record, 20-21.

^[15]
Sec. 2, P.D. No. 807.

^[16]
Sec. 28, P.D. No. 807.

^[17]
Sec. 3, General Rules, Rules on Personnel Actions & Policies.

^[18]
Sec. 28, P.D. No. 807.

^[19]
Sec. 31, P.D. No. 807.

^[20] Rollo, 20.

^[21] Tajonera, et. al. vs. Lamaroza,
et. al., 110 SCRA 438 (1981).

^[22] Rollo, 43.