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FACTS: Salas was appointed by the PAGCOR Chairman as
Internal Security Staff (ISS) member and assigned to the
casino at the Manila Pavilion Hotel. His employment was
terminated by the PAGCOR Board for loss of confidence, after
a covert investigation yielded an alleged involvement of Salas
in proxy betting.
Salas requested reinvestigation from the PACGOR Board,
which was denied. Appeals to the MPSB and CSC were
denied saying that being a confidential employee by operation
of law (PD1869) his term only in fact expired upon loss of
confidence by the appointing power. The CA however
reversed the mentioned rulings and adjudged Salas to not be
a confidential employee after applying the proximity rule.
Petitioners raise 4 grounds: (1) Sec 16. PD. 1869 creating the
PACGOR expressly provides that all employees of the casinos
and related services shall be classified as confidential
appointees; (2) PAGCOR vs. Court of Appeals, et al. which
classified PAGCOR employees as confidential appointees; (3)
CSC Resolution No. 91-830 declared employees in casinos
and related service as confidential appointees by operation of
law; and (4) His functions as a member of the ISS
ISSUE: WON Salas, a member of the PACGORs Internal
Security Staff is a confidential employee
RATIO: "Section 16 1 of PD 1869 insofar as it exempts
PAGCOR positions from the provisions of Civil Service Law

All positions in the corporation, whether technical, administrative,

professional or managerial are exempt from the provisions of the Civil
Service Law, rules and regulations, and shall be governed only by the

and Rules has been modified by the 1987 Constitution and EO

292. However, the same cannot be said with respect to the
last portion of Section 16, which provides that "all employees
of the casino and related services shall be classified as
'confidential' appointees."
There were two instances when a position may be considered
primarily confidential: First, when the President, upon
recommendation of the CSC Commissioner has declared the
position to be primarily confidential; and, second, when by the
nature of the functions of the office there exists "close
intimacy" between the appointee and appointing power which
insures freedom of intercourse without embarrassment or
freedom from misgivings of betrayals of personal trust or
confidential matters of state. At first glance, it would seem that
the instant case falls under the first category by virtue of the
express mandate under Section 16 of Presidential Decree No.
In Nature
The Court explicitly decreed that executive pronouncements,
such as Presidential Decree No. 1869, can be no more than
initial determinations that are not conclusive in case of conflict.
According to the transcripts in the passage of the bill, it is the
nature of the position that determines whether it is policydetermining or primarily confidential." The matter should be left
to the "proper implementation of the laws, depending upon the
nature of the position to be filled", and if the position is "highly
confidential" then the President and the CSC Commissioner
must implement the law. The words in nature is used in
Section 2, Article XII- of the old Constitutions, Section 5 of
personnel management policies set by the Board of Directors. All employees
of the casinos and related services shall be classified as "confidential"

Republic Act No. 2260 and Section 1 of the General Rules in

the implementing rules of P.D. 807. Despite the deletion of the
phrase in nature in the 1987 Constitution and the RAC, the
Pinero doctrine still applies, as can be gleaned from the
deliberations by the Constitutional Commission. The CSC itself
ascribes to this view as may be gleaned from its resolution
which stated that "the declaration of a position as primarily
confidential if at all, merely exempts the position from the civil
service eligibility requirement.
Proximity Rule
Where the position occupied is remote from that of the
appointing authority, the element of trust between them is no
longer predominant. The functions of Salas: to prevent
irregularities, misbehavior, illegal transactions and other
anomalous activities; report unusual incidents and related
observations in accordance with established procedures;
prevention, documentation or suppression of any unwanted
incidents at the gaming and non-gaming areas etc do not
involve "such close intimacy" between him and the appointing
authority the Chairman of PAGCOR, as would insure
"freedom from misgivings of betrayals of personal trust, albeit
requiring honesty and integrity in their exercise. The fact that,
sometimes, private respondent may handle ordinarily
"confidential matters" or papers which are somewhat
confidential in nature does not suffice to characterize his
position as primarily confidential. The case of PAGCOR vs. CA
upheld the dismissal of PAGCOR employees declared to be
confidential simply because the validity of the PD 1869 was
not questioned therein.
Although appointed by the Chairman, ISS members do not
directly report to the Office of the Chairman in the performance
of their official duties. An ISS member is subject to the control
and supervision of an Area Supervisor who, in turn, only
implements the directives of the Branch Chief Security Officer.

The latter is himself answerable to the Chairman and the

Board of Directors. The position of an ISS member belongs to
the bottom level of the salary scale of the corporation, being in
Pay Class 2 level only, whereas the highest level is Pay Class
VITUG, J., concurring:
I agree with the thorough and exhaustive ponencia of Mr.
Justice Florenz D. Regalado supporting the theory of the
appellate court that Salas, not being a confidential employee,
may not dismissed for mere lack of trust or confidence;
nevertheless, I should like to bring into focus the phrase,
"without prejudice to the filing of administrative charges
against Salas if warranted."