G.R. No. 74814 ; July 16, 1991
JOSE LUSTERIO, petitioner, vs. INTERMEDIATE APPELLATE COURT, HON. BENIGNO M. PUNO, and SERAFIN PALOMAR, respondents.

FACTS

The position of Supply Officer III in the Division of Quezon became vacant in April 1977. Respondent Serafin Palomar was appointed to the position on April 11, 1977, by the Regional Director of the Ministry of Education and Culture (MEC), with the appointment being “permanent” but qualified as “subject to the final outcome” of a protest filed by petitioner Jose Lusterio. Palomar assumed office immediately. Lusterio’s protest, filed with the MEC, was denied for lack of merit on September 19, 1977, with the MEC finding Palomar met all requirements, including being “next in rank.” Lusterio appealed to the Office of the President.
The Civil Service Commission, through its Merit Systems Board, later recommended rescinding Palomar’s appointment, finding Lusterio, who occupied a “functionally related position,” to be the qualified “next in rank” employee. The Office of the President adopted this recommendation in a decision dated May 8, 1979, rescinding Palomar’s appointment in favor of Lusterio. Consequently, Lusterio was appointed on May 22, 1979. Palomar filed a petition for reconsideration with the Office of the President and subsequently initiated an action for declaratory relief with the Regional Trial Court, which declared his appointment valid and Lusterio’s appointment null and void. The Intermediate Appellate Court affirmed this decision.

ISSUE

Whether the Office of the President committed grave abuse of discretion in rescinding the appointment of Serafin Palomar and directing the appointment of Jose Lusterio based on the “next-in-rank” rule.

RULING

The Supreme Court dismissed the petition, affirming the lower courts. The legal logic centers on the nature of the “next-in-rank” rule under the Civil Service Law. The Court held that the rule, as stated in Section 19(3) of the Civil Service Decree (P.D. No. 807), is not mandatory but merely directive. The provision states that employees in the next lower positions “shall be considered for promotion.” This does not confer an absolute right to promotion upon the next-in-rank employee. The appointing authority retains wide discretion in selecting from among several qualified candidates, provided the choice is based on merit and fitness.
The Office of the President, in adopting the Civil Service Commission’s recommendation, erroneously interpreted the rule as giving Lusterio a preferential right because he occupied a “functionally related” position. This was a grave abuse of discretion, as it unduly restricted the appointing power’s discretion. The MEC, as the appointing authority, validly exercised its discretion in originally appointing Palomar, who was also qualified and, as found by the MEC, met the next-in-rank requirement. The subsequent policy (CSC Resolution No. 89-779) clarifying that employees in “functionally related occupational groups” shall be considered is consistent with the statute but does not alter the discretionary nature of the appointment. Therefore, the MEC’s appointment of Palomar was valid and could not be arbitrarily overturned.