COMMISSION ON AUDIT CIRCULAR NO.

86-259 April 14, 1986

TO : All Heads of Ministries; Chiefs of Bureaus/Offices of the National Government;

Managing Heads of Government-Owned or Controlled Corporations, Including
State Colleges and Universities and Self-Governing Boards, Commissions or
Agencies of the Government; COA Managers; COA Regional Directors; All
Heads of Auditing Units, and All Others Concerned.

SUBJECT : Entitlement of NDCP Graduates to Salary Adjustment under Executive Orders

No. 696 and 771.

For the information and guidance of all concerned, quoted hereunder is the full text of
the opinion of the General Counsel, this Commission, relative to the entitlement of NDCP
graduates to salary adjustment under Executive Orders No. 696 and 771:

"February 14, 1986

MEMORANDUM for -

Commissioner Pobre

RE: Entitlement of NDCP graduates to salary adjustment under

Executive Orders No. 696 and 771

You seek my opinion on the issue as raised in the within papers, on

whether or not NDCP graduates are automatically entitled to the salary
adjustment authorized under Section 2 of Executive Order No. 696, as amended
by Executive Order No. 771.

As I see it, the resolution of such issue would hinge on the proper
construction/interpretation, thru a conceptual analysis, of said Executive Orders
vis-a-vis the implementing CESB Circular No. 8, s. 1982, as supplemented by
National Compensation Circular No. 29, s. 1984, of the OBM, which is hereunder
essayed.

1. At the very outset, special notice should be taken of the raison

d'etre of Executive Order No. 696 which, as is manifest from its title, is the
"granting" of CESO rank to NDCP graduates who, as intimated by its 5th
WHEREAS clause, are as qualified as CESDP graduates for "appointment to the
Career Executive Service." Accordingly, Section 2 thereof provides thus:

"Initially, NDCP graduates belonging to the government

service shall be granted the rank of CESO III with corresponding
compensation and other privileges in the Career Executive
Service." (emphasis mine)
 The self-evident design is to assimilate NDCP graduates into the Career
Executive Service and thereby enable them to be part and parcel of "a continuing
pool of well-selected and development-oriented career administrators of the
government."

Considering, however, that CESDP graduates "who are equally deserving

have not been extended the same or similar benefits" as that extended to NDCP
graduates under the just-quoted Section 2 of Executive Order 696, and realizing
the "need to harmonize the conferment of ranks, compensation and other
benefits to graduates of both institutions or programs (NDCP and CESDP) in
order to maintain a high level of morale in the Career Executive Service," the
President subsequently issued Executive Order No. 771 so as to amend
particularly said Section 2 of Executive Order No. 696 in the following tenor:

"Sec. 2. Graduates of the National Defense College of the

Philippines belonging to the civil service, and graduates of the
Career Executive Service Development Program who have not yet
been appointed to a CESO rank shall be granted initially CESO
Rank V or higher, depending on the recommendation of the
Ministry or Agency head concerned and the evaluation of the
Career Executive Service Board, with corresponding compensation
and other benefits. The Career Executive Service Board, in
consultation with the National Defense College of the Philippines
shall promulgate rules and regulations to implement this Order."
(emphasis mine)

Such an amendment is self-explanatory. While retaining the thrust and

substance of Section 2 of Executive Order No. 696, i.e., the initial grant of CESO
rank to NDCP graduates belonging to the government service, it a) expanded its
coverage so as to embrace CESDP graduates who have not yet been appointed
to a CESO rank; b) lowered to CESO Rank V (from Rank III) the said initial grant
subject to certain conditions; and c) empowered the Career Executive Service
Board to promulgate implementing rules and regulations.

It is crystal clear then that basically, both Executive Orders 696 and 771
speak of and contemplate the initial grant of CESO rank to NDCP graduates in
the government service before the corresponding compensation and other
benefits may be enjoyed. In other words, entitlement to the resulting salary
adjustment was never meant to be instant or automatic. For it is a pre-condition
or an a priori requisite that the appropriate CESO rank be first granted or
conferred by the President on the NDCP graduate concerned. Only then will the
latter be entitled to the "corresponding compensation." Verily, his enjoyment of
the contemplated salary adjustment is but a consequence of the grant or
conferment on him of the appropriate CESO rank by the President.

Significantly, even such grant of the CESO rank was never envisioned to
be automatic, as may be gleaned from the 3rd WHEREAS clause of Executive
771 which frowns upon "the automatic grant of CESO Rank III (pursuant to
Executive Order 696) with corresponding compensation and privileges to NDCP
graduates (since this) has caused salary inequities in some agencies." (words in
parenthesis mine) In this regard, I share the view expressed by Budget Minister
Alba in his letter of January 16, 1985 to the COA Chairman "that conferment of
rank and privileges under Section 2 of said Order (Ex. Order 696) was not
automatic" since the language used therein was "shall be granted", not "are
hereby granted".

Indeed, inasmuch as even the grant or conferment of CESO rank under

Section 2 of Executive Order 696, as amended, as a pre-requisite to the
enjoyment of its corresponding compensation is not automatic, it stands to
reason that the entitlement to the resulting salary adjustment as contemplated
therein cannot likewise be automatic.

2. Let us now shift our attention to CESB Circular No. 8, s. 1982, and
OBM's National Compensation Circular No. 29, s. 1984. What strike me
as odd are the following provisions thereof:

CESB Circular No. 8

"1. All graduates of the x x x National Defense College of

the Philippines (NDCP) who are CES eligibles, but are not
incumbents of CES positions, shall be entitled to the salary
equivalent to Rank V (Grade 2) in accordance with the CES
Compensation Schedule. Incumbents are those with Presidential
appointments or designations. (emphasis mine)

"2. All graduates of the x x x NDCP who possess no

CES eligibility and are not incumbents of CES positions shall be
entitled to the salary equivalent to Rank V (Grade 1) of the CES
Compensation Schedule." (emphasis mine)

OBM's National Compensation Circular No. 29

"3.1 The salary of all graduates of the x x x NDCP who

are CES eligibles, and who have not been appointed/designated
by the President to CES positions, shall be adjusted to the full
amount of Grade 2 of Rank V of the CES Compensation
Schedule. (emphasis mine)

"3.2. The salary of all graduates of the x x x NDCP who

are not CES eligibles and who have not been
appointed/designated by the President to CES positions, shall be
adjusted to the full amount of Grade 1 of Rank V of the CES
Compensation Schedule. (emphasis mine)

Taken together, these provisions would seem, at first blush, to signify that
entitlement by the NDCP graduates concerned to the contemplated salary
adjustments is automatic. But, upon closer scrutiny, I detect certain deviations
therein from Executive Order 771. Thus, while they speak of and distinguish two
(2) categories of NDCP graduates, namely, a) CES eligibles, and b) non-CES
eligibles, Executive Order 771 contemplates only NDCP graduates belonging
to the Civil Service regardless of whether these are CES or non-CES eligibles,
as long as they have not yet been appointed to a CESO rank. Moreover, the
main thrust of these provisions appears to be the entitlement of NDCP graduates
to the salary equivalent to the appropriate CESO Rank without regard to their
being appointed to or conferred such CESO Rank. Executive Order 771, on the
other hand, lays stress on the initial grant or conferment of CESO rank to NDCP
graduates, with entitlement to the corresponding compensation flowing therefrom
as a mere consequence.

Such deviations, in a sense, render vulnerable CESB Circular No. 8 and

OBM's National Compensation Circular No. 29. Being merely implementary
issuances "pursuant to the provisions of Executive Order No. 771" (opening
phrase of 1st paragraph of CESB Circular No. 8), they must need be given a
construction that would harmonize them with said Order which is the reason for
their being. ("A spring cannot rise higher than its source.")

Thus, if viewed and construed in the light of Executive Order 771, as

hereinabove analyzed, these Circulars cannot but yield the ineluctable
conclusion that entitlement to the salary adjustments authorized therein
necessarily presupposes the grant/conferment of or appointment/designation to
an appropriate CESO Rank and, hence, cannot be automatic.

In any event, significantly enough, for purposes of payment of subject

salary adjustments, the selfsame CESB Circular No. 8 requires the submission
by the Ministry/Agency Head concerned to the OBM and COA a list of qualified
NDCP graduates as certified by the NDCP "together with their respective copies
of appointment papers duly certified by the Civil Service Commission."

Obviously, the appointment contemplated is that extended by the

President to a CESO Rank within the purview of Executive Order 771.

3. On this score alone, I am not quite prepared to go along with the

CESB Executive Director's assertion in his letter of September 12, 1985 to the
OCPC that "Appointment of these graduates by the President to a rank in the
CES would not be necessary since they cannot be appointed to a rank unless
they possess CES eligibility." To belie such an observation, it suffices to point
out that precisely, as earlier stressed, Executive Order 771 authorizes the grant
of CESO Rank V or higher to NDCP graduates, whether with or without CES
eligibility, who have not yet been appointed to a CESO rank. It is my submission
that requiring NDCP graduates to possess CES eligibility to qualify them for
appointment to a CESO rank is no longer necessary since in the apt language of
Executive Order 696, "the pre-qualification requirements for admission at NDCP
as well as the training obtained there fully satisfy the training and pre-qualification
requirements for appointment to the Career Executive Service." (emphasis
mine) NDCP schooling is thus equated with CESDP. In my perception, this can
only mean that graduation from NDCP is tantamount to acquiring CES eligibility
and suffices to qualify the graduate for appointment to an appropriate CES rank.

Please be advised accordingly.

(SGD.) B. C. FERNANDEZ, JR.

 General Counsel"

Conformably thereto and in line therewith, all Auditors and other officials concerned are
hereby directed to see that only those NDCP graduates who have been conferred or appointed
to the appropriate CESO Rank by the President are entitled to the salary adjustment authorized
under Executive Orders No. 696 and 771.

(SGD.) TEOFISTO T. GUINGONA, JR., Chairman

(SGD.) EUFEMIO C. DOMINGO, Commissioner
(SGD.) BARTOLOME C. FERNANDEZ, Commissioner