Government reorganization; when valid - G.R. No. 187107

G.R. No. 187107

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In Betoy v. The Board of Directors, National Power Corporation,[4] the Court upheld the dismissal of all the employees of the NPC pursuant to the EPIRA Law. In ruling that the power of reorganization includes the power of removal, the Court explained:

[R]eorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. It could result in the loss of one’s position through removal or abolition of an office. However, for a reorganization for the purpose of economy or to make the bureaucracy more efficient to be valid, it must pass the test of good faith; otherwise, it is void ab initio. (Emphasis supplied.)

Evidently, the termination of all the employees of NEA was within the NEA Board’s powers and may not successfully be impugned absent proof of bad faith.

Petitioners Failed to Prove that the NEA Board Acted in Bad Faith

Next, petitioners challenge the reorganization claiming bad faith on the part of the NEA Board.

Congress itself laid down the indicators of bad faith in the reorganization of government offices in Sec. 2 of RA 6656, an Act to Protect the Security of Tenure of Civil Service Officers and Employees in the Implementation of Government Reorganization, to wit:

Section 2. No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:

(a) Where there is a significant increase in the number of positions in the new staffing pattern of the department or agency concerned;

(b) Where an office is abolished and other performing substantially the same functions is created;

(c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit;

(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same function as the original offices;

(e) Where the removal violates the order of separation provided in Section 3 hereof. (Emphasis supplied.)


It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled in Culili v. Eastern Telecommunications, Inc.,[5] “According to jurisprudence, ‘basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.’ ” Moreover, in Spouses Palada v. Solidbank Corporation,[6] the Court stated, “Allegations of bad faith and fraud must be proved by clear and convincing evidence.”

Here, petitioners have failed to discharge such burden of proof.

In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b) and (c). Petitioners have the burden to show that: (1) the abolished offices were replaced by substantially the same units performing the same functions; and (2) incumbents are replaced by less qualified personnel.

Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be considered as clear and convincing proof.

Next, petitioners state that the NEA Board should not have abolished all the offices of NEA and instead made a selective termination of its employees while retaining the other employees.

Petitioners argue that for the reorganization to be valid, it is necessary to only abolish the offices or terminate the employees that would not be retained and the retention of the employees that were tasked to carry out the continuing mandate of NEA. Petitioners argue in their Memorandum dated July 27, 2010:

A valid reorganization, pursued in good faith, would have resulted to: (1) the abolition of old positions in the NEA’s table of organization that pertain to the granting of franchises and rate fixing functions as these were all abolished by Congress (2) the creation of new positions that pertain to the additional mandates of the EPIRA Law and (3) maintaining the old positions that were not affected by the EPIRA Law.

The Court already had the occasion to pass upon the validity of the similar reorganization in the NPC. In the aforecited case of Betoy,[7] the Court upheld the policy of the Executive to terminate all the employees of the office before rehiring those necessary for its operation. We ruled in Betoy that such policy is not tainted with bad faith:

It is undisputed that NPC was in financial distress and the solution found by Congress was to pursue a policy towards its privatization. The privatization of NPC necessarily demanded the restructuring of its operations. To carry out the purpose, there was a need to terminate employees and re-hire some depending on the manpower requirements of the privatized companies. The privatization and restructuring of the NPC was, therefore, done in good faith as its primary purpose was for economy and to make the bureaucracy more efficient. (Emphasis supplied.)

Evidently, the fact that the NEA Board resorted to terminating all the incumbent employees of NPC and, later on, rehiring some of them, cannot, on that ground alone, vitiate the bona fides of the reorganization.
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