DIOGENES O. RUBIO, ERROL SAM­BRANO, JESUS RACASA, VICENTE SEPE, ARMANDO PELAYO, JOSE GERONIMO, ALMARIO SAGUM, JOSE PINEDA, ARTURO PAREDES, ROBERTO SAMPANG, CARLOS MANSAL, RAFAEL…

Rubio versus People's Homesite and Housing Corporation

The Case

This is a special civil action of mandamus brought by Diogenes Rubio and thirty-one co-employees against the People's Homesite and Housing Corporation, its General Manager, and its board officials. The petitioners were permanent employees of the Multi-Storey Tenement Projects who were separated from the service in 1966 after the corporation passed a resolution abolishing their positions. They asked the Court of First Instance of Quezon City to order their reinstatement and the payment of their back salaries. The case matters because it is the Supreme Court's classic statement on the limits of the power to abolish offices in the civil service, and on the remedies of reinstatement, separation pay, and back salaries when that power is used as a pretext to dismiss employees without cause.

Procedural History

The petitioners filed their action for mandamus in the Court of First Instance of Quezon City, Branch Four. The parties submitted a stipulation of facts and asked the trial court to render judgment on the merits on the basis of those facts. The trial court rendered judgment for the petitioners, ordering the respondents to reinstate them to their former positions and to pay their back salaries from July 1, 1966 until reinstatement, including the allowances they had been enjoying, plus the costs.

The respondents appealed to the Court of Appeals. Briefs were submitted by both sides. The Court of Appeals, however, declined to resolve the appeal on the merits. Observing that the parties had stipulated all the facts and that the trial court had resolved only the question of whether the corporation's resolution covered the petitioners, the appellate court endorsed the case to the Supreme Court, treating the question as one of law within the exclusive jurisdiction of the Supreme Court at that time. The Supreme Court accepted the case and decided it on the merits.

Facts

Republic Act Number 3469 authorized the construction of multi-storey tenement buildings, financed from the general funds and from the proceeds of reparations from Japan. The projects were operated and maintained from rentals collected from tenants, which formed a revolving fund kept under a separate and independent account. The projects were projects of the national government, subject only to maintenance, repair, improvement, expansion, and administration by the corporation upon their completion.

The petitioners were issued original and permanent appointments by the corporation in the Multi-Storey Tenement Projects. They occupied regular and permanent positions in the plantilla of personnel of the project starting from the fiscal year 1964 to 1965, at a total annual salary budget of 61,656 pesos. On March 10, 1966, the corporation passed Resolution Number 686 for the fiscal year 1965 to 1966, abolishing positions and terminating the services of all employees, including those in the independent projects, who had been granted original appointments from January 1, 1965 up to the date of the resolution. The separation was made effective April 30, 1966, and later extended to June 30, 1966. The resolution was approved by the Office of the Economic Coordination, but subject to the explicit condition that the abolished positions should not be re-created thereafter. The resolution was later implemented in the Multi-Storey Tenement Projects as well.

Barely a month after the petitioners' separation, the corporation hired thirty-one casual employees at daily wages, and these casuals continued working up to the time of trial although they were ostensibly hired only for three months. For the following fiscal year, the corporation incorporated in the budget of the Multi-Storey Tenement Projects a lump sum appropriation of 51,500 pesos for the wages of casuals. The trial court found that the resolution was a mere pretext, politically motivated, to replace the old employees with people of the choice of the new directors and officers, and that the petitioners were dismissed without cause.

Issues

• Whether or not Resolution Number 686 of the corporation, abolishing positions and terminating services, covered the petitioners who were permanent employees of the Multi-Storey Tenement Projects.
• Whether or not the corporation had the power to abolish the petitioners' positions and separate them from the service.
• Whether or not the petitioners are entitled to reinstatement and back salaries, and if reinstatement is no longer feasible, what alternative relief the law allows.

Applicable Provisions

Section 76 of Batas Pambansa Bilang 337, the Local Government Code, provides:

SEC 76. Abolition of Position. -- When the position of an official or employee under the civil service is abolished by law or ordinance the official or employee so affected shall be reinstated in another vacant position without diminution of salary. Should such position not be available, the official or employee affected shall be granted a separation pay equivalent to one month salary for every year of service over and above the monetary privileges granted to officials and employees under existing law.

This provision supplies the measure of relief for the petitioners, whose positions were abolished and whose reinstatement has become impossible after more than twenty-three years.

The decision also relies on the statutory power of the General Manager of the corporation, which the respondents themselves invoked, providing that he may:

appoint and fix the number and salaries, with the approval of the Board of directors, of such subordinate personnel as may be necessary for the proper discharge of the duties and functions of the Corporation, and, with the approval of the Board, remove, suspend, or otherwise discipline, for cause, any subordinate employee of the Corporation.

This language is decisive because it limits removal to removal for cause, and the Court found that the petitioners were dismissed without cause.

Ruling

On the first issue, the Court agreed with the trial court that the facts on record establish that the resolution was a mere pretext to replace the petitioners. There was in fact no abolition of positions either contemplated or actually effected. The employees engaged after the petitioners' termination were not in truth casual, but more or less permanent, since provision for their salaries was made in the budget for the following year. What happened simply was that the petitioners were dismissed without cause.

On the second issue, the Court rejected the respondents' argument that the power to create an office includes the power to abolish it. The respondents' reliance on that principle was unavailing because the very law they invoked limited the General Manager's power to remove subordinate employees to removal for cause. The dismissal of the petitioners violated that express limitation.

On the third issue, the Court held that the trial court was correct in directing reinstatement and the payment of back salaries and other benefits. But it recognized that reinstatement was no longer feasible after more than twenty-three years, since many of the petitioners would have found employment elsewhere, some may have passed away, and others would have reached retirement age. The Court therefore applied Section 76 of Batas Pambansa Bilang 337, although it was enacted many years after the abolition, because the petitioners were employees under the civil service. The Court saw no reason to confine the provision to local government personnel, since a contrary conclusion would make it questionable under the equal protection clause, there being no substantial distinction between civil servants in the local government and those in other branches of government. As reinstatement was no longer possible, the petitioners or their heirs were deemed entitled to separation pay under that provision. As regards back salaries, the Court followed its consistent rulings awarding back salaries to government employees unlawfully separated from employment corresponding to a period of five years, without qualification and deduction.

Doctrine

The power to abolish an office is not a license to dismiss employees without cause. Where the law grants the power to remove subordinate employees only for cause, a resolution abolishing positions that is in truth a pretext to replace the occupants is void as a dismissal without cause. The test is substance, not form: if the positions were not genuinely abolished and replacements were hired shortly after, the abolition is a sham.

When reinstatement is no longer feasible, a civil service employee unlawfully separated may be granted separation pay equivalent to one month salary for every year of service, as provided in Section 76 of Batas Pambansa Bilang 337, a provision the Court applies to all civil servants to avoid a violation of the equal protection clause. In addition, the unlawfully separated employee is entitled to back salaries corresponding to five years, without qualification or deduction.

Disposition

The respondents' appeal was pronounced without merit, and they were ordered to pay the petitioners separation pay equivalent to one month salary for every year of service under Section 76 of Batas Pambansa Bilang 337, as well as back salaries at the rates presently prescribed for the positions equivalent to those they previously occupied, corresponding to a period of five years, without qualification or deduction.

Remember This

The one line to memorize: the power to abolish is not the power to dismiss without cause, and when reinstatement is no longer feasible the unlawfully separated civil servant receives separation pay under Section 76 of Batas Pambansa Bilang 337 plus back salaries for five years. Examiners use this case on the limits of the abolition power, on the sham abolition doctrine, and on the computation of separation pay and back wages for illegally dismissed government employees.