MAYOR MARCEL S. PAN, REPRESENTING THE MUNICIPALITY OF GOA, CAMARINES SUR AS MAYOR, PETITIONER, VS. YOLANDA O. PEÑA, MARIVIC P. ENCISO, MELINDA S. CANTOR, ROMEO ASOR AND EDGAR A.…

Pan versus Peña

The Case

This is a petition for review brought by Mayor Marcel Pan, representing the Municipality of Goa, Camarines Sur, against five permanent employees of the local government whose positions were abolished in a reorganization and who were then separated from the service. The employees appealed to the Civil Service Commission, which ordered their reinstatement with backwages, and the Court of Appeals affirmed. The case matters because it is the Supreme Court's clearest statement that a reorganization undertaken for economy or efficiency is valid only if it passes the test of good faith, and that a reorganization done to defeat the constitutional security of tenure of civil service employees is void from the start. It is a staple in examinations on the security of tenure of civil servants and on the requisites of a bona fide reorganization under Republic Act Number 6656.

Procedural History

The five employees appealed their separation to the Civil Service Commission. The Commission, after considering the qualifications of the parties, found for the employees and ruled that their separation violated Republic Act Number 6656. It ordered their reinstatement or reappointment to their former positions or their equivalent under the new staffing pattern, without loss of seniority rights, and the payment of backwages from the time they were separated until actual reinstatement. The mayor moved for reconsideration, adducing additional evidence and grounds, but the Commission denied the motion. The mayor then went up to the Court of Appeals, which sustained the Commission in a decision dated July 14, 2005. The appellate court noted that the new positions were filled by others who were less preferred or qualified in terms of status of appointment, training, education and length of service, instead of by the employees who held permanent positions. Reconsideration was denied, and the mayor filed the present petition with the Supreme Court.

Facts

After winning the mayoralty in the 1998 elections, Mayor Marcel Pan initiated a reorganization of the Municipality of Goa, citing a large budgetary deficit brought about by a bloated bureaucracy. The Sangguniang Bayan passed a resolution authorizing a partial reorganization, amended it to give the mayor full authority to restructure, and then created a Placement Committee to oversee the selection and placement of personnel in consonance with Republic Act Number 6656 and its implementing rules.

Affected were Yolanda Peña, Marivic Enciso, Melinda Cantor, Romeo Asor and Edgar Enciso, all permanent employees whose positions were abolished. They applied for newly created positions in the new organization and staffing pattern, but the Placement Committee did not approve their applications. Instead, it recommended, and the mayor appointed, other persons to fill the ranks. After due notice and hearing, thirty one employees, including the five, were separated from the service effective October 30, 1998.

Before the Civil Service Commission, the records showed a pattern. Romeo Asor, with fourteen years of service and one hundred twelve training hours, was denied a position given to someone with only three years of service, and the mayor's justification that Asor had no civil service eligibility applied equally to the appointee. Edgar Enciso, with six years of service, was denied a bookbinder position given to a midwifery graduate, although civil service eligibility was not even required for that position. Yolanda Peña, an accounting graduate with professional civil service eligibility and twenty five years of service, was denied the cashier position given to someone with only eleven years of service, on a self-serving claim of losses that was never proven. Marivic Enciso and Melinda Cantor were likewise denied positions filled by persons with no eligibility or with only a few months of service.

Issues

• Whether or not the mayor complied with the provisions of Republic Act Number 6656 in effecting the separation of the employees from the service.
• Whether or not the reorganization of the Municipality of Goa was undertaken in good faith.

Applicable Provisions

Section 2 of Republic Act Number 6656 provides:

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 exist 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 the 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 another 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 functions as the original offices; e) Where the removal violates the order of separation provided in Section 3 hereof.

This provision supplies the test of bad faith, and the Court used it to measure whether the separation of the five employees was valid.

Section 3 of the same law provides:

Section 3. In the separation of personnel pursuant to reorganization, the following order of removal shall be followed: (a) Casual employees with less than five (5) years of government service; (b) Casual employees with five (5) years or more of government service; (c) Employees holding temporary appointments; and (d) Employees holding permanent appointments: Provided, That those in the same category as enumerated above, who are least qualified in terms of performance and merit shall be laid first, length of service notwithstanding.

This provision fixes the order of removal, which the Court found was not observed.

Section 4 of the same law provides:

Section 4. Officers and employees holding permanent appointments shall be given preference for appointment to the new positions in the approved staffing pattern comparable to their former positions or in case there are not enough comparable positions, to positions next lower in rank. No new employees shall be taken until all permanent officers and employees have been appointed, including temporary and casual employees who possess the necessary qualification requirement, among which is the appropriate civil service eligibility, for permanent appointment to positions in the approved staffing pattern, in case there are still positions to be filled, unless such positions are policy-determining, primarily confidential or highly technical in nature.

This provision gives permanent employees preference in the new staffing pattern, and the Court found it was violated when casuals were appointed to recreated positions.

Ruling

On the first issue, the Court held that the mayor did not comply with Republic Act Number 6656. A reorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions, and it may result in the loss of one's position. But for a reorganization for the purpose of economy or efficiency to be valid, it must pass the test of good faith; otherwise it is void from the start. The Court explained that if the abolition, which is nothing else but a separation or removal, is done for political reasons or purposely to defeat security of tenure, or otherwise not in good faith, no valid abolition takes place and whatever abolition is done is void from the start.

On the second issue, the Court found bad faith. The Commission had highlighted the recreation of six casual positions for clerk and utility worker, positions previously held by the employees, and the mayor never disputed this finding nor offered proof that the new positions do not perform the same or substantially the same functions as the abolished ones. Nowhere in the records did it appear that these recreated positions were first offered to the employees. The appointment of casuals to these recreated positions violated Section 4 of Republic Act Number 6656. As for Yolanda Peña, the mayor claimed the waterworks supervisor position was abolished, yet he appointed an officer-in-charge for waterworks operations in 1999, after the new staffing pattern had supposedly taken effect in 1998, and that position did not even appear in the new staffing pattern. The municipality, the Court said, never intended to do away with the position wholly and permanently.

The Court also rejected the mayor's claim that the Commission contradicted itself by approving the new appointments while ordering reinstatement. The Commission's authority over appointments is limited to determining whether the appointees meet all the required conditions laid down by law; it may still order reinstatement to former positions, since these were never actually abolished, or appointment to comparable positions in the new staffing pattern. In fine, the reorganization was not entirely undertaken in the interest of efficiency and austerity but appears to have been marred by other considerations in order to circumvent the constitutional security of tenure of civil service employees.

Doctrine

A reorganization is valid only if it passes the test of good faith, meaning it is genuinely for the purpose of economy or to make the bureaucracy more efficient. If the abolition of positions is done for political reasons or purposely to defeat security of tenure, no valid abolition takes place and it is void from the start. The circumstances in Section 2 of Republic Act Number 6656, such as replacing incumbents with those less qualified in terms of status of appointment, performance and merit, are evidence of bad faith giving rise to a claim for reinstatement or reappointment. Permanent employees must be given preference for appointment to comparable positions in the new staffing pattern, and no new employees may be taken until all permanent officers and employees have been appointed, as Section 4 commands. The Civil Service Commission's authority over appointments is limited to determining whether the appointees meet the conditions laid down by law, and it may order reinstatement where positions were never actually abolished.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, with costs against the mayor, so the five employees won reinstatement with backwages.

Remember This

Memorize the line that a reorganization not done in good faith is void from the start, and that replacing incumbents with those less qualified is evidence of bad faith under Section 2 of Republic Act Number 6656. Examiners use this case to test the requisites of a bona fide reorganization and the preference of permanent employees under Section 4.