G.R. No. L-14956; February 27, 1961
TEOFILO ARCEL and JUAN CALINAWAN, petitioners-appellants, vs. SERGIO OSMEÑA, JR., ET AL., respondents-appellees.

FACTS

Petitioners Teofilo Arcel and Juan Calinawan were employees of Cebu City, with Arcel serving as a watchman since 1947. For the fiscal year 1956-1957, the Municipal Board enacted Ordinance No. 220, the city’s general fund budget, which reduced the number of watchmen positions in the City Treasurer’s office from two to one. Consequently, on December 31, 1956, Mayor Sergio Osmeña Jr. terminated Arcel’s services, citing the abolition of his position. Simultaneously, on December 29, 1956, the mayor appointed a new individual, Catalino Lanete, to the sole remaining watchman position. Arcel was also offered a new appointment as a Clerk-Collector, which was temporary and “good until revoked,” but he refused it.
Arcel and Calinawan filed a petition for mandamus in the Court of First Instance of Cebu to compel their reinstatement and payment of back salaries. The trial court dismissed the petition, ruling that the Municipal Board had the authority to abolish positions, that there was no evidence of fraud or abuse of power, that the petitioners were not civil service eligibles, that the City of Cebu was not included as an indispensable party, and that administrative remedies were not exhausted. Only Arcel appealed the decision.

ISSUE

The core issue is whether the dismissal of Teofilo Arcel from his position as a watchman, following a budgetary reduction of the item he occupied and its subsequent filling by a new appointee, was lawful.

RULING

The Supreme Court reversed the lower court’s decision and ordered Arcel’s reinstatement with back pay. The legal logic is anchored on the constitutional and statutory protection against removal except for cause, which extends to both classified and unclassified civil service employees. While the Municipal Board possesses the authority to reduce or abolish positions under the city charter, this power cannot be exercised to circumvent civil service laws and effectuate an illegal removal.
The Court found that the reduction of the watchman item from two to one was not a bona fide abolition but a scheme to remove Arcel unlawfully. This was evidenced by the immediate appointment of a new person to the very position that was supposedly reduced, demonstrating that the position itself was not truly abolished. Since Item No. 40 in the new budget was the same, albeit reduced, item previously occupied by Arcel, he, as the senior incumbent and a USAFFE veteran entitled to preference, should have been appointed to it ahead of any new appointee. His refusal to accept the temporary Clerk-Collector position was justified, as accepting it would have compromised his right to challenge his illegal dismissal. The Court also held that naming the city officials was sufficient and dismissed the procedural objections regarding parties and exhaustion of remedies.