G.R. No. 187107 ; January 31, 2012
UNITED CLAIMANTS ASSOCIATION OF NEA (UNICAN), represented by BIENVENIDO R. LEAL, et al., Petitioners, vs. NATIONAL ELECTRIFICATION ADMINISTRATION (NEA), NEA BOARD OF ADMINISTRATORS, et al., Respondents.

FACTS

Petitioners are former employees of the National Electrification Administration (NEA), a government-owned and/or controlled corporation created under Presidential Decree No. 269. They were terminated from employment upon the implementation of NEA Board Resolution Nos. 46 and 59 (dated July 10, 2003 and September 3, 2003, respectively), known as the NEA Termination Pay Plan. The issuance of these resolutions was prompted by Republic Act No. 9136 (the Electric Power Industry Reform Act of 2001 or EPIRA Law), which imposed additional mandates on NEA and provided a framework for restructuring the electric power industry. The Implementing Rules and Regulations (IRR) of RA 9136, issued on February 27, 2002, stated under Rule 33 that all NEA officials and employees “shall be considered legally terminated” when a restructuring is implemented. Subsequently, Executive Order No. 119 (dated August 28, 2002) directed the NEA Board to submit a reorganization plan. The NEA Board issued the assailed resolutions, and the Department of Budget and Management approved the Termination Pay Plan on September 17, 2003. NEA implemented an “Early Leavers Program,” and employees who did not avail of it were terminated effective December 31, 2003.

ISSUE

1. Whether the NEA Board had the power to terminate all NEA employees.
2. Whether Executive Order No. 119 granted the NEA Board the power to terminate all NEA employees.
3. Whether Resolution Nos. 46 and 59 were carried out in bad faith.
(Respondents also raised procedural issues: (a) lack of jurisdiction due to violation of the hierarchy of courts, and (b) impropriety of injunction as the resolutions had long been implemented.)

RULING

The Supreme Court DISMISSED the petition and UPHELD NEA Board Resolution Nos. 46 and 59.
1. On Procedural Issues:
* Jurisdiction and Hierarchy of Courts: The Court held that while the petition directly filed with it violated the principle of hierarchy of courts (which generally requires filing first with the Regional Trial Court), an exception applies. The case involves the employment of NEA’s entire plantilla—more than 700 employees dismissed simultaneously—which is a special and important reason warranting the Court’s direct attention. This is consistent with the ruling in *National Power Corporation Drivers and Mechanics Association (NPC-DAMA) v. National Power Corporation.
Availability of Injunction and Mootness: The Court ruled that the remedy of injunction is not moot. The case involves a situation “capable of repetition yet evading review,” as the termination of a large group of government employees under a restructuring program could happen again. Furthermore, a ruling on the validity of the termination would determine the employees’ entitlement to benefits.
2. On the Substantive Issues:
* Power of the NEA Board to Terminate Employees: The Court ruled that the NEA Board had the power to terminate all employees. This power is derived from:
a. Section 5(a)(5) of P.D. No. 269, which expressly grants the NEA Board the power “to organize or reorganize NEA’s staffing structure.”
b. Section 77 of RA 9136 (EPIRA Law), which mandates the issuance of Implementing Rules and Regulations. The subsequently issued IRR (Rule 33) explicitly provided that NEA officials and employees “shall be considered legally terminated” upon the implementation of a restructuring pursuant to law or P.D. No. 269.
c. Executive Order No. 119, which directed the NEA Board to submit a reorganization plan, effectively recognized and activated the Board’s inherent power to reorganize under its charter.
* Good Faith in the Reorganization: The Court found no evidence of bad faith. The reorganization was undertaken pursuant to a valid national policy (EPIRA) aimed at making the bureaucracy more efficient. The fact that the plan terminated all employees and later rehired some based on new staffing requirements is a legitimate feature of a bona fide reorganization, as established in jurisprudence (e.g., Dario v. Mison). The Court distinguished this from a malicious “purge” aimed at removing specific individuals.