G.R. No. 194529. August 06, 2019.
NATIONAL POWER CORPORATION, PETITIONER, VS. FRAULEIN CABANBAN CABANAG AND JESUS T. PANAL, RESPONDENTS.

FACTS

Respondents Fraulein C. Cabanag and Jesus T. Panal were employed as Principal Chemists Analyst C at the National Power Corporation’s (NPC) Palinpinon Geothermal Power Plant. Pursuant to the Electric Power Industry Reform Act (EPIRA), the NPC Board passed NPB Resolution Nos. 2002-124 and 2002-125, providing for the termination of all NPC personnel effective January 31, 2003, and the implementation of a separation program. Respondents applied for positions under the reorganized plantilla. They were not appointed, and four Chemical Engineers were appointed instead. Respondents, both licensed Chemists, sought clarification, insisting they were more qualified as the Qualification Standards required a registered chemist. The Senior Plant Manager replied that the selection considered behavioral traits and that only four of eight incumbents were chosen. Respondents filed a complaint for illegal dismissal. The Civil Service Commission (CSC) initially upheld NPC’s discretionary power, ruling the termination valid under reorganization. On reconsideration, the CSC reversed, finding that three of the four appointees (Chemical Engineers) lacked the required licensure as Chemists, and thus respondents, being qualified, should have been preferred for appointment. Respondents appealed to the Court of Appeals (CA), seeking reinstatement. The CA held respondents were illegally dismissed because the NPB Resolutions relied upon for the reorganization were subsequently declared void by the Supreme Court. The CA ordered NPC to pay backwages and benefits from March 1, 2003, until September 14, 2007. NPC elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in holding NPC liable for illegal dismissal and ordering the payment of backwages and benefits to respondents.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CA decision with MODIFICATION. The Court held that the termination of respondents, based on NPB Resolution Nos. 2002-124 and 2002-125, was illegal because these resolutions were subsequently declared void by the Supreme Court in a prior case (National Power Corporation Employees Consolidated Union v. National Power Corporation). Consequently, respondents were entitled to reinstatement or separation pay in lieu of reinstatement, plus backwages and other benefits. However, since respondents were no longer reinstatable due to the passage of time and the circumstances, the Court awarded them separation pay in lieu of reinstatement. The award of backwages and benefits was limited to the period from March 1, 2003, until September 14, 2007 (the date of the Supreme Court’s final resolution in the prior case declaring the separation program void), in accordance with the ruling in the prior NPC case. The amounts received under the void separation program were to be deducted. The Court also fixed the attorney’s fees for respondent Panal’s counsel at 10% of the amounts awarded, based on quantum meruit.