G.R. No. 86517 ; April 30, 1991
ANDRES MAMA, JR., ET AL., petitioners, vs. COURT OF APPEALS, JESUS SANCIANGCO, JR. (City Mayor), ET AL., respondents.

FACTS

Petitioners were medical personnel and employees of the S.M. Lao Memorial City Emergency Hospital in Ozamiz City. On March 10, 1988, the newly elected City Council passed Resolution No. 61, abolishing the hospital effective upon the mayor’s approval. The resolution cited the city’s serious financial dilemma, substantial annual losses from the hospital’s operations, and findings of unsatisfactory services due to constant lack of oxygen and medicines, inadequate facilities, and poor administration. The City Treasurer’s certification showed a significant cash overdraft and deficit in the city’s funds as of December 31, 1987.
Petitioners filed a petition for mandamus and prohibition with the Supreme Court, seeking to enjoin the hospital’s closure, declare the resolution null and void, and compel the payment of their salaries. The Supreme Court referred the petition to the Court of Appeals. The appellate court dismissed the petition for lack of merit, finding that the extraordinary writs did not lie. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in dismissing the petition, thereby upholding the validity of the abolition of the S.M. Lao Memorial City Emergency Hospital and the consequent termination of the petitioners’ employment.

RULING

The Supreme Court affirmed the decision of the Court of Appeals, upholding the validity of the hospital’s abolition. The legal logic is anchored on the well-settled principle that the power to create a public office includes the prerogative to abolish it. Such abolition does not constitute removal of the incumbents and thus is not protected by the constitutional guarantee of security of tenure, provided the abolition is done in good faith.
The Court found the abolition was made in good faith, as it was justified by the city’s dire financial condition and the hospital’s documented operational deficiencies and losses. The subsequent re-opening of the facility months later as a specialized maternity and children’s hospital did not prove bad faith. This action was compelled by the need to prevent the reversion of the donated hospital land to the donor, a condition of the donation, which was a legitimate governmental objective to protect city property.
On procedural grounds, the Court agreed that the extraordinary writs of prohibition and mandamus were improperly availed of by petitioners. Prohibition did not lie as there was no showing of usurpation of power or act without jurisdiction by the city officials in abolishing the hospital, a discretionary act within their authority. Mandamus was also unavailable as petitioners had no clear legal right to compel the continued operation of the hospital or the appropriation of funds for it, which are discretionary executive and legislative functions. Petitioners had adequate remedies at law, such as a suit for reinstatement or separation pay, which they did not initially pursue. Nonetheless, the Court modified the ruling to affirm petitioners’ entitlement to reinstatement in other vacant positions or separation pay as provided under the Local Government Code.