G.R. No. L-40641 September 9, 1982
FILOMENO ABROT, ET AL., petitioners, vs. THE COURT OF APPEALS, CITY OF LA CARLOTA and LUIS G. JALANDONI, JR., respondents.

FACTS

The petitioners were former employees of the City of La Carlota, appointed by the previous mayor. Following the election of respondent Mayor Luis G. Jalandoni in 1967, the petitioners were separated from service on various grounds, including alleged resignation, layoffs for “lack of funds and public interest,” and the abolition of positions in the 1968-69 city budget. They filed separate actions for reinstatement, back salaries, and damages, arguing their termination violated their constitutional security of tenure, was done without due process, and was a politically motivated bad faith act disguised as an economic measure.
The trial court dismissed all complaints, crediting the city’s evidence of a severe financial crisis, including huge overdrafts and unpaid obligations exceeding one million pesos, which necessitated a workforce reduction. On appeal, the Court of Appeals modified the judgment. It affirmed the dismissal for some petitioners but ordered the payment of back salaries (from January to June 1968) without reinstatement for others, namely Gorgonio Torrechilla, Noel Geollegue, and Elias Dequina. The petitioners sought a review of this decision.

ISSUE

The primary issue is whether the retrenchment policy and the subsequent abolition of positions undertaken by the city government were justified, thereby validating the petitioners’ separation from service.

RULING

The Supreme Court affirmed the Court of Appeals’ decision with modification, upholding the validity of the separations based on a bona fide abolition of positions due to financial necessity. The Court ruled that abolition of a position in good faith for reasons of economy is valid and does not constitute the removal prohibited by the Constitution. It found no error in the appellate court’s factual conclusion that the city faced a genuine financial crisis, as evidenced by substantial overdrafts and unpaid salaries, which justified the retrenchment.
The Court addressed the petitioners individually. For Filomeno Abrot, his position as Municipal Board Secretary was terminable at the mayor’s pleasure under the city charter, negating any claim to security of tenure. For Tomas Hilaga Jr., the abolition of his City Development Officer position was upheld as done in good faith. For Erlinda Castillo and Francisco Seloterio, their temporary appointments meant they lacked security of tenure. However, for Gorgonio Torrechilla, Noel Geollegue, and Elias Dequina, the Court modified the ruling, ordering the city to pay them back salaries from their dismissal dates until June 30, 1968, as their layoffs preceded the formal budget abolition of their positions. Florentino Pagunsan was excluded from the judgment for failure to prosecute his case. The decision underscores that financial distress, when proven, constitutes a valid ground for the good faith abolition of positions.