G.R. No. L-8907 April 30, 1957
JOSE L. LOPEZ, petitioner-appellee, vs. THE BOARD OF DIRECTORS AND GENERAL MANAGER OF THE NATIONAL MARKETING CORPORATION, respondents-appellants.

FACTS

Petitioner Jose L. Lopez was a government employee, a lawyer and a first grade civil service eligible with over 35 years of service. He was appointed Chief of the Research and Standardization Section of the Philippine Relief and Trade Rehabilitation Administration (PRATRA) on April 10, 1950. On October 3, 1950, President Elpidio Quirino promulgated Executive Order No. 350, dissolving the PRATRA and the National Rice and Corn Corporation (NARIC) and creating the Price Stabilization Corporation (PRISCO). Section 12 of the Order transferred the personnel of the dissolved corporations to PRISCO, provided they were reappointed within sixty days from the Order’s effectivity; those not reappointed would be considered separated. Lopez was not reappointed within the sixty-day period but continued in office until December 31, 1950, when PRISCO’s Administrative Order No. 106 laid him off, effective January 1, 1951, following a reorganization that abolished his section and created a new one. He received a sum of money, contested as either lay-off gratuity or commutation of leave credits. After his requests for reinstatement were denied, the Commissioner of Civil Service and the Administrator of Economic Coordination issued endorsements directing his reinstatement, citing civil service rules requiring demotions or separations to begin with temporary employees and those with the lowest efficiency ratings, and giving preference to permanent appointees with good ratings. Due to non-compliance, Lopez filed a mandamus petition on May 8, 1953. During the proceedings, on October 7, 1953, he was reappointed as a Special Assistant in PRISCO. The Court of First Instance of Manila granted his petition, ordering his reinstatement and payment of back salaries. Meanwhile, Republic Act No. 1345 , approved on June 17, 1955, dissolved PRISCO and created the National Marketing Corporation (NAMARCO), transferring PRISCO’s assets, liabilities, and personnel obligations to NAMARCO. The Supreme Court allowed the substitution of PRISCO’s board and general manager with those of NAMARCO as respondents-appellants.

ISSUE

Whether the lower court erred in granting the writ of mandamus to compel the reinstatement of Jose L. Lopez and the payment of his back salaries.

RULING

The Supreme Court reversed the decision of the lower court and dismissed the petition. The Court held that the mandamus suit became moot and academic upon the dissolution of PRISCO by Republic Act No. 1345 . The Act extinguished PRISCO’s corporate existence and transferred its functions, assets, and liabilities to NAMARCO. Since PRISCO, the entity ordered to reinstate Lopez, ceased to exist, the writ of mandamus could no longer be enforced against it. The Court further ruled that the new law did not provide for the reinstatement of employees separated from PRISCO; instead, it outlined a scheme for retirement or gratuity. Lopez’s acceptance of the reappointment as Special Assistant on October 7, 1953, constituted a novation of his original cause of action, barring his claim for back salaries from January 1, 1951. The Court also noted that the preliminary injunction issued by the lower court was improperly granted, as Lopez had not shown a clear legal right to reinstatement at that time, given the ongoing validity of his lay-off. The writ of preliminary injunction was dissolved.