Case: Betoy vs.

the Board of Directors, NAPOCOR

October 4, 2011
By: Lj Babatuan

Reorganization of Public Office

A public office is created by the Constitution or by law or by an officer or tribunal to which the power to
create the office has been delegated by the legislature. The power to create an office carries with it the
power to abolish.
Abolition of a public office is usually done thru reorganization. Reorganization can involve the reduction of
personnel, consolidation of offices, or even abolition of positions by reason of economy or redundancy of
functions.
Reorganization however, must be done in good faith to be valid.
In this case, employees affected by the privatization of the NPC led by Betoy filed a petition directly to the
Supreme Court praying to declare the board resolutions providing for their termination with separation
benefits null and void. The petition basically questioned certain provisions of Rep. Act No. 9136 or the
Electric Power Industry Reform Act of 2001.
The Court in this case sustained the reorganization of the NPC involving the reduction of personnel,
consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. The court
did not lend credence to the allegation of the petitioner that the reorganization was tainted with bad faith.
Facts:
On June 8, 2001, the EPIRA Electric Power Industry Reform Act of 2001 (EPIRA) was enacted by Congress
for the restructuring of the electric power industry and privatization of the assets of the National Power
Corporation (NPC).
Section 63 of the EPIRA provides for separation benefits to officials and employees who would be affected
by the restructuring of the electric power industry and the privatization of the assets of the NPC.
The NAPOCOR Board passed a Resolution which, among others, resolved that all NPC personnel shall be
legally terminated on January 31, 2003 and shall be entitled to separation benefits.
As a result of the foregoing NPB Resolutions, petitioner Enrique U. Betoy, together with more than eight
thousand of his co-employees from the NPC was terminated.
Hence, herein petition for certiorari before SC.
Issue:
Is the NPC Board Resolution null and void for being violative of their Constitutional rights?
Ruling:

Anent the question of the constitutionality of Section 63 of RA 9136, as well as Rule 33 of the IRR, this
Court finds that the same is without merit.
A reorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by
reason of economy or redundancy of functions. It could result in the loss of ones position through removal
or abolition of an office. However, for a reorganization for the purpose of economy or to make the
bureaucracy more efficient to be valid, it must pass the test of good faith; otherwise, it is void ab initio.
It is undisputed that NPC was in financial distress and the solution found by Congress was to pursue a
policy towards its privatization. The privatization of NPC necessarily demanded the restructuring of its
operations. To carry out the purpose, there was a need to terminate employees and re-hire some
depending on the manpower requirements of the privatized companies. The privatization and restructuring
of the NPC was, therefore, done in good faith as its primary purpose was for economy and to make the
bureaucracy more efficient.