Facts:

On June 8, 2001, the EPIRA Electric Power Industry Reform Act of 2001 (EPIRA) was enacted by Co
ngress for the restructuring of the electric power industry and privatization of the assets of the Na
tional 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 s
hall 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 one’s position thro
ugh removal or abolition of an office. However, for a reorganization for the purpose of economy o
r 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 purs
ue a policy towards its privatization. The privatization of NPC necessarily demanded the restructuri
ng of its operations. To carry out the purpose, there was a need to terminate employees and re-hi
re 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 ec
onomy and to make the bureaucracy more efficient.

Compiled by: Jay Anthony M. Bantugan