G.R. No. L-20818 - Guillergan vs. Ganzon

Petitioners were laborers or employees in the unclassified service of the City of Iloilo, performing roles such as market sweeping, slaughterhouse work, and supervision as market cleaning capataces.
Their tenure of service ranged from nine (9) to twenty-five (25) years, establishing a long history of employment and experience in their respective positions.

On July 12, 1955, petitioners—together with 13 other similar employees—filed civil case No. 3764 in the Court of First Instance of Iloilo.
The primary relief sought was to compel the reinstatement of petitioners to their positions from which they were allegedly separated or dismissed, as well as to secure the payment of their salaries during their period of separation.
The respondents, comprising the Mayor, the Treasurer, and the Veterinarian of Iloilo City, contended that petitioners were not civil service eligibles due to their daily-paid status, thereby justifying their removal.

On March 15, 1956, the lower court rendered a judgment in favor of petitioners—excluding three who voluntarily dismissed their claims—affirming the reinstatement of the remaining eleven petitioners as permanent employees and laborers of Iloilo City.
In addition, the decision mandated that petitioners’ salary items, which had been previously established, were to be restored in the city's budget and that back salaries were to be paid during their separation from service.

Despite the precedent judgment, the salary items corresponding to the petitioners were not included in the Iloilo City budget for the fiscal year 1960-1961.
Petitioners sought relief from the Secretary of Finance to render the removal of these items inoperative. Their request, however, was denied on the basis that the matter was appropriate for judicial resolution rather than administrative action.

Dissatisfied with the exclusion of the salary items and the continued non-reinstatement, petitioners instituted an action for mandamus against the City Mayor, the Municipal Board, the City Treasurer, and the City of Iloilo.
The relief prayed included:

Respondents argued that the elimination of the petitioners’ budget items was the result of measures taken for economic reasons—specifically, to balance the budget and fund the free elementary education program.
They further averred that the petitioners were inefficient in their duties and noted that the City was contemplating contracting out the market cleaning operations to private individuals.
The lower court, however, found these arguments to be mere pretexts concealing a politically motivated elimination intended to enable the placement of politically affiliated individuals in the vacated positions.

The court concluded that the elimination of the petitioners’ items from the budget was “politically inspired,” aiming to replace them with new appointments favorable to the respondents.
Consequently, the court declared the elimination of the salary items illegal and void, thereby affirming the petitioners’ entitlement to reinstatement and back pay.

Whether the lower court erred in holding the City of Iloilo jointly liable with the other respondents for the back salaries of the petitioners.

Whether municipal corporations, like the City of Iloilo, enjoy the same immunity as the state regarding the performance of governmental functions unless liability is expressly imposed by statute.
Whether the elimination of the petitioners’ salary items from the city budget, purportedly undertaken for economic or reformative reasons, was legally justified or merely a politically motivated maneuver.
Whether judicial intervention is proper in preventing actions that affect the employment rights of public servants, particularly in restoring reinstated positions and enforcing the payment of back salaries.