ANDRES CASTILLO, ETC., ET AL., PETITIONERS, VS. HON. FROILAN BAYONA, ETC., AND ESPERANZA ARZAGA-GALLARDO, RESPONDENTS.

This is a petition for certiorari and prohibition filed by Andres V.
Castillo in his capacity as Deputy Governor of the Central Bank of the
Philippines, Ruben Ledesma, Amado R. Briones and Jesus C. Razon, in
their capacity as members of the committee created under Monetary Board
Resolution No. 608, to restrain respondent Judge Froilan Bayona,
presiding over Branch I of the Court of First Instance of Manila, from
taking further action in Civil Case No. 34956, and to annul his orders
dated January 23, March 24 and August 28, all of the year 1958.
Esperanza Arzaga-Gallardo, later on referred to as Esperanza, is
included as one of the respondents.

The petition was given due course; respondents were required to
answer it; and after depositing a cash bond in the sum of P500.00,
respondent Judge was enjoined not to take any action in Civil Case No.
34956, until further orders from this Tribunal.

The facts in this case as gathered from the record are as follows:
Respondent Esperanza, presently employed in the Central Bank as
assistant drug consultant in the Office of Exchange Tax Administration,
was prior to December 7, 1956, a processor in said office with the duty
of investigating and screening thoroughly applications for refund of
the 17 per cent special excise tax levied on foreign exchange
(Memorandum of Petitioner, p. 8). In view of reports received by the
Monetary Board (Appendices Q, P, and N attached to Petitioner’s
Memorandum) to the effect that respondent Esperanza and other employees
in the Central Bank had committed irregularities in connection with the
processing of applications for refund, the Monetary Board, by
Resolution No. 608, dated May 15, 1927, created a fact finding
committee composed of herein petitioners Ledesma, Briones and Razon, to
investigate the supposed tax refund anomalies (Annex 1 to Appendix D).
On July 17, 1957, respondent Esperanza, one of those employees in the
Central Bank mentioned in the reports aforementioned, was advised in
writing to submit an explanation within seven days why disciplinary
action should not be taken against her for negligence in the
performance of her duties in connection with the processing, of
applications for tax refund. She refused to submit an explanation
because, according to her, the charges against her were not specific
and what is more, the committee had no jurisdiction to conduct the
investigation. In view of the insistence of the Deputy Governor
Castillo that she submit her explanation and appear before the
committee personally or by counsel to present her defense (Annexes I
and L to Appendix A), Esperanza filed against herein petitioners as
respondents, a petition for prohibition with preliminary injunction ex parte
with Branch I of the Court of First Instance, presided by respondent
Judge Bayona (Civil Case No. 34956). In her petition, she alleged that
Deputy Governor Castillo, herein petitioner, had sent her a letter
dated July 17, 1957, demanding the explanation already mentioned; that
in answer to said demand, she had requested the following:

“* * * (1) “What was the exact nature of the actions
taken by my clients which constitute what you term ‘gross negligence’?;
(2) what are the alleged falsified documents and please state with
particularity and definiteness the acts constituting the fraud?; (3)
how did you arrive at the conclusion that these documents are
forgeries?; (4) does the Auditor, whose report you adopted, have
academic background in pharmacy and chemistry to determine scientific
issues?; (5) has the decision of the Central Bank on these applications
been revoked?; and (6) under what Civil Service Rules have your letters
been predicated?

“The application mentioned in your letter
being actionable documents, it is respectfully requested that my
clients be furnished with photo static copies of said applications and
be allowed a period of ten (10) days within which to examine the
originals and at least fifteen (15) days from the date of such
examination to answer your charges. It is of the utmost urgency that my
clients review these applications because the action they took thereon
was made a long time ago and they cannot rely on memory for an answer.”
(Annex B to Appendix A);

that in reply to said request, respondent Castillo in his letter of
August 2, 1957, said that the information contained in his letter of
July 17, 1957 more than satisfied her request and that it could serve
her in the preparation of her answer; so, on August 11, 1957, Esperanza
wrote respondent Castillo that she could not submit an explanation in
view of his failure to give her the information she had requested; that
on November 18, 1957, respondent Castillo directed her to appear before
the committee created by Monetary Board Resolution No. 608 on November
21, 1957, so that she may be given an opportunity to present her
defense, either personally or through counsel, to examine the papers
and documents pertaining to her case and to be confronted with
witnesses; and that on November 21, 1957, she entered her appearance
with counsel and questioned the jurisdiction of the committee to
investigate her. She likewise alleged in her petition that in December,
1957, respondent Castillo voluntarily withheld the Christmas bonus due
to her.

Respondent Judge gave due course to Esperanza’s petition and by his
order of January 23, 1958, required petitioner to answer, at the same
time, issuing a writ of preliminary injunction ex parte.

On February 13, 1958, herein petitioners, as respondents in that
case, filed their answer with a motion to dismiss and/or to dissolve
the injunction. They alleged that the petition stated no cause of
action; and that the committee had no juridical personality or legal
capacity to be sued.

In an order dated March 24, 1958, respondent Judge dismissed herein
petitioner’s motion to dismiss. A motion for reconsideration was
likewise overruled by an order dated August 28, 1958. It was to set
aside the three orders of respondent Judge of January 23, 1958, giving
due course to the petition for prohibition filed by respondent
Esperanza and requiring herein petitioners to answer it, of March 24,
1958 dismissing petitioner’s motion to dismiss, and of August 28, 1958,
denying the motion for reconsideration, and to restrain respondent from
taking further action in Civil Case No. 34956, that the present
petition was filed. In support of their present petition for certiorari
and prohibition, petitioners take the stand that under the broad powers
granted to it by Section 14 of Republic Act No. 265, the Monetary Board
is authorized to create a committee or designate an officer to conduct
an administrative investigation of any act of irregularity in the
Central Bank. Said Section 14 reads thus:

“SEC. 14. Exercise of authority.—In order to exercise the authority granted to it under this Act the Monetary Board shall:

“(a)
Prepare and issue such rules and regulations as it considers necessary
for the effective discharge of the responsibilities and exercise of the
powers assigned to the Monetary Board and to the Central Bank under
this Act;

“(b) Direct the management, operations and
administration of the Central Bank and prepare such rules and
regulations as it may deem necessary or convenient for this purpose;

“(c)
On the recommendation of the Governor, appoint, fix the remunerations,
and remove all officers and employees of the Central Bank, with the
exception of the Governor; * * *.”

On the other hand, respondent Esperanza contends that being a civil
service employee, she should be governed by the civil service law and
regulations, pursuant to Section 132 of the Central Bank Charter
(Republic Act No. 265), which reads:

“No officer or employee of the Central Bank subject
to the Civil Service Law and Regulations shall be removed or suspended
except for cause as provided by law.”;

and Section 695 of the Revised Administrative Code, which provides that:

“SEC. 695. Administrative Discipline of Subordinate Officers and Employees.—The
Commissioner of Civil Service shall have exclusive jurisdiction over
the removal, separation and suspension of subordinate officers and
employees in the Civil Service and over all other matters relating to
the conduct, discipline, and efficiency of such subordinate officers
and employees, and shall have exclusive charge of all formal
investigations against them. * * *”

The conclusion the respondent urges is that the committee created by
the. Monetary Board to investigate her not having been appointed by the
Commissioner of Civil Service himself, the said committee was not
legally created, and so had no jurisdiction to investigate her.

Reading the two legal provisions invoked by respondent Esperanza and
Section 14 of Republic Act No. 265, relied on by petitioner, we find
that the latter provision of law (Section 14, Republic Act No. 265),
particularly, paragraph (c) is sufficiently broad to vest the Monetary
Board with the power of investigation and removal of its officials,
except the Governor thereof. In other words, the Civil Service Law is
the general legal provision for the investigation, suspension or
removal of civil service employees, whereas Section 14 is a special
provision of law which must govern the investigation, suspension or
removal of employees of the Central Bank, though they be subject to the
Civil Service Law and Regulations in other respects. We must not lose
sight of the fact that the Central Bank is called upon to administer
the monetary and banking business in the country (Section 2, Republic
Act No. 265); and its powers and functions are exercised by the
Monetary Board. So, it is but just and reasonable that in order to
perform the functions assigned to it by law, it be given broad powers
in issuing such rules and regulations as it considers necessary to
direct and effect the operation and administration of the Central Bank,
and with the recommendation of the Governor, the authority to appoint,
fix the remunerations, and remove all officials and employees of the
Central Bank, with the exception of the Governor, which power to remove
naturally includes the authority to investigate.

But assuming for a moment that employees of the Central Bank were
governed by Section 695 of the Revised Administrative Code in that the
Commissioner of Civil Service should have exclusive jurisdiction over
their removal, separation and suspension, nevertheless, inasmuch as
respondent Esperanza was not being removed by the committee but only
was being subjected to an investigation by it, the committee would
still have jurisdiction.

Executive Order No. 370, dated September 29, 1941 (40 Off. Gaz.,
2787) provides that administrative proceedings may be commenced against
a government officer or employee by the head or chief of a bureau or
office concerned. It is only after the investigation that the record of
the case, with comment and recommendation of the investigator is
forwarded to the Commissioner of Civil Service. So, again, under the
view urged by respondent Esperanza, the Monetary Board could still
investigate respondent Esperanza.

Furthermore, under Republic Act No. 2260, known as the Civil Service Act of 1959, Section 16 (i) changed the jurisdiction of the Civil Service Commissioner from “exclusive” to “final”. We reproduce Section 16 (i) and (j) for purposes of reference:

“SEC. 16. Powers and Duties of the Commissioner of Civil Service.—It shall be among the powers and duties of the Commissioner of Civil Service—

* * * * * * *

(i) Except as otherwise provided by law, to have final authority
to pass upon the removal, separation and suspension of all permanent
officers and employees in the competitive or classified service and
upon all matters relating to the conduct, discipline, and efficiency of
such officers and employees; and to prescribe standards, guidelines and
regulations governing the administration of discipline.

(j)
To hear and determine appeals instituted by any person believing
himself aggrieved by an action or determination of any appointing
authority contrary to the provisions of the Civil Service law and
rules, and to provide rules and regulations governing such appeals, and
he may make such investigations or inquiries into the facts relating to
the action or determination appealed from as may be deemed advisable
and may affirm, review, or modify, such action or determination, and
the decision of the Commissioner shall be final. * * *” (Italics
supplied).

Again, even according to respondent’s stand, the Monetary Board
would still have jurisdiction to investigate her, either to suspend or
remove her or otherwise take disciplinary action against her as the
result of their investigation may warrant, subject to the final authority of the Commissioner of Civil Service on appeal to him by the aggrieved party.

In the case of Rafael Pastoriza vs. Superintendent of Schools, et al., supra, p. 216, this Tribunal said:

“Pursuant to Executive Order No. 370 a complaint
against an officer or employee of the government is to be filed with
the head or chief of the bureau or office where he is working and the
officer or employee concerned shall be required to answer the complaint
within 72 hours after receipt thereof. If the officer or employee
elects to be heard on the charges, a hearing will be held by the chief
or head of office who shall, after said hearing, forward to the
Commissioner of Civil Service the records of the case with his comment
and recommendation. In other words, the Commissioner of Civil Service
has absolutely nothing to do with or has no participation whatever in
the investigation from the time the charges are filed until the
termination. The commissioner takes cognizance of the case only after
the investigation is finished, when he receives the records. In effect,
said executive order completely divests the commissioner of his
‘exclusive’ power of investigation. * * *.”

And as to the authority of the Monetary Board to conduct an
administrative investigation of its employees, considering that said
Monetary Board may be regarded as a department head, we have Section 79
(c) of the Revised Administrative Code which reads:

“The department head may order the investigation of
any act or conduct of any person in the service of any bureau or office
under his department and in connection therewith may appoint a
committee or designate an official or person who shall conduct such
investigation, and such committee, official, or person may summon
witnesses by subpoena and subpoena duces tecum, administer oath, and
take testimony relevant to the investigation.”

As regards the contention of respondent that she was not given
sufficient notice and information of the charges filed against her, it
is true that the charges could have been made more specific and
detailed. However, she was given seven days within which to make the
explanation required, and was informed that at the investigation, she
would be allowed either personally or through counsel, to examine the
papers and documents pertinent to the case. If she needed more time to
prepare her defense after examining said papers and documents, she
could have asked for postponement of the investigation. But instead,
she immediately resorted to the Court of First Instance.

In view of the foregoing, we are of the opinion that the committee
created to investigate respondent was validly constituted by Resolution
No. 608, and that in proceeding or trying to proceed with said
investigation, it did not act in excess or with abuse of discretion.
Consequently, the present petition for certiorari and prohibition is
granted and the writ of preliminary injunction heretofore issued is
hereby made permanent. Respondent Esperanza will pay the costs.

Paras, C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, Barrera, and Gutierrez David, JJ., concur.
Bengzon, J., took no part.