PHILIPPINE NATIONAL BANK (PNB), NORMA A. VICTORINO, DIOSDADO SOLIDUM, JR., DANTE FAJARDO, AND GERMAN FABELLA, THE LATTER IN THEIR OFFICIAL CAPACITIES AS OFFICERS OR EM­PLOYEES O…

Philippine National Bank versus Virtudazo

The Case

This is a special civil action of certiorari brought by the Philippine National Bank and several of its officers against Primitivo Virtudazo, a credit investigator of the Bank's Dipolog City Branch who was dismissed from the service. The Bank asks the Supreme Court to nullify the trial court's refusal to dismiss Virtudazo's complaint for reinstatement and damages. The case matters because it is the Court's clearest application of the "cardinal primary rights" of due process in administrative proceedings, first laid down in Ang Tibay versus the Court of Industrial Relations, and because it marks the limits of summary dismissal under the civil service law.

Procedural History

Virtudazo filed a complaint for reinstatement and damages with the Court of First Instance at Dipolog City against the Philippine National Bank and certain of its officers. The defendants answered, raising failure to exhaust administrative remedies and insisting they had acted in accordance with law. After due proceedings, the trial court issued a pre-trial order observing that a formal investigation should have been, but was not, conducted; that the preliminary fact-finding inquiry was held secretly and without Virtudazo's presence, depriving him of cross-examination; and that he was never served a copy of the decision. The Bank moved twice for reconsideration, and both motions were denied. The Bank and its co-defendants then came to the Supreme Court by petition for certiorari, which the Court gave due course, to nullify and set aside the trial court's resolution.

Facts

In January 1978, Norma A. Victorino, Assistant Vice President and Manager of the Personnel Administration Department, served on Virtudazo a Memorandum of Specification of Charges for dishonesty and violation of bank rules, arising from the alleged falsification of his overtime record and the alleged unauthorized punching of his bundy clock time card. Virtudazo filed a verified answer denying the charges point by point, explaining that the discrepancy was due to a mechanical defect in the time clock caused by electric power interruptions, and that he never authorized a co-employee to punch his card.

Two months later, personnel examiners Diosdado Solidum, Jr. and Dante Fajardo conducted a fact-finding inquiry at Dipolog City. They interviewed four bank employees in Virtudazo's absence. Virtudazo asked to confront and cross-examine them or at least to be given copies of their statements; he was told this was merely a fact-finding inquiry and that a formal investigation would follow. He asked for time to engage counsel, was given little, and was interrogated by examiners while represented by a lawyer who had no prior notion of the investigation. His request that certain persons be called as his witnesses was again deferred to a formal investigation that never came. The fact-finding team itself recommended a formal investigation.

Instead, Virtudazo received a memorandum informing him that under a Board resolution he had been found guilty and dismissed, without benefits, effective upon receipt. His motion for reconsideration was denied by the Board. His counsel repeatedly asked for a copy of the Board's decision so he could appeal to the Civil Service Commission or go to court, but the Bank never furnished it, even after personal visits to the main office.

Issues

• Whether or not the proceedings that led to Virtudazo's dismissal accorded him the cardinal primary rights of due process in administrative proceedings.
• Whether or not Section 40 (a) of Presidential Decree No. 807, allowing summary proceedings where the charge is serious and the evidence of guilt is strong, justified the dismissal without a formal investigation.
• Whether or not Virtudazo's failure to exhaust administrative remedies barred his judicial action.

Applicable Provisions

Section 40 (a) of Presidential Decree No. 807, invoked by the Bank to justify summary dismissal, provides:

Section 40. Summary Proceedings. No formal investigation is necessary and the respondent may be immediately removed or dismissed if any of the following circumstances is present: (a) When the charge is serious and the evidence of guilt is strong.

The Court found this provision inapplicable on the facts and turned instead to Section 38 of the same decree.

Section 38 (a) of Presidential Decree No. 807 provides:

Section 38. Procedure in Administrative Cases Against Non-Presidential Appointees. (a) Administrative proceedings may be commenced against a subordinate officer or employee by the head of department or office of equivalent rank, or head of local government, or chief of agencies, or regional directors, or upon sworn, written complaint of any other persons.

This fixes the manner of commencing the administrative case against a non-presidential appointee such as Virtudazo.

Section 38 (c) of Presidential Decree No. 807 provides:

(c) Although a respondent does not request a formal investigation, one shall nevertheless be conducted when from the allegations of the complaint and the answer of the respondent including the supporting documents, the merits of the case cannot be decided judiciously without conducting such an investigation.

This is the provision the Court held properly applicable, because Virtudazo's answer traversed the charges and raised defenses that could not be judged without a hearing.

Ruling

On the first issue, the Court held that the proceedings failed the cardinal primary rights of due process. Virtudazo was not given a copy of the judgment dismissing him, so he was not informed of the issues involved and the reason for the decision; the evidence on which it rested was not disclosed to him; and he was not accorded an opportunity to present his case and submit evidence. The proceedings were therefore pronounced null and void.

On the second issue, the Court held Section 40 (a) inapplicable. The Bank's own fact-finders, despite finding prima facie flagrant violations, recommended a formal investigation precisely because Virtudazo's answer might be substantiated and destroy the prima facie evidence of guilt. That recommendation was inconsistent with the Bank's later claim that no formal hearing was necessary. The Court held that Section 38 (c) governed, and quoted it as above.

On the third issue, the Court held that the failure to exhaust administrative remedies did not bar the action, because Virtudazo had been denied due process. The case fell within recognized exceptions to the doctrine: where the administrative action is so patently illegal as to be deemed done without or in excess of jurisdiction, or where the question involved is purely a legal one.

Doctrine

Parties in administrative or quasi-judicial proceedings are entitled to the cardinal primary rights of due process: the right to a hearing, including the right to present one's case and submit evidence; the tribunal must consider the evidence presented; the decision must have something to support itself; the evidence must be substantial; the decision must rest on evidence presented at the hearing or at least contained in the record and disclosed to the parties; the tribunal must act on its own independent consideration of law and fact; and the decision must be rendered so that the parties can know the issues involved and the reason for the decision.

Summary dismissal under Section 40 (a) of Presidential Decree No. 807 is unavailable where the employee's answer traverses the charges and the merits cannot be decided judiciously without a formal investigation; Section 38 (c) then requires one.

The doctrine of exhaustion of administrative remedies does not bar judicial relief where the administrative proceedings denied due process, or where the action is patently illegal, or where the question is purely legal.

Disposition

The petition for certiorari was denied for lack of merit, with costs against the petitioners, so Virtudazo prevailed and the trial court's resolution stood.

Remember This

Memorize the line that summary proceedings cannot substitute for the cardinal primary rights of due process where the answer raises matters that require a hearing. Examiners use this case on the seven cardinal primary rights from Ang Tibay, on Section 40 (a) versus Section 38 (c) of Presidential Decree No. 807, and on the due process exception to exhaustion of administrative remedies.