ESPERO SANTOS SALAW, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, ASSOCIATED BANK AND/OR JOSE R. TENGCO, CHAIRMAN OF THE BOARD, ROLLIE TUAZON, MANAGER, RESPONDENTS.

Salaw versus Associated Bank

The Case

This is a petition for review on certiorari brought by Espero Santos Salaw against the National Labor Relations Commission, the Associated Bank, and its officers, arising from his dismissal from employment. Salaw asks the Supreme Court to set aside the decision of the National Labor Relations Commission, which had reversed the labor arbiter and upheld his dismissal. The case matters because it is a clean illustration of the twin requirements of due process in dismissal — substantive and procedural — and of how a confession extracted without the assistance of counsel cannot be made the sole basis for terminating an employee.

Procedural History

Salaw filed a complaint for illegal dismissal against the bank and its officers before the National Labor Relations Commission. Labor Arbiter Benigno C. Villarente, Jr. rendered a decision declaring the dismissal illegal and ordering reinstatement with backwages and benefits. The private respondents appealed to the National Labor Relations Commission, which reversed the labor arbiter and dismissed the case for lack of merit. Salaw moved for reconsideration, but the motion was denied. He then came to the Supreme Court by petition for review on certiorari.

Facts

Espero Santos Salaw was employed by the private respondents in September 1967 as a credit investigator and appraiser. His duties included inspecting, investigating, appraising, and identifying the company's foreclosed assets, giving valuation to its real properties, and verifying the genuineness and encumbrances of titles of properties mortgaged to the respondents.

In November 1984, the Criminal Investigation Service of the Philippine Constabulary extracted from Salaw, without the assistance of counsel, a sworn statement making it appear that he and a co-employee had sold twenty sewing machines and electric generators foreclosed by the bank for 60,000 pesos and divided the proceeds equally between them. The bank manager later asked Salaw to appear before the bank's Personnel Discipline and Investigation Committee. When Salaw signified his readiness to appear, the manager sent him a letter requesting him to come on a set date and time, expressly "without counsel or representative."

On April 1, 1985, Salaw was terminated effective March 27, 1985, for alleged serious misconduct or willful disobedience and fraud or willful breach of trust. He then filed a complaint for illegal dismissal and submitted an affidavit recanting his sworn statement before the Criminal Investigation Service.

Issues

• Whether or not the dismissal of the petitioner by the private respondents was legally justified.
• Whether or not the dismissal complied with the substantive and procedural requirements of due process under the Labor Code.
• Whether or not the sworn statement extracted from the petitioner without the assistance of counsel may be admitted in evidence against him as basis for dismissal.

Applicable Provisions

Section 5 of Rule XIV, Book V of the Implementing Rules and Regulations of the Labor Code provides:

The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.

This is the procedural standard the bank violated when it required Salaw to appear without counsel or representative.

Section 12, paragraph 1, Article III of the 1987 Constitution provides:

Any person under investigation for the commission of an offense shall have the right to have competent and independent counsel preferably of his own choice. If the person cannot afford the service of counsel, he must be provided with one. These rights cannot be waived except in writing and in the presence of counsel.

This guarantees the right to counsel even in administrative proceedings, which the bank denied to Salaw.

Section 12, paragraph 3, Article III of the 1987 Constitution provides:

Any confession or admission obtained in violation of this or the preceding section shall be inadmissible in evidence against him.

This renders the sworn statement extracted from Salaw without counsel inadmissible as evidence against him.

Ruling

On the first issue, the Court held that the dismissal was not legally justified. Under the Labor Code, the requirements for lawful dismissal are two-fold: the substantive and the procedural. Not only must the dismissal be for a valid or authorized cause, but the rudimentary requirements of due process — notice and hearing — must also be observed. One does not suffice; without their concurrence, the termination is illegal.

On the second issue, the Court found that Salaw was terminated without the benefit of due process. The bank convened its investigating committee, but when Salaw asked to refute the allegations, the hearing was set "without counsel or representative." The Court stressed that the right to counsel and to due process are fundamental rights guaranteed to any person under investigation, whether the proceeding is administrative, civil, or criminal. The investigation violated the rule requiring that the worker be afforded ample opportunity to be heard and to defend himself with the assistance of his representative.

On the third issue, the Court held that the sworn statement extracted by the Criminal Investigation Service without the assistance of counsel, and made the sole basis for dismissal, could not be admitted in evidence against Salaw. Since the finding of guilt rested on nothing else, it had no leg to stand on. A decision with absolutely nothing to support it is a nullity. The Court also noted the undue haste of the dismissal, reiterating that due process must not be subordinated to expediency.

Doctrine

For a dismissal to be lawful, both the substantive and the procedural requirements must concur: a valid or authorized cause, and observance of notice and hearing. The right to counsel and to due process applies to any person under investigation, even in administrative proceedings, and a confession or admission obtained in violation of these rights is inadmissible in evidence. A dismissal resting solely on such an inadmissible admission is illegal, entitling the employee to reinstatement without loss of seniority rights and to backwages from the time of illegal dismissal until actual reinstatement.

Disposition

The Court set aside the decision of the National Labor Relations Commission and reinstated the decision of the labor arbiter, holding the dismissal illegal and awarding reinstatement with backwages and benefits.

Remember This

Memorize this line: the twin requirements of notice and hearing are essential elements of due process in dismissal, and neither can be dispensed with. Examiners use this case to test the right to counsel in administrative investigations and the inadmissibility of confessions obtained without counsel as basis for dismissal.