JR Hauling Services and Mapue vs. Solamo

Substantial evidence — the quantum of proof required in labor proceedings — may be satisfied by notarized affidavits of co-employees attesting to an employee's misconduct, even if the affiants were not presented for cross-examination, because technical rules of evidence do not control proceedings before labor tribunals; however, where just cause for dismissal exists but the employer fails to observe the twin-notice requirement of procedural due process, the dismissal is upheld but the employer is liable for nominal damages.

JR Hauling Services is a domestic corporation engaged in the hauling and delivery of broiler chickens to clients such as Magnolia Corporation and San Miguel Foods, Inc. Respondents were former drivers/helpers of JR Hauling, tasked with transporting live chickens from broiler farms in various provinces to the processing plant of JR Hauling's clients in Hermosa, Bataan. They were paid P300 per trip and were required to make two trips per day. In the course of deliveries, respondents would secure excess broilers from the farms to replace those that died in transit, ensuring the quantity specified in the job orders was met upon delivery to the processing plant.

JR Hauling Services, a domestic corporation, is engaged in the business of hauling and delivering broiler chickens to clients such as Magnolia Corporation and San Miguel Foods, Inc. (SMFI). Respondents — Gavino Solamo, Ramil Jerusalem, Armando Parungao, Rafael Caparos, Jr., Noriel Solamo, Alfredo Salangsang, Mark Parungao, and Dean V. Calvo — were employed as drivers/helpers of JR Hauling at various dates from October 2003 to August 2010, each paid P300 per trip. As drivers/helpers, they were tasked to transport live chickens from broiler farms located in Pangasinan, Tarlac, Batangas, Bulacan, Zambales, or La Union to the processing plant of JR Hauling's clients in Hermosa, Bataan. JR Hauling issued "receiving slips" or job orders containing delivery details, including the number of live chickens to be loaded and the delivery route. Because broilers often died in transit, respondents would secure additional broilers from the farms as replacements to ensure the quantity under the job order was delivered.

Respondents were required to make two trips per day, earning P600 per day if both were completed. They averred, however, that because the broiler farms were located in remote areas, they could on average accomplish only one trip per day, earning P300 per day. They further alleged that from the time they were engaged, they were not paid 13th month pay, holiday pay, premium pay for holiday and rest day, and Service Incentive Leave (SIL) pay. On April 3, 2011, respondents claimed that JR Hauling dismissed them without notice, hearing, or investigation, when management allegedly displayed their pictures at the gate and barred them from entering the company premises.

Petitioners countered that respondents had incurred shortages in their broiler deliveries — 371 pieces in February 2011 and 377 pieces in March 2011 — and presented a summary of short broilers delivery supposedly issued by SMFI. Upon further investigation, petitioners discovered that respondents, without JR Hauling's knowledge or consent, were committing anomalous transactions involving the sale of excess broilers and crates in Concepcion, Tarlac. Petitioners presented the affidavits of Oscar Mapue (JR Hauling's manager), Pedro (a helper of Mapue), and respondents' co-employees — Acoba, Enriquez, Moratin, Fuentes, Espares, and Sanico — attesting to these unauthorized sales. The affidavits of Mapue, Pedro, Fuentes, and Espares also revealed that JR Hauling incurred shortages totalling 232 broiler crates, purportedly sold by respondents together with the excess broilers. Petitioners insisted that these transgressions amounted to serious misconduct and fraud or willful breach of trust and confidence, justifying dismissal. Petitioners also averred that respondents were field employees paid by results and therefore not entitled to the monetary claims sought.

Respondents, by way of rebuttal, argued that the documentary and testimonial evidence presented by petitioners were purely self-serving and hearsay, and therefore inadmissible. They maintained that admissions of culpability made by their co-employees were binding only on those who made them and inadmissible against respondents as hearsay. The Labor Arbiter found respondents illegally dismissed, noting that the summary of short broilers delivery was unsigned and unauthenticated, and that the sworn statements were inadmissible as hearsay. The NLRC reversed, relying on the co-employees' affidavits to find loss of trust and confidence. The Court of Appeals reversed the NLRC, holding that the affidavits were uncorroborated and did not constitute substantial evidence, and reinstated the LA Decision.

• Substantial Evidence of Just Cause: Petitioners argued that the affidavits of co-employees — particularly Acoba, Enriquez, Moratin, and Sanico — constituted voluntary admissions akin to declarations against interest and should not be dismissed as hearsay or self-serving. They maintained that substantial evidence existed to prove respondents' fraudulent acts constituted serious misconduct and willful breach of trust justifying dismissal.
• Liberal Application of Evidence Rules: Petitioners contended that the LA should not have confined himself to technical rules on evidence and should have liberally applied the same in deciding the case, consistent with the summary nature of labor proceedings.
• Multiple Just Causes, Not Limited to Breach of Trust: Petitioners asserted that their defenses were not limited to loss of trust and confidence but also included serious misconduct, fraud, and commission of a crime under Article 297 of the Labor Code.
• Abandonment Defense Not Raised: Petitioners argued that the CA erred in discussing abandonment as a defense, since such defense was never raised by petitioners before the LA or the NLRC.
• Nominal Damages, Not Reinstatement, for Procedural Lapse: Petitioners invoked Agabon vs. National Labor Relations Commission, arguing that where dismissal is founded on valid cause, the sanction for procedural lapse is indemnification or penalty (nominal damages), not reinstatement or backwages, thereby setting aside the earlier rule in Serrano vs. National Labor Relations Commission.
• Salary Differentials Unfounded: Petitioners claimed that respondents were receiving an average of P600 per day, exceeding the minimum daily wage rate of P308 under Wage Order No. RBIII-15 for non-agricultural establishments with total assets less than P30,000,000, and presented audited financial statements showing total assets of P24,049,905.51 for 2010.

• Inadmissibility of Affidavits: Respondents argued that the affidavits presented by petitioners were taken ex parte and therefore incomplete and inaccurate; that the statements therein were self-serving, hearsay, and unsubstantiated by concrete evidence; and that admissions of culpability made by co-employees were binding only on the confessants and inadmissible against respondents.
• Loss of Trust Inapplicable: Respondents contended that loss of trust and confidence under Article 297(c) of the Labor Code was not applicable to them because they did not hold positions of trust where fidelity to duty was expected.
• Regular Employees, Not Field Personnel: Respondents argued that they could not be considered field personnel because their hours of work could be easily determined with reasonable certainty and they were under constant supervision while performing their duties as drivers/helpers. They insisted they were regular employees entitled to SIL and other monetary claims.
• Illegal Dismissal: Respondents maintained that JR Hauling dismissed them without notice and hearing when management displayed their pictures at the gate and barred them from entering the company premises.

• Substantial Evidence for Valid Dismissal: Whether there is substantial evidence to prove that respondents were validly dismissed from employment.
• Salary Differentials: Whether respondents are entitled to their claims for payment of salary differentials.

• Substantial Evidence for Valid Dismissal: Yes, there is just cause for dismissal. The notarized affidavits of co-employees constitute substantial evidence of respondents' involvement in the unauthorized sale of excess broilers and broiler crates, constituting serious misconduct and willful breach of trust. However, petitioners failed to observe procedural due process, entitling respondents to P30,000 each as nominal damages.
• Salary Differentials: Yes. Petitioners failed to present evidence to disprove respondents' allegation that they earned only P300 per day, below the minimum wage under Wage Order No. RBIII-15. The award of salary differentials was upheld, subject to applicable prescriptive periods.

• Substantial Evidence for Valid Dismissal: The Court first established that it may review factual issues due to the conflicting findings between the LA and CA (finding illegal dismissal) and the NLRC (finding valid dismissal). The quantum of proof in labor proceedings is substantial evidence — "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion" — the least demanding in the hierarchy of evidentiary values. As to the alleged shortages in broiler deliveries, the Court agreed with the CA that the unsigned and unauthenticated summary of short broilers delivery had no evidentiary value; it did not identify respondents as the assigned drivers/helpers, did not even indicate JR Hauling as the responsible hauler, and was of uncertain origin. Moreover, the affidavits submitted by petitioners addressed only the unauthorized sale of excess broilers and crates, not the delivery shortages. The Court found no logical connection between the shortages and the unauthorized sale, since what respondents sold were excess broilers secured from the farms — meaning those broilers were not part of the job order deliveries and thus could not have caused short deliveries. As to the unauthorized sale, the Court held that the affidavits of co-employees constituted substantial evidence. The argument that ex parte affidavits are hearsay was rejected: Article 227 (formerly 221) of the Labor Code provides that rules of evidence prevailing in courts of law or equity shall not be controlling in labor proceedings, and the NLRC Rules allow submission of position papers with supporting affidavits in lieu of testimony. Notarized affidavits enjoy the presumption of regularity and are prima facie evidence of the facts stated therein. Respondents presented no evidence to rebut the affidavits — no proof of coercion on the affiants, no proof of falsehood, only bare denials. The affidavits of Acoba, the joint affidavit of Enriquez and Moratin (who admitted their own participation in the unauthorized sales), and the affidavit of Fuentes (attesting to respondents' participation in selling broiler crates) corroborated each other and constituted substantial evidence. The CA erred in requiring proof over and above substantial evidence. The Court then found that respondents' acts constituted serious misconduct — the transgression of an established rule of action, willful in character, relating to the performance of their duties, rendering them unfit to continue working. The unauthorized sale also constituted a breach of trust and confidence: although respondents were not managerial or supervisory employees, they held positions of responsibility as they were entrusted with the custody, delivery, and transportation of broilers and crates — the core business of JR Hauling. The nature of the work, not the job title, determines whether an employee holds a position of trust. The acts were clearly work-related, as respondents could not have perpetrated the sales were it not for their positions as drivers/helpers. However, petitioners admitted that no written notices were served on respondents. Their defense that respondents prevented service by not reporting for work was rejected: petitioners could have served notices personally or by courier/registered mail at respondents' last known addresses. Allegations not specifically denied are deemed admitted under Section 11, Rule 8 of the Rules of Court, which supplements the NLRC Rules. Because just cause existed but procedural due process was not observed, respondents were entitled to nominal damages of P30,000 each, in line with existing jurisprudence.

• Salary Differentials: The burden of proving payment of salary differentials rests on the employer, as all pertinent personnel files, payrolls, and records are in the employer's custody and control. Petitioners claimed respondents earned P600 per day, exceeding the P308 minimum wage under Wage Order No. RBIII-15 for non-agricultural establishments with total assets below P30,000,000, and presented audited financial statements showing total assets of P24,049,905.51. However, petitioners failed to present evidence to disprove respondents' allegation that they completed only one trip per day on average, earning P300 per day — below the minimum wage. The Court found no reversible error in the CA's award of salary differentials, subject to applicable prescriptive periods, and remanded the case to the LA for recomputation.

• Substantial Evidence Rule in Labor Cases — In labor proceedings, the quantum of proof required is substantial evidence, defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." This is the least demanding standard in the hierarchy of evidentiary values, below proof beyond reasonable doubt, clear and convincing evidence, and preponderance of evidence. The ground for dismissal of an employee need not be proven beyond reasonable doubt; requiring a higher quantum is contrary to law. The Court applied this doctrine by holding that the notarized affidavits of co-employees, corroborating each other and unrebutted by respondents, satisfied the substantial evidence threshold.

• Admissibility of Ex Parte Affidavits in Labor Proceedings — Technical rules of evidence prevailing in courts of law or equity do not control proceedings before labor tribunals. Under Article 227 (formerly 221) of the Labor Code, the LA and NLRC shall use every reasonable means to ascertain facts speedily and objectively without regard to technicalities. Affidavits submitted with position papers take the place of testimony and need not conform to technical rules of evidence. Notarized affidavits enjoy the presumption of regularity and are prima facie evidence of the facts stated therein; the burden to overcome this presumption lies on the party contesting the document. The Court applied this by giving evidentiary weight to the co-employees' affidavits despite respondents' objection that they were taken ex parte and thus hearsay.

• Serious Misconduct as Just Cause for Dismissal — Misconduct is "the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For serious misconduct to justify dismissal, it must be: (a) serious, (b) related to the performance of the employee's duties, and (c) show that the employee has become unfit to continue working for the employer. The Court found that respondents' unauthorized sale of excess broilers and crates satisfied all three elements.

• Loss of Trust and Confidence — Loss of trust and confidence as a ground for dismissal covers employees occupying positions of trust who are proven to have breached that trust. The act complained of must be work-related and show the employee is unfit to continue working. It is the nature of the work, not the job title, that determines whether an employee holds a position of trust. Employees entrusted with the custody, care, and protection of the employer's property — even if not managerial or supervisory — hold positions of responsibility from which greater fidelity is expected. The Court applied this by holding that respondents, as drivers/helpers entrusted with the custody and delivery of broilers and crates constituting JR Hauling's core business, held positions of trust, and their unauthorized sale of company property constituted a breach justifying dismissal.

• Procedural Due Process: Twin-Notice Requirement — The Implementing Rules in relation to Article 297 of the Labor Code require: (a) a written notice served on the employee specifying the ground for termination and giving reasonable opportunity to explain; and (b) a written notice of termination indicating that grounds have been established to justify termination. Failure to comply entitles the employee to nominal damages even where just cause exists. The Court applied this by awarding P30,000 each to respondents, petitioners having admitted that no written notices were served.

• Burden of Proof for Payment of Monetary Claims — In claims for salary differentials, the burden rests on the employer to prove payment, as all pertinent personnel files, payrolls, and records are in the employer's custody and control. The Court applied this by holding that petitioners failed to disprove respondents' allegation of earning only P300 per day, below the minimum wage.

• "The rules of evidence prevailing in courts of law or equity [shall not be controlling] and that the LA and the NLRC shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law and procedure, all in the interest of due process." — This passage articulates the rationale for admitting ex parte affidavits in labor proceedings, grounding the holding in Article 227 (formerly 221) of the Labor Code and the summary nature of labor proceedings.

• "It is not the job title but the nature of the work that the employee is duty-bound to perform which is material in determining whether he holds a position where greater trust is placed by the employer and from whom greater fidelity to duty is concomitantly expected." — This defines the controlling test for loss of trust and confidence, clarifying that rank-and-file employees entrusted with the employer's property may be dismissed for breach of trust.

• "The standard of substantial evidence is satisfied where the employer has reasonable ground to believe that the employee is responsible for the misconduct, and his participation therein renders him unworthy of the trust and confidence demanded by his position." — This formulation states the threshold for substantial evidence in dismissal cases, frequently cited in subsequent labor jurisprudence.

• "[A]dministrative bodies like the NLRC are not bound by the technical niceties of law and procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of Court and prevailing jurisprudence may be given only stringent application, i.e., by analogy or in a suppletory character and effect." — This passage, quoted from Bantolino vs. Coca Cola Bottlers Phils., Inc., establishes the principle that labor tribunals are not bound by technical rules of evidence, supporting the admissibility and probative value of affidavits in labor cases.

• Manila Electric Company vs. National Labor Relations Commission, 275 Phil. 746 (1991) — Cited for the proposition that the ground for dismissal need only be established by substantial evidence, not proof beyond reasonable doubt, even where the misconduct also constitutes a criminal offense.
• Bantolino vs. Coca Cola Bottlers Phils., Inc., 451 Phil. 839 (2003) — Followed for the principle that administrative bodies like the NLRC are not bound by technical rules of evidence and procedure, and that affidavits not testified to in trial may be given probative value in administrative proceedings.
• Southern Cotabato Development and Construction Inc. vs. National Labor Relations Commission, 345 Phil. 1110 (1997) — Cited for the rule that Article 227 (formerly 221) of the Labor Code mandates that rules of evidence in courts of law or equity shall not be controlling in labor proceedings.
• Gabunas, Sr. vs. Scanmar Maritime Services Inc., 653 Phil. 457 (2010) — Followed for the doctrine that notarized documents carry the presumption of regularity and the burden to overcome this presumption lies on the contesting party.
• Cañete vs. National Labor Relations Commission, 374 Phil. 272 (1999) — Followed for the rule that documents and affidavits submitted in labor proceedings need not conform to technical rules of evidence and may be accorded probative value under the NLRC Rules of Procedure.
• Punongbayan and Araullo (P&A) vs. Lepon, 772 Phil. 311 (2015) — Followed for the principle that affidavits of co-employees, executed based on personal knowledge and without proof of coercion, constitute substantial evidence for the employer's loss of trust and confidence.
• Agabon vs. National Labor Relations Commission — Cited by petitioners for the rule that where dismissal is founded on valid cause, the sanction for procedural lapse is nominal damages rather than reinstatement or backwages; the Court applied this principle in awarding P30,000 each.
• Serrano vs. National Labor Relations Commission — Cited by petitioners as the earlier, superseded rule; the Court effectively applied the Agabon doctrine over Serrano.

• Article 297, Labor Code — Enumerates just causes for termination by employer, including (a) serious misconduct or willful disobedience, (c) fraud or willful breach of trust, and (d) commission of a crime or offense. Applied to characterize respondents' unauthorized sale of broilers and crates as serious misconduct and willful breach of trust justifying dismissal.
• Article 227 (formerly 221), Labor Code — Provides that rules of evidence prevailing in courts of law or equity shall not be controlling in labor proceedings, and that labor tribunals shall ascertain facts speedily and objectively without regard to technicalities. Applied to uphold the admissibility and probative value of ex parte affidavits in labor cases.
• Implementing Rules of the Labor Code (in relation to Article 297) — Prescribes the twin-notice requirement for procedural due process: (a) a written notice specifying the ground for termination and giving the employee opportunity to explain, and (b) a written notice of termination. Applied to hold petitioners liable for nominal damages for non-compliance.
• Section 11, Rule 8, Rules of Court — Provides that allegations not specifically denied are deemed admitted; supplements the NLRC Rules of Procedure. Applied to deem admitted respondents' allegation that JR Hauling barred them from entering company premises, since petitioners failed to categorically deny it.
• Wage Order No. RBIII-15 — Sets the minimum daily wage at P308 for non-agricultural establishments in Region III with total assets less than P30,000,000. Applied in determining respondents' entitlement to salary differentials, as their actual earnings of P300 per day fell below this rate.
• Section 3, Rule V, NLRC Rules of Procedure — Allows parties to submit position papers accompanied by supporting documents including affidavits of witnesses, which take the place of testimony. Applied to support the admissibility of affidavits in labor proceedings.

Perlas-Bernabe, Senior Associate Justice (Chairperson), Inting, J., and Delos Santos, J., concurred. Baltazar-Padilla, J., was on leave.