Lepanto Consolidated Mining Company vs. Dumapis

Affidavits containing hearsay statements are admissible in labor proceedings before the NLRC and Labor Arbiters by virtue of Article 221 of the Labor Code, which dispenses with strict application of technical rules of evidence; however, admissibility does not equate to probative value, and such evidence must still constitute substantial evidence to support a finding of just cause for dismissal. In this case, the Joint Affidavit of the security investigators, though admissible, had no probative value because its underlying sources did not identify the respondents as participants in the highgrading activity, rendering the dismissal for loss of trust and confidence unsupported by substantial evidence.

Lepanto Consolidated Mining Company is a domestic juridical entity engaged in mining operations in Mankayan, Benguet. Respondents Moreno Dumapis and Elmo Tundagui were employed as lead miners, while Francis Liagao served as a load, haul, and dump (LHD) machine operator. All three were assigned to the 850 level underground in the Victoria Area, a known "highgrade" area where most ores mined are of high-grade content. Highgrading—theft of gold-bearing ores from a mining claim—is criminalized under Presidential Decree No. 581. The dispute arose from the employer's dismissal of the respondents based on an internal investigation into an alleged highgrading incident, which the respondents challenged as illegal dismissal before the labor tribunals.

Lepanto Consolidated Mining Company employed Moreno Dumapis and Elmo Tundagui as lead miners and Francis Liagao as a load, haul and dump (LHD) machine operator, all assigned at the 850 level underground in the Victoria Area of its mine in Mankayan, Benguet—a known "highgrade" area where most ores are of high-grade content. In the afternoon of September 15, 2000, at about 2:00 p.m., Dwayne Chambers, a foreign consultant then acting as Assistant Resident Manager of the Mine, conducted a routinary inspection of the 850 level. Upon reaching the various stopes, he found nobody present, but at the 8K stope he noticed a group of workers sitting, sorting, and washing ores believed to be highgrade. Realizing that highgrading was being committed, Chambers shouted, causing the workers to scatter in different directions. Chambers reported the incident to the security investigation office.

Security Investigators Paul Pespes, Jr. and Felimon Ringor conducted an investigation and executed a Joint Affidavit on September 28, 2000. The affidavit stated that Chambers had seen and surprised several unidentified miners at 8K Stope committing highgrading activities. It further recounted that Security Guard Ceasarion Damoslog confessed his direct participation and named respondents Tundagui and Dumapis among his companions. The affidavit also referenced the confirmation of highgrading by shiftboss Pablo Daguio and the confession of Maximo Madao, who named respondent Liagao as one of those who assisted in drilling and blasting. On October 24, 2000, petitioner issued a resolution finding respondents and their co-accused guilty of highgrading and dismissing them from employment.

On November 14, 2000, respondents together with nine other miners filed a complaint for illegal dismissal with the Labor Arbiter. The Labor Arbiter dismissed the complaint on August 21, 2001. On appeal, the NLRC rendered a decision on August 30, 2002 declaring the dismissal of respondents Dumapis, Tundagui, and Liagao illegal—while affirming the dismissal of the nine other miners—and ordering payment of backwages and separation pay. Petitioner's motion for reconsideration was denied on November 22, 2002. Petitioner then filed a petition for certiorari with the Court of Appeals, which affirmed the NLRC decision on November 7, 2003, treating the Joint Affidavit as hearsay and inadmissible, and denied reconsideration on April 15, 2004.

Scrutiny of the underlying sources of the Joint Affidavit revealed significant inconsistencies. Chambers had seen only unidentified miners and did not indicate the respondents. Damoslog submitted two sworn statements: in the first, he denied any involvement in highgrading; in the second, he narrated the events in detail but did not name respondents Dumapis or Tundagui, nor did he mention respondent Liagao. Daguio, in his sworn statement, confirmed that a group was committing highgrading but expressly stated he could not recognize or identify any of them. Madao likewise submitted two sworn statements: the first, dated September 16, 2000, proclaimed his innocence and did not implicate any respondent; the second, dated September 20, 2000, named Liagao as among those who drilled and blasted. However, Madao later executed a Joint Affidavit with respondent Tundagui retracting his second statement, claiming he was made to give self-incriminating answers without counsel and had knowingly mentioned innocent persons, and adopting and retaining his first sworn statement.

• Hearsay Rule Inapplicable in Labor Proceedings: Petitioner argued that the Court of Appeals' strict application of the hearsay rule under Section 36, Rule 130 of the Rules of Court was uncalled for, citing Article 221 of the Labor Code, which provides that technical rules of evidence are not controlling in proceedings before the NLRC and Labor Arbiters.
• Breach of Trust Standard: Petitioner maintained that in cases of dismissal for breach of trust and confidence, proof beyond doubt is not required, it being sufficient that the employer has reasonable ground to believe that the employees are responsible for the misconduct rendering them unworthy of the trust and confidence demanded by their positions.

• Reinstatement and Full Backwages: Respondents prayed in their Comment and Memorandum that the CA Decision be modified by ordering their reinstatement to their former positions without loss of seniority rights and with payment of full backwages from the time of their alleged dismissal up to the date of reinstatement.

• Admissibility of Hearsay Evidence: Whether the Joint Affidavit of the Security Investigators is inadmissible hearsay in labor proceedings before the NLRC.
• Substantial Evidence for Dismissal: Whether there was substantial evidence to hold respondents guilty of highgrading sufficient to warrant their dismissal on the ground of loss of trust and confidence.
• Entitlement to Reinstatement: Whether respondents are entitled to reinstatement to their former positions.

• Admissibility of Hearsay Evidence: The Joint Affidavit is admissible. Article 221 of the Labor Code dispenses with strict application of technical rules of evidence in labor proceedings; affidavits need not satisfy the hearsay rule to be admitted, though their evidentiary weight remains subject to evaluation.
• Substantial Evidence for Dismissal: No. The Joint Affidavit, while admissible, lacks probative value because its sources—Chambers, Damoslog, Daguio, and Madao—either did not identify the respondents or recanted their implicating statements, falling short of the substantial evidence required to justify dismissal for loss of trust and confidence.
• Entitlement to Reinstatement: No. Respondents are estopped from claiming reinstatement under the doctrine of conclusiveness of judgment, a prior CA ruling in CA-G.R. SP No. 75457 having already ordered separation pay instead of reinstatement, which ruling attained finality when the petition in G.R. No. 162554 was denied with finality.

• Admissibility of Hearsay Evidence: Administrative bodies like the NLRC are not bound by the technical niceties of law and procedure, and the Revised Rules of Court may be given only suppletory application. Article 221 of the Labor Code expressly provides that rules of evidence prevailing in courts shall not be controlling in proceedings before the Commission or Labor Arbiters. Jurisprudence has consistently construed this provision as permitting the NLRC or Labor Arbiters to decide cases on the basis of position papers and documents without strictly observing technical rules of evidence. In Bantolino vs. Coca-Cola Bottlers Phils., Inc., affidavits were given evidentiary value even though the affiants were not presented for cross-examination; the argument that such affidavits were hearsay was rejected. Similarly, in Rase vs. National Labor Relations Commission, it was held unnecessary for affiants to appear and testify, as requiring otherwise would negate the summary nature of labor proceedings. Accordingly, the CA and NLRC erred in ruling the Joint Affidavit inadmissible for being hearsay; it is admissible for what it is—an investigation report. However, admissibility must not be confused with probative value: admissibility refers to whether evidence is to be considered at all, while probative value refers to whether the admitted evidence proves an issue. A particular item may be admissible but its evidentiary weight depends on judicial evaluation within the guidelines of the rules of evidence.

• Substantial Evidence for Dismissal: While technical rules of evidence are not strictly observed before the LA and NLRC, their decisions must still be based on substantial evidence—more than a mere scintilla, meaning such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. An examination of the Joint Affidavit revealed that the facts alleged by the Security Investigators were not of their own personal knowledge but were relayed by Chambers, Damoslog, Daguio, and Madao, necessitating individual scrutiny of each source's statements. Chambers saw only "unidentified miners" and did not indicate the respondents. Damoslog's first sworn statement denied any involvement, and his second—though narrating the highgrading in detail—did not name respondents Dumapis or Tundagui, nor did he mention respondent Liagao. Daguio confirmed the highgrading activity but expressly stated he could not recognize or identify any of the miners. Madao's second sworn statement named Liagao, but Madao subsequently retracted that statement in a Joint Affidavit executed with respondent Tundagui, claiming he was made to give self-incriminating answers without counsel and had knowingly mentioned innocent persons; he adopted and retained his first statement proclaiming innocence. In labor cases, an affidavit of desistance or recantation gains added importance in the absence of any evidence explicitly showing the dismissed employee committed the act. The sworn statements of the sources thus did not corroborate but actually cast doubt on the veracity of the Joint Affidavit. Regarding the second ground, while the respondents' jobs as miners required a substantial amount of trust and confidence, the rule that proof beyond reasonable doubt is not required for loss of confidence is not absolute. Loss of trust and confidence must be substantial, not arbitrary, and founded on clearly established facts. The evidence here was not substantial. Moreover, settled doctrine dictates that doubts between the evidence of employer and employee must be resolved in favor of the latter, consistent with the State's policy of maximum aid and protection to labor.

• Entitlement to Reinstatement: Respondents' prayer for reinstatement deserves scant consideration because they are estopped from claiming that right. Records show that respondents, together with their co-accused, previously filed an appeal with the CA docketed as CA-G.R. SP No. 75457, questioning the NLRC decision. That appeal was denied, and the case was elevated to the Supreme Court through a petition for review in Thomas Garcia vs. Court of Appeals (G.R. No. 162554), which was denied with finality for having been filed out of time. Under the doctrine of conclusiveness of judgment—also known as "reclusion of issues" or "collateral estoppel"—issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving a different cause of action. The former suit (CA-G.R. SP No. 75457 and G.R. No. 162554) ordered separation pay instead of reinstatement; the present case is a different petition filed by the employer. Reinstatement was not an issue raised by petitioner, and respondents cannot now be allowed to raise it, as that would circumvent the finality of judgment as to separation pay.

• Admissibility vs. Probative Value in Labor Proceedings — Admissibility refers to whether certain pieces of evidence are to be considered at all, while probative value refers to whether the admitted evidence proves an issue. An item of evidence may be admissible but its evidentiary weight depends on judicial evaluation within the guidelines provided by the rules of evidence. The Court applied this distinction by admitting the Joint Affidavit under the relaxed evidentiary rules of labor proceedings but denying it any probative value because its sources did not identify the respondents.

• Relaxed Application of Technical Rules of Evidence in Labor Proceedings — Under Article 221 of the Labor Code, the rules of evidence prevailing in courts of law or equity shall not be controlling in proceedings before the NLRC or Labor Arbiters. Administrative bodies are not bound by technical niceties of law and procedure; the Revised Rules of Court may be given only suppletory application. Affidavits may be given evidentiary value even without presentation and cross-examination of affiants, as requiring otherwise would negate the summary nature of labor proceedings.

• Substantial Evidence Requirement — Even though technical rules of evidence are not strictly complied with before the LA and NLRC, their decisions must be based on substantial evidence, which is more than a mere scintilla—such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The Court found that the Joint Affidavit, lacking corroboration and undermined by recantations, did not meet this standard.

• Loss of Trust and Confidence as Ground for Dismissal — Loss of trust and confidence must be substantial, not arbitrary, and founded on clearly established facts sufficient to warrant the employee's separation from work. While proof beyond reasonable doubt is not required, the employer's right to dismiss on this ground must not be exercised arbitrarily and without just cause. The rule is not absolute.

• Doubts Resolved in Favor of Labor — If doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. In controversies between laborer and master, doubts reasonably arising from the evidence should be resolved in favor of the workingman, consistent with the State's policy of maximum aid and protection to labor.

• Conclusiveness of Judgment — Also known as "reclusion of issues" or "collateral estoppel," this doctrine provides that issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving a different cause of action. The Court applied it to bar respondents from seeking reinstatement, as a prior final judgment had already ordered separation pay in their favor.

• "However, the admissibility of evidence should not be confused with its probative value. Admissibility refers to the question of whether certain pieces of evidence are to be considered at all, while probative value refers to the question of whether the admitted evidence proves an issue." — This passage articulates the central analytical framework of the decision, distinguishing between the threshold for admitting evidence in labor proceedings and the separate inquiry into whether that evidence actually proves the employer's case.

• "While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. The evidence presented must at least have a modicum of admissibility for it to have probative value." — This qualifies the relaxed evidentiary regime in labor proceedings, establishing that the relaxation of technical rules does not exempt labor tribunals from the requirement of substantial evidence.

• "In order that loss of trust and confidence may be considered as a valid ground for an employee's dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employee's separation from work." — This states the canonical formulation of the requirements for valid dismissal based on loss of trust and confidence, a doctrine frequently cited in subsequent labor jurisprudence.

• "It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former's favor." — This encapsulates the pro-labor canon of construction that governs evidentiary disputes in labor cases, reinforcing the constitutional policy of protection to labor.

• Bantolino vs. Coca-Cola Bottlers Phils., Inc., G.R. No. 153660, June 10, 2003 — Followed. The Court relied on this case for the proposition that affidavits may be given evidentiary value in labor proceedings even though affiants were not presented for cross-examination, and that the hearsay objection to such affidavits is not persuasive.

• Rase vs. National Labor Relations Commission, G.R. No. 110637, October 7, 1994 — Followed. Cited for the ruling that it is not necessary for affiants to appear and testify in labor proceedings, as requiring otherwise would negate the summary nature of such proceedings.

• Skippers United Pacific, Inc. vs. National Labor Relations Commission, G.R. No. 148893, July 12, 2006 — Followed. The Court relied on this case to illustrate the distinction between admissibility and probative value, where a report lacking personal knowledge of its author was held bereft of probative value despite being considered.

• PNOC Shipping & Transport Corporation vs. Court of Appeals, 358 Phil. 38 (1998) — Cited for the definition of the distinction between admissibility and probative value.

• Ang Tibay vs. Commissioner of Internal Revenue, 69 Phil. 635 (1940) — Cited for the principle that decisions of labor tribunals must be based on substantial evidence even when technical rules are relaxed.

• Tan vs. Court of Appeals, 415 Phil. 675 (2001) — Cited for the doctrine of conclusiveness of judgment, applied to bar respondents from seeking reinstatement.

• Article 221, Labor Code — Provides that in proceedings before the NLRC or Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling, and that the Commission and Labor Arbiters shall use all reasonable means to ascertain the facts speedily and objectively without regard to technicalities of law or procedure. The Court applied this provision to hold that the Joint Affidavit was admissible despite its hearsay character.

• Section 36, Rule 130, Rules of Court — Defines the hearsay rule, providing that a witness can testify only to facts within his personal knowledge. The Court agreed with petitioner that strict application of this rule was uncalled for in labor proceedings, but used the principle underlying it to evaluate the probative weight of the Joint Affidavit.

• Section 1, Presidential Decree No. 581 — Defines and criminalizes "highgrading" as the taking of gold-bearing ores or rocks from a mining claim without the consent of the operator. Cited as the statutory backdrop defining the offense for which respondents were dismissed.

Ynares-Santiago (Chairperson), Chico-Nazario, Nachura, and Reyes, JJ., concurred.