FELICIANO B. DUQUE, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, MANILA WATER COMPANY, INC. AND GERARDO C. ABLAZA, JR., RESPONDENTS.

Duque versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Feliciano Duque against the National Labor Relations Commission, Manila Water Company, and its officer Gerardo Ablaza, Junior. Duque, who had risen to Asset Management Section Manager, was dismissed by Manila Water on the ground of loss of trust and confidence after an administrative investigation into allegations that he solicited money from a bidder in a company procurement project. He filed a complaint for illegal dismissal, lost before the Labor Arbiter and the National Labor Relations Commission, and now asks the Supreme Court to reverse them. The case matters because it is the Court's clearest recent teaching on how much and what kind of evidence an employer needs to justify a dismissal for loss of trust and confidence, and on how the relaxed rules of evidence in labor proceedings actually operate.

Procedural History

Duque filed a complaint for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission. The Labor Arbiter dismissed the complaint for lack of merit. Duque appealed to the National Labor Relations Commission, which dismissed the appeal in a resolution dated May 31, 2013. His motion for reconsideration was denied in a resolution dated July 29, 2013. Duque then came to the Supreme Court by a petition for certiorari, charging the Commission with grave abuse of discretion amounting to lack or excess of jurisdiction.

Facts

Manila Water is a water service utility serving the East Zone of Metro Manila under a concession agreement with the Metropolitan Waterworks and Sewerage System. Duque was among the employees absorbed when Manila Water took over, and in February 2012 he was promoted to Asset Management Section Manager. Manila Water undertook a project for the procurement, installation, operation, and maintenance of 550 data loggers to monitor water demand in its franchise area. Duque was not officially a member of the technical evaluation team, but he was allowed to participate so that he could anticipate future maintenance issues.

In April 2012 the technical evaluation was presented to the panel, with Garie Garcia, the Instrumentation, Control and Automation Manager, as presenter. After the initial evaluation, only one bidder's data logger was found fully compliant. When East Asia Solutions Technologies Corporation contested the result, a re-evaluation and an actual test of its equipment were conducted. During that test, East Asia's president, Gregg Cordova, protested that his equipment had only one analog input, ordered his personnel to pull out the data logger, and the test was not completed. Duque went to the Legal Department that afternoon, and upon advice prepared an incident report, which he submitted in early May 2012.

In June 2012 Manila Water received a notarized joint affidavit executed by Ariel Alcantara and Gregg Cordova of East Asia, accusing Duque and Garcia of demanding money in exchange for the award. Manila Water issued a Notice to Explain and placed Duque on forced leave with pay. Duque denied the allegations in his written response, and an administrative hearing was held in July 2012 with Duque and his counsel present. The company's Legal and Corporate Governance Department concluded its investigation and reported substantial evidence of Duque's complicity: material misrepresentation of the nature and extent of his participation in the technical evaluation, a predetermined intent to submit only one technically compliant bidder, soliciting fees from East Asia, and use of his position to exclude East Asia. On August 31, 2012, Manila Water terminated his services for loss of trust and confidence.

Issues

• Whether or not the August 6, 2012 memorandum containing the results of the administrative investigation is inadmissible for being unsigned, unverified, and hearsay, following the Skippers United Pacific and Lepanto Consolidated Mining cases.
• Whether or not the evidence submitted by Manila Water, namely the August 6, 2012 memorandum and the joint affidavit of Alcantara and Cordova, sufficiently established a just cause for Duque's dismissal.
• Whether or not Manila Water validly dismissed Duque on the ground of loss of trust and confidence.

Applicable Provisions

Article 221 of the Labor Code provides:

In any proceeding before the National Labor Relations Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law shall not be controlling and it is the spirit and intention of the Labor Code that the National Labor Relations Commission and its members and the Labor Arbiters 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 is the provision the Court invokes to reject Duque's technical objections to the unsigned memorandum and to affirm the relaxed evidentiary standard in labor proceedings.

Article 282, paragraph (c) of the Labor Code provides:

An employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

This is the just cause on which Manila Water based the dismissal, and which the Court holds was established by substantial evidence.

Ruling

On the first issue, the Court held that the petition misunderstood the Skippers United and Lepanto cases. In Skippers United, the employer's only evidence was a Chief Engineer's report that was uncorroborated, based purely on hearsay, and issued more than a month after the seafarer's repatriation, so it was obviously an afterthought. Here, the August 6, 2012 memorandum, although unsigned by its authors, was not a mere afterthought; it was issued after an investigation and served as the basis for the dismissal, and it was supported by the joint affidavit of Alcantara and Cordova, who had personal knowledge of the matter. The Court reminded the petitioner of Article 221 of the Labor Code, quoted above, which makes the technical rules of evidence non-controlling in labor proceedings.

On the second issue, the Court distinguished Lepanto. There, the joint affidavit of the security investigators was admissible as an investigation report, but it had no probative value because its affiants merely relayed facts told to them by others. Here, Alcantara and Cordova spoke of what they themselves experienced, and they specifically named Duque as having taken part in soliciting kickbacks. The Court quoted the joint affidavit's account of Duque asking Cordova, "O parekoy magiging masaya na ba tayo?" and held that this statement, taken in light of the circumstances and the investigation results, would shake the confidence of any employer. The Court added that the absence of the exact place, time, and date of the utterance is trivial, since what matters is that both affiants recalled the petitioner's actions toward them.

On the third issue, the Court held that loss of trust and confidence is a just cause for dismissal under Article 282, paragraph (c), and that the employer must show that the employee holds a position of trust and confidence and that there is substantial evidence of a breach of that trust. The Court defined substantial evidence as more than a mere scintilla, meaning such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise. It stressed that an employee may be discharged only for a valid cause, and that uncorroborated assertions and accusations by the employer would not suffice, otherwise the constitutional guaranty of security of tenure would be put in jeopardy. On the evidence, the Court found that Manila Water had met that standard.

Doctrine

First, in labor proceedings the rules of evidence prevailing in courts of law are not controlling, and the Labor Arbiter and the National Labor Relations Commission may use every reasonable means to ascertain the facts speedily and objectively, without regard to technicalities, all in the interest of due process, as Article 221 of the Labor Code commands. An unsigned or unverified investigation memorandum is therefore not automatically inadmissible.

Second, admissibility must not be confused with probative value. A joint affidavit may be admissible as an investigation report, but its weight depends on whether its affiants speak from personal knowledge; hearsay recitals carry no probative value, while firsthand accounts do.

Third, dismissal for loss of trust and confidence under Article 282, paragraph (c) requires that the employee hold a position of trust and confidence and that the employer prove the breach by substantial evidence, meaning relevant evidence a reasonable mind would accept as adequate to support a conclusion. Uncorroborated assertions by the employer will not suffice, for the constitutional guaranty of security of tenure would otherwise be placed in jeopardy.

Disposition

The Supreme Court denied the petition and upheld Duque's dismissal, finding no grave abuse of discretion on the part of the National Labor Relations Commission.

Remember This

Memorize this line: substantial evidence is more than a mere scintilla, and in labor cases admissibility is not probative value. Examiners use this case to test the difference between the Skippers United and Lepanto rulings and to ask whether an unsigned investigation memorandum can support a dismissal for loss of trust and confidence.