I couldn't finish 'em. Looks like this's gonna get complicated.
If Ceodore has learned Float, casting it before the fight will negate the Tunneler's Earthquake attack. Otherwise, it will do high damage when the Tunneler randomly counter attacks with it. Its other physical attacks do not do high damage. Once the battle begins, have Ceodore cast Protect on your party and have the Hooded Man use a Spider's Silk to slow the Tunneler down. You can then either have both characters attack physically or use their Cross Slash on it. If you need to heal, have Ceodore cast Cura or use Hi-Potions. You can deal more damage during the Waning Moon phase, but remember that this will also increase the Tunneler's attack damage to your party as well. If needed, stay near the Save point and item vendor in the caves and raise a few levels before engaging the Tunneler.