When an Employee's Failure to Attend a Hearing Waives the Right to Present Evidence

The Supreme Court's 1998 decision in Fernandez v. NLRC (G.R. No. 105892) clarifies an important procedural question in Philippine labor law: when does a party's failure to appear at a hearing before the labor arbiter amount to a waiver of the right to present evidence? The case also settles how appeal bonds are computed and how service incentive leave pay and backwages should be awarded.

The Facts of the Case

Eleven employees of Agencia Cebuana-H. Lhuillier filed a consolidated complaint for illegal dismissal. They claimed they were verbally terminated on July 19, 1990, after demanding salary increases and reporting alleged tax evasion to the employer.

The employer denied dismissing them, claiming the employees abandoned their posts. The employer also alleged that some employees were involved in anomalies, including over-declared jewelry values and missing "rematado" items.

During the proceedings before the labor arbiter, hearings were scheduled for July 5, 8, and 12, 1991. The July 5 hearing was postponed by agreement. The July 8 hearing was set for the cross-examination of the complainants' last witness, Marilyn Lim, and the July 12 hearing was for the respondents to present their evidence.

The employer and its counsel failed to appear on both July 8 and July 12. On July 12, the complainants' counsel submitted the case for resolution. The labor arbiter rendered a decision in favor of the employees, awarding separation pay, service incentive leave pay, backwages, moral and exemplary damages, attorney's fees, and litigation expenses totaling P1,078,200.55.

The Issue Before the Supreme Court

The central question was whether the employer's failure to attend the hearings constituted a waiver of the right to present evidence, or whether this amounted to a denial of due process requiring the case to be remanded.

The Court's Ruling on Waiver of Evidence

The Supreme Court held that the employer was not denied due process. Under Section 11, Rule V of the 1990 NLRC Rules of Procedure, a case may be deemed submitted for decision when a respondent incurs two successive unjustified non-appearances during its turn to present evidence.

The Court noted that the employer's counsel failed to attend both the July 8 and July 12 hearings. While the July 8 hearing was technically for cross-examination, the employer had ample opportunity to present its side through position papers and supporting documents, which were duly considered by the labor arbiter.

The Court emphasized that the essence of due process is simply the opportunity to be heard. The employer was given multiple chances to present additional evidence but failed to do so. Notably, the employer's counsel himself requested until August 19, 1991 to submit additional affidavits but never complied, even after the case was submitted for decision.

The Ruling on Appeal Bonds

The Court also addressed the computation of the appeal bond. Article 223 of the Labor Code requires an employer to post a bond equivalent to the monetary award in the judgment appealed from. However, Rule VI, Section 6 of the 1990 NLRC Rules of Procedure clarifies that the bond is computed exclusive of moral and exemplary damages and attorney's fees.

The Court upheld this interpretation, noting that the implementing rule is a contemporaneous construction of Article 223 and deserves great respect. Since the employer posted a bond of P752,183.00—more than the required P750,182.55 after excluding damages and fees—the appeal was properly perfected.

The Ruling on Illegal Dismissal

The Court found that nine of the eleven employees were illegally dismissed. To prove abandonment, an employer must show both the employee's intention to abandon and an overt act indicating no desire to resume work. Mere absence is not enough.

The employer failed to prove abandonment because the employees immediately filed their complaints for illegal dismissal—an act inconsistent with an intent to abandon. However, the Court found that Marilyn Lim and Joseph Canonigo were not illegally dismissed, as they voluntarily resigned.

Practical Takeaways

• Two successive absences are required. Under the NLRC Rules, a respondent's right to present evidence is waived only after two successive unjustified non-appearances during its turn to present evidence. One absence is not enough.
• Position papers can satisfy due process. Labor cases may be decided on the basis of position papers and supporting documents. An adversarial trial is not a matter of right.
• Appeal bonds exclude certain awards. When computing the appeal bond, moral and exemplary damages, attorney's fees, and litigation expenses are excluded.
• Abandonment requires proof of intent. Employers must prove both the intention to abandon and an overt act showing no desire to return to work. Filing an illegal dismissal complaint negates abandonment.
• Counsel's excuses are closely scrutinized. A claim that a car "bogged down" without a motion for postponement was not a compelling justification for non-appearance.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.