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Power of NLRC to Reduce Appeal Bond

By J. Vicente Q. Roxas

Is there a shift from strict to liberal policy, under Art. 223 of the Labor Code, in granting the NLRC the discretion to reduce appeal bonds? Stated differently, is the power of the NLRC to reduce the appeal bond, absolute? Negative to both questions.

The discretion given to the NLRC to reduce the amount of appeal bond is not a blanket power to the NLRC. The discretion of the NLRC is not unbridled and is subjected by the Supreme Court to strict guidelines because Art. 223 of the Labor  Code is a rule of jurisdiction, not a rule of procedure, that affords little leeway for liberal interpretation.

The reduction must be reasonable according to the special circumstance and the reduction must have a factual basis.

When Article 223 of the Labor Code expressly provided that perfection of an appeal would be “only upon the posting of a cash or surety bond”, the lawmakers had no other intention but to require that the posting of the bond would be an indispensable requirement for perfection of an employer’s appeal.

When Article 223 of the Labor Code expressly provided that the cash or surety bond to be posted must be equivalent to the amount of the award of the Labor Arbiter whose award is on review with the NLRC, the lawmakers had no other intention but to require that the amount to be posted must be the whole amount of the Labor Arbiter’s award, excluding of course, damages and attorney’s fees.

The revision which allowed the NLRC to reduce the  amount of the bond is a discretionary power but that discretionary power is not unbridled and is subject to strict guidelines as set forth in several decisions of the Supreme Court.

The reduction of the appeal bond must be reasonable and must be restricted to justifiable cases. Thus, without proof and on the mere allegation that the decision sought to be appealed is purportedly erroneous in fact or in law, would be inadequate.

As expressly stated by the law, a mere motion to reduce appeal bond cannot serve to mitigate the appeal bond requirement, nor could the allegation that the monetary award was too large or too harsh or unfounded or unsettled, be proper grounds to reduce the appeal bond. Even if the monetary award to be paid as appeal bond runs into millions or billions of pesos, this does not automatically give the employer-appellant a “meritorious case” to reduce the appeal bond.

Settled is the rule that Article 223 of the Labor Code, which  prescribes the appeal bond requirement, is a rule of jurisdiction and not a rule of procedure that could be treated liberally. Being a rule of jurisdiction, it is strictly construed. There is little leeway for condoning a liberal interpretation thereof, and certainly none premised on the ground that its requirements are mere technicalities. The requirement for posting the surety bond is not merely procedural but jurisdictional and cannot be trifled with.

The underlying purpose for the strict construction, other than the fact that Art. 223 of the Labor Code is a rule of jurisdiction, not a rule of procedure, and being a rule of jurisdiction, it is strictly construed, is that the appeal bond was intended by the lawmakers as a safeguard to ensure that the employee can target properties of the employer on which he or she can execute upon in the event of a final, providential award against the employer. It was intended to discourage employers from using an appeal as a means to delay, or even evade, their obligation to satisfy their employees’ just and lawful claims. The non-payment or woefully insufficient payment of the appeal bond by the employer frustrates these ends.

Time and again, it has been held that the right to appeal is not a natural right or a part of due process, it is merely a statutory privilege, and may be exercised only in the manner and in accordance with the provisions of law. The party who seeks to avail of the same must comply with the requirements of the rules. Failing to do so, the right to appeal is lost.

Article 223 of the Labor Code, as amended, must be strictly construed, and the NLRC would have gravely abused its discretion if it reduced the appeal bond to be deposited, if a cash bond, or posted, if a surety bond, by the employers, in order to perfect their appeal from decision of the  Labor Arbiter, without factual basis or if unreasonably low depending on the circumstances of the case.

The Constitution commands that labor must be protected, because it is the declared policy of the State to protect the rights of workers and promote their welfare and the State has a duty to afford labor full protection in regard to assuring each employee who has been benefited with an award of the Labor Arbiter, that that award be substantiated with either ready cash to be deposited by the employer in the case of a cash bond, or reliable and liquid surety capable of paying the Labor Arbiter’s award, in the case of a surety bond, if the Labor Arbiter’s award is sustained by the NLRC.

The lawmakers have taken into consideration the situation when employees who have been benefited with a favorable award by the Labor Arbiter because of alleged illegal dismissal would find themselves laid-off, with the employer’s business already closed down and the employer’s assets already in the process of being scuttled, with the added scenario that the employer’s business may have already been taken over by an affiliate, subsidiary or business associate, in derogation of their rights to security of tenure, and ruining their hopes for the company ever to open again, so that any appeal could endanger the award of the Labor Arbiter with every day that passes while the company is being liquidated. The unpaid appeal bond becomes even more obscure if the employer would be permitted to subsequently employ artifices to evade execution of judgment.

The Labor Arbiter’s award which takes the form of an appeal bond as envisioned by the framers of the law, could turn out to be merely an illusion, with the passage of time, during employer’s appeal. If there were no appeal bond required that is equivalent to the Labor Arbiter’s award, even if the workers win the case appealed by the employer, there could be no money to pay for the Labor Arbiter’s award that may have been affirmed by the NLRC so that each employee who has lost his livelihood, would have nothing to tidy him over for the loss of his livelihood. The framers of the law intended that the appeal bond would assure the winning workers that at the end of the appeal by the employer, there would still be money to pay off their claims.

Article 223 of the Labor Code expressly provides the rules on appeal from the rules on appeal from the Labor Arbiter’s monetary award, as follows:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x. >

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

The pertinent provisions of Rule VI of the New Rules of Procedure of the NLRC provide:

Section 1. Periods of Appeal. – Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter x x x.

Section 3. Requisites for Perfection of Appeal. – (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, order or award and proof of service on the other party of such appeal.

A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period for perfecting an appeal. x x x

Section 6. Bond. – In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees.

The employer, his counsel, as well as the bonding company, shall submit a joint declaration under oath attesting that the surety bond posted is genuine.

The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal.

There are three (3) emphatic words that dictate a strict reading and application of the Labor Code and the rules: first, the word “only” makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to the exclusive means by which an employer’s appeal may be perfected. The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal is clearly limned in the provision that the appeal by the employer may be perfected only upon the posting of a cash or surety bond. Second, although the rules allow the NLRC to reduce the appeal bond, the law uses the word “justifiable” to modify the word “cases” – meaning that an exception to the rule is rare and this exception refers only to special cases where the movant in the motion to reduce bond has proven through factual and legal grounds that such employer is entitled to reduction of the appeal bond. Third, the rules provide that:  not even the filing of a motion to reduce bond is deemed to stay the period for requiring an appeal. The words “not even” emphasize that a posting of an insufficient amount as appeal bond, less than the monetary award in the judgment, or even the use of insufficient postage in mailing in the manager’s check to serve as appeal bond, for that matter, would be sufficient to perfect the appeal – thus emphasizing the strictness of the provision.  The exception of justifiable cases does not kick-in as a matter of course by mere allegation. Movant must prove reduction of appeal bond is meritorious.

Implied in the word “justifiable” is that the NLRC’s discretion to reduce the appeal bond must be “reasonable”. There ought to be no gross disparity between the Labor Arbiter’s monetary award from what the NLRC’s reduced amount of appeal bond.

When Section 6, Rule VI of the NLRC’s New Rules of Procedure allows the Commission to reduce the amount of the bond, such exercise of the authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing by the movant of meritorious grounds.

The NLRC should also have factual basis as “justifiable” grounds for the reduction of the appeal bond. The NLRC is obligated to make an in-depth analysis of the evidence to make sure that the findings of fact of the NLRC, is well supported by evidence on record and that the NLRC does not suffer from any misapprehension of the facts.

The NLRC’s discretion to reduce appeal bond based on bare allegations and emotions without factual basis is grave abuse of discretion tantamount to lack of or excess of jurisdiction. The mere allegation of the Labor Arbiter’s decision as purportedly erroneous in fact or in law or words of the NLRC to the effect that: (1) “monetary award was too harsh or unfounded or unsettled ” or (2) “that the amount of the required appeal bond is enormous”, or (3) “that the monetary award was too harsh and unfounded” – cannot serve to mitigate the appeal bond requirement, absent concrete  proof. Just about any aggrieved employer can invoke such grounds.

The NLRC should be circumspect in the exercise of its discretion to reduce the amount of bond by conducting an investigation on the matter in accordance with its power under Art. 218(e) of the Labor Code. This is more in keeping with the declared policy of the State to protect the rights of workers and promote their welfare, and to afford labor full protection.




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