As a rule, the posting of bond equivalent to monetary award is mandatory for the perfection of appeal.

Appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: [Salazar vs. Simbajon, G.R. No. 202374, June 30, 2021]

(1) payment of the appeal fees;

(2) filing of the Memorandum of Appeal; and (3) payment of the required cash or surety bond.

For the posting of cash or surety bond, its purpose is to assure the employees that they will receive the monetary award granted them if they finally prevail in the case.

The bond also serves to discourage employers from using the Appeal to delay, or even evade, their obligation to satisfy the judgment. Notably, the posting of Appeal Bond is not only mandatory but jurisdictional as well.

As Philippine Transmarine Carriers, Inc. v. Cortina holds, non-compliance with the bond requirement is fatal and has the effect of rendering the judgment final and executory in exceptional cases, however, the bond requirement may be relaxed in line with the desired objective of Labor Laws to resolve controversies on their merits, provided there is substantial compliance with the rules governing Appeal to the NLRC.

In Rosewood Processing, Inc. vs. NLRC, the Supreme Court (SC) held that there was substantial compliance when the Petitioner filed a Motion to Reduce Appeal Bond and posted a partial surety bond of P50,000, albeit not in the amount equivalent to the monetary award of P789.154.39.

Also, in Postigo vs. Philippine Tuberculosis Society, Inc. (PTSI) the SC sustained the CA’s ruling that the company substantially complied with the required posting of a cash or surety bond not only because the filing of its Motion for Reduction of the Bond was justified, but also because it immediately submitted a bond attached to its Motion for Reconsideration of the NLRC Resolution dismissing the Appeal.

According to the SC, the above cases reiterated pronouncements in Blancaflor vs. NLRC, Rada vs. NLRC, and YBL vs. NLRC in which the NLRC was cautioned to give Article 223 of the Labor Code, particularly the provisions on requiring a Bond on Appeals involving monetary awards, a liberal interpretation.

Citing Nicol vs. Footjoy Industrial Corporation, the SC held that the bond requirement on appeals involving monetary awards has been and may be  relaxed in meritorious cases.

These cases include instances in which

(1) there was substantial compliance with the Rules,

(2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond,

(3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or

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(4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.

Conversely, according to the SC, the reduction of the bond is not warranted when no meritorious ground is shown to justify the same. Where the appellant absolutely failed to comply with the requirement of posting a bond, even if partial or when circumstances show the employer’s unwillingness to ensure the satisfaction of its workers’ valid claims then reduction of bond cannot be justified.

These jurisprudential precepts had been applied in the following situation in the Simbajon case:

  • On March 23, 2007 the Labor Arbiter’s Decision was received
  • Had ten (10) days or until April 2, 2007 to file an Appeal
  • On March 30, 2007, appeal was filed as well as the motion to reduce the bond.
  • At the same time, the employer deposited a cashier’s check in the amount of P500,000.00 in favor of complainant, et al.
  • On April 2, 2007 or the last day of the period to appeal, a surety bond in the amount of P3,100,000,00 was posted.
  • Subsequently with the NLRC’s approval, the employer replaced the P500,000.00 check deposit with a surety bond of the same amount.
  • In sum, the total bond posted was P3,600,000.00 within the reglementary period, which substantially covers the total monetary award of P3,683,394.45.

For the SC, these constitute substantial compliance and demonstrate willingness on the part of employer to abide with the Rules on Perfection of Appeal.

Contrary to Simbajon, et al.’s argument, the failure of the indemnity agreement to indicate the effectivity period and the amount of premium paid do not affect the validity of the surety bond. The NLRC Rules of Procedure does not require such formalities with respect to the contents of the indemnity agreement.

In any case, the rules are explicit that a cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and conditions of the surety bond, and shall be binding on the appellants and the bonding company.

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