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On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and other monetary claims against GAnzon et.al. The latter opposed the complaint, contending that their agreement with McBurnie was to jointly invest in and establish a company for the management of hotels. They did not intend to create an employer-employee relationship.
In a Decision, the LA declared McBurnie as having been illegally dismissed from employment. Feeling aggrieved, Ganzon et.al appealed the LA’s Decision to the NLRC. On November 5, 2004, they filed their Memorandum of Appeal and Motion to Reduce Bond, and posted an appeal bond in the amount of ₱100,000.00. Ganzon et.al. contended in their Motion to Reduce Bond.
On March 31, 2005, the NLRC denied the motion to reduce bond, explaining that "in cases involving monetary award, an employer seeking to appeal the [LA’s] decision to the Commission is unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent to the monetary award x x x." Thus, the NLRC required from the respondents the posting of an additional bond in the amount of ₱54,083,910.00.
When their motion for reconsideration was denied, the respondents decided to elevate the matter to the Court of Appeals. In the meantime, in view of the respondents’ failure to post the required additional bond, the NLRC dismissed their appeal. The respondents’ motion for reconsideration was also denied.
On February 16, 2007, the CA issued a Resolution granting the respondents’ application for a writ of preliminary injunction conditioned upon the respondents’ posting of a bond in the amount of ₱10,000,000.00. McBurnie sought reconsideration but was denied. He then filed with the Court a Petition for Review on Certiorari but was denied.
In the meantime, the CA ruled allowing the respondents’ motion to reduce appeal bond and directing the NLRC to give due course to their appeal.
Whether or not an “Appeal Bond” can be reduced.
The Court explained in this case that the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the Labor Arbiter. “The word "only" makes it clear that the posting of a cash or surety bond by the employer is the essential and exclusive means by which an employer’s appeal may be perfected. x x x. Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the Labor Arbiter final and executory.
However, while the bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal.
In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and accompanied by the posting of the required appeal bond in a reasonable amount. The requirement on the existence of a "meritorious ground" delves on the worth of the parties’ arguments, taking into account their respective rights and the circumstances that attend the case.
By jurisprudence, the merit referred to may pertain to an appellant’s lack of financial capability to pay the full amount of the bond, the merits of the main appeal such as when there is a valid claim that there was no illegal dismissal to justify the award, the absence of an employer-employee relationship, prescription of claims, and other similarly valid issues that are raised in the appeal. For the purpose of determining a "meritorious ground", the NLRC is not precluded from receiving evidence, or from making a preliminary determination of the merits of the appellant’s contentions. In this case, the NLRC then should have considered the respondents’ arguments in the memorandum on appeal that was filed with the motion to reduce the requisite appeal bond.