In U-Bix Corporation v. Hollero, the Supreme Court reiterated the critical importance of strictly adhering to the procedural rules for perfecting an appeal, particularly the posting of a sufficient surety bond in labor cases involving monetary awards. The Court held that failure to comply with all requirements, including providing proof of a security deposit or collateral securing the bond, renders the appeal unperfected. This means the Labor Arbiter’s decision becomes final and executory, safeguarding the rights of employees to a timely resolution of their claims. This case serves as a cautionary tale for employers, emphasizing the need for meticulous compliance with procedural rules to ensure their appeals are properly considered.

Dismissal Upheld: When a Defective Appeal Bond Costs U-Bix Corporation

U-Bix Corporation and its officer, Edilberto B. Bravo, found themselves facing a final and executory decision in a labor dispute because they failed to properly perfect their appeal. This failure stemmed from a deficiency in the surety bond they submitted. The case originated from consolidated complaints—one filed by U-Bix against its employee, Valerie Anne H. Hollero, for reimbursement of training costs, and another filed by Hollero against U-Bix for illegal dismissal. Initially, the Labor Arbiter ruled in favor of U-Bix, ordering Hollero to reimburse training costs. However, the National Labor Relations Commission (NLRC) reversed this decision, finding Hollero to have been illegally dismissed and awarding her backwages and separation pay.

U-Bix then appealed to the Court of Appeals (CA), which affirmed the NLRC’s decision. The Supreme Court subsequently upheld the CA’s ruling, and the decision became final. Following this, Hollero filed a motion for the issuance of a writ of execution to enforce the monetary award. During pre-execution conferences, U-Bix sought a recomputation of the award, leading to a revised amount of P3,270,512.82. However, U-Bix contested this recomputation, leading to further legal wrangling.

When U-Bix appealed the Labor Arbiter’s order approving the recomputation, they posted a surety bond. However, the NLRC denied the appeal because the bond’s accreditation did not cover labor cases and lacked proof of a required security deposit. The CA affirmed the NLRC’s decision, emphasizing the mandatory and jurisdictional nature of filing a proper supersedeas bond. The core issue before the Supreme Court was whether the CA erred in affirming the NLRC’s dismissal of U-Bix’s appeal based on the inadequacy of the supersedeas bond.

The Supreme Court emphasized the mandatory nature of perfecting an appeal. The Court acknowledged that the Memorandum dated June 8, 2010, issued by the NLRC’s Legal and Enforcement Division, included Mapfre Insular Insurance Corporation (Mapfre) in the list of accredited bonding companies. The Court stated, “While the said guidelines were issued only in 2013, it is logical to conclude that the Memorandum dated June 8, 2010 was for the same purpose mentioned, i.e., to furnish all Presiding/Commissioners and Executive/Labor Arbiters a list of accredited bonding companies.” However, even with this acknowledgment, U-Bix’s appeal still failed.

The Court focused on the failure to provide proof of security deposit or collateral securing the bond. Article 223 of the Labor Code mandates that appeals involving monetary awards are perfected only upon posting a cash or surety bond. Moreover, Section 6, Rule VI of the 2005 Revised Rules of Procedure of the NLRC specifies additional requirements for surety bonds:

Section 6. Bond. – In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney’s fees.

In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the Commission or the Supreme Court, and shall be accompanied by original or certified true copies of the following:

c) proof of security deposit or collateral securing the bond; provided, that a check shall not be considered as an acceptable security;

U-Bix admitted that they did not submit any proof of security deposit or collateral, arguing that Mapfre did not require it. The Court rejected this excuse, stating, “It must be noted that right from the start, petitioners were well represented by counsel who is presumed to know the explicit requirement under the aforementioned Section 6 that a surety bond should be accompanied by a proof of security deposit or collateral.”

The Court also dismissed the argument that Bravo’s personal guarantee in the Indemnity Agreement sufficed as security for the bond. The Court explained that “[t]he obvious purpose of an appeal bond is to ensure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment if subsequently affirmed.” Requiring a security deposit or collateral further ensures the employee’s recovery of the judgment award. Since Section 6, Rule VI of the 2005 NLRC Rules of Procedure requires both an indemnity agreement and proof of security deposit or collateral, the submission of one cannot dispense with the other.

Because U-Bix failed to perfect their appeal in the manner prescribed, the Labor Arbiter’s order approving the recomputation of the money award became final. The Court acknowledged that it has relaxed procedural rules in certain cases to allow full ventilation of cases on their merits, but emphasized that “the policy of liberal interpretation is qualified by the requirement that there must be exceptional circumstances to allow the relaxation of the rules.” Absent such circumstances, strict adherence to procedural rules is required.

Finally, the Court addressed U-Bix’s argument that the recomputation of the monetary award was erroneous. Specifically, U-Bix challenged the computation of backwages up to the finality of the Supreme Court’s 2008 decision, arguing that backwages should not accrue beyond the NLRC’s decision awarding separation pay. Citing Bani Rural Bank Inc. v. De Guzman, the Court clarified the computation of backwages:

Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) or reinstatement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.

Therefore, Hollero was entitled to backwages from the time of her illegal dismissal up to the finality of the Supreme Court’s decision. The Court found the recomputation of the monetary award to be correct. Consequently, the Supreme Court denied U-Bix’s petition, affirming the CA’s decision and underscoring the importance of strict compliance with procedural rules in perfecting appeals in labor cases.

FAQs

What was the key issue in this case?	The key issue was whether U-Bix Corporation properly perfected its appeal by posting the required surety bond with adequate proof of security or collateral, as mandated by the NLRC rules.
Why was the surety bond considered defective?	The surety bond was considered defective because, while the bonding company was accredited, U-Bix failed to submit proof of a security deposit or collateral securing the bond, a mandatory requirement for perfecting the appeal.
What is the significance of perfecting an appeal in labor cases?	Perfecting an appeal is crucial because it is a jurisdictional requirement; failure to comply with all procedural rules renders the Labor Arbiter’s decision final and executory, preventing further review of the case.
Can the requirement of a security deposit or collateral be waived if the bonding company doesn’t require it?	No, the Supreme Court clarified that the requirement of a security deposit or collateral cannot be waived, even if the bonding company does not explicitly require it, as the NLRC rules mandate its submission.
What is the purpose of requiring a surety bond in appeals involving monetary awards?	The purpose of requiring a surety bond is to ensure that the employee can recover the monetary award if the judgment is affirmed on appeal and to discourage employers from delaying or evading their obligations.
How are backwages calculated when separation pay is awarded in lieu of reinstatement?	Backwages are calculated from the time of the illegal dismissal until the finality of the decision ordering the payment of separation pay, as this marks the termination of the employment relationship.
Did the Supreme Court consider any exceptional circumstances that might warrant relaxing the procedural rules?	No, the Supreme Court found no exceptional circumstances or compelling reasons to depart from the strict interpretation and application of the procedural rules in this case.
What was the final outcome of the case?	The Supreme Court denied U-Bix Corporation’s petition and affirmed the Court of Appeals’ decision, which upheld the NLRC’s ruling, making the Labor Arbiter’s order final and executory.

The U-Bix case underscores the stringent requirements for perfecting appeals in labor disputes, especially concerning the posting of surety bonds. Employers must ensure meticulous compliance with all procedural rules to avoid the irreversible consequences of a failed appeal. The decision serves as a reminder that while the courts may, in certain instances, relax procedural rules, the absence of compelling reasons necessitates strict adherence to ensure the orderly administration of justice.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: U-BIX CORPORATION AND EDILBERTO B. BRAVO VS. VALERIE ANNE H. HOLLERO, G.R. No. 199660, July 13, 2015