Case Title: KARJ GLOBAL MARKETING NETWORK, INC., v. MIGUEL P. MARA, G.R. No.
190654, July 28, 2020
(CAGUIOA, J.)
Instruction learned:
1. Whether posting of bond is needed in the perfection of an appeal by the employer.
Indeed, as the CA ruled, the posting of the bond is "an indispensable requisite for the perfection of an appeal
by the employer." As the Court held in Viron Garments Manufacturing, Co., Inc. v. NLRC (Viron), the
mandatory nature of the bond "is clearly limned in the provision that an appeal by the employer may be
perfected 'only upon the posting of a cash or surety bond.' The word 'only' makes it perfectly clear, that the
lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by
which an employer's appeal may be perfected."
2. What the exceptional circumstances for posting of bond in the perfection of an appeal by the employer?
As against this rule, the Court has recognized exceptional circumstances where it relaxed the requirement
for an appeal bond. As held in Lepanto Consolidated Mining Corp. v. Icao:
x x x [T]his Court has liberally applied the NLRC Rules and the Labor Code provisions on the posting of an
appeal bond in exceptional cases. In Your Bus Lines v. NLRC, the Court excused the appellant's failure to
post a bond, because it relied on the notice of the decision. While the notice enumerated all the other
requirements for perfecting an appeal, it did not include a bond in the list. In Blancaflor v. NLRC, the failure
of the appellant therein to post a bond was partly caused by the labor arbiter's failure to state the exact
amount of monetary award due, which would have been the basis of the amount of the bond to be posted.
In Cabalan Paslulan Negrito Labor Association v. NLRC, petitioner-appellant was an association of Negritos
performing trash-sorting services in the American naval base in Subic Bay. The plea of the association that
its appeal be given due course despite its non-posting of a bond, on account of its insolvency and poverty,
was granted by this Court. In UERM-Memorial Medical Center v. NLRC, we allowed the appellant-
employer to post a property bond in lieu of a cash or surety bond. The assailed judgment involved more
than P17 million; thus, its execution could adversely affect the economic survival of the employer, which
was a medical center.
To determine whether to allow a liberal application of the rule on bonds, it is crucial to understand,
especially in this case, whether respondent stands to lose the security provided by the appeal bond as the
purpose of the appeal bond, as held in Viron, is to ensure that when the workers prevail, they will receive
the money judgment in their favor:
The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently
intended to assure the workers that if they prevail in the case, they will receive the money judgment in their
favor upon the dismissal of the employer's appeal. It was intended to discourage employers from using an
appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims.]
Here, the Court deems the existence of the insolvency proceedings as an exceptional circumstance to
warrant the liberal application of the rules requiring an appeal bond. The failure to file an appeal bond did
not contradict the need to ensure that respondent, if his claim is deemed valid, will receive the money
judgment.
3. Whether employee’s claim have preferential right in the insolvency proceedings of and employer.
In this jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings provide the only
proper venue for the enforcement of a creditor's preferential right such as that established in Article 110 of
the Labor Code, for these are in rem proceedings binding against the whole world where all persons having
any interest in the assets of the debtor are given the opportunity to establish their respective credits
[Philippine Savings Bank v. Lantin, supra; Development Bank of the Philippines v. Santos, supra].
What Article 110 means in the context of an insolvent employer is "that during bankruptcy, insolvency or
liquidation proceedings involving the existing properties of the employer, the employees have the
advantage of having their unpaid wages satisfied ahead of certain claims which may be proved therein."
The foregoing therefore shows that an employee of an employer who is undergoing insolvency proceedings
has many layers of protection starting from being allowed to prosecute his claim, registering a contingent
claim before the insolvency court, and finally, enjoying a preference in case the assets of the corporation are
ordered liquidated to pay for its debts.
Here, petitioner informed the labor tribunals of the pendency of the insolvency proceedings. In fact, it also
informed the NLRC that it had apprised the insolvency court of the pendency of the case in its Motion to
Suspend Proceedings. Even as it wanted a suspension of the proceedings, it still filed a Notice of Appeal and
Memorandum of Appeal Ad Cautelam. It was therefore an error for the NLRC to dismiss the appeal
outright when the foregoing shows that the law itself provides many measures of protection for the
employee, such that an appeal before the NLRC may be allowed to proceed despite the lack of an appeal
bond.
