Sara Lee Philippines, Inc.

versus Macatlang

Facts:

1. This case is about 6 consolidated petitions for review on certiorari, pertaining to the 3.45 Billion
appeal bond, which, as mandated by Article 233 of the Labor Code, is equivalent to the
monetary award adjudged by the labor arbiter in the cases. The first 5 petitions seek a
relaxation of the rule, while the last petition urges its strict interpretation.
2. This controversy stemmed from a Notice of Permanent Closure filed by Aris Phils. Inc. with the
DOLE, stating that it will permanently cease its operations. All employees of Aris were duly
informed.
3. Aris Philippines Workers Confederation of Filipino Workers (Union) staged a strike for violation
of duty to bargain collectively, union busting and illegal closure.
4. After conciliation, the parties entered into an agreement whereby Aris undertook to pay its
employees the benefits which accrued by virtue of the company’s closure, which settlement
amounted to P419 Million and an additional P15 Million Benevolent Fund to the Union.
5. On 26 October 1995, Fashion Accessories Philippines, Inc. (FAPI) was incorporated. When said
incorporation came to the knowledge of the affected employees, they all filed 63 separate
complaints against Aris for illegal dismissal.
6. Essentially, the complainants insisted that FAPI was organized by the management of Aris to
continue the same business of Aris, thereby intending to defeat their right to security of tenure.
They likewise impleaded in their subsequent pleadings that Sara Lee Corporations and Sara Lee
Phils. are the major stockholders of FAPI.
7. Aris countered that it had complied with all the legal requirements for a valid closure of business
operations; that it is not, in any way, connected with FAPI, which is a separate and distinct
corporation; that the contracts of Aris with its contractors were already terminated; and that
there is no truth to the claim that its export quota with Garments and Textile Export Board was
transferred to FAPI because the export quota is nontransferable.
8. The Labor Arbiter found that the complainants were illegally dismissed and awarded them with
separation pay and other monetary benefits amounting to P3.45 billion.
9. The Corporations filed their Notice of Appeal with Motion to Reduce Appeal Bond and To Admit
Reduced Amount with the NLRC.
10. They asked the NLRC to reduce the appeal bond to P1 Million each on the grounds that it is
impossible for any insurance company to cover such huge amount and that, in requiring them to
post in full the appeal bond would be tantamount to denying them their right to appeal.
11. The NLRC granted the reduction of the appeal bond. The NLRC ordered the Corporations to post
an additional P4.5 Million bond, bringing the total posted bond to P9 Million.
12. Macatlang, representing the employees, filed a petition for certiorari before the CA, charging
the NLRC with grave abuse of discretion in giving due course to the appeal of petitioners despite
the gross insufficiency of the cash bond. They declared that the appeal bond must be equivalent
to the amount of the award.
13. The Corporations filed a Motion to Dismiss the petition on the grounds of forum shopping.
14. While the case was pending, the NLRC issued a Resolution setting aside the Decision of the labor
arbiter and remanding the case to the “forum of origin for further proceedings.”
 15. Notwithstanding this second resolution, the CA proceeded to reverse and set aside the first
NLRC Resolution and deemed it reasonable under the circumstances of the case to order the
posting of an additional appeal bond of P1 Billion.
16. All parties filed their Motion for Reconsideration but were later denied by the CA.
17. Hence, these petitions.

Issue:

Whether the appeal bond may be reduced.

Held:

1. Yes.
2. Well-settled is the doctrine that appeal is not a constitutional right, but a mere statutory
privilege. Hence, parties who seek to avail themselves of it must comply with the statutes or
rules allowing it. The primary rule governing appeal from the ruling of the labor arbiter is Article
223 of the Labor Code.
3. The requisites for perfection of appeal as embodied in Article 223, as amended, are: 1) payment
of appeal fees; 2) filing of the memorandum of appeal; and 3) payment of the required cash or
surety bond from receipt of the decision or order appealed from. These requisites must be
satisfied within 10 days from receipt of the decision or order appealed from.
4. It is presumed that an appeal bond is only necessary in cases where the labor arbiter’s decision
or order contains a monetary award. Conversely, when the labor arbiter does not state the
judgment award, posting of bond may be excused.
5. Considering the peculiar circumstances in this case, the Supreme Court determined what the
reasonable amount of appeal bond is.
6. The Court underscored the fact that the amount of 10% of the award is not a permissible bond,
but is only such amount that shall be deemed reasonable in the meantime that the appellant’s
motion is pending resolution by the Commission.
7. The actual reasonable amount yet to be determined is necessarily a bigger amount. In an effort
to strike a balance between the constitutional obligation of the state to afford protection to
labor on the one hand, and the opportunity afforded to the employer to appeal on the other,
the Court considered the appeal bond in the amount of P725M which is equivalent to 25% of
the monetary award sufficient to perfect the appeal.
8. The Supreme Court sustained the Court of Appeals insofar as it increases the amount of the
required appeal bond. But the court deemed it reasonable to reduce the amount of the appeal
bond to P725 Million.
9. This directive already considers that the award if not illegal, is extraordinarily huge and that no
insurance company would be willing to issue a bond for such big money.
10. The amount of P725 Million is approximately 25% of the basis above calculated.
11. By reducing the amount of the appeal bond in this case, the employees would still be assured of
at least substantial compensation, in case a judgment award is affirmed. On the other hand,
management will not be effectively denied of its statutory privilege of appeal.