STAR ANGEL HANDICRAFT, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) AND SPOUSES HELEN AND JOLITO FRIBALDOS, RESPONDENTS.

This is a petition for certiorari under Rule 65 of the
Revised Rules of Court to set aside: (1) the Resolution of the Third Division of the National Labor Relations
Commission (NLRC), dated October 23, 1992, in NLRC Case No. RAB-IV-2-4223-92-RI
and (2) its Resolution dated January 21, 1993, which denied petitioner’s motion
for reconsideration.

We grant the petition.

I

On February 12, 1992, private respondents filed a complaint
against the Star Angel Handicraft owned by Ildefonso and Estella Nuique, with
the Regional Arbitration Branch, Region IV, of the NLRC, for illegal dismissal,
underpayment of wages, overtime pay, premium pay for holidays, premium pay for
rest day, service incentive leave pay and thirteenth-month pay (RAB-IV-2-4223-92-RI).

By agreement of
the parties, private respondents were allowed to report back for work, leaving
only the money claims for the determination of the Labor Arbiter (Rollo, p. 2).

Private respondents filed their position paper on April 20, but
petitioner failed to submit one despite several directives issued to it to do
so (Rollo, pp. 25-28). On June 24, the
case was set for hearing, but petitioner’s counsel failed to appear. Thus, the case was submitted for resolution
(Rollo, p. 2).

On August 7, petitioner filed a motion to admit its position paper
with the supporting documents (Rollo, pp. 11­-21).

On August 19, petitioner received a copy of the deci­sion
rendered by the Labor Arbiter dated July 22, 1992. In the decision, the money claims were resolved in favor of
private respondents with Helen Fribaldos receiving an award of P45,347.00 and
Jolito Fribaldos an award of P48,125.00, or a total sum of P93,472.00 (Rollo,
p. 32).

Petitioner moved for the reconsideration of the decision of the
Labor Arbiter (Rollo, p. 42). After the
denial of the motion for reconsideration, petitioner appealed to the NLRC with
an Urgent Motion to Reduce Bond, alleging as grounds grave abuse of discretion
committed by the Labor Arbiter in computing the award of the claims based on an
erroneous applicable, daily-minimum wage for the handicraft establishment
(Rollo, p. 33).

On October 23, without resolving the Urgent Motion to Reduce
Bond, the NLRC (Third Division) dismissed the appeal of petitioner for
appellant’s failure to put up a bond. Thus, the NLRC stated:

“On July 22, 1992, Labor Arbiter Ambrosio B. Sison rendered a
Decision in the instant case awarding complainants Helen and Jolito Fribaldos
wage differentials in the total amount of P93,472.00.

Respondents duly filed their Memorandum of Appeal and paid appeal
fee. However, respondents filed an
Urgent Motion to Reduce Bond on the grounds that the Labor Arbiter committed
errors of judgment and that it cannot afford to post bond equivalent to the
amount awarded.

We dismiss the appeal.

The posting of cash or supersedeas bond equivalent to the award is
mandated by law (Art. 223, Labor Code). Without such bond, the appeal is not perfected. And while the Commission in meritorious
cases allows reduction bond (sic), it must be for compelling reasons and shown
by evidence. The posting of bond is
likewise first required before the reduction thereof is allowed.

PREMISES CONSIDERED, respondents’ appeal from the Decision of July
22, 1992 is hereby DISMISSED for failure to perfect appeal” (Rollo, pp.
40-41).

In its Resolution dated January 21, 1993, the NLRC (Third
Division) denied the motion for reconsideration (Rollo, pp. 57-58).

Hence, this petition.

II

The pivotal issue raised by petitioner is whether the NLRC acted
with grave abuse of discretion when it refused to act on the motion to reduce
the appeal bond and when it dismissed the appeal for failure of petitioner to
post the appeal bond.

There is no question about the timeliness of the filing of the
motion for reduction of the appeal bond, which was annexed to the Memorandum on
Appeal. The motion averred that a big
portion of the awards had already prescribed, thus justifying the reduction of
the bond from P93,472.00 to only P19,890.00.

The appeal bond is required under Paragraph 2 of Article 223 of
the Labor Code, which provides:

“In case of a judgment involving a monetary award, an appeal
by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from.”

Section 3(a), Article 223, Rule VI of the New Rules of Procedure
of the NLRC provides:

“Requisites for Perfection of Appeals. – (a) The appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under oath
with proof of payment of the required appeal fee and the posting of a cash or
surety bond as provided in Section 5 of this Rule; xxx.”

Under Section 5 of Rule VI, the appellant is required to pay an
appeal fee of P100.00 to the Regional Arbitration Branch, Regional Office, and
to attach to the records of the case the official receipt of such payment.

In Section 6 of Rule VI, it is provided that:

“Bond. – In case the
decision of a Labor Arbiter involves a monetary award, an appeal by the
employer shall be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission or the
Supreme Court in an amount equivalent to the monetary award.

The Commission may, in meritorious cases and upon Motion of the
Appellant, reduce the amount of the bond. (However, an appeal is deemed perfected upon the posting of the bond
equivalent to the monetary award exclusive
of moral and exemplary damages as well as attorney’s fees [Deleted,
effective on January 14, 1992]).

Nothing herein however, shall be construed as extending the period
of appeal.”

In dismissing the appeal, the NLRC said: “The posting of bond is likewise first
required before the reduction thereof is allowed.” In other words, the
NLRC would not act on a motion for the reduction of the bond unless petitioner
first files the bond, the amount of which he is precisely contesting. This posture of the NLRC needs rethinking.

What obviously misled the NLRC in imposing the posting of a bond
as a precondition before it can act on the motion to reduce the bond is the
provision of Article 223 (par. 2) of the Labor Code which requires the posting
of the bond before an appeal “may be perfected.”

There is a clear distinction between the filing of an appeal
within the reglementary period and its perfection. The latter may transpire after the end of the reglementary period
for filing the appeal.

Under Article 223 of the Labor Code, an appeal to the NLRC from
the decisions, awards or orders of the Labor Arbiter must be made “within
ten (10) calendar days from receipt of such decisions, awards or orders.”
Under Section 3(a) of Rule VI of the New Rules of Procedure of the NLRC, the
appeal fees must be paid and the memorandum of appeal must be filed within the
ten-day reglementary period.

Neither the Labor Code nor its implementing rules specifically
provide for a situation where the appellant moves for a reduction of the appeal
bond.

Inasmuch as in practice the NLRC allows the reduction of the
appeal bond upon motion of appellant and on meritorious grounds, it follows
that a motion to that effect may be filed within the reglementary period for
appealing. Such motion may be filed in
lieu of a bond which amount is being contested. In the meantime, the appeal is not deemed perfected and the Labor
Arbiter retains jurisdiction over the case until the NLRC has acted on the
motion and appellant has filed the bond as fixed by the NLRC.

An analogous procedure is the extension of time to file a record
on appeal, provided the motion for such extension is filed before the
expiration of the reglementary period for filing said record on appeal (Vda. de
Capulong v. Workmen’s Insurance Co., Inc., 178 SCRA 314 [1989]; Tuason v. Court
of Appeals, 43 SCRA 664 [1972]). If the
order of the trial court granting the motion is issued only after the
expiration of the original period, the appeal may still be perfected within the
period extended (Singbengco v. Arellano, 99 Phil. 952 [1956]). Likewise, the appeal is deemed perfected
only after the approval of the record on appeal and not upon the filing of said
record on appeal.

We have, heretofore, relaxed the requirement of the posting of an
appeal bond as a condition for perfecting an appeal under Article 223 of the
Labor Code. In Erectors, Incorporated
v. National Labor Relations Commission, 202
SCRA 597 (1991), we nullified an order of the NLRC which required the appellant
to post a bond of P575,222.00 within ten days from receipt of the order or
suffer the dismissal of the appeal. The
bond therein required was based on the award which was erroneously computed
based on the salary which the employee was no longer receiving at the time of
his separation and “which even included in the computation the award of
P400,000.00 for moral and exemplary damages.”

In Blancaflor v. National Labor Relations
Commission, 218 SCRA 366 (1993), Rada v. National Labor
Relations Commission, 205 SCRA 67 (1992), and Your Bus
Line v. National Labor Relations Commission,
190 SCRA 160 (1990), we cautioned the NLRC to give Article 223 of the Labor
Code, particularly the provisions on requiring a bond on appeals involving
monetary awards, a liberal interpretation in line with the desired objective of
resolving controversies on the merits.

WHEREFORE, the Resolutions of the NLRC (Third Division)
dated October 23, 1992 and January 21, 1993 are SET ASIDE. The NLRC (Third Division) is DIRECTED to ACT
on the motion for the reduction of the appeal bond and to ACCEPT the appeal of
petitioner after the filing of the appropriate appeal bond.

SO ORDERED.

Cruz, (Chairman), Davide, Jr., Bellosillo, and Kapunan, JJ., concur.