GR 151133; (June, 2008) (Digest)
G.R. No. 151133; June 30, 2008
AFP GENERAL INSURANCE CORPORATION, petitioner, vs. NOEL MOLINA, JUANITO ARQUEZA, LEODY VENANCIO, JOSE OLAT, ANGEL CORTEZ, PANCRASIO SIMPAO, CONRADO CALAPON AND NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), respondents.
FACTS
Private respondents, security guards, filed an illegal dismissal case against Radon Security & Allied Services Agency. The Labor Arbiter ruled in their favor. Radon Security appealed to the NLRC, posting a supersedeas bond issued by petitioner AFP General Insurance Corporation (AFPGIC) as surety. The NLRC affirmed the illegal dismissal finding. Upon finality of the NLRC decision, a writ of execution was issued, and the NLRC Sheriff garnished the supersedeas bond.
AFPGIC then filed an Omnibus Motion to Quash the garnishment and to discharge the bond, arguing it had cancelled the bond due to Radon Security’s failure to pay the annual premiums. The Labor Arbiter denied the motion, ruling that a dispute over premium payment is between the principal and the surety and cannot defeat the bond’s purpose. The NLRC and the Court of Appeals affirmed this denial.
ISSUE
Whether the supersedeas bond can be enforced through garnishment despite the alleged cancellation by the surety for non-payment of premiums.
RULING
The Supreme Court denied the petition and affirmed the lower courts. The legal logic is anchored on the nature and purpose of a supersedeas bond in labor cases and the relationship between the surety and the obligee (the employees). A supersedeas bond is required precisely to ensure that monetary awards granted to employees will be satisfied if the employer’s appeal fails. It is posted for the benefit of the winning employees, not merely as a private contract between the employer and the surety.
The Court held that the surety’s liability to the obligees became fixed upon the finality of the judgment against the principal (Radon Security). The subsequent non-payment of premiums by the principal to the surety is a separate issue that does not extinguish the surety’s obligation to the judgment creditors. To rule otherwise would undermine the very reason for requiring the bond, allowing employers to frustrate execution by simply stopping premium payments. The bond’s efficacy is judged at the time of its issuance and acceptance by the court for the perfection of the appeal. AFPGIC’s remedy is to proceed against its principal, Radon Security, for reimbursement of any amount it pays on the bond, but it cannot evade its direct liability to the private respondents.