FINMAN GENERAL ASSURANCE CORP. vs. WILLIAM INOCENCIO, ET AL.

AND EDWIN CARDONES, THE

ADMINISTRATOR, PHILIPPINE OVERSEAS AND EMPLOYMENT ADMINISTRATION, THE SECRETARY OF
LABOR AND EMPLOYMENT. [G.R. No. 90273-75 November 15, 1989]
Facts: Pan Pacific Overseas Recruiting Services, Inc. ("Pan Pacific") is a private, fee-charging, recruitment
and employment agency. Pan Pacific posted a surety bond issued by petitioner Finman General
Assurance Corporation ("Finman") and was granted a license to operate by the POEA.
Private respondents William Inocencio, Perfecto Palero, Jr., Edwin Cardones and one Edwin Hernandez
filed with the POEA separate complaints against Pan Pacific for violation of Articles 32 and 34 (a) of the
Labor Code, as amended and for refund of placement fees paid to Pan Pacific. The complainants alleged
that Pan Pacific charged and collected such fees from them but did not secure employment for them.
Acting on the complaints, the POEA Administrator motu proprio impleaded petitioner Finman as party
respondent in its capacity as surety for Pan Pacific. Separate summonses were served upon Finman and
Pan Pacific. The return of the summons served on Pan Pacific at its official address registered in the
POEA records, showed that Pan Pacific had moved out therefrom; no prior notice of transfer or change
of address was furnished by Pan Pacific to the POEA as required under POEA rules. The POEA considered
that constructive service of the complaints had been effected upon Pan Pacific and proceeded
accordingly.
The POEA Administrator issued an Order to respondents to pay jointly and severally complainants. The
Secretary of Labor upheld the POEA Order appealed from and denied the appeal for lack of merit.
Petitioner Finman now comes before this Court on a Petition for certiorari with prayer for preliminary
injunction or temporary restraining order, raising much the same issues it had already ventilated before
the POEA and the Secretary of Labor. It is contended once again by petitioner Finman that the POEA had
no authority to implead petitioner in the proceedings commenced by private respondents: and that the
POEA was not authorized to require, in those same proceedings, petitioner to pay private respondents'
claims for refund against Pan Pacific on the basis of the surety bond issued by petitioner.
Issue: Whether or not petitioner is solidarily liable and POEA has jurisdiction over the case involving the
security bonds rather than the insurance commission.
Ruling: Yes. Petitioner cannot seriously dispute the direct and solidary nature of its obligations under its
own surety bond. Under Section 176 of the Insurance Code, as amended, the liability of a surety in a
surety bond is joint and several with the principal obligor.
Under the Labor Code and the POEA Rules and Regulations, Pan Pacific had violated at least one of the
conditions for the grant and continued use of the recruitment license granted to it.
The fundamental argument of Finman is that its liability under its own bond must be determined and
enforced, not by the POEA or the Secretary of Labor, but rather by the Insurance Commission or by the
regular courts. Once more, we are not moved by petitioner's argument.
There appears nothing so special or unique about the determination of a surety's liability under its bond
as to restrict that determination to the Office of the Insurance Commissioner and to the regular courts
of justice exclusively. The exact opposite is strongly stressed by the second paragraph of Article 31 of the
Labor Code:
Art. 31. Bonds. The secretary of Labor shall have the exclusive power to determine, decide, order or direct
payment from, or application of, the cash or surety bond for any claim or injury covered and guaranteed by the
bonds.
Clearly that public policy will be effectively negated if POEA and the Department of Labor and
Employment were held powerless to compel a surety company to make good on its solidary undertaking
in the same quasi-judicial proceeding where the liability of the principal obligor, the recruitment or
employment agency, is determined and fixed and where the surety is given reasonable opportunity to
present any defenses it or the principal obligor may be entitled to set up.