FINMAN GENERAL ASSURANCE CORP VS.

INOCENCIO
179 SCRA 480
NOVEMBER 15, 1989

FACTS
Pan Pacific is a recruitment and employment agency. It posted surety bond issued by Finman
General Assurance and was granted license to operate by POEA.

Inocencio, Palero, Cardones, Hernandez filed with POEA complaints against Pan Pacific for violation
of Labor Code and for refund of placement fees. POEA Administrator motu propio impleaded Finman as
surety for Pan Pacific.

Pan Pacific moved out and no notice of transfer was furnished to POEA as required. POEA
considered that constructive service of complaints had been effected.

Finman denied liability and said that:

1. POEA had no jurisdiction over surety bonds; jurisdiction is vested in Insurance Commission
2. Finman had not violated Labor Code
3. Complainants have no cause of action against Finman
4. Amounts claimed were paid as deposits and not as placement fees.
5. POEA Administrator issued Order that respondents should pay.

Finman appealed to Secretary of Labor. Secretary upheld the POEA order.

ISSUE: WON Finman can be held liable for complainants’ claims against Pan Pacific.

HELD:
YES

Under Insurance Code, liability of surety in a surety bond is joint and several with the principal obligor.

Conditions of a bond specified and required in the provisions of a statute providing for submission of
the bond, are incorporated into all bonds tendered under that statute even though not set out in printer’s
ink.

POEA held and Secretary of Labor affirmed that Pan Pacific had violated Labor Code, and at least
one of the conditions for the grant and continued use of the recruitment license. POEA and Secretary of
Labor can require Pan Pacific to refund the placement fees and to impose the fine.

If Pan Pacific is liable, and if Finman is solidarily liable with Pan Pacific, then Finman is liable both to
private respondents and to POEA.

Cash and surety bonds are required from recruitment companies as means of ensuring prompt and
effective recourse against such companies when held liable. Public policy will be effectively negated if
POEA and the DoLE were held powerless to compel a surety company to make good on its solidary
undertaking.