G.R. Nos. 90273-75 November 15, 1989
FINMAN GENERAL ASSURANCE CORP., petitioner, vs. WILLIAM INOCENCIO, ET AL. AND EDWIN CARDONES, THE ADMINISTRATOR, PHILIPPINE OVERSEAS AND EMPLOYMENT ADMINISTRATION, THE SECRETARY OF LABOR AND EMPLOYMENT, respondents.

FACTS

Pan Pacific Overseas Recruiting Services, Inc., a licensed recruitment agency, posted a surety bond issued by petitioner Finman General Assurance Corporation as required by POEA rules. Private respondents filed complaints with the POEA against Pan Pacific for failing to secure overseas employment after collecting placement fees, alleging violations of the Labor Code. The POEA Administrator impleaded Finman as a party-respondent in its capacity as surety. Summons was served, but Pan Pacific could not be located at its registered address. Finman filed an answer, denying liability and contesting the POEA’s jurisdiction over surety bonds, arguing that jurisdiction lay with the Insurance Commission or regular courts. After a hearing where complainants presented evidence and Finman did not appear, the POEA issued an order holding Finman and Pan Pacific jointly and severally liable for the refund of the placement fees. Finman’s appeal to the Secretary of Labor was denied.

ISSUE

Whether the POEA has the authority to implead a surety company and directly enforce the surety bond against it in an administrative proceeding for claims against a recruitment agency.

RULING

The Supreme Court ruled affirmatively, dismissing Finman’s petition. The legal logic is anchored on the nature of the surety bond and the statutory powers of the Secretary of Labor. The bond was posted pursuant to Article 31 of the Labor Code, which explicitly grants the Secretary of Labor the “exclusive power to determine, decide, order or direct payment from, or application of, the cash and surety bond.” Furthermore, under Section 176 of the Insurance Code, the liability of a surety is joint and several with the principal obligor. The POEA Rules also specify that such bonds shall answer for all valid claims arising from violations of recruitment laws and contracts. Consequently, Finman’s obligation under the bond is direct and solidary with Pan Pacific. The Court held that allowing the POEA to implead and adjudicate claims against the surety in the same proceeding where the agency’s liability is determined is efficient and avoids multiplicity of suits. Finman, having undertaken a solidary obligation, is not entitled to a separate proceeding in a different forum merely because it is a surety. The quasi-judicial proceeding before the POEA, where Finman was given notice and opportunity to be heard, satisfies due process for fixing its liability alongside its principal.