G.R. No. L-77279 April 15, 1988
MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION and FRANCISCO D. REYES, respondents.

FACTS

Petitioner M.S. Catan Placement Agency, a licensed recruitment agency, recruited private respondent Francisco D. Reyes for employment as a steelman in Saudi Arabia under a one-year contract (May 15, 1981 to May 14, 1982) with the Ali and Fahd Shabokshi Group. The contract contained an automatic renewal clause if neither party gave a one-month termination notice prior to its expiry. Reyes was not repatriated upon the contract’s initial expiration and was instead reassigned as a crusher plant operator, effectively renewing his employment. On March 30, 1983, during this renewed term, Reyes sustained a work-related injury that crushed his right ankle. He returned to the Philippines for medical treatment and later resumed work in Saudi Arabia before final repatriation on May 15, 1984.
Reyes filed a claim for disability benefits and medical reimbursement against the recruitment agency before the Philippine Overseas Employment Administration (POEA). The POEA ruled in his favor, a decision affirmed by the National Labor Relations Commission (NLRC). The petitioner agency then filed this certiorari petition, arguing it incurred no liability as the injury occurred after the original contract’s term and that its agency agreement with the Saudi principal had already expired.

ISSUE

Whether the NLRC committed grave abuse of discretion in holding the local recruitment agency solidarily liable for the worker’s disability benefits and medical expenses.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion. The Court upheld the NLRC’s ruling based on two primary legal grounds. First, the employment contract was valid and subsisting when the injury occurred due to its automatic renewal clause. Since no termination notice was given, Reyes’s reassignment and continued work constituted a renewed contract, making the injury compensable under its terms.
Second, the local agency’s solidary liability with its foreign principal is firmly established under labor regulations and jurisprudence. Applying Section 10(a)(2), Rule V, Book I of the Rules Implementing the Labor Code, the Court reiterated that a recruitment agency can be sued jointly and solidarily with the foreign employer for violations of the employment contract. This liability persists even if the agency agreement itself had expired, as the obligations to the recruited worker extend until the expiration of the employment contract. The Court cited Article 1921 of the Civil Code, noting that the revocation of an agency does not prejudice third parties, like the employee, who were not notified thereof.
Regarding the medical expenses, the Court found no evidence to support the agency’s claim that Reyes was negligent or medically unfit upon his return to work. A medical certificate merely indicated pain and walking difficulty but did not declare him unfit for duty. Significantly, the agency itself facilitated his return by purchasing his travel ticket, which the NLRC rightly interpreted as an implied certification of his fitness. Thus, the awarded expenses were justified. The petition was dismissed for lack of merit.