G.R. No. 79436 -50; January 17, 1990
EASTERN ASSURANCE & SURETY CORPORATION, petitioner, vs. SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, ELVIRA VENTURA, ESTER TRANGUILLAN, et al., respondents.

FACTS

Petitioner Eastern Assurance and Surety Corporation (EASCO) executed a surety bond on January 2, 1985 in favor of the Philippine Overseas Employment Administration (POEA to secure the obligations of J & B Manpower Specialist, Inc., a recruitment agency. The bond, amounting to P150,000.00, was conditioned upon the faithful performance of the agency’s duties under POEA rules and its license. It contained a clause stating that notice to the principal agency was also notice to the surety, and that liability would expire on January 2, 1986, with claims to be presented within ten days thereafter. Multiple applicants filed complaints with the POEA against J & B for illegal exaction and non-deployment from April to October 1985. The agency failed to answer the summons. The POEA Administrator found violations and held EASCO jointly and severally liable with J & B for refunds to numerous complainants.
The Secretary of Labor, on appeal, modified the POEA order. He limited EASCO’s joint and several liability to refund only nineteen complainants, reducing the aggregate amount to P140,817.75, which was within the bond’s penal sum. The Secretary ruled that the agency had received summons for several claims before the bond’s expiration period, and since notice to the principal was notice to the surety, EASCO was deemed notified. EASCO filed this certiorari petition, arguing its liability had expired and that claims were filed beyond the bond’s stipulated period.

ISSUE

Whether the Secretary of Labor committed grave abuse of discretion in holding petitioner EASCO jointly and severally liable on the surety bond despite claims being formally presented to the surety after the bond’s stipulated expiration period.

RULING

No. The Supreme Court upheld the Secretary of Labor’s decision, finding no grave abuse of discretion. The Court emphasized that the surety bond explicitly stipulated that notice to the principal recruitment agency constituted notice to the surety. The records established that J & B Manpower had received summons for several claims before the expiration of the ten-day period following the bond’s cancellation on January 2, 1986. Therefore, EASCO was constructively and legally notified within the required period by virtue of this contractual provision. Furthermore, the Court cited the doctrine that contracts of compensated sureties, like EASCO, are to be interpreted liberally in favor of the obligees and beneficiaries—the migrant workers—and not strictly for the surety’s benefit. The aggregate liability imposed, P140,817.75, did not exceed the bond’s P150,000.00 limit. EASCO’s other procedural objections were deemed factual matters where the Secretary’s findings were supported. The petition was dismissed for lack of merit.