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, though notified, did not appear, the POEA issued an Order holding Finman and Pan Pacific jointly and severally liable for refunding the placement fees. Finman appealed to the Secretary of Labor, reiterating its jurisdictional objections. The Secretary denied the appeal. Finman then elevated the case to the Supreme Court via a Petition for Certiorari, contending the POEA lacked authority to implead it and to enforce the surety bond directly.

ISSUE

Whether the POEA has the authority to implead a surety company and directly enforce the obligations under a recruitment bond in a proceeding against the principal recruitment agency.

RULING

The Supreme Court dismissed the petition, upholding the POEA’s authority. 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 for any claim or injury covered and guaranteed by the bonds.” This provision confers quasi-judicial authority over the bond itself. 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 answer for all valid claims arising from violations of recruitment laws and contracts.
The Court reasoned that since the liability is solidary, the surety’s obligation is inseparable from that of the principal. Therefore, the POEA, in exercising its adjudicatory power over recruitment violations, can properly implead the surety and enforce the bond in the same proceeding. To require a separate action in regular courts would contravene the statutory scheme designed for expedient resolution of migrant workers’ claims and would negate the solidary nature of the undertaking. The surety is not entitled to a different procedural forum merely because it is a bonding company; it steps into the shoes of the principal agency for the purpose of answering claims guaranteed by the bond. The POEA proceeding, where Finman was given notice and opportunity to be heard, satisfied due process.