Labor Law

Finman General Assurance Corp. vs William Inocencio

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G.R. No. 90273-75 – 179 SCRA 480 (259 Phil. 85) – Pre-Employment – Impleading Sureties in Labor Cases; Liability of local recruitment agency and foreign employer; Solidary Liability

Pan Pacific Overseas is a recruitment agency duly registered with the POEA. It offers jobs abroad. Finman General is acting as Pan Pacific’s surety (as required by POEA rules and Art. 31 of the Labor Code). Pan Pacific was sued by William Inocencio and 3 others for alleged violation of Article 32 and 34 of the Labor Code. Inocencio alleged that Pan Pacific charged and collected fees but failed to provide employment abroad.

POEA ruled in favor of Inocencio et al and had impleaded Finman (upon request of Inocencio) in the complaint as well (Pan Pacific changed business address without prior notice to POEA). The Labor Secretary affirmed POEA’s ruling. Finman General asserts that it should not be impleaded in the case because it is not a party to the contract between Pan Pacific and Inocencio et al.

ISSUE: Whether or not Finman General is solidarily liable in the case at bar.

HELD: Yes. Since Pan Pacific had thoughtfully refrained from notifying the POEA of its new address and from responding to the complaints, Finman may well be regarded as an indispensable party to the proceedings before the POEA. Whether Finman was an indispensable or merely a proper party to the proceedings, the SC held that the POEA could properly implead it as party respondent either upon the request of Inocencio et al or motu propio. Such is the situation under the Revised Rules of Court.

Finman General is solidarily liable. Under Section 176 of the Insurance Code, as amended, the liability of a surety in a surety bond (Finman) is joint and several with the principal obligor (Pan Pacific).

Further, Article 31 of the Labor Code provides:

Art. 31. Bonds. – All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and, conditions of employment as appropriate.

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The Secretary of Labor shall have 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.

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