Finman General Assurance Corporation v. Abdulgani Salik
REITERATIONFacts
The Antecedents: Private respondents Abdulgani Salik et al. applied with Pan Pacific Overseas Recruiting Services, Inc. (Pan Pacific) and paid P30,000.00 in fees for alleged assurance of employment abroad. Despite assurances, they were not employed. They filed a complaint with the Philippine Overseas Employment Administration (POEA) against Pan Pacific for violation of Articles 32 and 34(a) of the Labor Code, seeking a refund of P30,000.00. Procedural History: The POEA motu proprio impleaded Finman General Assurance Corporation (Finman), Pan Pacific's bonding company. Summons were served on both Pan Pacific and Finman, but they failed to answer. Despite being notified of the hearing, they also failed to appear, leading to ex-parte proceedings. Private respondents presented evidence corroborating their claims. Finman, in an un-timely filed answer, raised several defenses, including lack of valid cause of action, lack of privity, statute of frauds, waiver, and questioned the validity of receipts. The Secretary of Labor and Employment, upon POEA's recommendation, ordered Pan Pacific and Finman to pay jointly and severally the claims of the private respondents amounting to P5,000.00 each, and cancelled Pan Pacific's license. Finman's motion for reconsideration was denied. The Petition: Finman filed a petition for certiorari, assailing the orders of the Secretary of Labor and Employment, primarily on the grounds of grave abuse of discretion amounting to lack of jurisdiction in impleading Finman, in directing Finman to pay jointly and severally, and that the findings of fact were not supported by substantial evidence.
Issue(s)
Whether the POEA has jurisdiction to directly enforce the suretyship undertaking of Finman. Whether the Secretary of Labor acted with grave abuse of discretion amounting to lack of jurisdiction in directing Finman to pay jointly and severally with Pan Pacific. Whether the findings of fact by the POEA and the Secretary of Labor are supported by substantial evidence and are in accordance with law.
Ruling
The petition is devoid of merit. The questioned Orders of the Secretary of Labor are affirmed in toto.
Ratio Decidendi
On the jurisdiction of POEA and the Secretary of Labor to enforce the suretyship undertaking: The Court held that Finman, as the surety company, entered into a suretyship agreement with Pan Pacific, which stipulated joint and several liability for all claims arising from recruitment violations. This is in accordance with Section 4, Rule V, Book I of the Implementing Rules of the Labor Code. The nature of Finman's obligation makes it privy to the proceedings against its principal, Pan Pacific. Therefore, Finman is bound by a judgment against its principal, even if not a party to the proceedings, absent collusion. The Court cited Leyson v. Rizal Surety and Insurance Co. and Government of the Philippines v. Tizon to support the principle that a surety is considered in law as being the same party as the debtor in relation to whatever is adjudged touching the obligation of the latter. Thus, Finman can be held jointly and severally liable. Furthermore, the Court found that Finman's contention regarding the Secretary of Labor's jurisdiction was raised too late, as it did not challenge jurisdiction in its motion for reconsideration before the Secretary, thereby being barred by estoppel, citing Akay Printing Press v. Minister of Labor and Employment. On the alleged grave abuse of discretion in directing Finman to pay jointly and severally: The Court reiterated that Finman's obligation as a surety company, as established by the suretyship agreement and relevant rules, makes it jointly and severally liable for the claims arising from Pan Pacific's recruitment violations. The impleading of Finman was necessary to provide complete relief to the private respondents, who had a legal claim against Pan Pacific and its insurer. The Court found no grave abuse of discretion as the Secretary's order was based on the established liabilities of the surety. On the substantiality of evidence and compliance with law: The Court found this contention untenable, as it would require a review of the Secretary's findings of fact, which are generally accorded great weight. The records showed that both Pan Pacific and Finman failed to appear at the hearings despite proper notice. Consequently, the Secretary of Labor admitted and considered the private respondents' testimonies and evidence as substantial due to the absence of any controverting evidence. The Court affirmed that there was no justifiable reason to disturb the findings of fact of the Secretary of Labor, as they were supported by substantial evidence and made in the absence of grave abuse of discretion, citing Asiaworld Publishing House, Inc. vs. Ople and National Federation of Labor Union (NAFLU) v. Ople.
Main Doctrine
A surety company, by virtue of a suretyship agreement, is privy to the proceedings against its principal and is bound by a judgment against its principal, even if not a party to the proceedings, absent collusion. The surety is jointly and severally liable for all claims arising from recruitment violations of the principal.