View full case

EASTERN ASSURANCE v. SECRETARY OF LABOR

FACTS:

J & B Manpower Specialist, Inc. applied for a license to engage in business as a recruitment agency and filed a surety bond with the Philippine Overseas Employment Administration (POEA). The surety bond was filed by J & B Manpower Specialist, Inc. and the Eastern Assurance and Surety Corporation (EASCO) in the amount of P150,000. The bond was conditioned upon J & B Manpower Specialist, Inc.'s faithful performance of its duties and obligations in accordance with the rules and regulations of the Ministry of Labor and the terms and conditions of the license.

Several individuals applied for overseas employment with J & B Manpower Specialist, Inc. and paid various fees. However, they were not deployed and filed complaints against J & B Manpower Specialist, Inc. for violation of the Labor Code. Despite the summonses and notices of hearing, J & B Manpower Specialist, Inc. failed to file an answer or appear in the hearings.

The POEA Administrator issued an order in favor of the complainants, finding J & B Manpower Specialist, Inc. liable for violating the Labor Code. The order declared EASCO jointly and severally liable with J & B Manpower Specialist, Inc. to twenty-nine complainants, except for four complainants whose claims were transacted prior to the effectivity of the bond.

J & B Manpower Specialist, Inc. filed a motion for reconsideration, which was denied by the then Deputy Minister of Labor. On appeal, the Secretary of Labor modified the judgment, directing J & B Manpower Specialist, Inc. and EASCO to refund the complainants in specific amounts. EASCO's liability was limited to nineteen complainants, and the amount was reduced from the previous judgment.

EASCO filed a special civil action for certiorari seeking the nullification of the POEA Administrator's order.

ISSUES:

  1. Whether the Eastern Assurance and Surety Corporation (EASCO) is liable to refund the complainants for the fees charged and collected by J & B Manpower Specialist, Inc.

  2. Whether the POEA has jurisdiction to order forfeiture of the surety bond.

  3. Whether the claims of the complainants are covered by the surety bond.

  4. Whether the claims of some complainants were paid beyond the period of effectivity of the bond.

RULING:

  1. EASCO is found jointly and severally liable with J & B Manpower Specialist, Inc. to refund the complainants for the fees charged and collected. The evidence presented by the complainants establishes that they were charged and collected fees in amounts exceeding what is prescribed by the POEA. The non-deployment of the complainants indicates that no employment was obtained for them, thus the violation of labor code provisions is established.

  2. The POEA has jurisdiction to order the forfeiture of the surety bond. As stated in the bond, notice to the principal is also notice to the surety. The claims of the complainants arose out of acts of the principal covered by the surety bond, therefore the surety is equally liable.

  3. The claims of the complainants are covered by the surety bond. The bond is conditioned upon the true and faithful performance and observance of the duties and obligations of J & B Manpower Specialist, Inc. in accordance with the rules and regulations of the POEA and the terms and conditions stipulated in the license.

  4. The claims of some complainants were paid beyond the period of effectivity of the bond. However, the evidence presented establishes that the claims were transacted prior to the effectivity of the bond. EASCO is therefore liable for the claims of the complainants who transacted with J & B Manpower Specialist, Inc. before the expiration of the bond.

PRINCIPLES:

  • Joint and several liability of surety and principal for claims arising out of acts covered by the surety bond.

  • Jurisdiction of the POEA to order forfeiture of the surety bond.

  • Liability of the surety for claims covered by the surety bond.

  • Effectivity and termination of the surety bond.