G.R. No. 91096 - Capricorn International Travel and Tours, Inc. vs. Court of Appeals

The case involves Capricorn International Travel and Tours, Inc. (petitioner) and Sameer Overseas Placement Agency (private respondent), with the Court of Appeals also named as respondent.
The dispute centers on whether the cash bond posted by a recruitment agency with the Philippine Overseas Employment Administration (POEA) may be garnished by a judgment creditor.

In Civil Case No. 86-36195 of the Regional Trial Court of Manila, a judgment was rendered in favor of the petitioner against the private respondent.
The judgment ordered the respondent to pay Ninety-one Thousand Two Hundred Sixteen Pesos and Sixty Centavos (P91,216.60), along with legal interest from the filing of the complaint, 10% attorney’s fees, and costs.
A writ of execution was issued subsequently, leading to the garnishment of the cash bond posted by the respondent.

A notice of garnishment was served on the POEA, instructing the delivery of the cash bond posted by the respondent to the sheriff.
Despite its reservations, POEA officials eventually complied by delivering a check for One Hundred Thousand Pesos (P100,000.00) to the petitioner’s counsel since no alternative recourse was available.
Meanwhile, the private respondent moved to quash the notice of garnishment; however, the trial court denied this motion and its subsequent motion for reconsideration.

The private respondent filed a petition for certiorari with the Court of Appeals, asserting that the trial court judge had gravely abused his discretion in denying the motion to quash the notice of garnishment.
The Court of Appeals granted the petition, annulling the trial court’s orders that allowed the notice of garnishment.
The appellate court also issued an injunction permanently enjoining the petitioner from attaching, levying, and garnishing the respondent’s cash bond, with an order to return the cash bond to the POEA if it had not yet been returned.

The case extensively discusses the regulatory framework under the Labor Code and the POEA Rules and Regulations regarding the posting of cash and surety bonds by recruitment agencies.
Specific provisions include:

Article 31 of the Labor Code, which requires recruitment agencies to post such bonds to guarantee compliance with prescribed recruitment procedures, rules, and employment conditions.
POEA Rules and Regulations (Book II, Rule II) detailing the payment of fees, the posting of bonds, the conditions for renewal (including replenishment of the cash bond if garnished), and the process for refunding the cash bond upon voluntary surrender of the license or authority.

The purpose of the cash bond is to ensure that agencies meet their obligations towards addressing potential liabilities from employment-related claims and violations of labor laws.

Whether the cash bond posted by the recruitment agency with the POEA can be subject to garnishment by a judgment creditor.

The legal inquiry focused on whether the cash bond may be executed upon for a judgment arising from a contractual obligation, specifically pertaining to the purchase and sale of airline tickets.
Whether the purpose and nature of the cash bond – as a guarantee for employment-related claims and liabilities, as delineated in the POEA rules and the Labor Code – precludes its garnishment for liabilities not falling under those categories.