Title
Royal Crown Internationale vs. National Labor Relations Commission
Case
G.R. No. 78085
Decision Date
Oct 16, 1989
A private employment agency was held jointly and severally liable with a foreign employer for illegal termination and unpaid benefits of an overseas worker, as the agency failed to prove just cause for dismissal.
private employment agency
jointly and severally liable
salary and vacation pay

Case Summary (G.R. No. 78085)

Factual Background

In 1983, Royal Crown Internationale, a duly licensed private employment agency, recruited and deployed Virgilio P. Nacioniales to work for Zamel-Turbag Engineering and Architectural Consultant (ZAMEL) in Saudi Arabia as an architectural draftsman. On May 25, 1983, private respondent executed a service agreement with ZAMEL providing for US$500 monthly salary plus US$100 allowances for one year from arrival. Private respondent departed for Saudi Arabia on June 28, 1983. On February 13, 1984, ZAMEL terminated his employment, allegedly for substandard performance. He was detained at his quarters for three days, prevented from reporting to work while exit papers were prepared, and was repatriated on February 16, 1984.

Administrative Adjudication and POEA Award

Private respondent filed a complaint for illegal termination with the Philippine Overseas Employment Administration (POEA) on April 23, 1984, docketed as POEA Case No. (L) 84-04-401. The Workers Assistance and Adjudication Office of the POEA found that respondents failed to prove termination for just and valid cause and, in a decision dated June 23, 1986, ordered respondents, jointly and severally, to pay US$2,640.00 representing unexpired salaries, US$600.00 less SR 558 for unpaid vacation pay, US$350.00 for reimbursement of return-travel fund salary deductions, and ten percent attorney’s fees; legal and transportation expenses were dismissed.

Proceedings Before the NLRC and This Court

Petitioner filed a motion for reconsideration with new counsel on July 18, 1986, which the POEA treated as an appeal to the NLRC. In a resolution promulgated December 11, 1986, the National Labor Relations Commission affirmed the POEA decision and held petitioner jointly and severally liable with ZAMEL because petitioner was a duly licensed private employment agency. The NLRC denied reconsideration on March 30, 1987. Petitioner then filed a petition titled “Petition for Review” to the Supreme Court under Rule 45; the Court treated the petition as one for certiorari under Rule 65 and proceeded to resolve the issues on the merits.

Issues Presented

The Court identified two principal issues: (1) whether a private employment agency may be held jointly and severally liable with the foreign-based employer for claims arising from the implementation of overseas employment contracts; and (2) whether petitioner presented sufficient evidence to establish that private respondent’s employment was terminated for just and valid cause.

Petitioner’s Contentions

Petitioner argued that no provision in the Labor Code or its omnibus implementing rules imposes third-party or agency liability on private employment agencies for violations of employment agreements performed abroad, and that it could not be held jointly and severally liable with ZAMEL because it was not a party to the service agreement. Petitioner further contended that the omnibus rules were invalid for lack of publication in the Official Gazette as argued in Tanada v. Tuvera, that the 1985 POEA Rules and Regulations should not be applied retroactively, and that jurisdiction over ZAMEL had not been acquired by extraterritorial service of summons as required by Section 17, Rule 14 of the Rules of Court. Petitioner also urged that it had established just and valid cause for dismissal by evidence of poor performance and related documents.

Respondents’ Position and Administrative Findings

The POEA and the NLRC found that petitioner and ZAMEL failed to prove just and valid cause for termination. The agencies relied on petitioner’s own contractual undertakings submitted for licensing as the basis for holding petitioner jointly and severally liable with its foreign principal. The NLRC affirmed the POEA award and applied the view that an employment agency licensed for overseas recruitment assumes responsibility for implementation of employment contracts and for claims arising therefrom.

Contractual Undertakings as Legal Basis for Liability

The Court examined petitioner’s licensing submissions and concluded that petitioner voluntarily assumed solidary liability. In applying for a private employment agency license for overseas placement, petitioner submitted a verified undertaking to assume responsibility for proper use of the license and for implementation of employment contracts (Section 2(e), Rule V, Book I, Rules to Implement the Labor Code). Petitioner likewise filed an appointment or agency contract executed by the foreign employer empowering the agency to sue and be sued jointly and solidarily with the foreign principal for violations of recruitment agreements and contracts of employment (Section 10(a)(2), Rule V, Book I). Petitioner was further required to post cash and surety bonds under Section 1 of Presidential Decree No. 1412. The Court held that those submitted undertakings constitute the binding legal basis for imposing joint and several liability upon petitioner.

Precedents Supporting Agency Liability

The Court cited earlier decisions applying the same principle. The Court referenced Ambraque International Placement and Services v. NLRC (G.R. No. 77970), Catan v. NLRC (G.R. No. 77279), and Alga Moher International Placement Services v. Atienza (G.R. No. 74610) as authority that a recruitment agency may be held solidarily liable with its foreign principal for claims arising from implementation of overseas employment contracts when the agency has assumed such obligations by contract.

Jurisdiction over Foreign Principal Through Service on Agent

Petitioner’s contention that the NLRC lacked jurisdiction over ZAMEL because extraterritorial service was not effected was rejected. The Court explained that service upon an agent of a foreign corporation constitutes personal service upon that corporation and authorizes judgment against it, citing Facilities Management Corporation v. De la Osa. The Court found from the record that petitioner acted as ZAMEL’s agent: the service agreement was executed in the Philippines between private respondent and Milagros G. Fausto, General Manager of petitioner, on behalf of ZAMEL, and petitioner’s own submissions admitted agency.

Burden of Proof on Termination and Evaluation of Evidence

The Court reiterated that the burden of proof in dismissal cases rests upon the employer to show just and valid cause (citing Polymedic General Hospital v. NLRC and Article 277 of the Labor Code). In overseas recruitment cases, the burden rests upon both the foreign employer and the recruitment agency because of the agency’s dual role and solidary liability. The Court reviewed petitioner’s proffered evidence and found it inadequate. Petitioner’s evidence consisted principally of an undetailed letter alleging poor performance, a telex attesting to general good conditions, signatures on the telex, a receipt dated February 16, 1984 purporting payment, and a counter-affidavit of the agency’s general manager alleging dishonesty and misconduct. The Court held that the telex was irrelevant, the receipt did not prove payment of the amounts claimed, and the letter and affidavit contained only general, unparticularized, and self-serving allegations that failed to specify the acts constituting incompetence, dishonesty, insubordination, or misconduct. The Court found these insufficient to meet the employer’s burden and relied on precedents such as Euro-Lines, Phils., Inc. v. NLRC and the Ambraque decision to characterize the proffered proofs as inadequate.

Rejection of Foreign Law

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