G.R. No. 78085 - Royal Crown Internationale vs. National Labor Relations Commission

Case Summary (G.R. No. 78085)

POEA Decision and NLRC Affirmation

The POEA’s Workers Assistance and Adjudication Office found that petitioner and ZAMEL failed to prove that termination was for just and valid cause and ordered them jointly and severally to pay the complainant the salaries for the unexpired portion of the contract, unpaid vacation pay (less partial payment), reimbursement for certain deductions, and attorney’s fees. Petitioner’s motion for reconsideration before the POEA was treated as an appeal to the NLRC; the NLRC affirmed the POEA decision, holding the petitioner jointly and severally liable with ZAMEL.

Questions Presented to the Court

Whether a private employment agency (Royal Crown) can be held jointly and severally liable with the foreign employer (ZAMEL) for claims arising from the implementation of overseas employment contracts.
Whether petitioner presented sufficient evidence to establish that the termination of Nacioniales was for just and valid cause.

Basis for Agency Liability — Court’s Holding and Reasoning

The Court upheld the NLRC’s imposition of joint and several liability on Royal Crown. The dispositive legal basis is contractual: as part of the licensing process a private employment agency must submit undertakings and documents (including a verified undertaking to assume responsibility for proper use of its license and implementation of employment contracts, and an agency/apportionment contract from the foreign principal empowering the agency to sue and be sued jointly and solidarily) and post bonds as required by law (Rules to Implement the Labor Code; Pres. Dec. 1412). Those contractual undertakings constitute an express assumption of liability by the agency. The Court relied on controlling authorities recognizing that such undertakings and regulatory framework justify holding recruitment agencies solidarily liable for claims arising from contracts they implement.

The Court rejected petitioner’s contention that the omnibus rules implementing the Labor Code were invalid under Tanada v. Tuvera and that the 1985 POEA rules could not be retroactively applied. The Court found these arguments irrelevant because the liability rested on petitioner’s own contractual undertakings filed with the Bureau of Employment Services; whether or not the omnibus rules themselves were valid did not negate the binding effect of petitioner’s voluntarily assumed obligations.

Jurisdiction Over Foreign Employer Through Service on Agent

Petitioner argued that NLRC lacked jurisdiction over ZAMEL because summons were not served extra‑territorially pursuant to Rule 14, Section 17. The Court rejected this, citing settled law that service upon an agent of a foreign corporation constitutes personal service upon the corporation and supports rendition of judgment against the foreign principal. The evidence showed that Royal Crown acted as ZAMEL’s agent (the service agreement was executed in the Philippines by Royal Crown’s general manager on behalf of ZAMEL, and Royal Crown’s own general manager admitted representation in a counter‑affidavit), supporting the NLRC’s exercise of jurisdiction and the imposition of solidary liability.

Burden of Proof on Termination for Just and Valid Cause — Evidence Review

The Court reaffirmed the settled rule that the employer bears the burden of proving that dismissal was for just and valid cause (Article 277 and jurisprudence). Where overseas employment is involved, both the foreign employer and the recruitment agency share the burden because the agency is agent and solidarily liable.

Petitioner’s evidentiary submissions were found insufficient to meet that burden. The documents offered included: a May 15, 1984 letter alleging periodic staff evaluation and asserting “below par” performance and an allegation that the employee was caught leaving office to look for another job; a telex from alleged ZAMEL employees about working conditions; signatures of those senders; a receipt dated February 16, 1984 purportedly acknowledging payment of salary and vacation pay for February; and the general manager’s counter‑affidavit asserting dismissal for poor performance, dishonesty and misconduct. The Court characterized these as conclusory, self‑serving, and lacking particularity as to the precise acts constituting incompetence, dishonesty, insubordination or misconduct. The telex was irrelevant to the legality of dismissal; the receipt did not definitively prove payment of all claimed benefits; and the allegations of misconduct were not substantiated by specific, probative evidence. Consequently, the NLRC’s conclusion that petitioner failed to prove just cause was supported by the record.

Disputed Post‑departure Document and Its Credibility

Petitioner submitted a purported statement signed by the private respondent in Saudi Arabia acknowledging receipt of all benefits and indemnifying ZAMEL. The Court noted the document’s veracity was contested: the private respondent alleged it was signed under duress and threat of deportation. Given th

Case Syllabus (G.R. No. 78085)

Procedural History

Petition for annulment of an NLRC resolution affirming a POEA decision rendered by petitioner Royal Crown Internationale seeking to avoid joint and several liability with Zamel-Turbag Engineering and Architectural Consultant (ZAMEL) for unpaid salary and vacation pay to employee Virgilio P. Nacioniales.
Worker recruited and deployed in 1983; service agreement executed May 25, 1983. Worker departed for Saudi Arabia June 28, 1983.
Worker allegedly terminated by ZAMEL on February 13, 1984, detained for three days, and repatriated on February 16, 1984.
Complainant filed POEA complaint April 23, 1984 (POEA Case No. (L) 84-04-401).
POEA Workers Assistance and Adjudication Office issued decision June 23, 1986 ordering joint and several payment by petitioner and ZAMEL of specified amounts (dispositive portion quoted in the record).
Petitioner filed motion for reconsideration July 18, 1986; POEA treated it as an appeal to the NLRC.
NLRC promulgated a resolution December 11, 1986 affirming the POEA decision; denied motion for reconsideration March 30, 1987.
Petitioner filed a “Petition for Review” to the Supreme Court; Court treated it as a petition for certiorari under Rule 65 in the interest of justice.
Supreme Court resolved the matter and rendered the decision dismissing the petition on October 16, 1989 (G.R. No. 78085).

Facts of the Case

Petitioner: Royal Crown Internationale, duly licensed private employment agency engaged in overseas recruitment and placement.
Private respondent/complainant: Virgilio P. Nacioniales, recruited as an architectural draftsman for ZAMEL.
Service agreement (May 25, 1983) provided salary US$500/month plus US$100 allowances for one year from date of arrival in Saudi Arabia.
Departure to Saudi Arabia: June 28, 1983.
Termination by employer ZAMEL: February 13, 1984, on ground of below-par performance.
Post-termination events: detained for three successive days, not allowed to report to work until exit papers were ready; boarded a plane to the Philippines February 16, 1984.
Claims filed with POEA on April 23, 1984 for illegal termination and unpaid benefits.

POEA Decision — Relief and Award

Decision dated June 23, 1986 (Workers Assistance and Adjudication Office, POEA) found petitioner and ZAMEL failed to prove just and valid cause for termination and ordered joint and several liability:
- US$2,640.00 (or its Philippine peso equivalent at time of payment) for salaries corresponding to the unexpired portion of the contract;
- US$600.00 less partial payment of SR 558 (or its Philippine peso equivalent) for unpaid balance of vacation pay;
- US$350.00 (or its Philippine peso equivalent) as reimbursement of salary deductions for return travel fund;
- Ten percent (10%) of the above-stated amounts as attorney’s fees;
- Claim for legal and transportation expenses dismissed for lack of merit.

Issues Presented to the Supreme Court

I. Whether Royal Crown Internationale, as 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.
II. Whether petitioner presented sufficient evidence to establish that private respondent’s employment was terminated for just and valid cause.

Court’s Ruling — Disposition

The Supreme Court dismissed the petition and affirmed that:
- Petitioner is jointly and severally liable with ZAMEL for claims arising from the implementation of the employment contract; and
- The evidence presented by petitioner was insufficient to establish termination for just and valid cause.

Legal Basis for Joint and Several Liability

Petitioner had voluntarily assumed solidary liability through contractual undertakings submitted to the Bureau of Employment Services in applying for its license:
- Requirement to submit a verified undertaking assuming responsibility for proper use of the license and implementation of employment contracts (Section 2(e), Rule V, Book I, Rules to Implement the Labor Code (1976));
- Requirement to file a formal appointment/agency contract from the foreign employer empowering the agency “to sue and be sued jointly and solidarily with the foreign principal” for violations of recruitment agreements and employment contracts (Section 10(a)(2), Rule V, Book I, Rules to Implement the Labor Code (1976));
- Requirement to post cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with recruitment procedures and employment terms (Section 1 of Pres. Dec. 1412 (1978) amending Article 31 of the Labor Code).
Court’s holding: these contractual undertakings constitute the legal basis for holding licensed private employment agencies jointly and severally liable with their foreign principals for claims by recruited workers arising from implementation of service agreements or employment contracts.
Court cited controlling precedents recognizing agency liability and obligations assumed by licensed recruiters: Ambraque International Placement and Services v. NLRC; Catan v. NLRC; Alga Moher International Placement Services v. Atienza.

Petitioner’s Arguments Re Omnibus Rules, Retroactivity, and Their Rejection

Petitioner argued no statutory provision created third-party liability and further argued omnibus rules implementing the Labor Code were invalid for not being published in the Official Gazette (Tanada v. Tuvera) and that 1985 POEA Rules should not be applied retro