This Supreme Court decision clarifies that recruitment agencies remain jointly and severally liable with the foreign employer for claims arising from overseas employment contracts, even if the accreditation is transferred to another agency. The ruling emphasizes the protection of overseas Filipino workers (OFWs) and ensures that recruitment agencies cannot evade their responsibilities through internal agreements unknown to the workers. This solidary liability is crucial for safeguarding the rights and interests of OFWs, providing them with a direct recourse for monetary claims regardless of any subsequent arrangements between agencies and employers.

Shifting Blame? How Accreditation Transfer Doesn’t Absolve OFW Recruitment Agency

Powerhouse Staffbuilders International, Inc. deployed several Filipino workers to Catcher Technical Co. Ltd. in Taiwan. When Catcher reduced working days due to financial difficulties, the workers were repatriated and subsequently filed complaints for illegal dismissal and other monetary claims against Powerhouse and Catcher. During the proceedings, Powerhouse attempted to bring JEJ International Manpower Services into the case, alleging that Catcher’s accreditation had been transferred to JEJ. Powerhouse argued that JEJ should assume liability as a consequence of this transfer. The core legal question revolved around whether the alleged transfer of accreditation to another recruitment agency relieved the original agency, Powerhouse, from its liabilities to the illegally dismissed overseas Filipino workers.

The Labor Arbiter (LA) initially ruled in favor of the employees, finding their dismissal illegal and holding Powerhouse and JEJ jointly and severally liable. However, the National Labor Relations Commission (NLRC) modified this decision, absolving JEJ from liability because it was not involved in the deployment of the workers. Powerhouse elevated the matter to the Court of Appeals (CA), questioning the NLRC’s decision. The CA dismissed Powerhouse’s petition, citing procedural lapses and finding no evidence to support the transfer of accreditation. The Supreme Court then took up the case to resolve the matter, ultimately affirming the CA’s decision with modifications regarding the interest rates on the monetary awards.

One of the key issues before the Supreme Court was the timeliness of Powerhouse’s petition for certiorari before the CA. The Court found that the petition was indeed filed on time, given that the last day to file fell on a special non-working day, extending the deadline to the next working day. Furthermore, the Court addressed the issue of the verification and certification against forum shopping. It determined that the petition was in substantial compliance, as it was signed by the President and General Manager of Powerhouse, whose authority was later ratified by the Board of Directors. Despite resolving these procedural issues in favor of Powerhouse, the Court ultimately ruled against them on the substantive merits of the case.

The Supreme Court emphasized that findings of fact by quasi-judicial bodies like the NLRC, when supported by substantial evidence, are generally accorded respect and finality, especially when upheld by the CA. In this case, the Court found no reason to depart from this established doctrine. The evidence on record supported the findings that the respondent employees were illegally dismissed. The Court noted that the burden of proving that the dismissal was legal rests on the employer. Here, Powerhouse failed to provide sufficient evidence to overturn the factual findings that the employees were forced to resign, especially considering the abrupt cessation of food provisions by Catcher. The filing of illegal dismissal complaints immediately after repatriation further undermined Powerhouse’s claims of voluntary separation.

The Court further addressed the monetary claims of the illegally dismissed workers. Citing Serrano v. Gallant Maritime Services, Inc. and Sameer Overseas Placement Agency, Inc. v. Cabiles, the Court upheld the employees’ entitlement to their salaries for the entire unexpired portion of their employment contracts. The Court also affirmed the refund of unauthorized monthly deductions from their salaries, as the employees had presented evidence of these deductions, which Powerhouse failed to adequately dispute. The matter of applicable interest rates on the monetary claims was also clarified. The Court differentiated between the reimbursement of placement fees, which are subject to a 12% annual interest rate as specified in R.A. No. 8042, and other monetary awards like salaries and attorney’s fees, which are subject to a 6% annual interest rate as per Bangko Sentral ng Pilipinas Circular No. 799.

Crucially, the Court affirmed that Powerhouse remained liable for the monetary claims, despite the alleged transfer of accreditation to JEJ. This ruling hinged on Section 10 of R.A. No. 8042, which clearly establishes the joint and several liability of the principal employer and the recruitment agency. This liability persists throughout the employment contract’s duration and remains unaffected by any substitution, amendment, or modification, whether local or foreign. The court stated:

Sec. 10. Monetary Claims. – Notwithstanding any provision of law to the contrary… The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment… Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.

This provision ensures that OFWs have a reliable recourse for their claims, regardless of any internal arrangements between the recruitment agencies and foreign employers. The Supreme Court emphasized that the purpose of R.A. No. 8042 is to protect the rights and interests of OFWs by providing an additional layer of protection. This ensures that overseas workers have legal recourse, despite their employment circumstances. The Court stated:

By providing that the liability of the foreign employer may be ‘enforced to the full extent’ against the local agent, the overseas worker is assured of immediate and sufficient payment of what is due them.

The ruling aligns with the intent of the law, which aims to shield OFWs from exploitative practices and ensure accountability in overseas employment arrangements. Moreover, the Court found that even the Affidavit of Assumption of Responsibility submitted to the CA could not absolve Powerhouse of its liabilities. The Court reasoned that to relieve Powerhouse from liability would be to change the contract without the consent of the other contracting party, which in this case, are the respondent employees. It is a fundamental principle that contracts cannot be altered without the mutual agreement of all parties involved, especially when such alterations would prejudice the rights and interests of one party over the other.

FAQs

What was the key issue in this case?	The central issue was whether the alleged transfer of accreditation to another recruitment agency relieved the original agency from its liabilities to illegally dismissed OFWs.
What is solidary liability in the context of overseas employment?	Solidary liability means that the recruitment agency and the foreign employer are jointly and individually responsible for any claims arising from the employment contract. The OFW can pursue the entire claim against either party.
How does R.A. No. 8042 protect overseas Filipino workers?	R.A. No. 8042, also known as the Migrant Workers and Overseas Filipinos Act, aims to protect the rights and interests of OFWs by ensuring fair labor practices and providing legal recourse for grievances. It enforces the solidary liability of the agencies to provide an additional layer of protection to the OFWs.
Can a recruitment agency transfer its liabilities to another agency?	No, the recruitment agency cannot unilaterally transfer its liabilities to another agency without the consent of the OFW. The agency remains liable under the original employment contract, regardless of any internal agreements.
What happens if an OFW is illegally dismissed?	If an OFW is illegally dismissed, they are entitled to the full reimbursement of their placement fee, plus their salaries for the unexpired portion of their employment contract. The agency must also pay interest.
What is the interest rate applicable to monetary awards in illegal dismissal cases?	Placement fees have a 12% interest rate per annum, while salaries and attorney’s fees have a 6% interest rate per annum from the finality of the decision until full payment.
What evidence is needed to prove illegal deductions from an OFW’s salary?	OFWs can present documents such as passbooks, pay slips, or any other records that show unauthorized deductions from their salaries. The burden of proof then shifts to the employer to justify these deductions.
Does the POEA have any role to play in disputes involving OFWs?	Yes, the Philippine Overseas Employment Administration (POEA) regulates and supervises recruitment agencies and overseas employment. It handles disputes related to recruitment violations and enforces the rights of OFWs.

This Supreme Court decision reinforces the importance of upholding the rights of overseas Filipino workers and ensuring that recruitment agencies are held accountable for their obligations. The ruling serves as a reminder that internal agreements and accreditation transfers cannot be used to evade the solidary liability established by law. The decision provides clarity on the extent of protection afforded to OFWs and the responsibilities of recruitment agencies in overseas employment contracts.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: POWERHOUSE STAFFBUILDERS INTERNATIONAL, INC. VS. ROMELIA REY, G.R. No. 190203, November 07, 2016