Feagle Construction Corporation vs. Dorado

A recruitment agency may be relieved of joint and solidary liability with the foreign employer for unpaid wages where the overseas workers, after being warned of the employer's financial distress, voluntarily signed individual waivers releasing the agency from liability, entered into new contracts directly with the foreign employer without the agency's participation, and pursued their claims directly with the employer's liquidator.

Petitioner Feagle Construction Corporation is a licensed private recruitment agency that deployed Filipino workers, including private respondents, to Algosaibi-Bison, Ltd. (AB) in Saudi Arabia. Petitioner had historically advanced mobilization expenses for its workers and never charged them for deployment. AB encountered financial difficulties beginning 1983 due to a drop in oil prices, leading to delayed remittances of workers' allotments. Under the rules of the Philippine Overseas Employment Administration (POEA), every licensed private recruitment agency is generally jointly and severally liable with the foreign employer for all claims arising from the employment contract. This case tests the limits of that general rule where workers voluntarily assumed the risk of non-payment by a financially distressed foreign employer.

Petitioner Feagle Construction Corporation is a licensed private recruitment agency that deployed Filipino workers, including private respondents Mauro Dorado, Eduardo Librando, Reynaldo Decepida, Renato Tiangco, Dionisio Bergonia, Eugenio Macawili, and Salvador Ardeza, to work for Algosaibi-Bison, Ltd. (AB) in Saudi Arabia. Private respondents had been working in Saudi Arabia for three to five years. Petitioner never charged its Filipino workers for deployment and even advanced mobilization expenses such as medical fees, passport fees, and visa application fees, which were supposed to be reimbursed by AB.

Sometime in 1983, AB began encountering financial difficulties because of a sudden drop in the price of oil in Saudi Arabia. The remittance of allotments to beneficiaries of Filipino workers employed with AB were delayed, although the workers' salaries were fully paid before they left Saudi Arabia to return to the Philippines. Because AB could not reimburse petitioner for the mobilization expenses, petitioner decided to stop sending back to Saudi Arabia Filipino workers who had returned to the Philippines.

In July 1984, the Filipino workers who had returned, including private respondents, requested a meeting with petitioner's management and pleaded to be sent back to Saudi Arabia because they were jobless in the Philippines. Petitioner's president, Florentino B. Aguila, explained that petitioner did not want to send workers back because of the big risk, as AB was encountering financial difficulties. The workers insisted they would rather take their chance in Saudi Arabia than remain jobless. They assured petitioner they were willing to assume the risk of delayed salary remittances, would seek assistance from the Saudi Arabia Labor Office if delays occurred, and offered to sign written waivers pledging not to hold petitioner liable for any delay or non-payment of salaries and other amounts due from AB. Petitioner reluctantly agreed.

In accordance with their commitment, private respondents signed individual statements or waivers declaring that they were willing to return to work for AB fully aware of the situation, that they would not pressure Feagle Construction Corporation to pay their delayed salaries while AB had not fully paid its obligations, and that they would claim their back salaries only upon settlement of AB's obligations. While in Saudi Arabia, the workers received their salaries directly from AB, from whom they demanded direct payment. When AB went into bankruptcy in 1986, all Filipino workers, including private respondents, filed a complaint with the Saudi Labor Office at Dammam. They dealt with AB's liquidator directly and in their individual capacities. The liquidator issued certificates to each worker stating the amount payable as soon as funds became available, and the workers agreed to be paid through their bank accounts after liquidation and availability of funds. Petitioner wrote the liquidator to follow up the workers' claims, but the liquidator refused to furnish petitioner a list of individual claimants and amounts due, citing confidentiality. Under Saudi Arabian law, the claims of Filipino workers have first priority for payment.

Despite the liquidator's commitment to pay, private respondents filed a complaint for non-payment of wages and other benefits against petitioner and Florentino Aguila and Rene Aguila before the POEA. On October 7, 1987, the POEA Administrator rendered a decision ordering petitioner, jointly and severally with AB, to pay the amounts specified in the individual certifications, plus 5% attorney's fees. Petitioner appealed to the NLRC, which affirmed the decision with the modification that Florentino Aguila and Rene Aguila were liable only in their official capacity as officers of Feagle Construction Corporation.

• Absence of Employer-Employee Relationship: Petitioner alleged that the NLRC acted without or in excess of jurisdiction and with grave abuse of discretion in declaring petitioner jointly and severally liable with AB despite the absence of an employer-employee relationship between petitioner and private respondents.
• Issue Not Raised: Petitioner argued that the NLRC resolved an issue which was never presented, pleaded, or raised by private respondents.
• Validity of Waivers: Petitioner maintained that the NLRC unjustifiably refused to consider and ignored the promissory obligation as well as the release and quitclaim executed by private respondents in favor of petitioner.
• Inequity and Injustice: Petitioner argued that the NLRC rendered a decision which would inevitably cause, promote, and enhance inequity and injustice.
• Denial of Motion for Reconsideration: Petitioner alleged that the NLRC gravely abused its discretion in maintaining and adhering to its erroneous decision by denying petitioner's motion for reconsideration.

• Joint and Solidary Liability: Whether petitioner, as a licensed recruitment agency, can be held jointly and severally liable with the foreign employer AB for the unpaid wages and benefits of private respondents despite the absence of an employer-employee relationship and the execution of individual waivers.
• Validity of Waivers: Whether the individual waivers signed by private respondents, releasing petitioner from liability for any delay or non-payment of salaries due from AB, are valid and enforceable.
• Double Recovery: Whether private respondents may collect from both the liquidator of AB and petitioner, potentially resulting in unjust enrichment.

• Joint and Solidary Liability: No. Petitioner cannot be held jointly and severally liable with AB, the general rule of joint and solidary liability being properly deviated from due to changed circumstances and the individual agreements between the parties.
• Validity of Waivers: Yes. The individual waivers are valid and enforceable, having been voluntarily executed by private respondents with full knowledge of the risks involved and without deceit or deception.
• Double Recovery: No. Private respondents cannot collect from both the liquidator and petitioner, as this would result in unjust enrichment.

• Joint and Solidary Liability: The general rule under Section 1, Rule II of the POEA rules and regulations is that every licensed private recruitment agency shall be jointly and severally liable with the employer for all claims arising from the employment contract. However, the Court found it necessary to deviate from this general rule because of changed circumstances and individual agreements between petitioner and private respondents that are not contrary to law. The original contracts of employment with petitioner had expired, and private respondents entered into new and different contracts of employment directly with AB without petitioner's participation or consent. Their claims were made directly with AB's liquidator, and they agreed to wait for promised payment — again without petitioner's involvement. Petitioner was reluctant to send the workers back precisely because of AB's financial difficulties, and only acceded to the workers' insistence after they signed waivers. The Court noted that petitioner had always treated the workers fairly and in accordance with law, and that petitioner had nothing to do with AB's bankruptcy. Petitioner even assisted the workers by writing the liquidator to follow up their claims. Under these circumstances, the general rule of joint and solidary liability was inapplicable.

• Validity of Waivers: The individual waivers signed by private respondents were held valid. The Court emphasized that the workers were not victims of deceit or deception. They entered into the waivers with open eyes and clear minds, fully aware of the imminent danger and great risks involved in returning to a financially distressed employer. They had insisted on returning to Saudi Arabia despite petitioner's warnings and had persuaded petitioner to allow them to do so by waiving petitioner's possible liability. The Court found that these waivers cannot be considered void as they are not contrary to law. The workers were informed of the risks, insisted on taking a calculated risk, and voluntarily signed written statements releasing petitioner from responsibility.

• Double Recovery: The Court noted that the liquidator had a standing commitment to pay private respondents, and under Saudi Arabian law, the claims of Filipino workers have first priority for payment. The Court observed that it was not improbable that private respondents may have already collected partially, if not fully, what was due them from the liquidator. Allowing them to collect from both the liquidator and petitioner would result in unjust enrichment, which the Court could not permit.

• Deviation from the General Rule of Joint and Solidary Liability — Under Section 1, Rule II of the POEA rules and regulations, every licensed private recruitment agency is jointly and severally liable with the foreign employer for all claims and liabilities arising from the employment contract. This general rule may be deviated from where: (a) the original employment contract with the recruitment agency has expired and the worker entered into a new contract directly with the foreign employer without the agency's participation; (b) the worker voluntarily signed a waiver releasing the agency from liability with full knowledge of the risks involved; and (c) the worker pursued claims directly against the foreign employer or its liquidator without the agency's involvement. The Court applied this doctrine to relieve petitioner of liability, finding all three circumstances present.

• Validity of Waivers in Overseas Employment — A waiver or release executed by an overseas worker in favor of the recruitment agency is valid and enforceable when the worker, after being warned of the financial difficulties of the foreign employer, voluntarily and with full knowledge of the risks insists on returning to work and signs a written statement releasing the agency from liability for any delay or non-payment of salaries. Such a waiver is not void when it is not contrary to law and was executed without deceit or deception, with the worker entering into it with open eyes and a clear mind.

• Unjust Enrichment in Labor Claims — A worker cannot collect the same claim from both the foreign employer's liquidator and the recruitment agency, as this would result in unjust enrichment. Where the liquidator has a standing commitment to pay and the worker's claims are given priority under the laws of the host country, allowing double recovery is impermissible.

• "These individual statements voluntarily signed by the private respondents to convince the reluctant petitioner to send them back to Saudi Arabia, notwithstanding their knowledge of the financial reverses of this employer, are eloquent individual waivers of their rights against petitioner." — This passage articulates the Court's characterization of the waivers as valid, voluntary relinquishments of rights, central to the ratio decidendi.

• "They were not victims of deceit or deception. They entered into those waivers with open eyes and clear minds. They were aware of the imminent danger and the great risks involved in their renewed ventures." — This defines the standard for validity of waivers in overseas employment contexts: informed, voluntary, and free from deception.

• "Holding, therefore, that in view of the circumstances proven in this case, and the very clear waiver of liability individually signed by private respondents in favor of petitioner, the petitioner cannot be held jointly and severally liable with the employer Algosaibi-Bison Ltd. for the claims of private respondents." — This states the operative conclusion applying the deviation doctrine to the facts.

• "the Court cannot allow the private respondents to unjustly enrich themselves by collecting twice from the liquidator and petitioner." — This establishes the bar on double recovery as an independent ground for dismissing the complaint.

• Feagle Construction Corporation vs. Gavino Gayda et al., G.R. No. 82310 (decided June 18, 1990) — Controlling precedent. The environmental facts were identical to the present case. The Court reproduced its disquisition from that decision with approval and held it squarely applicable, disposing of the present case accordingly. The same ruling was applied in the companion case Feagle Construction Corporation vs. Joseph Orpilla, et al., G.R. No. 87998.

• Section 1, Rule II, POEA Rules and Regulations — Provides the general rule that every licensed private recruitment agency shall be jointly and severally liable with the employer for all claims and liabilities arising from the implementation of the contract of employment. The Court acknowledged this rule as the general framework but found it necessary to deviate from it under the exceptional circumstances of the case.

Narvasa, Cruz, Griño-Aquino, and Medialdea, JJ., concurred.