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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated, Labor Relations, Volume II of a 3-Volume Series 2017 Edition, 5th Revised Edition,
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[G.R. NO. 152012. September 30, 2005]




uitclaims, releases and other waivers of benefits granted by laws or contracts in favor of workers should be strictly scrutinized to protect the weak and the disadvantaged. The waivers should be carefully examined, in regard not only to the words and terms used, but also the factual circumstances under which they have been executed.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to set aside the July 27, 2001 Decision2 and the January 29, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 50679. The dispositive portion of the Decision reads as follows:

"WHEREFORE, premises considered, the decision dated May 30, 1997 of public respondent is hereby ANNULLED and SET ASIDE and the decision, dated February 27, 1997 of Labor Arbiter Andres Zavalla is REINSTATED and AFFIRMED in toto. Costs against [herein petitioners]."4

The assailed Resolution denied petitioners' Motion for Reconsideration.

The Facts

The antecedents are narrated by the CA as follows:

"[Respondent] Marianito C. Esquillo was hired as a structural engineer by [Petitioner] ABV Rock Group ('ABV') based in Jeddah, Kingdom of Saudi Arabia. He commenced employment on July 27, 1989, with an initial monthly salary of US$1,000.00 that was gradually increased, on account of his good performance and the annual renewal of his employment contract, until it reached US$1,300.00. Private respondent Land & Housing Development Corporation ('LHDC'), a local placement agency, facilitated [respondent's] employment papers.

"Although [respondent's] employment contract was supposed to be valid until July 26, 1995, it was pre-terminated, through an Inter-Office Memo on Notice of Termination, dated November 17, 1994, allegedly, for the reason, 'reduction of force. 'Petitioner however, claims that the reason adduced was 'negated by the fact that a lot of transferees from other sites were taken in and promotions as well as re-classifications in the lower ranks were done as shown by the list of fifteen (15) transferees from Riyadh effective November 5, 1994, as well as letters of promotion and re-classification. 'He further claimed that [Petitioner] ABV maliciously confiscated his 'iqama' or resident visa despite the fact that it was [respondent's] previous employer, FEAL IBC., which secured his 'iqama. 'Consequently, [respondent] was prevented from getting another job in Jeddah.

"[Respondent] subsequently received the amount of twenty-three thousand, one hundred fifty-three Saudi Riyals (SR23,153.00) from [Petitioner] ABV, as final settlement of his claims and was issued an exit visa that required him to immediately go back to the Philippines.

"As a result of the foregoing, [respondent] filed a complaint for breach of contract and/or illegal dismissal, before the Philippine Overseas Employment Administration which was referred to the National Labor Relations Commission, Sub-Regional Arbitration Branch No. IV, San Pablo City, and docketed as SRAB-IV-4-0053-96-L. The parties were required to file their position papers and responsive pleadings.

"In their position paper, [petitioners] maintained that [respondent's] dismissal was for valid cause, that is, reduction of force. Due to the Gulf War, the projects of [Petitioner] ABV were reduced and it was forced to 'terminate the contracts of workers whose job were not so immediate and urgent and retain only those workers whose skills were needed just to maintain the projects. '[Respondent] was informed, one month in advance, of the pre-termination of his contract, and he was paid his salary, overtime pay, bonus and other benefits in the total amount of US$6,716.00 or Saudi Riyals SR25,192.00. With respect to the alleged confiscation of [respondent's] 'iqama,' [petitioners] alleged that the law requires its surrender to the Saudi authorities upon the termination of the employee's contract of employment.

"Upon the submission of the case for resolution, the Hon. Labor Arbiter Andres Zavalla issued his Decision, dated February 27, 1997, decreeing, as follows:

'WHEREFORE, premises considered, judgment is hereby rendered ordering [petitioners] jointly and severally to pay [respondent] his salaries corresponding to the unexpired portion of his contract from December 19, 1994 up to July 26, 1995 in the total amount of NINE THOUSAND FOUR HUNDRED FORTY SEVEN U.S. Dollars (US$9,447.00) and ten percent (10%) of his monetary award as attorney's fees both in Philippine currency to be computed at the prevailing rate at the time of payment.

'All other claims of [respondent] are hereby dismissed for lack of merit.


"When [petitioners] filed their joint appeal, docketed as NLRC NCR CA No. 012650-97, [the NLRC] in a Decision, dated May 30, 1997, reversed the aforecited decision and dismissed the [respondent's] complaint for lack of merit. [Respondent's] motion for reconsideration was denied in a Resolution, dated July 10, 1997."5

Ruling of the Court of Appeals

The Court of Appeals ruled that despite the absence of a written categorical objection to the sufficiency of the payment received as consideration for the execution of the quitclaim,
jurisprudence supported the right of respondent to demand what was rightfully his under our labor laws. Hence, he should have been allowed to recover the difference between the amount he had actually received and the amount he should have received.

The CA also found that the NLRC had erroneously applied RA 8042 to the case. The appellate court held that respondent was entitled to the salaries corresponding to the unexpired portion of his Contract, in addition to what he had already received.

Hence, this Petition.6

The Issues

Petitioners raise the following issues for this Court's consideration:

"A. Whether or not the Honorable Court of Appeals committed reversible error when it took cognizance of an issue of fact which was raised for the first time on appeal.

"B. Whether or not the Honorable Court of Appeals committed reversible error in its 27 July 2001 Decision and 29 January 2002 Resolution by affirming the 27 February 1997 Decision of the Labor Arbiter which rendered as null and void and without binding effect the release and quitclaim executed by the respondent in favor of the petitioners, and, thereafter, granted the respondent monetary award."7

In the main, the issue is whether respondent, despite having executed a quitclaim, is entitled to a grant of his additional monetary claims.

The Court's Ruling

The Petition has no merit.

At the outset, the Court notes the Manifestation of the Office of the Solicitor General (OSG), recommending that "the decision dated May 30, 1997 of the NLRC be annulled and set aside and that [Respondent] Esquillo be awarded the total amount of his salaries corresponding to the unexpired portion of his contract of employment."8

Main Issue:

Entitlements of a Dismissed

Employee Who Has Executed a Quitclaim

The factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but finality.9 In the present case, the labor arbiter found respondent's dismissal to be illegal and devoid of any just or authorized cause. The factual findings of the NLRC and the CA on this matter were not contradictory. Hence, the Court finds no reason to deviate from their factual finding that respondent was dismissed without any legal cause.

Indeed, an employee cannot be dismissed except for cause, as provided by law, and only after due notice and hearing.10 Employees who are dismissed without cause have the right to be reinstated without loss of seniority rights and other privileges; and to be paid full back wages, inclusive of allowances and other benefits, plus proven damages.

With regard to contract workers, in cases arising before the effectivity of RA 8042 (the Migrant Workers and Overseas Filipinos Act11), it is settled that if "the contract is for a fixed term and the employee is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unexpired portion of his contract."12 In the present case, the Contract of respondent was until July 26, 1995. Since his dismissal from service effective December 18, 1994, was not for a just cause, he is entitled to be paid his salary corresponding to the unexpired portion of his Contract, in the total amount of US$9,447.

We now go to the Release and Quitclaim signed by respondent. The document, which was prepared by Petitioner ABV Rock Group,13 states:


That for and in consideration of the sum of Saudi Riyals SR: TWENTY THREE THOUSAND ONE HUNDRED FIFTY THREE (SR23,153) receipt of which is hereby acknowledged to my full and complete satisfaction, I, MARIANITO C. ESQUILLO do discharge my employer, ABV ROCK GROUP KB, JEDDAH, & its recruitment agent, the LAND & HOUSING DEV P. CORP., from any and all claims, demands, debts, dues, actions, or causes of action, arising from my employment with aforesaid company/firm/entity.

"I hereby certify that I am of legal age, that I fully understand this instrument and agree that this is a full and final release and discharge of the parties referred to herein, and I further agree that this release may be pleaded as absolute and final bar to any suit or suits or legal proceedings that may hereafter be prosecuted by me against aforementioned companies/entities.




Petitioners claim that the foregoing Release and Quitclaim has forever released them from "any and all claims, demands, dues, actions, or causes of action" arising from respondent's employment with them. They also contend that the validity of the document can no longer be questioned.

Unfortunately for petitioners, jurisprudence does not support their stance. The fact that employees have signed a release and/or quitclaim does not necessarily result in the waiver of their claims. The law strictly scrutinizes agreements in which workers agree to receive less compensation than what they are legally entitled to. That document does not always bar them from demanding benefits to which they are legally entitled.15 The reason for this policy was explained, inter alia, in Marcos v. National Labor Relations Commission, which we quote:

"We have heretofore explained that the reason why quitclaims are commonly frowned upon as contrary to public policy, and why they are held to be ineffective to bar claims for the full measure of the workers' legal rights, is the fact that the employer and the employee obviously do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of a job, he had to face the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent on their claim. They pressed it. They are deemed not [to] have waived any of their rights. Renuntiatio non praesumitur.

"Along this line, we have more trenchantly declared that quitclaims and/or complete releases executed by the employees do not estop them from pursuing their claims arising from unfair labor practices of the employer. The basic reason for this is that such quitclaims and/or complete releases are against public policy and, therefore, null and void. The acceptance of termination does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. While there may be possible exceptions to this holding, we do not perceive any in the case at bar.

x x x

"We have pointed out in Veloso, et al. v. Department of Labor and Employment, et al., that:

'While rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.

'Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This runs counter to Art. 22 of the Civil Code which provides that no one shall be unjustly enriched at the expense of another. '"16

In Periquet v. NLRC, this Court set the guidelines and the current doctrinal policy regarding quitclaims and waivers, as follows:

"Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking."17

Hence, quitclaims in which employees voluntarily accept a reasonable amount or consideration as settlement are deemed valid. These agreements cannot be set aside merely because the parties have subsequently changed their minds.18 Consistent with this doctrine, a tribunal has the duty of scrutinizing quitclaims brought to its attention by either party, in order to determine their validity.

In the present case, petitioners themselves offered the Release and Quitclaim as a defense. Even though respondent - - in his pleadings before the labor arbiter - - was silent on the matter, he nonetheless filed this case and questioned his dismissal immediately, a few days after setting foot in the Philippines. In asking for payment for the unexpired portion of his employment Contract, he was eloquently taking issue with the validity of the quitclaim. His actions spoke loudly enough; words were not necessary.

To determine whether the Release and Quitclaim is valid, one important factor that must be taken into account is the consideration accepted by respondent; the amount must constitute a "reasonable settlement." The NLRC considered the amount of US$6,716 or SR23,153 reasonable, when compared with (1) $3,900, the three-month salary that he would have been entitled to recover if RA 8042 were applied; and (2) US$9,447, his salaries for the unexpired portion of his Contract.

It is relevant to point out, however, that respondent was dismissed prior to the effectivity of RA 8042. As discussed at the outset, he is entitled to his salaries corresponding to the unexpired portion of his Contract. This amount is exclusive of the SR23,153 that he received based on the November 29, 1994 Final Settlement. The latter amount was comprised of overtime pay, vacation pay, indemnity, contract reward and notice pay - - items that were due him under his employment Contract. For these reasons, the consideration stated in the Release and Quitclaim cannot be deemed a reasonable settlement; hence, that agreement must be set aside.

That respondent is a professional structural engineer did not make him less susceptible to disadvantageous financial offers, faced as he was with the prospect of unemployment in a country not his own. "This Court has allowed supervisory employees to seek payment of benefits and a manager to sue for illegal dismissal even though, for a consideration, they executed deeds of quitclaims releasing their employers from liability."19

To stress, "in case of doubt, laws should be interpreted to favor the working class - - whether in the government or in the private sector - - in order to give flesh and vigor to the pro-poor and pro-labor provisions of our Constitution."20

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners.


Sandoval-Gutierrez, Corona, Carpio Morales, and Garcia, JJ., concur.


1 Rollo, pp. 8-25.

2 Id., pp. 26-34. Penned by Justice Teodoro P. Regino and concurred in by Justices Delilah Vidallon-Magtolis (Division chair) and Josefina Guevara-Salonga (member).

3 Id., p. 35.

4 CA Decision, p. 8; rollo, p. 33.

5 Id., pp. 1-3 & 26-28. Citations omitted.

6 The case was deemed submitted for decision on August 9, 2004, upon this Court's receipt of petitioners' Memorandum, signed by Attys. Victor Pablo C. Trinidad and Charlo de la Costa Paredes. Respondent's Memorandum, signed by Atty. Benito Ching Jr., was filed on July 16, 2004.

7 Petitioners' Memorandum, p. 5; rollo, p. 182. Original in uppercase.

8 OSG's Manifestation and Motion dated August 5, 2004, p. 3, rollo, p. 173.

9 Asia World Recruitment, Inc. v. NLRC, 371 Phil. 745, August 24, 1999; Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade, 396 SCRA 518, January 28, 2003; Tres Reyes v. Maxim's Tea House, 398 SCRA 288, February 27, 2003.

10 Art. 279 of the Labor Code. Anderson v. NLRC, 252 SCRA 116, 126, January 22, 1996.

11 This law was approved on June 7, 1995.

12 Anderson v. NLRC, supra, p.126, January 22, 1996, per Mendoza, J. See also Teknika Skills and Trade Services, Inc. v. NLRC, 212 SCRA 132, August 4, 1992.

13 Respondent's Memorandum, p. 2; rollo, p. 164.

14 CA rollo, p. 45.

15 Fuentes v. NLRC et al., GR No. 76835, November 24, 1988, 167 SCRA 767; see also Garcia v. NLRC et al., GR No. 67825, September 4, 1987, 153 SCRA 639.

16 248 SCRA 146, 152-153, September 8, 1995, per Regalado, J.

17 186 SCRA 724, June 22, 1990, per Cruz, J.

18 Galicia v. NLRC (Second Division), 276 SCRA 381, 387-388, July 28, 1997.

19 Ariola v. Philex, GR No. 147756, August 9, 2005, per Carpio, J. (citing De Leon v. NLRC, 100 SCRA 691, October 30, 1980).

20 PPA Employees Hired After July 1, 1989 v. Commission on Audit, GR No. 160396, September 6, 2005, per Panganiban, then acting CJ.


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