Quitclaims and requirements on validity (2)

Quitclaims and requirements on validity (2) | Daily Tribune

In the recent case of Naldo Jr. et al. v. Corps (G.R. 243139, 3 April 2024), the Supreme Court nullified a set of quitclaims signed by petitioners, who are security guards employed by respondent CORPS. The Court found out that the company intended to defraud its employees (petitioner security guards) by deceiving them to sign the quitclaims.

In their petition, the security guards averred that CORPS underpaid them and that certain amounts were being deducted from their salaries. They further claimed, that during the entire period of their employment, they were required to work every day, including regular and special holidays, and even their scheduled rest days. Despite the foregoing, the security guards claim that CORPS did not pay them their special salaries such as holiday pay, rest day pay, service incentive leave pay, 13th month pay and emergency cost of living allowance.

Due to these grievances, petitioners filed a Request for Assistance (RFA) with the Department of Labor and Employment (DoLE) — National Conciliation Mediation Board (NCBM). In their RFA, petitioners cited monetary claims consisting of nonpayment/underpayment of wages, overtime pay, service incentive leave pay, and holiday pay, among others.

During the conciliation-mediation conference before the NCMB, CORPS asked petitioners to submit their signed resignation letters before the checks, which they were told would cover ALL their claims, were distributed to them. Relying on the assurance that the new checks covered all their money claims, petitioners submitted their signed resignation letters. They were also made to sign separate quitclaims.

Thereafter, CORPS distributed the checks. However, upon receipt of the checks, petitioners realized that they were given the same checks offered during the previous conciliation-mediation conference, which covered only the amounts of trust fund savings and cash bonds. The employees tried to return the checks, but CORPS explained that the checks for the remaining money claims, which were still being processed, would follow.

When the employees showed up for work the next day, their supervisors prevented them, claiming they had already supposedly resigned. But by the end of the month, CORPS still had not given them checks for the remaining money claims, and they were not allowed to report for duty.

Petitioners filed a Complaint with the National Labor Relations Commission (NLRC) for nonpayment of salary and benefits and for constructive illegal dismissal. The complaint was dismissed by the Labor Arbiter, ruling that the employees voluntarily signed the quitclaims and the resignation letters and are thus barred from seeking further claims against CORPS.

When the case was appealed to the NLRC and the Court of Appeals (CA), it ruled that the quitclaims and resignation letters were invalid. However, both the NLRC and CA ruled that the petitioners were not illegally dismissed.

When the case reached the Supreme Court, the SC, through Associate Justice Antonio T. Kho reversed and set aside the ruling of the CA that found that the NLRC did not commit grave abuse when it ruled that the five petitioners were not illegally dismissed.

According to the Supreme Court, for a deed of release, waiver and quitclaim to be valid, it must be shown that:

(a) there was no fraud or deceit on the part of any of the parties;

(b) the consideration of the quitclaim is credible and reasonable; and

(c) the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law

According to the court, regardless of whether the quitclaims were executed before or after the petitioners were given the checks, or before whom they were executed, such quitclaims are VOID as they were signed by petitioners with the honest belief, based on assurances made, that they would be paid their money claims in full.

Citing the minutes in the mediation-conciliation proceedings, the court found that both parties were aware that there were pending money claims to be reconciled, and that both parties were aware that the checks did not represent the entire amount claimed by the petitioners. The Court also found that petitioners accept such checks intending to forego all other money claims against CORPS.

The court also ruled that CORPS constructively dismissed the employees, finding that CORPS, through fraud, induced them to submit their resignation letters and sign their pro forma quitclaims. It found CORPS had attempted to disguise the petitioners’ dismissal as a voluntary termination of employment. According to the SC, the case involves resignation obtained through deceit and/or fraud. Thus, the High Court ordered CORPS to reinstate the employees and pay their back wages and other benefits.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.