Quitclaims and requirements on validity (3)

In the previous articles, we mentioned that for a deed of release, waiver and quitclaim to be valid, it must be shown that:

(a) the employee executes a deed of quitclaim voluntarily;

(b) there is no fraud or deceit on the part of any of the parties;

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

(d) 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.

We likewise mentioned that the burden rests on the employer to prove that the quitclaim constitutes a credible and reasonable settlement of what an employee is entitled to recover, and that the one accomplishing it has done so voluntarily and with a full understanding of its import.

The stringent requirements are because resignation letters with quitclaims, waivers, or releases are generally looked upon with disfavor and commonly frowned upon. According to the Supreme Court, they are usually contrary to public policy, ineffective, and are meant to bar claims to a worker’s legal rights. (Al-Masiya Overseas Placement Agency v. Viernes, G.R. 216132, 22 January 2020).

The Court added that the reason for this strictness in the rules for quitclaims, waivers, or releases is that the employer and the employee do not stand on the same footing, such that quitclaims usually take the form of contracts of adherence, not of choice. Nonetheless, as a matter of doctrinal policy, the Supreme Court upholds the validity of quitclaims provided the requisites provided by law and jurisprudence are present.

In Carolina’s Lace Shoppe v. Maquilan (G.R. 219419, 10 April 2019), the Supreme Court elucidated that in order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees under Philippine laws, said agreements should contain the following:

1. A fixed amount as full and final compromise settlement;

2. The benefits of the employees, if possible, with the corresponding amounts, which the employees are giving up in consideration of the fixed compromise amount;

3. A statement that the employer has clearly explained to the employee in English, Filipino, or in the dialect known to the employee that by signing the waiver or quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are due them under the law; and

4. A statement that the employees signed and executed the document voluntarily, and had fully understood the contents of the document and that their consent was freely given without any threat, violence, duress, intimidation, or undue influence exerted on their person.

Moreover, the Supreme Court in Edi-Staffbuilders International Inc. v. NLRC (G.R. 145587, 26 October 2007) added that it is advisable that the stipulations in a quitclaim, release, or waiver be made in English and Tagalog or in the dialect known to the employee. The Court also clarified that there should be two witnesses to the execution of the quitclaim who must also sign the quitclaim, release, or waiver.

Furthermore, the Court emphasized that the quitclaim, release, or waiver should be subscribed and sworn to under oath preferably before any administering official of the Department of Labor and Employment or its regional office, the Bureau of Labor Relations, the National Labor Relations Commission or a labor attaché in a foreign country. According to the High Court, such official shall assist the parties regarding the execution of the quitclaim, release, or waiver.

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