Dear Atty. Kathy,

Our Company recently terminated the employment of a number of employees on the ground of retrenchment due to serious business losses. Some of the said employees accepted their separation pay and executed quitclaims voluntarily. The rest of the said employees did not receive their separation pay and did not execute quitclaims because they said they will file an illegal dismissal case against our Company. However, the employees who executed quitclaims also joined in filing the illegal dismissal case. May these employees still be allowed to file an illegal dismissal case when they already executed quitclaims?

Emerson

***

Dear Emerson,

The Supreme Court has ruled that it is the duty of the employer to prove with clear and satisfactory evidence that legitimate business reasons exist to justify retrenchment, otherwise, there will be a finding of illegal dismissal. If the retrenchment is illegal and of no effect, the quitclaims are not voluntarily entered into by the retrenched employees and are deemed illegal, as well, since the employees’ consents had been made ineffective by mistake or fraud. Therefore, a quitclaim shall not bar the retrenched employees from receiving the benefits that they are legally entitled to.

Based on your narration, the retrenched employees voluntarily executed the quitclaims. However, the mere fact that retrenched employees were not physically coerced or intimidated does not necessarily mean that they freely or voluntarily consented to the terms of the quitclaims. It is still the burden of your company, as the employer, to prove that the quitclaims were voluntarily entered into.

In sum, as a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the illegality of their dismissal; and that the acceptance of such benefits would not amount to estoppel, or would not prevent one the employee from contradicting an action or statement made in the past.

However, the amounts already received by the retrenched employees as consideration for signing the quitclaims should be deducted from their respective monetary awards.

(Philippines Phosphate Fertilizer Corporation versus Alejandro O. Mayol, et al., G.R. Nos. 205528-29, 9 December 2020; Alejandro O. Mayol, et al. versus Philippine Phosphate Fertilizer Corporation, G.R. Nos. 205797-98, 9 December 2020).

Atty. Kathy Larios