Invalid compromise

Dear Atty. Angela,

I worked as a production aide in a company for several years and I, together with my co-workers, were illegally dismissed when one day, our employer said we are no longer needed in our jobs. We filed a complaint against the company and won in the NLRC, Court of Appeals until Supreme Court and were awarded backwages and separation pay. When we met with the representatives of the company, we were made to agree to accept 20 percent of the judgment award and sign compromise agreements, telling us that this is only a partial payment. When we were asking the company for the balance, we were told that we can no longer receive the remaining amount since we accepted the settlement. Is this correct and legal?

Edward

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Dear Edward,

No, the Compromise Agreement you entered into was not only unreasonable but outrightly unfair.

In the case of Leo A. Abad, et al. v. San Roque Metals Inc., G.R. No. 255368 (2024), the Supreme Court found that in this case where the compromise agreements signed by the petitioners only represent 5.20 percent to 23.42 percent of the amounts they are entitled to receive from the judgment in their illegal dismissal case were rendered invalid. The Court ruled that settlements are also considered quitclaims or legal documents signed by employees to waive their rights in favor of their employers.

For a quitclaim to be valid, (1) it must be signed by the employee voluntarily; (2) there is no fraud or deceit on the part of the parties; (3) the amount stated in the quitclaim is credible and reasonable; and (4) it is not contrary to law, public order, public policy, morals or good customs.

The Court found that the compromise agreements here only represent 5.20 percent to 23.42 percent of the amounts they are entitled to receive. The Court ruled that there is no fixed percentage that determines the reasonableness of settlement amounts; instead, this is evaluated on a case-by-case basis. In this case, the amounts received in the settlements are significantly lower than the back wages and separation pay the petitioners are owed, making them unreasonable.

As there was deceit employed and the amount is evidently unreasonable, the Compromise Agreement you signed is invalid. The company will have to pay you the full judgment award to which you are entitled to.

Atty. Angela Antonio