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Case digest · Quitclaims; requisites of validity
Goodrich Manufacturing Corporation vs. Ativo
They took the separation pay, signed quitclaims, and filed a case the very next day. Did the quitclaims hold?
Facts
Late 2004
Because of lingering financial constraints, Goodrich gave all its employees the option to resign voluntarily. The respondents, machine or maintenance operators, took the option and were paid their separation pay on December 29, 2004.
January 3–4, 2005
On January 3, 2005, they signed waivers and quitclaims. The next day, they filed complaints before the NLRC for illegal dismissal and payment of their full monetary benefits.
The labor tribunals
The Labor Arbiter found no illegal dismissal but held Goodrich still liable for unpaid ECOLA, 13th month pay and service incentive leave pay, and found the separation pay insufficient. The NLRC reversed and dismissed the money claims, finding that the amounts received were not unreasonable.
The Court of Appeals
The Court of Appeals set aside the NLRC decision and reinstated the Labor Arbiter’s decision.
Issue
Were the quitclaims valid and binding, and could the employees still recover the deficiency?
Ruling
The quitclaims were valid and binding. The Court reversed the Court of Appeals and reinstated the NLRC decision.
The employees themselves admitted that they were not coerced into signing. Their claim that they were deceived failed on three counts. First, the quitclaims were simple, clear and unequivocal, and nothing showed that the employees did not know what they were giving up. Second, their claim that Mr. Chua Goy had set up another company in the same line of business was never proven before the Labor Arbiter or the NLRC. Third, the amounts they received did not appear to be grossly inadequate compared with what they should receive in full, since the Labor Arbiter’s computation even included 13th month pay for 2002 and 2003 that had already been paid. The difference could be considered a fair and reasonable bargain.
“The difference between the amounts expected from those that were received may, therefore, be considered as a fair and reasonable bargain on the part of both parties.”
Doctrine
“In certain cases, however, the Court has given effect to quitclaims executed by employees if the employer is able to prove the following requisites, to wit: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) 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.”
Compare: Periquet vs. NLRC
Goodrich quotes Periquet vs. NLRC, G.R. No. 91298, June 22, 1990: “Not all waivers and quitclaims are invalid as against public policy.”
Bar tip
On a quitclaim question, run through the four requisites, and remember that the employer must prove them. Receiving less than the full claim does not void a quitclaim by itself; the question is whether the amount is credible and reasonable, or grossly inadequate.
Watch it explained
Pumirma Ka Na sa Quitclaim? May Habol Ka Pa Ba?
This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.