In the landscape of Philippine labor relations, a Quitclaim and Release is a document executed by an employee, typically upon separation from employment, whereby they relinquish any further claims or causes of action against the employer in exchange for a settlement sum.
While the law generally frowns upon the waiver of rights, Philippine jurisprudence recognizes that quitclaims can be valid, binding, and effective legal instruments provided they meet specific stringent requirements.
The General Rule: Skepticism Toward Waivers
The Supreme Court has historically viewed quitclaims with a degree of skepticism. The rationale is the inherent inequality in the bargaining power between an employer and an employee. Most employees sign these documents out of economic necessity, leading to the legal presumption that they may not have done so entirely of their own free will.
"As a rule, quitclaims and waivers or releases are looked upon with disfavor and frowned upon as contrary to public policy. They are ineffective to bar claims for the full measure of the worker’s legal rights." (Land and Housing Development Corp. vs. Esquillo)
Requirements for a Valid Quitclaim
For a quitclaim to be considered valid and sufficient to dismiss a labor case, it must pass the "Scrutiny of Validity." The following elements must be present:
- Voluntariness: The employee must have signed the document voluntarily, without any force, coercion, or intimidation.
- Reasonable Consideration: The amount received by the employee must be "reasonable." It does not necessarily have to be the full amount claimed, but it cannot be unconscionably low (e.g., receiving ₱5,000 in exchange for waiving ₱500,000 in backwages).
- Full Understanding: The employee must fully understand the contents of the document. This is often gauged by the employee's level of education and the language used in the deed.
- Not Contrary to Law or Public Policy: The waiver cannot ask the employee to waive rights that are non-waivable by law (e.g., future safety standards).
The Role of Notarization
Notarization serves a vital evidentiary purpose. A notarized quitclaim is a public document. Under the Rules of Court, a public document is evidence of the facts that gave rise to its execution and the date of that execution.
- Presumption of Regularity: A notarized quitclaim enjoys the legal presumption that it was executed regularly and in good faith.
- Burden of Proof: Once a quitclaim is notarized, the burden of proof shifts to the employee to prove—by clear and convincing evidence—that the signature was forged or that consent was vitiated by fraud or duress.
When a Quitclaim is Deemed Invalid
Even if a document is notarized and signed, the labor courts (NLRC/Court of Appeals/Supreme Court) will strike it down if:
- Economic Pressure: The employee was "forced" to sign because their final pay or 13th-month pay (which they are already legally entitled to) was withheld until the signature was provided.
- Unconscionable Settlement: The consideration is "shockingly low" compared to the actual legal entitlements.
- Deceptive Language: The document is written in a language the employee does not understand, or the legal implications were misrepresented.
- Pending Litigation: If a quitclaim is signed while a labor case is already pending without the assistance of the Labor Arbiter or the legal counsel of the employee, it is often viewed with higher suspicion.
Summary Table: Valid vs. Invalid Quitclaims
| Feature | Valid Quitclaim | Invalid/Void Quitclaim |
|---|---|---|
| Consent | Freely given; voluntary. | Obtained through threat or "take it or leave it" pressure. |
| Consideration | Reasonable and substantial. | Unconscionably low or "pittance." |
| Clarity | Clear terms, understood by the worker. | Ambiguous, technical jargon, or foreign language. |
| Notarization | Properly notarized by a Commissioned Notary. | Unnotarized or "notarized in absentia." |
| Legality | Settlement of a legitimate dispute. | Waiver of future rights or statutory minimums. |
Jurisprudential Takeaway
The hallmark case of EDI-Staffbuilders International, Inc. vs. NLRC clarified that while the law protects the "lowly worker," it does not authorize them to repudiate a validly executed settlement simply because they changed their mind. If the employee is highly educated (e.g., a managerial employee or a CPA), the courts are more likely to uphold the quitclaim, as the "inequality of bargaining power" is less pronounced.
However, in cases involving rank-and-file workers, the presence of a notary public does not automatically cure a lopsided agreement. The National Labor Relations Commission (NLRC) maintains the authority to look behind the notarized seal to ensure that the "social justice" mandate of the Philippine Constitution is upheld.