Requirements for a Valid Quitclaim and Waiver - ALBURO ALBURO AND ASSOCIATES LAW OFFICES

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

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In its recent decision, the Supreme Court held that a quitclaim is void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject, as this would run counter to Article 22 of the Civil Code, which provides that no one shall be unjustly enriched at the expense of another.

Quitclaims are contracts in the nature of a compromise where parties make concessions, a lawful device to avoid litigation. It is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement and the one accomplishing it has done so voluntarily and with a full understanding of its import. In so doing, the parties adjust their difficulties in the manner they have agreed upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced by the danger of losing. (F.F. Cruz & Co., Inc. v. Galandez, G.R. No. 236496, July 8, 2019)

For a deed of release, waiver, and quitclaim to be valid, it must be shown that:

(a) there was no fraud or deceit on the part of any parties;

(b) that the consideration for the quitclaim is credible and reasonable; and

(c) that 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.

Quitclaims and waivers should be carefully examined and strictly scrutinized with regard not only to the words and terms used, but also to the factual circumstances under which they have been executed.

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.

“Necessitous men are not, truly speaking, free men; but to answer a present emergency, will submit to any terms that the crafty may impose upon them.” Due to this truism, case law looks upon quitclaims, waivers, or releases with disfavor. They are commonly frowned upon by courts.

However, it must be noted that not all waivers and quitclaims are invalid as against public policy. The Supreme Court’s recent ruling in Naldo, Jr. v. Corporate Protection Services, Phils., Inc. is instructive:

If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person, or the term of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.

A quitclaim is void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject, as this would run counter to New Civil Code (NCC) Article 22, which provides that no one shall be unjustly enriched at the expense of another.

RELATED ARTICLES:

The Supreme Court decides: Compromise agreements and settlements between employers and employees that offer employees excessively low amounts are invalid.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.

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