LAND AND HOUSING DEVELOPMENT CORPORATION vs ESQUILLO

G.R. No. 152012 Septeme! "0# 2005

DECISION


PANGANI$AN# J.:


Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of workers should be strictly scrutinized to protect the
weak and the disadvantaged. The waivers should be carefully examined, in regard not only to the words and terms used, but also the factual
circumstances under which they have been executed.
T%e C&se
Before us is a Petition for eview
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under ule $% of the ules of &ourt, seeking to set aside the 'uly (), (**" +ecision
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and the
'anuary (,, (**( esolution
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of the &ourt of .ppeals /&.0 in &.12 3P 4o. %*5),. The dispositive portion of the +ecision reads as follows6

789::;<:, premises considered, the decision dated =ay -*, ",,) of public respondent is
hereby ANNULLED and SET ASIDE and the decision, dated ;ebruary (), ",,) of >abor .rbiter .ndres ?avalla
is REINSTATED and A''IRMED in toto. &osts against !herein petitioners#.@
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The assailed esolution denied petitionersA =otion for econsideration.


T%e '&(ts
The antecedents are narrated by the &. as follows6

7!espondent# =arianito &. :sBuillo was hired as a structural engineer by !Petitioner# .BC ock 2roup /D.BCA0
based in 'eddah, Eingdom of 3audi .rabia. 9e commenced employment on 'uly (), ",F,, with an initial monthly salary of
G3H",***.** that was gradually increased, on account of his good performance and the annual renewal of his employment
contract, until it reached G3H",-**.**. Private respondent >and I 9ousing +evelopment &orporation /D>9+&A0, a local
placement agency, facilitated !respondentAs# employment papers.

7.lthough !respondentAs# employment contract was supposed to be valid until 'uly (5, ",,%, it was pre1terminated,
through an Jnter1<ffice =emo on 4otice of Termination, dated 4ovember "), ",,$, allegedly, for the reason, Dreduction of
force.A Petitioner however, claims that the reason adduced was Dnegated by the fact that a lot of transferees from other sites
were taken in and promotions as well as re1classifications in the lower ranks were done as shown by the list of fifteen /"%0
transferees from iyadh effective 4ovember %, ",,$, as well as letters of promotion and re1classification.A 9e further
claimed that !Petitioner# .BC maliciously confiscated his DiBamaA or resident visa despite the fact that it was !respondentAs#
previous employer, ;:.> JB&., which secured his DiBama.A &onseBuently, !respondent# was prevented from getting another
Kob in 'eddah.

7!espondent# subseBuently received the amount of twenty1three thousand, one hundred fifty1three 3audi iyals
/3(-,"%-.**0 from !Petitioner# .BC, as final settlement of his claims and was issued an exit visa that reBuired him to
immediately go back to the Philippines.

7.s a result of the foregoing, !respondent# filed a complaint for breach of contract andLor illegal dismissal, before
the Philippine <verseas :mployment .dministration which was referred to the 4ational >abor elations &ommission, 3ub1
egional .rbitration Branch 4o. JC, 3an Pablo &ity, and docketed as 3.B1JC1$1**%-1,51>. The parties were reBuired to
file their position papers and responsive pleadings.

7Jn their position paper, !petitioners# maintained that !respondentAs# dismissal was for valid cause, that is, reduction
of force. +ue to the 2ulf 8ar, the proKects of !Petitioner# .BC were reduced and it was forced to Dterminate the contracts of
workers whose Kob were not so immediate and urgent and retain only those workers whose skills were needed Kust to
maintain the proKects.A !espondent# was informed, one month in advance, of the pre1termination of his contract, and he
was paid his salary, overtime pay, bonus and other benefits in the total amount of G3H5,)"5.** or 3audi iyals
3(%,",(.**. 8ith respect to the alleged confiscation of !respondentAs# DiBama,A !petitioners# alleged that the law reBuires its
surrender to the 3audi authorities upon the termination of the employeeAs contract of employment.

7Gpon the submission of the case for resolution, the 9on. >abor .rbiter .ndres ?avalla issued his +ecision, dated
;ebruary (), ",,), decreeing, as follows6

D89::;<:, premises considered, Kudgment is hereby rendered ordering !petitioners# Kointly
and severally to pay !respondent# his salaries corresponding to the unexpired portion of his contract from
+ecember ",, ",,$ up to 'uly (5, ",,% in the total amount of 4J4: T9<G3.4+ ;<G 9G4+:+
;<TM 3:C:4 G.3. +ollars /G3H,,$$).**0 and ten percent /"*N0 of his monetary award as attorneyAs
fees both in Philippine currency to be computed at the prevailing rate at the time of payment.

D.ll other claims of !respondent# are hereby dismissed for lack of merit.

D3< <+::+.A

78hen !petitioners# filed their Koint appeal, docketed as 4>& 4& &. 4o. *"(5%*1,), !the 4>&# in a +ecision,
dated =ay -*, ",,), reversed the aforecited decision and dismissed the !respondentAs# complaint for lack of merit.
!espondentAs# motion for reconsideration was denied in a esolution, dated 'uly "*, ",,).@
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R)*+,- o. t%e Co)!t o. Appe&*s

The &ourt of .ppeals ruled that despite the absence of a written categorical obKection to the sufficiency of the payment received as
consideration for the execution of the Buitclaim, Kurisprudence supported the right of respondent to demand what was rightfully his under our
labor laws. 9ence, he should have been allowed to recover the difference between the amount he had actually received and the amount he
should have received.

The &. also found that the 4>& had erroneously applied . F*$( to the case. The appellate court held that respondent was
entitled to the salaries corresponding to the unexpired portion of his &ontract, in addition to what he had already received.

9ence, this Petition.
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T%e Iss)es
Petitioners raise the following issues for this &ourtAs consideration6

7.. 8hether or not the 9onorable &ourt of .ppeals committed reversible error when it took cognizance of an issue of fact
which was raised for the first time on appeal.

7B. 8hether or not the 9onorable &ourt of .ppeals committed reversible error in its () 'uly (**" +ecision and (, 'anuary
(**( esolution by affirming the () ;ebruary ",,) +ecision of the >abor .rbiter which rendered as null and void and
without binding effect the release and Buitclaim executed by the respondent in favor of the petitioners, and, thereafter,
granted the respondent monetary award.@
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Jn the main, the issue is whether respondent, despite having executed a Buitclaim, is entitled to a grant of his additional monetary claims.


T%e Co)!t/s R)*+,-
The Petition has no merit.

.t the outset, the &ourt notes the =anifestation of the <ffice of the 3olicitor 2eneral /<320, recommending that 7the decision dated
=ay -*, ",,) of the 4>& be annulled and set aside and that !espondent# :sBuillo be awarded the total amount of his salaries corresponding
to the unexpired portion of his contract of employment.@
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M&+, Iss)e0 Entitlements of a DismissedEmployee Who Has Executed a Quitclaim

The factual findings of labor officials, who are deemed to have acBuired expertise in matters within their respective Kurisdictions, are
generally accorded not only respect but finality.
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Jn the present case, the labor arbiter found respondentAs dismissal to be illegal and devoid of
any Kust or authorized cause. The factual findings of the 4>& and the &. on this matter were not contradictory. 9ence, the &ourt finds no
reason to deviate from their factual finding that respondent was dismissed without any legal cause.

Jndeed, an employee cannot be dismissed except for cause, as provided by law, and only after due notice and hearing.
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:mployees
who are dismissed without cause have the right to be reinstated without loss of seniority rights and other privilegesO and to be paid full back
wages, inclusive of allowances and other benefits, plus proven damages.
8ith regard to contract workers, in cases arising before the effectivity of . F*$( /the =igrant 8orkers and <verseas ;ilipinos .ct
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0,
it is settled that if 7the contract is for a fixed term and the employee is dismissed without Kust cause, he is entitled to the payment of his salaries
corresponding to the unexpired portion of his contract.@
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Jn the present case, the &ontract of respondent was until 'uly (5, ",,%. 3ince his
dismissal from service effective +ecember "F, ",,$, was not for a Kust cause, he is entitled to be paid his salary corresponding to the unexpired
portion of his &ontract, in the total amount of G3H,,$$).

8e now go to the elease and Quitclaim signed by respondent. The document, which was prepared by Petitioner .BC ock 2roup,
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states6

7E4<8 .>> =:4 BM T9:3: P:3:4T36


That for and in consideration of the sum of 3audi iyals 36 T8:4TM T9:: T9<G3.4+ <4: 9G4+:+ ;J;TM
T9:: /3(-,"%-0 receipt of which is hereby acknowledged to my full and complete satisfaction, J, =.J.4JT< &.
:3QGJ>>< do discharge my employer, .BC <&E 2<GP EB, ':++.9, I its recruitment agent, the >.4+ I 9<G3J42
+:CAP. &<P., from any and all claims, demands, debts, dues, actions, or causes of action, arising from my employment
with aforesaid companyLfirmLentity.

7J hereby certify that J am of legal age, that J fully understand this instrument and agree that this is a full and final
release and discharge of the parties referred to herein, and J further agree that this release may be pleaded as absolute and
final bar to any suit or suits or legal proceedings that may hereafter be prosecuted by me against aforementioned
companiesLentities.

J4 8JT4:33 89::<;, J 9.C: 9::G4T< 3:T =M 9.4+3 T9J3 (, day of 4<C, ",,$ at ':++.9.

3J24:+
=.J.4JT< &. :3QGJ>><.@
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Petitioners claim that the foregoing elease and Quitclaim has forever released them from 7any and all claims, demands, dues, actions,
or causes of action@ arising from respondentAs employment with them. They also contend that the validity of the document can no longer be
Buestioned.
Gnfortunately for petitioners, Kurisprudence does not support their stance. The fact that employees have signed a release andLor
Buitclaim does not necessarily result in the waiver of their claims. The law strictly scrutinizes agreements in which workers agree to receive
less compensation than what they are legally entitled to. That document does not always bar them from demanding benefits to which they are
legally entitled.
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The reason for this policy was explained, inter alia, in Marcos v. National Labor Relations Commission, which we Buote6

78e have heretofore explained that the reason why Buitclaims are commonly frowned upon as contrary to public
policy, and why they are held to be ineffective to bar claims for the full measure of the workersA legal rights, is the fact that
the employer and the employee obviously do not stand on the same footing. The employer drove the employee to the wall.
The latter must have to get hold of money. Because, out of a Kob, he had to face the harsh necessities of life. 9e thus found
himself in no position to resist money proffered. 9is, then, is a case of adherence, not of choice. <ne thing sure, however,
is that petitioners did not relent on their claim. They pressed it. They are deemed not !to# have waived any of their
rights. Renuntiatio non praesumitur.

7.long this line, we have more trenchantly declared that Buitclaims andLor complete releases executed by the
employees do not estop them from pursuing their claims arising from unfair labor practices of the employer. The basic
reason for this is that such Buitclaims andLor complete releases are against public policy and, therefore, null and void. The
acceptance of termination does not divest a laborer of the right to prosecute his employer for unfair labor practice acts.
8hile there may be possible exceptions to this holding, we do not perceive any in the case at bar.

x x x x x x x x x

78e have pointed out in Veloso, et al. vs. Department of Labor and Employment, et al., that6

D8hile rights may be waived, the same must not be contrary to law, public order, public policy,
morals or good customs or preKudicial to a third person with a right recognized by law.

D.rticle 5 of the &ivil &ode renders a Buitclaim agreement void ab initio where the Buitclaim
obligates the workers concerned to forego their benefits while at the same time exempting the employer
from any liability that it may choose to reKect. This runs counter to .rt. (( of the &ivil &ode which
provides that no one shall be unKustly enriched at the expense of another.A@
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Jn Periquet v. NLRC, this &ourt set the guidelines and the current doctrinal policy regarding Buitclaims and waivers, as follows6

74ot all waivers and Buitclaims are invalid as against public policy. Jf 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. Jt is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or
the terms of settlement are unconscionable on its face, that the law will step in to annul the Buestionable 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 Buitclaim is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking.@
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9ence, Buitclaims in which employees voluntarily accept a reasonable amount or consideration as settlement are deemed valid.
These agreements cannot be set aside merely because the parties have subseBuently changed their minds.
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&onsistent with this doctrine, a
tribunal has the duty of scrutinizing Buitclaims brought to its attention by either party, in order to determine their validity.
Jn the present case, petitioners themselves offered the elease and Quitclaim as a defense. :ven though respondent 11 in his
pleadings before the labor arbiter 11 was silent on the matter, he nonetheless filed this case and Buestioned his dismissal immediately, a few
days after setting foot in the Philippines. Jn asking for payment for the unexpired portion of his employment &ontract, he was eloBuently taking
issue with the validity of the Buitclaim. 9is actions spoke loudly enoughO words were not necessary.

To determine whether the elease and Quitclaim is valid, one important factor that must be taken into account is the consideration
accepted by respondentO the amount must constitute a 7reasonable settlement.@ The 4>& considered the amount of G3H5,)"5 or 3(-,"%-
reasonable, when compared with /"0 H-,,**, the three1month salary that he would have been entitled to recover if . F*$( were appliedO and
/(0 G3H,,$$), his salaries for the unexpired portion of his &ontract.

Jt is relevant to point out, however, that respondent was dismissed prior to the effectivity of . F*$(. .s discussed at the outset, he is
entitled to his salaries corresponding to the unexpired portion of his &ontract. This amount is exclusive of the 3(-,"%- that he received based
on the 4ovember (,, ",,$ ;inal 3ettlement. The latter amount was comprised of overtime pay, vacation pay, indemnity, contract reward and
notice pay 11 items that were due him under his employment &ontract. ;or these reasons, the consideration stated in the elease and
Quitclaim cannot be deemed a reasonable settlementO hence, that agreement must be set aside.

That respondent is a professional structural engineer did not make him less susceptible to disadvantageous financial offers, faced as
he was with the prospect of unemployment in a country not his own. 7This &ourt has allowed supervisory employees to seek payment of
benefits and a manager to sue for illegal dismissal even though, for a consideration, they executed deeds of Buitclaims releasing their
employers from liability.@
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To stress, 7in case of doubt, laws should be interpreted to favor the working class 11 whether in the government or in the private sector 11
in order to give flesh and vigor to the pro1poor and pro1labor provisions of our &onstitution.@
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89::;<:, the Petition is DENIED and the assailed +ecision and esolution AFFIRED. &osts against petitioners.