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While it is true that the law looks with disfavor on quitclaims and releases by employees who

have been pressured into signing them by employers seeking to evade their legal responsibilities,
in certain cases, the Court has upheld the validity of quitclaims executed by employees if the
employer is able to prove the following requisites: (Goodrich Manufacturing Corporation v.
Ativo, G.R. No. 188002, February 1, 2010)

[a] the employee executes a deed of quitclaim voluntarily;


[b] there is no fraud or deceit on the part of any of the parties;
[c] the consideration of the quitclaim is credible and reasonable; and
[d] 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.

The Supreme Court ruled that to determine whether the release and quitclaim is valid, one
important factor that must be taken is the consideration accepted by the employee; the amount
must constitute a “reasonable settlement.” (Land and Housing Development Corporation v.
Esquillo, G.R. No. 152012, September 30, 2005)

In Goodrich Manufacturing Corporation v. Ativo (G.R. No. 188002, February 1, 2010), the
Supreme Court held:

Not all waivers and quitclaims are invalid as against public policy. 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 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 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.

In that case, the Supreme Court found the quitclaims were valid because the contents thereof
were simple, clear and unequivocal; that the business was closed due to legitimate reasons; and
that the consideration given under the quitclaims did not appear to be grossly inadequate vis-a-
vis what the employees should have received in full.

In Jiao v. National Labor Relations Commission (G.R. No. 182331, April 18, 2012), the
quitclaim was declared valid because there were no allegations of fraud or deceit employed; no
force or duress was exerted against the employees to sign the quitclaims; and the consideration
was reasonable as it was based on the amount required by law. The Court observed that the
compensation of separation pay equivalent to one and a half month salary for every year of
service was a sufficient consideration under labor laws.

Similarly, in Arlo Aluminum, Inc., v. Piñon, Jr. (G.R. No. 215874, July 5, 2017), the deed of
release, waiver and quitclaim was valid because the consideration given to Vicente in the amount
of P150,000.00 was reasonable and sufficient to cover the labor claims (considering that the
Labor Arbiter found that the employee was entitled to the amount of P145,276.22); it was
expressly provided in the quitclaim that the consideration received by the employee in the
quitclaim was for the purpose of compensating the unpaid salaries and benefits of the employee;
the employer did not procure procure the quitclaim with fraud or deceit. Neither was there proof
that it employed force or duress to compel the employee to sign the quitclaim. Even if the
employee accepted the compensation due to dire economic needs, the quitclaim cannot be
invalidated on that ground alone. "Dire necessity" may be an acceptable ground to annul
quitclaims if the consideration is unconscionably low and the employee was tricked into
accepting it. It, however, does not justify the annulment of a quitclaim when it is not shown that
the employee had been forced to execute it.