G.R. No. 152012 September 30, 2005
LAND AND HOUSING DEVELOPMENT CORPORATION and ABV ROCK GROUP, Petitioners, vs. MARIANITO C. ESQUILLO, Respondent.

FACTS

Respondent Marianito C. Esquillo was hired as a structural engineer by petitioner ABV Rock Group in Jeddah, Saudi Arabia, with petitioner Land and Housing Development Corporation as the local placement agency. His employment contract was set to expire on July 26, 1995. However, on November 17, 1994, ABV pre-terminated his contract, citing “reduction of force.” Esquillo contested this, alleging the reason was negated by ABV’s hiring of transferees and promotions of other personnel. He further claimed his “iqama” (resident visa) was confiscated, preventing him from seeking other employment. Esquillo subsequently received SR23,153.00 as final settlement, executed a quitclaim, and returned to the Philippines.
Esquillo filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, ordering petitioners to pay his salaries for the unexpired portion of his contract. The National Labor Relations Commission (NLRC) reversed this, dismissing the complaint and upholding the validity of the quitclaim. The Court of Appeals reinstated the Labor Arbiter’s decision, finding the quitclaim invalid and awarding Esquillo additional monetary claims.

ISSUE

Whether the quitclaim and release executed by the respondent bars him from claiming additional benefits arising from his alleged illegal dismissal.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The Court held that quitclaims, releases, and waivers of benefits executed by workers are looked upon with disfavor and are strictly scrutinized to protect the weak and disadvantaged. For such a waiver to be valid, it must be shown that the settlement was voluntary, made with full understanding of its terms, and that the consideration received was reasonable and not unconscionable.
The Court found the quitclaim in this case to be invalid. The consideration of SR23,153.00, representing only his accrued benefits, was grossly disproportionate to the salaries for the approximately seven-month unexpired portion of his fixed-term contract, which amounted to US$9,447.00. The circumstances of its execution—where Esquillo was compelled to accept the amount and sign the document to obtain an exit visa for immediate repatriation—indicated it was not a voluntary and reasonable settlement. Consequently, the quitclaim did not waive his right to claim full compensation for the violation of his employment contract. The law leans toward the protection of the laborer, and waivers are void when the consideration is unconscionable or the execution is vitiated.