G.R. No. 80918 August 16, 1989
JOSEFINA M. PRINCIPE, petitioner, vs. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC. and CHUAN HUP AGENCIES, PTE. LTD., NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.

FACTS

Petitioner Josefina Principe is the widow of Abelardo Principe, Chief Engineer of M/V OSAM Falcon, owned by respondent Chuan Hup Agencies, Pte. Ltd. (Chuan Hup). The deceased was recruited by its Philippine agent, respondent Philippine-Singapore Transport Services, Inc. (PSTSI). His contract provided a monthly salary of S$2,800 and group accident insurance coverage of US$75,000, with a stipulation that disputes be governed by Singapore law and resolved by its courts. Abelardo died on September 15, 1982, while on duty in Palawan. Petitioner filed a claim for death benefits with the POEA against PSTSI. During pendency, the parties entered into a compromise, leading petitioner to execute a release and quitclaim in favor of PSTSI on December 22, 1983, for P7,000 plus reimbursement of hospital and burial expenses. Consequently, her counsel moved to dismiss the case with prejudice against PSTSI, and the POEA issued an order of dismissal. On April 21, 1986, petitioner filed a new claim against both PSTSI and Chuan Hup. The POEA dismissed it on grounds of res judicata, a ruling affirmed by the NLRC.

ISSUE

Whether the quitclaim executed by petitioner is valid and bars her subsequent claim for death benefits against the respondents.

RULING

The Supreme Court ruled for the petitioner, setting aside the NLRC resolution. The quitclaim is void for being unconscionable. The consideration of P7,000 is grossly disproportionate to the legitimate claim, which, under the contract’s Singapore law provision, amounts to 36 months’ salary or S$100,800. Such a paltry sum, given the circumstances of the widow, vitiates her consent and renders the waiver inequitable and contrary to the constitutional policy of protecting labor. The Court emphasized that quitclaims are often frowned upon and are void when the consideration is scandalously low and the execution is secured amidst economic distress.
Furthermore, the principle of res judicata does not apply. The quitclaim specifically released only PSTSI, “its directors, officers, employees, principals and agents.” The motion to dismiss and the POEA order were explicitly without prejudice to claims against the principal, Chuan Hup. Thus, the dismissal of the first case did not constitute a bar to the subsequent action against both the agent and the principal. The Court also held PSTSI and Chuan Hup jointly and severally liable, as PSTSI, being the local agent, actively participated in the compromise and cannot now deny liability. Finally, the contractual stipulation submitting disputes to Singapore courts cannot oust Philippine labor tribunals of jurisdiction conferred by law. Petitioner is entitled to the death benefit of S$100,800, payable jointly and severally by the respondents.