By its nature, quitclaims are contracts that act as a compromise between parties to lawfully avoid litigation. They are commonly entered between employer and employee where they acknowledge that the employer has fully settled his or her monetary obligations towards the employee, including releasing of final pay and payment of government-mandated or statutory benefits. 

In F.F. Cruz v. Jose B. Galandez, et.al, G.R. No. 236496, the Supreme Court describes quitclaims signed by the parties and two (2) witnesses are valid and binding if it is shown that: (a) there was no fraud or deceit on the part of any parties; (b) the consideration for the quitclaim is credible and reasonable; and (c) 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. It was also advised by the Supreme Court in Edi-Staffbuilders International Inc. v. NLRC, G.R. No. 145587 that the stipulations in the quitclaim be in a dialect known to the employee.

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As the employer and employee are not on the same footing, the Supreme Court in Domingo Naldo Jr. et.al v. Corporate Protection Services Philippines, G.R. 243139, 3 April 2024 ruled that the employer has the burden to prove that the quitclaim constitutes a credible and reasonable settlement of what an employee is entitled to recover and that one accomplishing it has done so voluntarily and with a full understanding of its import. 

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Thus, while quitclaims may be looked upon with disfavor, these are considered valid and enforceable if they have met the aforementioned requirements and their execution was not done to prejudice the rights of the employee. 

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Disclaimer: This article is for informational purposes only and should not be considered legal advice. For specific guidance on the validity of a quitclaim, consult with a legal professional.

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Padin & Partners Law Offices is a full-service law firm based in Cebu City, Cebu Philippines, that offers legal services such as drafting and notarization of quitclaims in Cebu City, Cebu, Philippines. For consultations: book an appointment or reach us at +63 (32) 316-1540 or +63 917 188 0361.

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