Quitclaim: Meaning

No. The rules on quitclaims come from Supreme Court rulings. A frequently cited one is Goodrich Manufacturing v. Ativo (2010), which also quotes the older ruling in Periquet v. NLRC (1990).

A worker who is leaving a job may feel he or she has no choice but to sign. In Goodrich, the Court said "the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees."

In Goodrich, the Court said it has given effect to quitclaims if the employer proves four requisites:

1. the employee signed the quitclaim voluntarily;
2. there was no fraud or deceit on the part of any of the parties;
3. the consideration, meaning the amount paid, is credible and reasonable; and
4. 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 amount does not have to equal everything the worker might claim. In Goodrich, the amounts received did not appear grossly inadequate compared with what the workers should receive in full, and the quitclaims were upheld.

As quoted in Goodrich, Periquet v. NLRC (1990) said: "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 and may not be disowned simply because of a change of mind. The law steps in 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 their face.

A worker may still file, but the employer can raise the quitclaim as a defense. Whether it holds depends on the facts: how it was signed, whether the worker understood it, and how the amount compares with what was due. See you signed a quitclaim: can you still file a case?

Made-up illustration: Ramon accepts his company's voluntary resignation offer. He reads a one-page quitclaim and signs it after receiving an amount close to what he computed as due. A month later he regrets it and files a claim for more. Under the reasoning in Goodrich, the quitclaim may be upheld if the company proves he signed freely and the amount was reasonable. If Ramon had been told he would lose his final pay unless he signed, or the amount were very far below what was due, a labor tribunal could decide differently.

If the worker was dismissed without a valid cause, the remedies are backwages and reinstatement or separation pay. See illegally dismissed: what can you get?