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Land and Housing Development Corporation vs. Esquillo

32

LAND AND HOUSING DEVELOPMENT CORPORATION and

ABV ROCK GROUP, petitioners, vs. MARIANITO C. ESQUILLO,
respondent.

Labor Law; National Labor Relations Commission; Appeals; Factual

findings of labor officials who are deemed to have acquired expertise in
matters within their respective jurisdiction are generally accorded not only
respect but finality.—The factual findings of labor officials, who are deemed
to have acquired expertise in matters within their respective jurisdictions,
are generally accorded not only respect but finality. In the present case, the
labor arbiter found respondent’s dismissal to be illegal and devoid of any
just or authorized cause. The factual findings of the NLRC and the CA on
this matter were not contradictory. Hence, the Court finds no reason to
deviate from their factual finding that respondent was dismissed without
any legal cause.
Same; Illegal Dismissals; An employee cannot be dismissed except for
cause as provided by law and only after due notice and hearing.—An
employee cannot be dismissed except for cause, as provided by law, and
only after due notice and hearing. Employees who are dismissed without
cause have the right to be reinstated without loss of seniority rights and
other privileges; and to be paid full back wages, inclusive of allowances and
other benefits, plus proven damages.
Same; Same; With regard to contract workers in cases arising before
the effectivity of RA 8042 (the Migrant Workers and Overseas Filipinos Act)
it is settled that if the contract is for a fixed term and the employee is
dismissed without just cause, he is entitled to the payment of his salaries
corresponding to the unexpired portion of his contract.—With regard to
contract workers, in cases arising before the effectivity of RA 8042 (the
Migrant Workers and Overseas Filipinos Act), it is settled that if “the
contract is for a fixed term and the employee is dismissed without just
cause, he is entitled to the payment of his salaries corresponding to the
unexpired portion of his

_______________

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* THIRD DIVISION.

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Land and Housing Development Corporation vs. Esquillo

contract.” In the present case, the Contract of respondent was until July 26,
1995. Since his dismissal from service effective December 18, 1994, was
not for a just cause, he is entitled to be paid his salary corresponding to the
unexpired portion of his Contract, in the total amount of US$9,447.
Same; Same; Quitclaims; Fact that employees have signed a release
and/or quitclaim does not necessarily result in the waiver of their claims.—
Unfortunately for petitioners, jurisprudence does not support their stance.
The fact that employees have signed a release and/or quitclaim does not
necessarily result in the waiver of their claims. The law strictly scrutinizes
agreements in which workers agree to receive less compensation than what
they are legally entitled to. That document does not always bar them from
demanding benefits to which they are legally entitled.
Same; Same; Same; Guidelines and current doctrinal policy regarding
quitclaims and waivers.—In Periquet v. NLRC, this Court set the guidelines
and the current doctrinal policy regarding quit-claims and waivers, as
follows: “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.”
Same; Same; Same; Court has allowed supervisory employees to seek
payment of benefits and a manager to sue for illegal dismissal even though
for a consideration, they executed deeds of quitclaims releasing their
employers from liability.—That respondent is a professional structural
engineer did not make him less susceptible to disadvantageous financial
offers, faced as he was with the prospect of unemployment in a country not
his own. “This Court has allowed supervisory employees to seek payment of
benefits and a manager to

490
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Land and Housing Development Corporation vs. Esquillo

sue for illegal dismissal even though, for a consideration, they executed
deeds of quitclaims releasing their employers from liability.”

PETITION for review on certiorari of the decision and resolution of

the Court of Appeals.

The facts are stated in the opinion of the Court.

     Romero, Valdecantos & Valencia Law Office for petitioners.
     Benito Ching, Jr. for respondent.

PANGANIBAN, J.:

Quitclaims, releases and other waivers of benefits granted by laws or

contracts in favor of workers should be strictly scrutinized to protect
the weak and the disadvantaged. The waivers should be carefully
examined, in regard not only to the words and terms used, but also
the factual circumstances under which they have been executed.

The Case
1
Before us is a Petition for Review under Rule 45 of the2 Rules of
Court, seeking to set aside 3 the July 27, 2001 Decision and the
January 29, 2002 Resolution of the Court of Appeals (CA) in CA-
GR SP No. 50679. The dispositive portion of the Decision reads as
follows:

“WHEREFORE, premises considered, the decision dated May 30, 1997 of

public respondent is hereby ANNULLED and SET ASIDE and the decision,
dated February 27, 1997 of Labor Arbiter

_______________

1 Rollo, pp. 8-25.

2 Id., pp. 26-34. Penned by Justice Teodoro P. Regino and concurred in by Justices Delilah
Vidallon-Magtolis (Division chair) and Josefina Guevara-Salonga (member).
3 Id., p. 35.

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Andres Zavalla is REINSTATED

4
and AFFIRMED in toto. Costs against
[herein petitioners].”

The assailed Resolution denied petitioners’ Motion for

Reconsideration.

The Facts

The antecedents are narrated by the CA as follows:

“[Respondent] Marianito C. Esquillo was hired as a structural engineer by

[Petitioner] ABV Rock Group (‘ABV’) based in Jeddah, Kingdom of Saudi
Arabia. He commenced employment on July 27, 1989, with an initial
monthly salary of US$1,000.00 that was gradually increased, on account of
his good performance and the annual renewal of his employment contract,
until it reached US$1,300.00. Private respondent Land & Housing
Development Corporation (‘LHDC’), a local placement agency, facilitated
[respondent’s] employment papers.
“Although [respondent’s] employment contract was supposed to be valid
until July 26, 1995, it was pre-terminated, through an InterOffice Memo on
Notice of Termination, dated November 17, 1994, allegedly, for the reason,
‘reduction of force.’ Petitioner however, claims that the reason adduced was
‘negated by the fact that a lot of transferees from other sites were taken in
and promotions as well as re-classifications in the lower ranks were done as
shown by the list of fifteen (15) transferees from Riyadh effective
November 5, 1994, as well as letters of promotion and re-classification.’ He
further claimed that [Petitioner] ABV maliciously confiscated his ‘iqama’ or
resident visa despite the fact that it was [respondent’s] previous employer,
FEAL IBC., which secured his ‘iqama.’ Consequently, [respondent] was
prevented from getting another job in Jeddah.
“[Respondent] subsequently received the amount of twentythree
thousand, one hundred fifty-three Saudi Riyals (SR23,153.00) from
[Petitioner] ABV, as final settlement of his claims and was issued an exit
visa that required him to immediately go back to the Philippines.

_______________

4 CA Decision, p. 8; Rollo, p. 33.

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“As a result of the foregoing, [respondent] filed a complaint for breach of

contract and/or illegal dismissal, before the Philippine Overseas
Employment Administration which was referred to the National Labor
Relations Commission, Sub-Regional Arbitration Branch No. IV, San Pablo

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City, and docketed as SRAB-IV-4-0053-96-L. The parties were required to

file their position papers and responsive pleadings.
“In their position paper, [petitioners] maintained that [respondent’s]
dismissal was for valid cause, that is, reduction of force. Due to the Gulf
War, the projects of [Petitioner] ABV were reduced and it was forced to
‘terminate the contracts of workers whose job were not so immediate and
urgent and retain only those workers whose skills were needed just to
maintain the projects.’ [Respondent] was informed, one month in advance,
of the pre-termination of his contract, and he was paid his salary, overtime
pay, bonus and other benefits in the total amount of US$6,716.00 or Saudi
Riyals SR25,192.00. With respect to the alleged confiscation of
[respondent’s] ‘iqama,’ [petitioners] alleged that the law requires its
surrender to the Saudi authorities upon the termination of the employee’s
contract of employment.
“Upon the submission of the case for resolution, the Hon. Labor Arbiter
Andres Zavalla issued his Decision, dated February 27, 1997, decreeing, as
follows:

‘WHEREFORE, premises considered, judgment is hereby rendered ordering

[petitioners] jointly and severally to pay [respondent] his salaries corresponding to
the unexpired portion of his contract from December 19, 1994 up to July 26, 1995 in
the total amount of NINE THOUSAND FOUR HUNDRED FORTY SEVEN U.S.
Dollars (US$9,447.00) and ten percent (10%) of his monetary award as attorney’s
fees both in Philippine currency to be computed at the prevailing rate at the time of
payment.
‘All other claims of [respondent] are hereby dismissed for lack of merit.
‘SO ORDERED.’

“When [petitioners] filed their joint appeal, docketed as NLRC NCR CA

No. 012650-97, [the NLRC] in a Decision, dated May 30, 1997, reversed
the aforecited decision and dismissed the [respon-

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Land and Housing Development Corporation vs. Esquillo

dent’s] complaint for lack of merit. [Respondent’s] motion 5

for
reconsideration was denied in a Resolution, dated July 10, 1997.”

Ruling of the Court of Appeals

The Court of Appeals ruled that despite the absence of a written

categorical objection to the sufficiency of the payment received as
consideration for the execution of the quitclaim, jurisprudence
supported the right of respondent to demand what was rightfully his
under our labor laws. Hence, he should have been allowed to

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recover the difference between the amount he had actually received

and the amount he should have received.
The CA also found that the NLRC had erroneously applied RA
8042 to the case. The appellate court held that respondent was
entitled to the salaries corresponding to the unexpired portion of his
Contract, in addition to 6what he had already received.
Hence, this Petition.

The Issues

Petitioners raise the following issues for this Court’s consideration:

“A. Whether or not the Honorable Court of Appeals committed reversible

error when it took cognizance of an issue of fact which was raised for the
first time on appeal.
“B. Whether or not the Honorable Court of Appeals committed
reversible error in its 27 July 2001 Decision and 29 January 2002
Resolution by affirming the 27 February 1997 Decision of the

_______________

5 Id., pp. 1-3 & 26-28. Citations omitted.

6 The case was deemed submitted for decision on August 9, 2004, upon this Court’s receipt
of petitioners’ Memorandum, signed by Attys. Victor Pablo C. Trinidad and Charlo de la Costa
Paredes. Respondent’s Memorandum, signed by Atty. Benito Ching, Jr., was filed on July 16,
2004.

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Labor Arbiter which rendered as null and void and without binding effect
the release and quitclaim executed by the respondent in favor7 of the
petitioners, and, thereafter, granted the respondent monetary award.”

In the main, the issue is whether respondent, despite having

executed a quitclaim, is entitled to a grant of his additional monetary
claims.

The Court’s Ruling

The Petition has no merit.

At the outset, the Court notes the Manifestation of the Office of
the Solicitor General (OSG), recommending that “the decision dated
May 30, 1997 of the NLRC be annulled and set aside and that
[Respondent] Esquillo be awarded the total amount of his salaries

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corresponding8 to the unexpired portion of his contract of

employment.”

Main Issue:
Entitlements of a Dismissed
Employee Who Has Executed a Quitclaim

The factual findings of labor officials, who are deemed to have

acquired expertise in matters within their respective 9
jurisdictions,
are generally accorded not only respect but finality. In the present
case, the labor arbiter found respondent’s dismissal to be illegal and
devoid of any just or authorized cause. The factual findings of the
NLRC and the CA on

_______________

7 Petitioners’ Memorandum, p. 5; Rollo, p. 182. Original in uppercase.

8 OSG’s Manifestation and Motion dated August 5, 2004, p. 3, Rollo, p. 173.
9 Asia World Recruitment, Inc. v. National Labor Relations Commission, 371 Phil.
745; 313 SCRA 1, August 24, 1999; Hacienda Fatima v. National Federation of
Sugarcane Workers-Food and General Trade, 396 SCRA 518, January 28, 2003; Tres
Reyes v. Maxim’s Tea House, 398 SCRA 288, February 27, 2003.

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Land and Housing Development Corporation vs. Esquillo

this matter were not contradictory. Hence, the Court finds no reason
to deviate from their factual finding that respondent was dismissed
without any legal cause.
Indeed, an employee cannot be dismissed except for 10
cause, as
provided by law, and only after due notice and hearing. Employees
who are dismissed without cause have the right to be reinstated
without loss of seniority rights and other privileges; and to be paid
full back wages, inclusive of allowances and other benefits, plus
proven damages.
With regard to contract workers, in cases arising before the
effectivity
11
of RA 8042 (the Migrant Workers and Overseas Filipinos
Act ), it is settled that if “the contract is for a fixed term and the
employee is dismissed without just cause, he is entitled to the
payment of 12
his salaries corresponding to the unexpired portion of his
contract.” In the present case, the Contract of respondent was until
July 26, 1995. Since his dismissal from service effective December
18, 1994, was not for a just cause, he is entitled to be paid his salary
corresponding to the unexpired portion of his Contract, in the total
amount of US$9,447.

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We now go to the Release and Quitclaim signed by respondent.

The document,
13
which was prepared by Petitioner ABV Rock
Group, states:

“KNOW ALL MEN BY THESE PRESENTS:

That for and in consideration of the sum of Saudi Riyals SR: TWENTY
THREE THOUSAND ONE HUNDRED FIFTY THREE (SR23,153) receipt
of which is hereby acknowledged to my full and

_______________

10 Art. 279 of the Labor Code. Anderson v. National Labor Relations Commission, 252
SCRA 116, 126, January 22, 1996.
11 This law was approved on June 7, 1995.
12 Anderson v. National Labor Relations Commission, supra, p. 126, January 22, 1996, per
Mendoza, J. See also Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission, 212 SCRA 132, August 4, 1992.
13 Respondent’s Memorandum, p. 2; Rollo, p. 164.

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Land and Housing Development Corporation vs. Esquillo

complete satisfaction, I, MARIANITO C. ESQUILLO do discharge my

employer, ABV ROCK GROUP KB, JEDDAH, & its recruitment agent, the
LAND & HOUSING DEV’P. CORP., from any and all claims, demands,
debts, dues, actions, or causes of action, arising from my employment with
aforesaid company/firm/entity.
“I hereby certify that I am of legal age, that I fully understand this
instrument and agree that this is a full and final release and discharge of the
parties referred to herein, and I further agree that this release may be
pleaded as absolute and final bar to any suit or suits or legal proceedings
that may hereafter be prosecuted by me against aforementioned
companies/entities.
IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HANDS
THIS 29 day of NOV. 1994 at JEDDAH.
SIGNED14
MARIANITO C. ESQUILLO.”

Petitioners claim that the foregoing Release and Quitclaim has

forever released them from “any and all claims, demands, dues,
actions, or causes of action” arising from respondent’s employment
with them. They also contend that the validity of the document can
no longer be questioned.
Unfortunately for petitioners, jurisprudence does not support
their stance. The fact that employees have signed a release and/or
quitclaim does not necessarily result in the waiver of their claims.

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The law strictly scrutinizes agreements in which workers agree to

receive less compensation than what they are legally entitled to.
That document does not always bar 15
them from demanding benefits
to which they are legally entitled. The reason for this policy was
explained, inter alia,in Marcos v. National Labor Relations
Commission, which we quote:

_______________

14 CA Rollo, p. 45.
15 Fuentes v. National Labor Relations Commission, et al., G.R. No. 76835,
November 24, 1988, 167 SCRA 767; see also Garcia v. National Labor Relations
Commission, et al., G.R. No. 67825, September 4, 1987, 153 SCRA 639.

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“We have heretofore explained that the reason why quitclaims are
commonly frowned upon as contrary to public policy, and why they are held
to be ineffective to bar claims for the full measure of the workers’ legal
rights, is the fact that the employer and the employee obviously do not stand
on the same footing. The employer drove the employee to the wall. The
latter must have to get hold of money. Because, out of a job, he had to face
the harsh necessities of life. He thus found himself in no position to resist
money proffered. His, then, is a case of adherence, not of choice. One thing
sure, however, is that petitioners did not relent on their claim. They pressed
it. They are deemed not [to] have waived any of their rights. Renuntiatio
non praesumitur.
“Along this line, we have more trenchantly declared that quit-claims
and/or complete releases executed by the employees do not estop them from
pursuing their claims arising from unfair labor practices of the employer.
The basic reason for this is that such quitclaims and/or complete releases are
against public policy and, therefore, null and void. The acceptance of
termination does not divest a laborer of the right to prosecute his employer
for unfair labor practice acts. While there may be possible exceptions to this
holding, we do not perceive any in the case at bar.
x x x      x x x      x x x
“We have pointed out in Veloso, et al. vs. Department of Labor and
Employment, et al., that:

‘While rights may be waived, the same must not be contrary to law, public order,
public policy, morals or good customs or prejudicial to a third person with a right
recognized by law.
‘Article 6 of the Civil Code renders a quitclaim agreement void ab initio where
the quitclaim obligates the workers concerned to forego their benefits while at the
same time exempting the employer from any liability that it may choose to reject.

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This runs counter to Art. 22 of the Civil Code which provides that no one shall be
16
unjustly enriched at the expense of another.’ ”

_______________

16 248 SCRA 146, 152-153, September 8, 1995, per Regalado, J.

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In Periquet v. NLRC, this Court set the guidelines and the current
doctrinal policy regarding quitclaims and waivers, as follows:

“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, 17
the
transaction must be recognized as a valid and binding undertaking.”

Hence, quitclaims in which employees voluntarily accept a

reasonable amount or consideration as settlement are deemed valid.
These agreements cannot be set aside merely 18
because the parties
have subsequently changed their minds. Consistent with this
doctrine, a tribunal has the duty of scrutinizing quitclaims brought to
its attention by either party, in order to determine their validity.
In the present case, petitioners themselves offered the Release
and Quitclaim as a defense. Even though respondent—in his
pleadings before the labor arbiter—was silent on the matter, he
nonetheless filed this case and questioned his dismissal immediately,
a few days after setting foot in the Philippines. In asking for
payment for the unexpired portion of his employment Contract, he
was eloquently taking issue with the validity of the quitclaim. His
actions spoke loudly enough; words were not necessary.

_______________

17 186 SCRA 724, June 22, 1990, per Cruz, J.

18 Galicia v. National Labor Relations Commission (Second Division), 276 SCRA
381, 387-388, July 28, 1997.

499

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To determine whether the Release and Quitclaim is valid, one

important factor that must be taken into account is the consideration
accepted by respondent; the amount must constitute a “reasonable
settlement.” The NLRC considered the amount of US$6,716 or
SR23,153 reasonable, when compared with (1) $3,900, the three-
month salary that he would have been entitled to recover if RA 8042
were applied; and (2) US$9,447, his salaries for the unexpired
portion of his Contract.
It is relevant to point out, however, that respondent was
dismissed prior to the effectivity of RA 8042. As discussed at the
outset, he is entitled to his salaries corresponding to the unexpired
portion of his Contract. This amount is exclusive of the SR23,153
that he received based on the November 29, 1994 Final Settlement.
The latter amount was comprised of overtime pay, vacation pay,
indemnity, contract reward and notice pay—items that were due him
under his employment Contract. For these reasons, the consideration
stated in the Release and Quitclaim cannot be deemed a reasonable
settlement; hence, that agreement must be set aside.
That respondent is a professional structural engineer did not
make him less susceptible to disadvantageous financial offers, faced
as he was with the prospect of unemployment in a country not his
own. “This Court has allowed supervisory employees to seek
payment of benefits and a manager to sue for illegal dismissal even
though, for a consideration, they executed 19
deeds of quitclaims
releasing their employers from liability.”
To stress, “in case of doubt, laws should be interpreted to favor
the working class—whether in the government or in the

_______________

19 Ariola v. Philex Mining Corporation, G.R. No. 147756, August 9, 2005, 466
SCRA 152, per Carpio, J. (citing De Leon v. National Labor Relations Commission,
100 SCRA 691, October 30, 1980).

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Chua vs. Total Office Products and Services (Topros), Inc.

private sector—in order to give flesh and20 vigor to the pro-poor and
pro-labor provisions of our Constitution.”
WHEREFORE, the Petition is DENIED and the assailed
Decision and Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.

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          Sandoval-Gutierrez, Corona, Carpio-Morales and Garcia,

JJ., concur.

Petition denied, assailed decision and resolution affirmed.

Note.—Well-established is the principle that findings of fact of

quasi-judicial bodies, like the NLRC, are accorded with respect,
even finality, if supported by substantial evidence. (San Miguel
Corporation vs. MAERC Integrated Services, Inc., 405 SCRA 579
[2003])

——o0o——

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