Validity of quitclaims and releases

WHERE a seaman signs a quitclaim and release in favor of the shipowners and the manning agencies, will this prevent him from pursuing any claims he might have against these shipowners and manning agencies?

This is a very common question propounded by seamen, shipowners and manning agencies alike.

Most of the time, because of the desperate and acute economic and financial situation of the seamen, they will reluctantly sign a quitclaim and release in favor of these shipowners and manning agencies, for an amount less than what the seaman is entitled to recover.

What is now the policy on these quitclaims and releases?

The author will discuss the jurisprudence relevant to this question.

Quitclaims and Releases executed by laborers are commonly frowned upon as contrary to public policy and are ineffective to bar claims for the full measure of the workers’ legal rights. (Lopez Sugar Corporation vs. FFW, 189 SRCA 179) In fact, in the case of AFP Mutual Benefit Association, Inc. vs. AFP-MBAI-EU, 97 SCRA 715, the Supreme Court held that:

“In labor jurisprudence, it is well established that quitclaims and/or complete releases executed by the employees do not stop them from pursuing their claims arising from the unfair labor practice 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.”

Indeed, jurisprudence exists to the effect that a deed of quitclaim or release cannot bar an employee from demanding benefits to which he is legally entitled. (Fuentes vs. NLRC, 167 SCRA 767) The same doctrine was applied in the case of MRR Crew Union vs. PNR, 72 SCRA 88, wherein the Supreme Court held:

“That the employee has signed a satisfaction receipt does not result in waiver; the law does not consider as valid any agreement to receive less compensation that a worker is entitled to recover.”

Without any doubt, quitclaims and releases signed are not binding and if they are palpably inequitable, they cannot be considered an obstacle to the pursuit of legitimate claims. If the consideration in the quitclaims and releases are unconscionably low and are incongruous to the declared policy of the State to afford protection to labor (Section 3, Article XIII of the 1987 Constitution), then it is null and void.

The rationale of the above-quoted jurisprudence is better explained in the case of Camelcraft Corporation vs. NLRC, 186 SCRA 393, wherein the Supreme Court held:

“The subordinate position of the individual employee vis-à-vis management renders him especially vulnerable to its blandishments and importunings, and even intimidations, that may result in his improvidently if not reluctantly signing over benefits to which he is clearly entitled. Recognizing this danger, we have consistently held that quitclaims of the workers’ benefits will not stop them from asserting them just the same on the ground that public policy prohibits such waivers.”

What about the rights of the shipowners and manning agencies who “in good faith” paid and settled with the seaman in order to end any legal controversies and hassles of litigation in the future?

Well, on the other hand, not all quitclaims and releases 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 and 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 is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. (Periquet vs. NLRC. 186 SCRA 724)

In fact, “dire necessity” is not an acceptable ground for annulling the releases, especially since it has not even been proved that the employees had been forced to execute them. It has not even been proved that the considerations for the quitclaims were unconscionably low and that the employees had been tricked into accepting them. (Veloso vs. DOLE, 200 SCRA 201)
How do we then reconcile these seeming and apparently contradictory pronouncements of the Supreme Court?

Applying the “balancing approach” in addressing this question on validity of quitclaims and releases, is that once a seaman executes a quitclaim and release in favor of the shipowners and manning agencies, he is stopped from filing any further money claims against these shipowners and manning agencies. However, this agreement should be voluntarily entered into and represents a reasonable settlement to make it binding on the parties. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms and settlement are unconscionable on its face that the law will step in to annul the questionable transaction. But where the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.

This is just, proper and equitable. Quitclaims and Releases must put an end to litigation, AS IT SHOULD BE. Otherwise, the maritime industry will be in dire straits because of the unending battle and confrontation of seamen against shipowners and manning agencies.

(The author is formerly the chief of the Legal and Enforcement Division of the National Labor Relations Commission. He is presently an attorney with admiralty and labor laws as his main concern at the Sapalo & Velez Law Office, 11th Floor, Security Bank Centre, 6776 Ayala Avenuue, Makati City, Tel. No. 891-13-16. He is also a professor of law at the College of Law, Manuel L. Quezon University.)

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