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. and manned by its Philippine agent, respondent Philippine-Singapore Transport Services, Inc. (PSTSI). The employment contract provided a monthly salary of S$2,800 and group accident insurance coverage of US$75,000. 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 agreement where petitioner, for P7,000 and reimbursement of incidental expenses, executed a quitclaim in favor of PSTSI. Consequently, her counsel moved to dismiss the case with prejudice against PSTSI but without prejudice as against Chuan Hup. The POEA dismissed the case based on this compromise.
Subsequently, on April 21, 1986, petitioner filed a new claim against both PSTSI and Chuan Hup. The POEA dismissed this new complaint on grounds of res judicata, citing the prior compromise agreement. The NLRC affirmed this dismissal. Petitioner thus elevated the case to the Supreme Court, arguing the quitclaim is void for being unconscionable, that it only released PSTSI and not the principal Chuan Hup, and that PSTSI, as local agent, is jointly and severally liable with its principal.

ISSUE

The primary issue is whether the quitclaim executed by petitioner is valid and bars her subsequent claim for death benefits against both the local agent and the foreign principal.

RULING

The Supreme Court ruled for the petitioner, setting aside the NLRC resolution. The quitclaim is declared null and void. The Court emphasized that quitclaims executed by employees, or their heirs in this case, are often frowned upon as they are usually signed under dire financial circumstances. For a quitclaim to be valid, it must be shown that the consideration was reasonable and the employee signed it voluntarily, with a full understanding of its consequences. Here, the consideration of P7,000 was deemed unconscionably low compared to the legitimate claim, which under the contract and applicable Singapore law amounted to S$100,800 (36 months’ salary). Such a gross disparity renders the quitclaim inequitable and contrary to the constitutional policy of protecting labor.
Furthermore, the Court held that the principle of res judicata does not apply. The compromise and motion to dismiss in the first case explicitly stated the dismissal was without prejudice to claims against the principal, Chuan Hup. Thus, the second complaint was not barred. On the matter of liability, the Court found PSTSI and Chuan Hup jointly and severally liable. PSTSI, as the local recruiting agent, cannot evade liability by claiming lack of privity, especially since it voluntarily entered into the compromise. The contractual stipulation submitting disputes to Singaporean courts was also declared void as it cannot deprive Philippine labor tribunals of the jurisdiction vested by law. Respondents were ordered to pay petitioner the death benefit of S$100,800.