Title
Arlo Aluminum, Inc. vs. Pinon, Jr.
Case
G.R. No. 215874
Decision Date
Jul 5, 2017
A gondola accident led to Vic Edward’s death; Vicente sought unpaid wages despite a P150,000 quitclaim. Courts ruled the quitclaim valid, dismissing claims against Arlo Aluminum.
joint and several liability
unpaid wages
benefits

Case Summary (G.R. No. 215874)

Factual Background

Arlo Aluminum contracted with Eton Properties in 2009 to supply and install aluminum and glass glazing works for the Eton Residences Greenbelt condominium project. For implementation, Arlo Aluminum engaged EMP Glazing through subcontracting. Vic Edward, son of Vicente, worked as an EMP Glazing employee and died in the January 27, 2011 gondola crash while installing glass and aluminum along the building perimeter.

Following the incident, the families of the victims received P150,000.00 as financial assistance. Vicente accepted the financial assistance and executed the Deed of Release, Waiver and Quitclaim dated February 3, 2011. In the deed, Vicente—described as Vicente M. Pinon, a Filipino of sufficient age and resident of a stated address—acknowledged that Vic Edward was an EMP Glazing employee who died in the January 27, 2011 accident at the Eton Residence Project site. Vicente then received P150,000.00 as financial assistance and as compensation for the benefits set by law. He further stated that, for that amount and in exchange, he released and absolved EMP Glazing and Eton Properties and Arlo Aluminum, among others, from any liability or claim he might have relating to Vic Edward’s death, and committed that he would not file any further claims against them. The deed also stated that the consideration represented the full compensation of the wages and benefits provided by law, policy, and custom, and in relation to Vic Edward’s service to EMP Glazing.

Vicente later asserted that he had believed the assistance was only financial and not full satisfaction of legal labor claims. He alleged that he eventually learned the compensation paid as wages to Vic Edward did not comply with law, and thus he filed the complaint before the LA.

Claims in the Labor Arbitration

On May 3, 2011, Vicente, in behalf of the deceased Vic Edward, filed a complaint before the LA for underpayment of wages, overtime pay, thirteenth month pay, non-payment of holiday pay, holiday premium, rest day premium, service incentive leave pay, separation pay, night shift differential, and claims for damages and death benefits. He alleged that starting in 2009, Vic Edward’s salary was P280.00, which was allegedly below the minimum wage, and that Vic Edward was not paid his service incentive leave pay and thirteenth month pay. Vicente further pleaded that during the wake, representatives of Eton Properties and Arlo Aluminum extended P150,000.00 as assistance and that he signed the deed of release and quitclaim under that belief.

Defense and Evidence Asserted by Arlo Aluminum

Arlo Aluminum countered that on the date of the accident, DOLE-NCR conducted an on-site inspection on labor standards and occupational safety and health standards, docketed as Case No. NCR-TSSD-1101-RI-004 SPL, attended by Eton Properties, C.E. Construction, and Arlo Aluminum. It claimed that DOLE-NCR found that Vic Edward was not an employee of Eton Properties, and that Arlo Aluminum and EMP Glazing were not among the contractors identified for unsettled obligations with their employees. It also asserted that it had not procured the deed by fraud or duress.

On the deed itself, Arlo Aluminum argued that on February 3, 2011, after Vicente received P150,000.00, Vicente executed a valid deed of release, waiver and quitclaim in Arlo Aluminum’s favor, witnessed by Vicente’s wife, Edna Pinon, and Vilma Pinon. Arlo Aluminum maintained that the claim had already been satisfied and that the quitclaim should be treated as a bar to further monetary recovery.

Labor Arbiter’s Ruling

In its November 22, 2011 Decision, the LA ruled in favor of Arlo Aluminum in part and against it in part. The LA found that Vic Edward had an employer-employee relationship only with EMP Glazing, which was hired by Arlo Aluminum as a subcontractor. However, the LA denied certain monetary components and awarded others. The LA reasoned that Vicente did not prove overtime, holiday, premium for holiday, and rest day claims due to lack of evidence on actual overtime services and holiday or rest day work performed.

As to other benefits, the LA noted that EMP Glazing failed to prove that it paid the correct wages and labor standard benefits because the payrolls were not presented. The LA consequently awarded Vic Edward’s underpaid wages, service incentive leave pay, and thirteenth month pay, subject to the prescriptive period under Article 291 of the Labor Code. The LA dismissed the complaint against Eton Properties and several other listed entities, including Arlo Aluminum, for lack of merit, and directed the computation of the award.

NLRC Modification

On appeal, the NLRC, in its June 29, 2012 Decision, modified the LA’s ruling. It upheld the computation that Vicente should receive P145,276.22 total for salary differentials, service incentive leave pay, and thirteenth month pay. The NLRC also held that even if EMP Glazing was an independent contractor, it did not completely absolve Arlo Aluminum and Eton Properties from liability. Invoking Article 106 of the Labor Code, it concluded that under the law, when the subcontractor fails to pay the wages of employees, the employer becomes jointly and severally liable to the extent of work performed under the contract. It characterized Eton Properties as the principal employer and Arlo Aluminum as the contractor, with EMP Glazing as the subcontractor, thereby extending solidary liability for unpaid wages and benefits.

Proceedings Before the Court of Appeals

Arlo Aluminum sought reconsideration before the NLRC, but it was denied in a resolution dated September 19, 2012. Arlo Aluminum then filed a petition for certiorari before the CA. In its February 11, 2014 Decision, the CA affirmed the NLRC. It disregarded the quitclaim and held it invalid because Vicente signed it only about one week after the death of Vic Edward. The CA concluded that Eton Properties and Arlo Aluminum took advantage of Vicente’s purportedly weakened state when they offered the financial assistance. The CA further held that the deed was invalid because it covered all potential claims against Eton Properties and Arlo Aluminum.

The CA also ruled that EMP Glazing was a labor-only contractor because Arlo Aluminum allegedly failed to show that EMP Glazing had sufficient capital and investments. It further found that Arlo Aluminum remained in control of the project because it coordinated with project managers and monitored the utilization of materials by EMP Glazing. Based on these findings, the CA sustained the conclusion that Eton Properties, Arlo Aluminum, and EMP Glazing should be held jointly and severally liable for unpaid wages and benefits. The CA denied Arlo Aluminum’s motion for reconsideration in a resolution dated December 15, 2014, prompting the present petition.

Issues Raised by Arlo Aluminum

Arlo Aluminum raised three principal issues. First, it argued that the CA’s ruling disregarding the deed of release, waiver and quitclaim was contrary to law and prevailing jurisprudence. Second, it contended that, when the CA invalidated the quitclaim, it should have directed the return of the P150,000.00 or deducted it from the judgment award in accordance with prevailing cases. Third, it claimed that the CA should not have decided factual matters not brought before it for review and not material to the issues raised in the petition for certiorari.

Ruling on the Validity of the Quitclaim

The Court granted the petition. It framed the controversy as one involving the validity of a release, waiver and quitclaim and the sufficiency of the consideration paid to the heirs of a laborer. The Court reiterated that not all quitclaims are invalid. It held that a quitclaim is valid if it satisfies: (1) the absence of fraud or deceit; (2) sufficient and reasonable consideration; and (3) the agreement 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 Court acknowledged that courts invalidate questionable waivers where there is clear proof that the waiver was obtained from an unsuspecting or gullible person or where the settlement is unconscionable on its face. It also reiterated that a quitclaim cannot be used to bar the full measure of a worker’s rights where the consideration is scandalously low and inequitable.

Applying these principles, the Court held that the deed executed by Vicente was valid. It found that the P150,000.00 consideration was reasonable and sufficient for the labor claims at stake. The Court emphasized that Vicente’s complaint involved underpayment of wages and non-payment of benefits by Arlo Aluminum and Eton Properties and that, as computed by the LA and affirmed by the NLRC, Vicente was entitled to P145,276.22. Since the LA computed the award and the NLRC affirmed the computation, the Court treated the monetary award as the proper baseline against which the adequacy of consideration was assessed. Consequently, the Court concluded that the consideration in the quitclaim sufficiently covered Arlo Aluminum’s and Eton Properties’ liability for the labor claims.

The Court further noted that the quitclaim expressly provided that the consideration was intended to compensate unpaid salaries and benefits of Vic Edward. It pointed out that the deed stated—unequivocally—that the amount represented, among others, “bahagi na ang lahat ng sahod at mga benepisyong tinatakda ng batas, polisiya at kaugalian,” and related to Vic Edward’s service. It also relied on the consistent findings of the LA, NLRC, and CA that the P150,000.00 was accepted and received by Vicente.

On fraud and coercion, the Court held that Arlo Aluminum did not procure the quitclaim through fraud or deceit, and it found no proof that Vicente was compelled through force or duress. The Court recognized that the deed was signed during the wake of Vic Edward but held that this fact alone did not conclusively prove that Arlo Aluminum

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