Not all quitclaims contrary to public policy; Waiver voluntarily executed valid, binding

Petitioners insist that the documents of waiver are without any effect because quitclaims and releases are contrary to public policy and therefore, null and void. Not all quitclaims and releases are, however, contrary to public policy. As we have stated: 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. In the case at bar, the documents of waiver were executed by the affected employees without any force or duress used against them by private respondent or its representatives. To the contrary, the employees waived their claims because of awareness of the precarious financial condition of the company as shown by a steady decline in its income. The documents embodied reasonable settlements of the parties' claim. As matter of fact, the employees received separation pay equivalent to one month pay for every year of service, which was more than what they were entitled to receive under the law which provides for separation pay equivalent to one month pay or one-half (1/2) month pay for every year of service, whichever is higher. [G.R. No. 108259. November 29, 1996]