You are on page 1of 4

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 143304 July 8, 2004
SPECIAL STEEL PRODUCTS, INC., petitioner,
vs.
LUTGARDO VILLAREAL AND FREDERIC SO, respondents.
D ! I S I O N
SANDOVAL!GUTIERRE", J.#
Ma" an e#plo"er $ithhold its e#plo"ees% $a&es and benefits as lien to protect its
interest as a suret" in the latter%s car loan and for e'penses incurred in a trainin&
abroad( This is the basic issue for our resolution in the instant case.
)t bar is a petition for revie$ on certiorari under Rule *+ of the ,--. Rules of !ivil
Procedure, as a#ended, assailin& the Decision
,
dated October /-, ,--- and
Resolution
/
dated Ma" 0, /111 of the !ourt of )ppeals in !)23.R. SP No. +1-+.,
entitled 4Special Steel Products, Inc. vs. National Labor Relations Commission,
Lutgardo Villareal and Frederick So.4
The factual antecedents as borne b" the records are5
Special Steel Products, Inc., petitioner, is a do#estic corporation en&a&ed in the
principal business of i#portation, sale, and #ar6etin& of 7OH8R steel products.
8ut&ardo !. Villareal and 9rederic6 3. So, respondents, $or6ed for petitioner as
assistant sales #ana&er and sales#an, respectivel".
So#eti#e in Ma" ,--:, respondent Villareal obtained a car loan fro# the 7an6 of
!o##erce, $ith petitioner as suret", as sho$n b" a 4continuin& suret"ship a&ree#ent4
and 4pro#issor" note4 $herein the" ;ointl" and severall" a&reed to pa" the ban6
P.0<,<,,.<1 in ./ #onthl" install#ents. On =anuar" ,+, ,--., respondent Villareal
resi&ned and thereafter ;oined Hi23rade Industrial and Technical Products, Inc. as
e'ecutive vice2president.
So#eti#e in )u&ust ,--*, petitioner 4sponsored4 respondent 9rederic6 So to attend a
trainin& course in >apfenber&, )ustria conducted b" 7OH8R, petitioner%s principal
co#pan". This trainin& $as a re$ard for respondent So%s outstandin& sales
perfor#ance. ?hen respondent returned nine #onths thereafter, petitioner directed hi#
to si&n a #e#orandu# providin& that 7OH8R re@uires trainees fro# >apfenber& to
continue $or6in& $ith petitioner for a period of three A:B "ears after the trainin&.
Other$ise, each trainee shall refund to 7OH8R C<,111.11 ADS dollarsB b" $a" of set2
off or co#pensation. On =anuar" ,<, ,--. or / "ears and * #onths after attendin& the
trainin&, respondent resi&ned fro# petitioner.
I##ediatel", petitioner ordered respondents to render an accountin& of its various
!hrist#as &ivea$a"s
:
the" received. These $ere intended for distribution to petitioner%s
custo#ers.
In protest, respondents de#anded fro# petitioner pa"#ent of their separation benefits,
co##issions, vacation and sic6 leave benefits, and proportionate ,:
th
#onth pa". 7ut
petitioner refused and instead, $ithheld their ,:
th
#onth pa" and other benefits.
On )pril ,<, ,--., respondents filed $ith the 8abor )rbiter a co#plaint for pa"#ent of
their #onetar" benefits a&ainst petitioner and its president, )u&usto Pardo, doc6eted as
N8R! N!R !ase No. 1*21/0/12-..
In due course, the 8abor )rbiter rendered a Decision dated 9ebruar" ,0, ,--0, the
dispositive portion of $hich reads5
4?HR9OR, decision is hereb" rendered orderin& the respondents, Special
Steel Products, Inc. and Mr. )u&usto Pardo to pa", ;ointl" and severall",
co#plainants 9rederic6 3. So and 8ut&ardo !. Villareal the a#ounts of
Sevent" One Thousand T$o Hundred Sevent" Nine Pesos and 9ift" i&ht
!entavos AP.,,/.-.+0B and One Hundred Si't" 9our Thousand i&ht Hundred
Sevent" Three Pesos AP,<*,0.:.11B, respectivel", representin& their
co##issions, retire#ent benefit Afor VillarealB, proportionate ,:
th
#onth,
earned vacation and sic6 leave benefits, and attorne"%s fees.
' ' '
SO ORDRD.4
On appeal, the National 8abor Relations !o##ission AN8R!B, in a Decision dated =une
/-, ,--0, affir#ed $ith #odification the )rbiter%s Decision in the sense that Pardo,
petitioner%s president, $as e'e#pted fro# an" liabilit".
1
On Septe#ber ,,, ,--0, petitioner filed a #otion for reconsideration but $as denied.
Hence, petitioner filed $ith the !ourt of )ppeals a petition for certiorari.
On October /-, ,---, the !ourt of )ppeals rendered a Decision dis#issin& the petition
and affir#in& the assailed N8R! Decision, thus5
4)t the outset, the !ourt notes that despite its Seventh )ssi&n#ent of rror,
petitioner does not @uestion the N8R!%s decision affir#in& the labor arbiter%s
a$ard to private respondents of co##issions, proportionate ,:
th
#onth pa",
earned vacation and sic6 leave benefits and retire#ent benefit Afor VillarealB. It
#erel" asserts that it $as $ithholdin& private respondents% clai#s b" reason of
their pendin& obli&ations.
Petitioner ;ustifies its $ithholdin& of Villareal%s #onetar" benefits as a lien for
the protection of its ri&ht as suret" in the car loan. It asserts that it $ould
release Villareal%s #onetar" benefits if he $ould cause its substitution as suret"
b" Hi23rade. It further asserts that since Villareal%s debt to the 7an6 is no$ due
and de#andable, it #a", pursuant to )rt. /1., of the Ne$ !ivil !ode, Edemand
a security tat sall protect im !rom any proceeding by te creditor and !rom
te danger o! insolvency o! te debtor.%
Petitioner%s posture is not sanctioned b" la$. It #a" onl" protect its ri&ht as
suret" b" institutin& an Eaction " " " to demand a security% A#uen$le and Strei!!
vs. %an Sunco, ,< Phil <.1B. It #a" not ta6e the la$ into its o$n hands. Indeed,
it is Eunla&!ul !or any person, directly or indirectly, to &itold any amount !rom
te &ages o! a &orker or induce im to give up any part o! is &ages by !orce,
stealt, intimidation, treat or by any oter means &atsoever &itout te
&orker's consent% A)rt. ,,<, 8abor !odeB.
Moreover, petitioner has #ade no pa"#ent on the car loan. !onse@uentl",
Villareal is not indebted to petitioner. On the other hand, petitioner o$es
Villareal for the decreed #onetar" benefits. The $ithholdin& of Villareal%s
#onetar" benefits had effectivel" prevented hi# fro# settlin& his arreara&es
$ith the 7an6.
?ith re&ard to So%s #one" clai#s. ?e find no co&ent reason to disturb the
findin&s of the N8R!. ' ' '.
So%s all2e'pense paid trip to )ustria $as a bonus for his outstandin& sales
perfor#ance. 7efore his so;ourn to )ustria, petitioner issued hi# a
#e#orandu# Aor E#e#o%B statin& that E7ohler is no$ i#posin& that trainees
co#in& to >apfenber& to sta" $ith the local representative for at least three A:B
"ears after trainin&, other$ise, a lu#p su# co#pensation of not less than DS
C<,111.11 $ill have to be refunded to the# b" the trainee%. So did not affi' his
si&nature on the #e#o. Ho$ever, nine A-B #onths after co#in& bac6 fro# his
trainin&, he $as #ade to si&n the #e#o. In his letter to )u&usto Pardo dated
=ul" ,0, ,--., So stated that his si&nature $as needed onl" as a for#alit" and
that he $as left $ith no choice but to acco##odate )u&usto Pardo%s re@uest.
The labor arbiter &ave credence to such e'planation.
)ssu#in& ar&uendo that the #e#o is bindin& on So, his #ore than t$o "ears
post2trainin& sta" $ith petitioner is a substantial co#pliance $ith the condition.
7esides, So tendered his resi&nation effective 9ebruar" ,<, ,--.. Instead of
as6in& So to defer his resi&nation until the e'piration of the three2"ear period,
petitioner advanced its effectivit" b" one #onth 2 as of =anuar" ,<, ,--.. This
#eans that petitioner no lon&er needed So%s services, particularl" the s6ill and
e'pertise ac@uired b" hi# fro# the trainin&. More i#portantl", the part" entitled
to clai# the DS C<,111.11 li@uidated da#a&es is 7OH8R and not petitioner.
!onse@uentl", petitioner has no ri&ht to insist on pa"#ent of the li@uidated
da#a&es, #uch less to $ithhold So%s #onetar" benefits in order to e'act
pa"#ent thereof.
?ith re&ard to the !hrist#as &ivea$a"s. ?e a&ree $ith the findin&s of the
labor arbiter Aaffir#ed b" the N8R!B Ethat there is no e'istin& #e#orandu#
re@uirin& the accountin& of such &ivea$a"s and that no actual accountin& has
ever been re@uired before, as in the case of then Sales Mana&er 7enito Sa"o
$hose resi&nation too6 effect on Dece#ber :,, ,--< but $as not re@uired to
account for the !hrist#as &ivea$a"s. To #a6e So account no$ for said ite#s
$ould a#ount to discri#ination.% In an" event, the #atter of accountin& of the
&ivea$a"s #a" be ventilated in the proper foru#.
9inall", $%&'&'o(%) *+y (o& o,,-%& '&- .l+'*- +/+'(-& $)'0+&% )%-$o(1%(&-2
*o(%&+)y 3%(%,'&-. ?ith respect to its bein& the suret" of Villareal, t$o
re@uisites of co#pensation are lac6in&, to $it5 Etat eac one o! te obligors be
bound principally, and tat e be at te same time a principal creditor o! te
oter% and Etat (te t&o debts) be li*uidated and demandable% A)rt. ,/.- A,B
and A*B, Ne$ !ivil !odeB. )nd in respect to its clai# for li@uidated da#a&es
a&ainst So, there can be no co#pensation because his Ecreditor% is not
petitioner but 7OH8R A)rt. ,/.0, Ne$ !ivil !odeB.
!onse@uentl", the N8R! co##itted no &rave abuse of discretion.
?HR9OR, the petition is DISMISSD $hile the assailed decision of the
N8R! is )99IRMD.
2
SO ORDRD.4
On Dece#ber ,+, ,---, petitioner filed a #otion for reconsideration but $as denied b"
the )ppellate !ourt in a Resolution dated Ma" 0, /111.
Hence, this petition for revie$ on certiorari. Petitioner contends that as a &uarantor, it
could le&all" $ithhold respondent Villareal%s #onetar" benefits as a preli#inar" re#ed"
pursuant to )rticle /1., of the !ivil !ode, as a#ended.
*
)s to respondent So, petitioner,
citin& )rticle ,,: of the 8abor !ode, as a#ended,
+
in relation to )rticle ,.1< of the !ivil
!ode, as a#ended,
<
#aintains that it could $ithhold his #onetar" benefits bein&
authoriFed b" the #e#orandu# he si&ned.
)rticle ,,< of the 8abor !ode, as a#ended, provides5
4)RT. ,,<. +itolding o! &ages and kickbacks proibited. G I& -4+ll 3%
u(l+5,ul ,o) +(y $%)-o(, 1')%.&ly o) '(1')%.&ly, &o 5'&44ol1 +(y +*ou(&
,)o* &4% 5+/%- 6+(1 3%(%,'&-7 o, + 5o)8%) or induce hi# to &ive up an" part
of his $a&es b" force, stealth, inti#idation, threat or b" an" other #eans
$hatsoever 5'&4ou& &4% 5o)8%)2- .o(-%(&.4
The above provision is clear and needs no further elucidation. Indeed, petitioner has no
le&al authorit" to $ithhold respondents% ,:
th
#onth pa" and other benefits. ?hat an
e#plo"ee has $or6ed for, his e#plo"er #ust pa".
.
Thus, an e#plo"er cannot si#pl"
refuse to pa" the $a&es or benefits of its e#plo"ee because he has either defaulted in
pa"in& a loan &uaranteed b" his e#plo"erH or violated their #e#orandu# of a&ree#entH
or failed to render an accountin& of his e#plo"er%s propert".
0
Nonetheless, petitioner, rel"in& on )rticle /1., Aearlier citedB, contends that the ri&ht to
de#and securit" and obtain release fro# the &uarant" it e'ecuted in favor of
respondent Villareal #a" be e'ercised even $ithout initiatin& a separate and distinct
action.
There is no &uarant" involved herein and, therefore, the provision of )rticle /1., does
not appl".
) &uarant" is distin&uished fro# a suret" in that a &uarantor is the insurer of the
solvenc" of the debtor and thus binds hi#self to pa" if the principal is unable to pa",
$hile a -u)%&y '- &4% '(-u)%) o, &4% 1%3&, +(1 4% o3l'/+&%- 4'*-%l, &o $+y ', &4%
$)'(.'$+l 1o%- (o& $+y.
-
7ased on the above distinction, it appears that the contract e'ecuted b" petitioner and
respondent Villareal Ain favor of the 7an6 of !o##erceB is a contract of suret". In fact, it
is deno#inated as a 4continuin& suret"ship a&ree#ent.4 Hence, petitioner could not ;ust
unilaterall" $ithhold respondent%s $a&es or benefits as a preli#inar" re#ed" under
)rticle /1.,. It #ust file an action a&ainst respondent Villareal. Thus, the )ppellate
!ourt aptl" ruled that petitioner 4#a" onl" protect its ri&ht as suret" b" institutin& an
Eaction to demand a security%.4
)s to respondent So, petitioner #aintains that there can be a set2off or le&al
co#pensation bet$een the#. !onse@uentl", it can $ithhold his ,:
th
#onth pa" and
other benefits.
9or le&al co#pensation to ta6e place, the re@uire#ents set forth in )rticles ,/.0 and
,/.- of the !ivil !ode, @uoted belo$, #ust be present.
4)RTI!8 ,/.0. !o#pensation shall ta6e place $hen t$o persons, in their
o$n ri&ht, are creditors and debtors of each other.
4)RTI!8 ,/.-. In order that co#pensation #a" be proper, it is necessar"5
A,B That each one of the obli&ors be bound principall", and that he be at the
sa#e ti#e a principal creditor of the otherH
A/B That both debts consist in a su# of #one", or if the thin&s due are
consu#able, the" be of the sa#e 6ind, and also of the sa#e @ualit" if the latter
has been statedH
A:B That the t$o debts be dueH
A*B That the" be li@uidated and de#andableH
A+B That over neither of the# there be an" retention or controvers",
co##enced b" third persons and co##unicated in due ti#e to the debtor.4
In the present case, set2off or le&al co#pensation cannot ta6e place bet$een petitioner
and respondent So because the" are not #utuall" creditor and debtor of each other.
) careful readin& of the Me#orandu#
,1
dated )u&ust //, ,--* reveals that the 4lu#p
su# co#pensation of not less than DS C<,111.11 $ill have to be refunded4 b" each
trainee to 7OH8R, not to petitioner.
3
In fine, $e rule that petitioner has no le&al ri&ht to $ithhold respondents% ,:
th
#onth pa"
and other benefits to reco#pense for $hatever a#ount it paid as securit" for
respondent Villareal%s car loanH and for the e'penses incurred b" respondent So in his
trainin& abroad.
9:EREFORE, the petition is DNID. The Decision dated October /-, ,--- and
Resolution dated Ma" 0, /111 of the !ourt of )ppeals in !)23.R. SP No. +1-+. are
hereb" )99IRMD.
SO ORDERED.
4