G.R. No.

192518, October 15, 2014

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND/OR ERNANI

TUMIMBANG, Petitioners, v. HENRY ESTRANERO, Respondent.

DECISION

REYES, J.:

FACTS: PLDT employed the Etranero as an Auto-Mechanic/Electrician Helper until his separation in
2003. His position was declared redundant during the company-wide workforce reduction.

Attracted by the redundancy pay offer, he declared that he had no objection and signed a deed
denominated as a Receipt, Release and Quitclaim.

Since he had outstanding loans, PLDT deducted said amount from the pay it ought to release. With
nothing to receive, he retracted his decision but the company no longer allowed him to report for work. He
then filed a complaint for illegal dismissal with reinstatement. The Labor Arbiter sustained the validity of
PLDT´s redundancy program but ruled that it lacked the jurisdiction to pass upon the off-setting of loans
with the separation pay as the same is not a labor dispute but one arising from a debtor-creditor relation
where PLDT stands as a collecting agent. The NLRC and the CA affirmed the LA’s decision.

Article 113 of the Labor Code on Wage Deduction reads:

No employer, in his own behalf or in behalf of any person, shall make any deduction from wages
of his employees, except:

xxx

(c) In cases where the employer is authorized by law or regulations issued by Secretary of Labor.

ISSUE: Whether or not PLDT can validly deduct the outstanding loan from Estranero’s redundancy pay

RULING: No. It is clear in Article 113 of the Labor Code that any withholding of an employee's
wages by an employer may only be allowed in the form of wage deductions under the
circumstances provided in said Labor Code provision, as well as the Omnibus Rules
implementing it.

In this case, the deductions made to the respondent's redundancy pay do not fall under any
of the circumstances provided under Article 113, nor was it established with certainty that
the respondent has consented to the said deductions or that the petitioners had authority to
make such deductions.

Decision is AFFIRMED.