478 Phil. 24
“WHEREFORE, decision is hereby rendered ordering the respondents, Special Steel Products, Inc. and Mr. Augusto Pardo to pay, jointly and severally, complainants Frederick G. So and Lutgardo C. Villareal the amounts of Seventy One Thousand Two Hundred Seventy Nine Pesos and Fifty Eight Centavos (P71,279.58) and One Hundred Sixty Four Thousand Eight Hundred Seventy Three Pesos (P164,873.00), respectively, representing their commissions, retirement benefit (for Villareal), proportionate 13th month, earned vacation and sick leave benefits, and attorney’s fees.On appeal, the National Labor Relations Commission (NLRC), in a Decision dated June 29, 1998, affirmed with modification the Arbiter’s Decision in the sense that Pardo, petitioner’s president, was exempted from any liability.x x x
“At the outset, the Court notes that despite its Seventh Assignment of Error, petitioner does not question the NLRC’s decision affirming the labor arbiter’s award to private respondents of commissions, proportionate 13th month pay, earned vacation and sick leave benefits and retirement benefit (for Villareal). It merely asserts that it was withholding private respondents’ claims by reason of their pending obligations.On December 15, 1999, petitioner filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated May 8, 2000.
Petitioner justifies its withholding of Villareal’s monetary benefits as a lien for the protection of its right as surety in the car loan. It asserts that it would release Villareal’s monetary benefits if he would cause its substitution as surety by Hi-Grade. It further asserts that since Villareal’s debt to the Bank is now due and demandable, it may, pursuant to Art. 2071 of the New Civil Code, ‘demand a security that shall protect him from any proceeding by the creditor and from the danger of insolvency of the debtor.’
Petitioner’s posture is not sanctioned by law. It may only protect its right as surety by instituting an ‘action x x x to demand a security’ (Kuenzle and Streiff vs. Tan Sunco, 16 Phil 670). It may not take the law into its own hands. Indeed, it is ‘unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent’ (Art. 116, Labor Code).
Moreover, petitioner has made no payment on the car loan. Consequently, Villareal is not indebted to petitioner. On the other hand, petitioner owes Villareal for the decreed monetary benefits. The withholding of Villareal’s monetary benefits had effectively prevented him from settling his arrearages with the Bank.
With regard to So’s money claims. We find no cogent reason to disturb the findings of the NLRC. x x x.
So’s all-expense paid trip to Austria was a bonus for his outstanding sales performance. Before his sojourn to Austria, petitioner issued him a memorandum (or ‘memo’) stating that ‘Bohler is now imposing that trainees coming to Kapfenberg to stay with the local representative for at least three (3) years after training, otherwise, a lump sum compensation of not less than US $6,000.00 will have to be refunded to them by the trainee’. So did not affix his signature on the memo. However, nine (9) months after coming back from his training, he was made to sign the memo. In his letter to Augusto Pardo dated July 18, 1997, So stated that his signature was needed only as a formality and that he was left with no choice but to accommodate Augusto Pardo’s request. The labor arbiter gave credence to such explanation.
Assuming arguendo that the memo is binding on So, his more than two years post-training stay with petitioner is a substantial compliance with the condition. Besides, So tendered his resignation effective February 16, 1997. Instead of asking So to defer his resignation until the expiration of the three-year period, petitioner advanced its effectivity by one month - as of January 16, 1997. This means that petitioner no longer needed So’s services, particularly the skill and expertise acquired by him from the training. More importantly, the party entitled to claim the US $6,000.00 liquidated damages is BOHLER and not petitioner. Consequently, petitioner has no right to insist on payment of the liquidated damages, much less to withhold So’s monetary benefits in order to exact payment thereof.
With regard to the Christmas giveaways. We agree with the findings of the labor arbiter (affirmed by the NLRC) ‘that there is no existing memorandum requiring the accounting of such giveaways and that no actual accounting has ever been required before, as in the case of then Sales Manager Benito Sayo whose resignation took effect on December 31, 1996 but was not required to account for the Christmas giveaways. To make So account now for said items would amount to discrimination.’ In any event, the matter of accounting of the giveaways may be ventilated in the proper forum.
Finally, petitioner may not offset its claims against private respondents’ monetary benefits. With respect to its being the surety of Villareal, two requisites of compensation are lacking, to wit: ‘that each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other’ and ‘that (the two debts) be liquidated and demandable’ (Art. 1279 (1) and (4), New Civil Code). And in respect to its claim for liquidated damages against So, there can be no compensation because his ‘creditor’ is not petitioner but BOHLER (Art. 1278, New Civil Code).
Consequently, the NLRC committed no grave abuse of discretion.
WHEREFORE, the petition is DISMISSED while the assailed decision of the NLRC is AFFIRMED.
“ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages (and benefits) of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.”The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal authority to withhold respondents’ 13th month pay and other benefits. What an employee has worked for, his employer must pay. Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he has either defaulted in paying a loan guaranteed by his employer; or violated their memorandum of agreement; or failed to render an accounting of his employer’s property.
"ARTICLE 1278. Compensation shall take place when two persons, in their ownIn the present case, set-off or legal compensation cannot take place between petitioner and respondent So because they are not mutually creditor and debtor of each other.right, are creditors and debtors of each other.
"ARTICLE 1279. In order that compensation may be proper, it is necessary:(1) That each one of the obligors be bound principally, and that he be atthe same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due areconsumable, they be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,commenced by third persons and communicated in due time to the debtor."
“Art. 2071. The guarantor, even before having paid, may proceed against the principal debtor: Article 113 of the Labor Code, as amended, provides:(1) When he is sued for the payment;In all these cases, the action of the guarantor is to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor.”
(2) In case of insolvency of the principal debtor;
(3) When the debtor has bound himself to relieve him from the guarantywithin a specified period, and this period has expired;
(4) When the debt has become demandable, by reason of theexpiration of the period for payment;
(5) After the lapse of ten years, when the principal obligation has nofixed period for its maturity, unless it be of such nature that it cannot
be extinguished except within a period longer than ten years;
(6) If there are reasonable grounds to fear that the principal debtorintends to abscond;
(7) If the principal debtor is in imminent danger of becoming insolvent.
“ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: Article 1706 of the Civil Code, as amended, provides:(a) In cases where the worker is insured with his consent by theemployer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his unionto check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulationsissued by the Secretary of Labor.
“Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.” See Azucena, C.A., Everyone’s Labor Code, 2001 Edition at 90.