GR 143304; (July, 2004) (Digest)
G.R. No. 143304 ; July 8, 2004
SPECIAL STEEL PRODUCTS, INC., petitioner, vs. LUTGARDO VILLAREAL AND FREDERICK SO, respondents.
FACTS
Petitioner Special Steel Products, Inc. employed respondents Lutgardo Villareal and Frederick So. Villareal obtained a car loan from a bank with the company acting as surety. Upon his resignation, petitioner withheld his monetary benefits, claiming a lien to protect its interest as surety, demanding he substitute it with his new employer. Separately, respondent So was sent by petitioner for training abroad as a reward for performance. After his return, he was made to sign a memorandum stating a requirement to stay with the company for three years or refund a sum to the principal, Bohler. He resigned before three years had elapsed. Petitioner also withheld his benefits, claiming compensation for the training expenses.
Respondents filed a complaint for non-payment of separation benefits, commissions, and other monetary claims. The Labor Arbiter ruled in their favor, ordering payment. The National Labor Relations Commission (NLRC) affirmed the decision, and the Court of Appeals dismissed petitioner’s subsequent petition for certiorari.
ISSUE
May an employer lawfully withhold employees’ wages and benefits as a lien for its contingent liability as a surety in an employee’s car loan and for expenses incurred for an employee’s training abroad?
RULING
No. The Supreme Court affirmed the Court of Appeals’ decision, ruling the withholding was unlawful. Regarding Villareal, the Court held that while a surety has rights under Article 2071 of the Civil Code, such as demanding security, these rights must be pursued through proper judicial action. An employer cannot unilaterally withhold wages and benefits; such self-help is expressly prohibited by Article 116 of the Labor Code, which forbids withholding wages by any means without the worker’s consent. Since petitioner had not actually paid the loan, Villareal was not indebted to it; rather, petitioner owed him the decreed benefits.
Regarding So, the Court upheld the finding that the training was a bonus for outstanding performance. The memorandum he signed was imposed nine months after his return, and its requirement for refund was payable to Bohler, not to petitioner. Therefore, petitioner had no claim to offset against So’s benefits. The withholding of wages and benefits is strictly construed against the employer and is permissible only under specific exceptions authorized by law, none of which applied here. Petitioner’s recourse was to file a separate civil action for its claims, not to deduct from the employees’ legally mandated wages and benefits.