GR 145259; (October, 2005) (Digest)
G.R. No. 145259. October 25, 2005.
CASIMIRO R. NADELA, Petitioner, vs. ENGINEERING AND CONSTRUCTION CORPORATION OF ASIA (ECCO-ASIA), Respondent.
FACTS
Respondent ECCO-ASIA, a construction firm, employed petitioner Casimiro R. Nadela as Assistant Vice-President of its Southern Philippines Division until his contract expired on July 31, 1985. Due to ECCO-ASIA’s financial difficulties, Nadela, in his official capacity, facilitated the offsetting of the company’s debts to creditors by paying them with company tools and equipment. He withdrew approximately ₱600,000 worth of properties from a warehouse and delivered them to creditor Percival Llaban. Llaban selected items worth ₱119,165.18 to settle ECCO-ASIA’s account, and the excess properties remained with him. ECCO-ASIA later discovered the withdrawal and directed its internal auditor, Juan Ibañez, to recover the remaining assets. Ibañez succeeded in having Llaban execute a quitclaim after further offsetting, but Nadela refused to return properties valued at ₱476,365.69 still in his custody, claiming a right of retention over them until ECCO-ASIA paid his unpaid salaries and other monetary claims.
ISSUE
Whether or not Nadela has a legal right to retain the properties of ECCO-ASIA as security for the payment of his unpaid wages and other money claims.
RULING
No. The Supreme Court affirmed the Court of Appeals’ decision holding Nadela liable for unlawfully withholding ECCO-ASIA’s properties. The legal logic is anchored on the principle that a right of retention, or a possessory lien, is a special privilege granted by law and cannot be created by mere contractual stipulation or by the unilateral act of a party. The Court examined the provisions invoked by Nadela, specifically Articles 1707 and 1731 of the Civil Code. Article 1707, which states that “the laborer’s wages shall be a lien on the goods manufactured or the work done,” was found inapplicable because Nadela was a corporate officer, not a laborer who personally worked on or manufactured the specific movable properties he sought to retain. The tools and equipment were not the product of his labor. Similarly, Article 1731, which grants a right of retention to one “who has executed work upon a movable,” did not apply as Nadela did not perform any work on these specific chattels. His claim arose from a general employer-employee relationship for managerial services, not from work performed on the assets themselves. Consequently, his refusal to return the properties constituted an unlawful detention. The proper remedy for his monetary claims was a personal action against ECCO-ASIA, which he had already successfully pursued in a separate labor case, and not the extrajudicial retention of company property.