[G.R. NO. 143304 : July 8, 2004] On April 16, 1997, respondents filed with the Labor
Arbiter a complaint for payment of their monetary
SPECIAL STEEL PRODUCTS, benefits against petitioner and its president, Augusto
INC., Petitioner, v. LUTGARDO VILLAREAL AND Pardo, docketed as NLRC NCR Case No. 04-02820-97.
FREDERICK SO,Respondents.
In due course, the Labor Arbiter rendered a Decision
DECISION dated February 18, 1998, the dispositive portion of
which reads: chan roblesv irt ua1awli bra ry
SANDOVAL-GUTIERREZ, J.:
WHEREFORE, decision is hereby rendered ordering the
respondents, Special Steel Products, Inc. and Mr.
May an employer withhold its employees wages and Augusto Pardo to pay, jointly and severally,
benefits as lien to protect its interest as a surety in the complainants Frederick G. So and Lutgardo C. Villareal
latters car loan and for expenses incurred in a training the amounts of Seventy One Thousand Two Hundred
abroad?This is the basic issue for our resolution in the Seventy Nine Pesos and Fifty Eight Centavos
instant case. (P71,279.58) and One Hundred Sixty Four Thousand
Eight Hundred Seventy Three Pesos (P164,873.00),
At bar is a Petition for Review on Certiorari under Rule respectively, representing their commissions, retirement
45 of the 1997 Rules of Civil Procedure, as amended, benefit (for Villareal), proportionate 13th month, earned
assailing the Decision1 dated October 29, 1999 and vacation and sick leave benefits, and attorneys fees.
Resolution2 dated May 8, 2000 of the Court of Appeals
in CA-G.R. SP No. 50957, entitled Special Steel xxx
Products, Inc. v. National Labor Relations Commission,
Lutgardo Villareal and Frederick So.
SO ORDERED.
proceeding by the creditor and from the danger of Finally, petitioner may not offset its claims against
insolvency of the debtor. private respondents monetary benefits.With respect
to its being the surety of Villareal, two requisites of
Petitioners posture is not sanctioned by law.It may only compensation are lacking, to wit: that each one of the
protect its right as surety by instituting an action x x x obligors be bound principally, and that he be at the
to demand a security (Kuenzle and Streiff v. Tan Sunco, same time a principal creditor of the otherand that (the
16 Phil 670) .It may not take the law into its own hands. two debts) be liquidated and demandable (Art. 1279 (1)
Indeed, it is unlawful for any person, directly or and (4), New Civil Code). And in respect to its claim for
indirectly, to withhold any amount from the wages of a liquidated damages against So, there can be no
worker or induce him to give up any part of his wages compensation because his creditor is not petitioner but
by force, stealth, intimidation, threat or by any other BOHLER (Art. 1278, New Civil Code).
means whatsoever without the workers consent(Art.
116, Labor Code). Consequently, the NLRC committed no grave abuse of
discretion.
Moreover, petitioner has made no payment on the car
loan. Consequently, Villareal is not indebted to WHEREFORE, the petition is DISMISSED while the
petitioner.On the other hand, petitioner owes Villareal assailed decision of the NLRC is AFFIRMED.
for the decreed monetary benefits.The withholding of
Villareals monetary benefits had effectively prevented SO ORDERED.
him from settling his arrearages with the Bank.
Sos all-expense paid trip to Austria was a bonus for his Hence, this Petition for Review on Certiorari .Petitioner
outstanding sales performance. Before his sojourn to contends that as a guarantor, it could legally withhold
Austria, petitioner issued him a memorandum (or respondent Villareals monetary benefits as a preliminary
memo) stating that Bohler is now imposing that trainees remedy pursuant to Article 2071 of the Civil Code, as
coming to Kapfenberg to stay with the local amended.4 As to respondent So, Petitioner, citing Article
representative for at least three (3) years after training, 113 of the Labor Code, as amended,5 in relation to
otherwise, a lump sum compensation of not less than Article 1706 of the Civil Code, as amended,6 maintains
US $6,000.00 will have to be refunded to them by the that it could withhold his monetary benefits being
trainee. So did not affix his signature on the authorized by the memorandum he signed.
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 Article 116 of the Labor Code, as amended, provides: chanro blesvi rt ua1awli bra ry
each other.
(2) In case of insolvency of the principal debtor; cha nrob lesvi rtua llawlib ra ry
of the expiration of the period for payment; chanrob lesvi rtua llawlib ra ry
within a period longer than ten years; chanro blesvi rt uallawl ibra ry
(3) That the two debts be due; chan roblesv irtuallaw lib rary
(5) That over neither of them there be any retention or (7) If the principal debtor is in imminent danger of
controversy, commenced by third persons and becoming insolvent.
communicated in due time to the debtor." chanrob lesvi rtua llawlib ra ry
6
Article 1706 of the Civil Code, as amended,
provides: c han roblesv irt ua1awli bra ry
7
See Azucena, C.A., Everyones Labor Code, 2001
Edition at 90.
8
Id. at 92.
9
See E. Zobel, Inc. v. Court of Appeals,G.R. No.
113931, May 6, 1998, 290 SCRA 1, 7, citing
Machetti v. Hospiciode San Jose and Fidelity & Surety
Co., 43 Phil. 297 (1922).
10
Rollo at 142.
[G.R. No. 26833. April 1, 1927.] At the hearing of the case, the parties submitted the
following stipulation of facts: jgc:chan roble s.com.p h
the defendants Ricardo Nolan, Eugenio Veraguth and debtor, "La Union de Agricultores de Negros y Panay,
Emilio Gaston from the complaint, without express Inc.," has al- ready paid its debt of P40,000, payment of
finding as to costs. which was secured by the defendants, because if so, the
obligation of the latter has been extinguished. (Art.
Plaintiff appealed from said decision, and assigns 1847, Civil Code.) Considering the question on the
several errors as committed by the trial court as supposition that the bonds Exhibits A and B are two
grounds for his petition that the judgment appealed independent contracts evidenced by two public
from be reversed. documents, we believe article 1924, No. 3, is applicable
to the case in the sense that said credits shall have
The first and, indeed, the most important question preference among themselves in the order of priority of
presented by the appellant is whether or not bond dates of the documents. Manresa, in his commentaries
Exhibit B is an alteration of bond Exhibit A. on said article 1924, among other things, says: "This
number of the article under examination means credits
It is admitted by both parties that the granting of a appearing in a public instrument or final judgment
credit by plaintiff of P30,000 in current account to the without any special preference. . . ." cralaw virt ua1aw li bra ry
March 1992 Luis Toh was designated as one of the signed by persons other than petitioners, 33 as well as
authorized corporate signatories for transactions in the designation of new FBPC officers which came to the
relation to FBPC’s checking account with respondent notice of the Bank’s Vice-President Jose Chan Jr. and
Bank. 19 Meanwhile, for failing to file an answer, other officers. 34
respondent FBPC was declared in default. 20
On 26 September 1996 the RTC-Br. 161 of Pasig City
Petitioner-spouses however could not be certain denied reconsideration of its Decision. 35
whether to deny or admit the due execution and
authenticity of the Continuing Guaranty. 21 They could On 9 October 1996 respondent Bank appealed the
only allege that they were made to sign papers in blank Decision to the Court of Appeals, docketed as CA-G.R.
and the Continuing Guaranty could have been one of CV No. 55957. 36 Petitioner-spouses did not move for
them. reconsideration nor appeal the finding of the trial court
that they voluntarily executed the Continuing
Still, as petitioners asserted, it was impossible and Guaranty. chanrob1es vi rtua1 1aw 1ib rary
The trial court described the Continuing Guaranty as Petitioner-spouses Luis Toh and Vicky Tan Toh argue
effective only while petitioner-spouses were that the Court of Appeals denied them due process
stockholders and officers of FBPC since respondent Bank when it did not grant their motion for reconsideration
compelled petitioners to underwrite FBPC’s indebtedness and without "bother[ing] to consider [their] Reply with
as sureties without the requisite investigation of their Motion for Oral Argument." They maintain that the
personal solvency and capability to undertake such risk. Continuing Guaranty is not legally valid and binding
32 The lower court also believed that the Bank knew of against them for having been executed long after they
petitioners’ divestment of their shares in FBPC and their had withdrawn from FBPC. Lastly, they claim that the
subsequent resignation as officers thereof as these facts surety agreement has been extinguished by the material
were obvious from the numerous public documents that alterations thereof and of the "letter-advise" which were
detailed the changes and substitutions in the list of allegedly brought about by (a) the provision of an
authorized signatories for transactions between FBPC acceleration clause in the trust receipts; (b) the flight of
and the Bank, including the many trust receipts being their co-sureties, respondent-spouses Kenneth Ng Li
and Ma. Victoria Ng Li; (c) the grant of credit facility undersigned, the heirs, executors, administrators,
despite the non-payment of marginal deposits in an successors and assigns of the undersigned, and shall
amount beyond the credit limit of P10 million pesos; (d) inure to the benefit of, and be enforceable by you, your
the inordinate delay of the Bank in demanding the successors, transferees and assigns," and that their
payment of the indebtedness; (e) the presence of ghost commitment "shall remain in full force and effect until
deliveries and fictitious purchases using the Bank’s written notice shall have been received by [the Bank]
letters of credit and trust receipts; (f) the extension of that it has been revoked by the undersigned." Verily, if
the due dates of the letters of credit without the petitioners intended not to be charged as sureties after
required 25% partial payment per extension; (g) the their withdrawal from FBPC, they could have simply
approval of another letter of credit, L/C 93-0042, even terminated the agreement by serving the required
after respondent-spouses Kenneth Ng Li and Ma. notice of revocation upon the Bank as expressly allowed
Victoria Ng Li had defaulted on their previous therein. 47 In Garcia v. Court of Appeals 48 we ruled —
obligations; and, (h) the unmistakable pattern of fraud.
Regarding the petitioner’s claim that he is liable only as
Respondent Solid Bank maintains on the other hand that a corporate officer of WMC, the surety agreement shows
the appellate court is presumed to have passed upon all that he signed the same not in representation of WMC
points raised by petitioners’ Reply with Motion for Oral or as its president but in his personal capacity. He is
Argument as this pleading formed part of the records of therefore personally bound. There is no law that
the appellate court. It also debunks the claim of prohibits a corporate officer from binding himself
petitioners that they were inexperienced and ignorant personally to answer for a corporate debt. While the
parties who were taken advantage of in the Continuing limited liability doctrine is intended to protect the
Guaranty since petitioners are astute businessmen who stockholder by immunizing him from personal liability
are very familiar with the "ins" and "outs" of banking for the corporate debts, he may nevertheless divest
practice. The Bank further argues that the notarization himself of this protection by voluntarily binding himself
of the Continuing Guaranty discredits the to the payment of the corporate debts. The petitioner
uncorroborated assertions against the authenticity and cannot therefore take refuge in this doctrine that he has
due execution thereof, and that the Decision of the trial by his own acts effectively waived.
court in the civil case finding the surety agreement to be
valid and binding is now res judicata for failure of But as we bind the spouses Luis Toh and Vicky Tan Toh
petitioners to appeal therefrom. As a final point, the to the surety agreement they signed so must we also
Bank refers to the various waivers made by petitioner- hold respondent Bank to its representations in the
spouses in the Continuing Guaranty to justify the "letter-advise" of 16 May 1993. Particularly, as to the
extension of the due dates of the letters of credit. extension of the due dates of the letters of credit, we
cannot exclude from the Continuing Guaranty the
To begin with, we find no merit in petitioners’ claim that preconditions of the Bank that were plainly stipulated in
the Court of Appeals deprived them of their right to due the "letter-advise." Fairness and justice dictate our
process when the court a quo did not address doing so, for the Bank itself liberally applies the
specifically and explicitly their Reply with Motion for Oral provisions of cognate agreements whenever convenient
Argument. While the Resolution of the appellate court of to enforce its contractual rights, such as, when it
2 July 2002 made no mention thereof in disposing of harnessed a provision in the trust receipts executed by
their arguments on reconsideration, it is presumed that respondent FBPC to declare its entire indebtedness as
"all matters within an issue raised in a case were laid due and demandable and thereafter to exact payment
before the court and passed upon it." 45 In the absence thereof from petitioners as sureties. 49 In the same
of evidence to the contrary, we must rule that the court manner, we cannot disregard the provisions of the
a quo discharged its task properly. Moreover, a reading "letter-advise" in sizing up the panoply of commercial
of the assailed Resolution clearly makes reference to a obligations between the parties herein.
"careful review of the records," which undeniably
includes the Reply with Motion for Oral Argument, hence Insofar as petitioners stipulate in the Continuing
there is no reason for petitioners to asseverate Guaranty that respondent Bank "may at any time, or
otherwise. from time to time, in [its] discretion . . . extend or
change the time payment," this provision even if
This Court holds that the Continuing Guaranty is a valid understood as a waiver is confined per se to the grant of
and binding contract of petitioner-spouses as it is a an extension and does not surrender the prerequisites
public document that enjoys the presumption of therefor as mandated in the "letter-advise." In other
authenticity and due execution. Although petitioners as words, the authority of the Bank to defer collection
appellees may raise issues that have not been assigned contemplates only authorized extensions, that is, those
as errors by respondent Bank as party-appellant, i.e., that meet the terms of the "letter-advise."cra law virt ua1aw li bra ry
kind on [the Bank’s] part in the premises shall in any A: Under LC 93-0017 first matured on 14 September
event affect or impair this guaranty" 51 must also be 1993. We rolled it over, extended it to December 13,
read "strictissimi juris" for the reason that petitioners 1993 but they made partial payment that is why we
are only accommodation sureties, i.e., they received extended it.
nothing out of the security contract they signed. 52
Thus said, the acts or omissions of the Bank conceded Q: The question to you now is how much was paid? How
by petitioners as not affecting nor impairing the surety much is supposed to be paid on September 14, 1993 on
contract refer only to those occurring "in the premises," the basis of the original amount of P1,655,675.13? chanrob1e s virtua1 1aw 1 ibra ry
Continuing Guaranty.
9. Ibid.; TSN, 6 July 1995, p. 14, Exhs. "N" to "Z." cralaw virtua1aw l ibra ry
Quisumbing, Austria-Martinez and Tinga, JJ., concur. 25. Id., pp. 227, 241.
28. Ibid.
2. Original Record, pp. 550–554; Exhs. "4" and "5." cralaw virtua1aw li bra ry
31. Ibid.
39. Ibid.
42. Ibid.