G.R. No. 80039, 18 April 1989


Petitioner was employed in respondent corporation. In that corporation, petitioner was convinced to subscribe to its shares of stock. Petitioner paid P37,500 for the subscription. Petitioner was appointed President and General Manager of the corporation, and after 10 years, he resigned. Petitioner then filed a case in thence for unpaid wages, allowances, and bonus compensation against Respondent Corporation. Respondent corporation admitted it owed Petitioner P17,060.7. However respondent corporation deducted that amount to the amount owed by petitioner to the corporation which is P95,439.93. The number P95,439.93 represented the unpaid balance for the shares of stock he previously subscribed to. Petitioner questioned the set-off alleging that there was no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged obligation is not enforceable.


Whether or not an obligation of an employee to his employer, arising from an unpaid subscription be offset against a money claim of an employee against the employer.


NO. Firstly, the unpaid subscriptions are not due and payable until a call is made by the corporation for payment. Private respondents have not presented a resolution of the board of directors of Respondent Corporation calling for the payment of the unpaid subscriptions. It does not even appear that a notice of such call has been sent to petitioner by the respondent corporation. What the records show is that the respondent corporation deducted the amount due to petitioner from the amount receivable from him for the unpaid subscriptions. No doubt such set-off was without lawful basis, if not premature. As there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and payable.

Secondly, the set off or deduction was unlawful since Article 113 of the Labor Code does not allow such deduction from the wages of the employees by the employer.

*Case Digest by Krishianne Louise C. Labiano, JD – 4, Andres Bonifacio College, SY 2019 – 2020