Apodaca vs. NLRC

The NLRC has no jurisdiction over claims involving unpaid stock subscriptions, which are intra-corporate disputes within the exclusive jurisdiction of the Securities and Exchange Commission; and an employer cannot unilaterally set off an employee's earned wages against an unpaid subscription balance absent a board call for payment and absent compliance with the strict enumeration of permissible wage deductions under Article 113 of the Labor Code.

Petitioner Ernesto M. Apodaca was employed by respondent INTRANS Phils., Inc. and was later appointed President and General Manager of the corporation on September 1, 1975. On August 28, 1985, respondent Jose M. Mirasol persuaded Apodaca to subscribe to 1,500 shares of the corporation at P100.00 per share, for a total subscription of P150,000.00, against which he made an initial payment of P37,500.00. Apodaca resigned from the corporation on January 2, 1986. The dispute concerns the interplay between his earned wages and benefits as an employee and his outstanding stock subscription balance as a shareholder, raising questions of labor-law wage protection and corporate-law jurisdiction over subscription calls.

Petitioner Ernesto M. Apodaca was employed by respondent corporation INTRANS Phils., Inc. On August 28, 1985, respondent Jose M. Mirasol persuaded Apodaca to subscribe to 1,500 shares of the corporation at P100.00 per share, for a total subscription price of P150,000.00. Apodaca made an initial payment of P37,500.00, leaving an unpaid balance of P112,500.00 on his subscription. On September 1, 1975, Apodaca was appointed President and General Manager of the corporation. He thereafter served in that capacity until January 2, 1986, when he resigned from his position.

On December 19, 1986, Apodaca instituted a complaint with the NLRC against private respondents for the payment of his unpaid wages, cost of living allowance, the balance of his gasoline and representation expenses, and his bonus compensation for 1986. The parties submitted their position papers to the labor arbiter. Private respondents admitted that P17,060.07 was due to Apodaca but asserted that this amount had been applied to the unpaid balance of his stock subscription, which stood at P95,439.93. Apodaca questioned the set-off, alleging that there had been no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged obligation was not yet enforceable.

The labor arbiter, in a decision dated April 28, 1987, sustained Apodaca's claim for P17,060.07 on the ground that the employer has no right to withhold payment of wages already earned under Article 103 of the Labor Code. Private respondents appealed to the NLRC, which reversed the labor arbiter in a decision dated September 18, 1987. The NLRC held that a stockholder who fails to pay his unpaid subscription on call becomes a debtor of the corporation and that the set-off of said obligation against the wages and other amounts due to Apodaca was not contrary to law, morals, and public policy. The records revealed that the corporation had deducted the amount due to Apodaca from the amount receivable from him for unpaid subscriptions by way of a letter dated February 8, 1986, but no board resolution calling for payment of the unpaid subscription had been presented, nor did it appear that any notice of such a call had been sent to Apodaca.

• Jurisdiction: Petitioner questioned the NLRC's authority to resolve the dispute over unpaid stock subscriptions, characterizing it as an intra-corporate matter outside the labor tribunal's competence.
• No Call or Notice: Petitioner alleged that there was no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged obligation was not yet enforceable, rendering the set-off invalid.
• Unlawful Wage Deduction: Petitioner contended that the employer had no right to withhold payment of wages already earned, invoking the protection afforded by the Labor Code.

• Valid Set-Off: Respondents argued that a stockholder who fails to pay his unpaid subscription on call becomes a debtor of the corporation, and that the set-off of said obligation against the wages and other benefits due to petitioner was not contrary to law, morals, and public policy.
• Admitted Indebtedness: Respondents admitted that P17,060.07 was due to petitioner but maintained that this amount had been properly applied to the unpaid balance of his stock subscription.

• NLRC Jurisdiction: Whether the NLRC has jurisdiction to resolve a claim involving non-payment of stock subscriptions to a corporation.
• Due and Payable: Whether the obligation arising from unpaid stock subscriptions can be offset against a money claim of an employee against the employer, given the absence of a call for payment.
• Lawful Wage Deduction: Whether the set-off of an employee's earned wages against an unpaid subscription balance is permissible under Article 113 of the Labor Code.

• NLRC Jurisdiction: No. The NLRC has no jurisdiction over intra-corporate disputes such as unpaid stock subscriptions; such controversies fall within the exclusive jurisdiction of the Securities and Exchange Commission under Section 5 of Presidential Decree No. 902-A.
• Due and Payable: No. Unpaid subscriptions are not due and payable until a call is made by the corporation's board of directors pursuant to Section 67 of the Corporation Code; no board resolution or notice of call was presented or shown to have been sent to petitioner.
• Lawful Wage Deduction: No. Article 113 of the Labor Code permits wage deductions by the employer only in three enumerated instances — insurance premiums with worker's consent, union dues check-off, and deductions authorized by law or regulations of the Secretary of Labor — none of which covers a set-off against an unpaid stock subscription.

• NLRC Jurisdiction: The controversy between Apodaca and INTRANS Phils., Inc. over the unpaid balance of his stock subscription is an intra-corporate dispute. Under Section 5 of Presidential Decree No. 902-A, the Securities and Exchange Commission has exclusive jurisdiction over such matters, including those involving subscription to shares. The NLRC, as a labor tribunal, is without authority to adjudicate the rights and obligations arising from the shareholder-corporation relationship, which are governed by corporate law rather than labor law. The NLRC's reversal of the labor arbiter on the basis of the stockholder's indebtedness to the corporation thus exceeded its jurisdiction.

• Due and Payable: Even assuming arguendo that the NLRC could exercise jurisdiction over the subject matter, the unpaid subscriptions were not yet due and payable. Section 67 of the Corporation Code of the Philippines (B.P. No. 68) requires that a call for payment of unpaid subscriptions be made by the corporation before the obligation becomes enforceable. Private respondents failed to present any resolution of the board of directors of INTRANS Phils., Inc. calling for payment of the unpaid subscriptions, nor did it appear that any notice of such a call had been sent to Apodaca. What the records showed was merely a letter dated February 8, 1986, in which the corporation deducted the amount due to Apodaca from the amount receivable from him for unpaid subscriptions. Such a set-off was without lawful basis, if not premature, because the subscription obligation had not ripened into an enforceable debt.

• Lawful Wage Deduction: Assuming further that a valid call for payment had been made, the NLRC still could not validly authorize the set-off against Apodaca's wages and other benefits. Article 113 of the Labor Code strictly enumerates the only three instances in which an employer may make deductions from the wages of an employee: (a) where the worker is insured with his consent and the deduction reimburses the employer for premiums paid; (b) for union dues where check-off has been recognized or authorized in writing; and (c) where the employer is authorized by law or regulations issued by the Secretary of Labor. A set-off against an unpaid stock subscription falls under none of these categories. The employer's unilateral withholding of earned wages to satisfy a corporate subscription debt was therefore unlawful, and the labor arbiter's original ruling under Article 103 of the Labor Code — that the employer has no right to withhold payment of wages already earned — was the correct approach.

• Exclusive SEC Jurisdiction over Intra-Corporate Disputes — Under Section 5 of Presidential Decree No. 902-A, the Securities and Exchange Commission has exclusive jurisdiction over intra-corporate disputes, including controversies arising from subscription to shares of stock. The NLRC, as a labor tribunal, cannot adjudicate the rights and obligations of a stockholder vis-à-vis the corporation arising from unpaid subscriptions, as these are corporate in nature, not labor-related.

• Call Requirement for Unpaid Subscriptions — Under Section 67 of the Corporation Code of the Philippines (B.P. No. 68), unpaid subscriptions are not due and payable until a call for payment is made by the corporation's board of directors. Absent a board resolution calling for payment and notice thereof sent to the subscriber, the subscription obligation is not yet enforceable, and any set-off against such obligation is premature and without lawful basis.

• Strict Enumeration of Permissible Wage Deductions — Article 113 of the Labor Code provides a closed list of three instances in which an employer may deduct from an employee's wages: (a) insurance premium reimbursement with the worker's consent; (b) union dues check-off as recognized or authorized in writing; and (c) deductions authorized by law or regulations issued by the Secretary of Labor. Deductions outside these three categories — including set-offs against unpaid stock subscriptions — are prohibited, regardless of the existence of a corporate debt.

• "Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and the corporation as in the matter of unpaid subscriptions." — This passage states the ratio decidendi on jurisdiction: the nature of the dispute as intra-corporate removes it from the NLRC's competence and places it within the SEC's exclusive jurisdiction under P.D. No. 902-A.

• "As there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and payable." — This sentence crystallizes the rule that a board call is a condition precedent to the enforceability of unpaid subscriptions under Section 67 of the Corporation Code, and that absent such a call, any set-off is premature.

• "Article 113 of the Labor Code allows such a deduction from the wages of the employees by the employer, only in three instances" — This passage underscores the strict and exclusive character of the statutory enumeration of permissible wage deductions, foreclosing any employer-set-off against corporate debts that does not fall within the three categories.

• Section 5, Presidential Decree No. 902-A — Grants the Securities and Exchange Commission exclusive jurisdiction over intra-corporate disputes, including controversies arising from subscription to shares. Applied to hold that the NLRC lacked jurisdiction over the dispute concerning Apodaca's unpaid stock subscription.
• Section 67, Corporation Code of the Philippines (B.P. No. 68) — Governs the requirement of a call by the corporation before unpaid subscriptions become due and payable. Applied to hold that absent a board resolution calling for payment and notice thereof, the subscription obligation was not yet enforceable and the set-off was premature.
• Article 113, Labor Code — Enumerates the only three instances in which an employer may lawfully deduct from an employee's wages. Applied to hold that a set-off against an unpaid stock subscription does not fall within any of the permitted categories and is therefore unlawful.
• Article 103, Labor Code — Prohibits the employer from withholding payment of wages already earned. Invoked by the labor arbiter in sustaining Apodaca's claim for P17,060.07, a ruling effectively vindicated by the Supreme Court's disposition.

Narvasa, Cruz, Griño-Aquino, and Medialdea, JJ., concurred.