GROUP 8: TORIO, Alyssa Joy; TORRES, Cyrene; VELOSO, Carlo

G.R. NO. 181393: July 28, 2009

GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC. and ABELARDO M. GONZALES, v. EDNA MARGALLO

FACTS:

Grandteq is a domestic corporation engaged in the business of selling welding electrodes, alloy steels,
aluminum and copper alloys. Gonzales is the President/Owner of Grandteq. Grandteq employed Margallo
as Sales Engineer. Margallo availed herself of the car loan program offered to her by Grandteq as a reward
for being "Salesman of the Year." She paid the down payment on a brand new Toyota Corolla, amounting
to P201,000.00, out of her own pocket. The monthly amortization for the car was P10,302.00, of which
P5,302.00 was to be her share and P5,000.00 was to be the share of Grandteq.

Margallo received a letter signed by Gonzales and de Leon, Vice-President for Administration of Grandteq,
for working with JVM Industrial Supply and Allied Services concurrent with her being employed with
Grandteq. She was given 24 hours upon receipt of letter to submit a written explanation on why she
should not be given a disciplinary action for allegedly violating/committing:

a) Moonlighting b) Sabotage c) Breach of trust and confidence (labor code).

Margallo wrote a letter-reply that Mr. Steve D. Rivera instructed her to bring the items to circle freight.
That she was just following orders from Mr. D. Rivera who is one of her boss.

De Leon asked her to just resign, promising that if she did, she would still be paid her commissions and
other benefits, as well as be reimbursed her car loan payments. Relying on De Leon's promise, Margallo
tendered her irrevocable resignation, effective immediately.

Margallo, however was never paid her money claims. Grandteq failed to pay her commissions in the sum
of P87,508.00, equivalent to 5% of the total sales that she collected which amounted to P1,750,148.84.
Grandteq likewise failed to refund the "sales accommodations" or advances she gave her customers. After
Margallo's resignation, Grandteq sold her car to Annaliza Estrella, another employee, for P550,000.00.
Margallo filed before the Labor Arbiter a Complaint against Grandteq and Gonzales, for recovery of sales
commission, cash incentive and car loan payment, damages and attorney fees.

Grandteq and Gonzales opposed. They maintained that Margallo was not entitled to sales commissions
because the computation thereof, according to company policy, should be based on actual collections
within 180 days from invoice date. All of Margallo's credit sales transactions were unpaid, outstanding,
and past due. Margallo was also not entitled to any sales incentive, because said benefit was intended for
customers, and not for the sales personnel. Grandteq and Gonzales further insisted that Margallo had no
right to the refund of her car loan payments under the car loan agreement she executed with Grandteq,
which expressly provided that in the event that Margallo resigned or was terminated for cause during the
effectivity of said agreement, her car loan payments would be forfeited in favor of Grandteq, and
Grandteq would regain possession of the car.

Labor Arbiter rendered a Decision, dismissing all of Margallo's claims, held that Margallo was not able to
prove by substantial evidence her entitlement to the sales commission. That Margallo had no right to the
reimbursement of her car loan payments under her car loan agreement with Grandteq.

NLRC ordered to refund to Margallo her car loan payments and to pay her the amount of her unpaid sales
commissions plus ten percent (10%) of the total monetary award as attorney's fees.

Court of Appeals agreed with the NLRC. CA found that Margallo had a right to be reimbursed her car loan
payments, and the terms of the car loan agreement between Margallo and Grandteq should not be
applied for being highly prejudicial to the employee's interest. CA likewise held that Grandteq and
Gonzales shall pay Margallo her sales commission, placing the burden upon the employer to prove that
the employee's money claims had been paid.

ISSUE: Whether or not Margallo had a right to be reimbursed of her car loan payments and also be entitled
to her sales commission?

RATIO: YES. Contracts are respected as the law between the contracting parties. The contracting parties
may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order or public policy.

The questionable provision in the car loan agreement between Grandteq and Margallo are contrary to
the fundamental principles of justice and fairness. Margallo herself paid for the down payment and her
 GROUP 8: TORIO, Alyssa Joy; TORRES, Cyrene; VELOSO, Carlo

share in the monthly amortization of the car. However, she did not get to leave with the car when she
resigned from Grandteq. In effect, Margallo parted with her hard-earned money for nothing, being left,
as she is, with an empty bag. The inequitableness in the conduct of Grandteq and Gonzales is heightened
by the fact that after they regained possession of the car, they resold the same to another employee under
a similar contract bearing the same terms and conditions signed by Margallo.

The principle that no person may unjustly enrich oneself at the expense of another (Nemo cum alteris
detrimento locupletari potest) is embodied in Article 22 of the New Civil Code, to wit:

ART. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall return
the same to him.

There is unjust enrichment when (1) a person is unjustly benefited, and (2) such benefit is derived at the
expense of or with damages to another. The main objective of the principle of unjust enrichment is to
prevent one from enriching oneself at the expense of another. It is commonly accepted that this doctrine
simply means that a person shall not be allowed to profit or enrich himself inequitably at another's
expense. One condition for invoking this principle is that the aggrieved party has no other action based
on a contract, quasi-contract, crime, quasi-delict, or any other provision of law. The principle against
unjust enrichment obliges Grandteq and Gonzales to refund to Margallo the car loan payments she had
made, since she has not actually acquired the car. To relieve Grandteq and Gonzales of their obligation to
reimburse Margallo would, indeed, be to sanction unjust enrichment in favor of the first two and cause
unjust poverty to the latter.

The Court rigorously disapproves contracts that demonstrate a clear attempt to exploit the employee and
deprive him of the protection sanctioned by both the Constitution and the Labor Code. The Constitution
and the Labor Code mandate the protection of labor. Hence, as a matter of judicial policy, this Court has,
in a number of instances, leaned backwards to protect labor and the working class against the
machinations and incursions of their more financially entrenched employers.

Although not strictly a labor contract, the car loan agreement herein involves a benefit extended by the
employers, Grandteq and Gonzales, to their employee, Margallo. It should benefit, and not unduly burden,
Margallo. The Court cannot, in any way, uphold a car loan agreement that threatens the employee with
the forfeiture of all the car loan payments he/she had previously made, plus loss of the possession of the
car, should the employee wish to resign; otherwise, said agreement can then be used by the employer as
an instrument to either hold said employee hostage to the job or punish him/her for resigning.

In cases involving money claims of employees, the employer has the burden of proving that the employees
did receive their wages and benefits and that the same were paid in accordance with law.

It is settled that once the employee has set out with particularity in his complaint, position paper,
affidavits and other documents the labor standard benefits he is entitled to, and which the employer
allegedly failed to pay him, it becomes the employer's burden to prove that it has paid these money claims.
One who pleads payment has the burden of proving it; and even where the employees must allege
nonpayment, the general rule is that the burden rests on the defendant to prove payment, rather than
on the plaintiff to prove nonpayment. Under the terms and conditions of Margallo's employment with
Grandteq, it is provided that she "will do field sales with commission on sales made after a month's
training." On this basis, Margallo's entitlement to sales commission is unrebutted. Grandteq and Gonzales
have the burden of proof to show, by substantial evidence, their claim that Margallo was not entitled to
sales commissions because the sales made by the latter remained outstanding and unpaid, rendering
these sales as bad debts and thus nullifying Margallo's right to this monetary benefit. Grandteq and
Gonzales could have presented pertinent company records to prove this claim. It is a rule that failure of
employers to submit the necessary documents that are in their possession as employers gives rise to the
presumption that the presentation thereof is prejudicial to its cause.