Title
Locsin II vs. Mekeni Food Corp.
Case
G.R. No. 192105
Decision Date
Dec 9, 2013
Employee resigned, sought refund of car plan payments; Supreme Court ruled refund of his 50% share but denied claim for employer's 50% share, citing unjust enrichment.
car plan payments
refund
employer
A

Case Summary (G.R. No. 192105)

Factual Background

Mekeni offered Locsin employment in February 2004, including a car plan under which the company would pay one-half of a vehicle’s cost and the employee would pay the other half via salary deductions. Locsin commenced employment on March 17, 2004 and was provided a used Honda Civic (valued at P280,000) as a service vehicle formerly used by his supervisor. Locsin’s 50% share was deducted at P5,000 per month. He resigned effective February 25, 2006, by which time P112,500 had been deducted from his salary toward the employee’s share. Mekeni purportedly had an equivalent contribution but disputed other terms, stating the car plan applied only to employees with five years’ service. Locsin offered to buy the vehicle, negotiations failed, and he returned the vehicle on May 2, 2006. He later filed claims for unpaid monetary benefits and reimbursement of his car plan deductions.

Terms of the Car Plan as Evidenced

The only demonstrated term of the car plan on record was the 50/50 cost-sharing: Mekeni would cover half the vehicle cost and the employee would pay the other half through salary deductions. No written stipulation or other documentary evidence was offered by Mekeni establishing additional terms (e.g., that deductions would be forfeited as rentals upon termination, or that the car plan applied only after five years).

Procedural History — Labor Arbiter

On October 30, 2007 the Labor Arbiter ordered Mekeni to turn over the vehicle to Locsin upon payment by Locsin of P100,435.84, effectively treating the arrangement as a sale with outstanding balance to be paid by the employee in order to obtain the vehicle.

Procedural History — NLRC

The NLRC reversed the Labor Arbiter on February 27, 2009. It awarded Locsin unpaid salary (P12,511.45), unpaid leave pay (P14,789.15), unpaid commission (P9,780.00), reimbursement of his car plan payments (P112,500.00), and reimbursement of Mekeni’s equivalent share (P112,500.00). The NLRC treated Locsin’s amortizations as payments that should be reimbursed since the vehicle remained in Mekeni’s possession and ownership; it also found Mekeni did not substantiate its five-year claim and therefore construed the car plan in favor of the employee. A subsequent NLRC resolution of April 30, 2009 denied Mekeni’s motion for reconsideration.

Procedural History — Court of Appeals

Mekeni filed a petition for certiorari with the Court of Appeals. The CA granted the petition in part on January 27, 2010: it deleted the NLRC awards of reimbursement of Locsin’s P112,500 car plan payments and deletion of the award of Mekeni’s 50% share of P112,500; the CA otherwise affirmed the NLRC. The CA concluded that, absent express terms showing otherwise, Locsin’s deductions could be treated as rentals for the use of the service vehicle during employment, citing Elisco Tool Manufacturing Corporation v. Court of Appeals and applying Civil Code Arts. 1484–1486 (sale on installment / leases with option to buy). The CA held the installments were not unconscionable and thus need not be returned; it also ruled Locsin could not recover Mekeni’s counterpart share because that would unjustly enrich him.

Issue Presented to the Supreme Court

Whether the Court of Appeals erred in treating Locsin’s car plan payments of P112,500 as forfeitable rentals rather than part of his compensation package and thus liable to reimbursement, despite the absence of express terms on the record to that effect.

Petitioner’s Arguments

Locsin contended the car plan was a benefit integral to his compensation package as reflected in the Offer Sheet, formed part of his inducement to accept employment, and was necessary for the performance of his duties. He argued that in the absence of written terms imposing forfeiture, doubts should be resolved in his favor under pro-labor construction. Locsin maintained the CA’s reliance on Elisco Tool was misplaced because that case involved a car loan arrangement, whereas his car plan was a compensation-related benefit imposed by the employer.

Respondent’s Arguments

Mekeni argued the Supreme Court should not reassess factual findings and that the CA’s conclusions about the car plan were questions of fact. It asserted that the vehicle arrangement was a loan to be repaid by monthly deductions and that refusal to treat the deductions as satisfying the loan would result in unjust enrichment materially opposite to its position.

Supreme Court’s Reviewability and Standard of Review

The Supreme Court noted that it may review CA conclusions where the appellate court’s findings rest on manifestly mistaken inferences, speculation, or absurd conclusions. Although Mekeni did not appeal the CA decision on certain points and is deemed to have accepted them, the central contested issue—characterization and disposition of Locsin’s car plan payments—was reviewable because the CA’s reliance on assumptions in the absence of express terms was erroneous.

Supreme Court’s Analysis — Character of the Car Plan and Elisco Tool Distinction

The Supreme Court emphasized that in Elisco Tool the court recognized that a typical car plan may contain express stipulations (e.g., forfeiture of installments as rentals upon termination) and that the company’s retention of registration is a lien. Crucially, the Supreme Court stressed that such treatment of installments as forfeitable rentals is justified only when there is an express stipulation to that effect. Here, there was no documentary or other evidence of such terms in the Mekeni-Locsin arrangement. The CA erred in applying Elisco Tool to treat Locsin’s payments as rentals absent express stipulation.

Supreme Court’s Analysis — Necessity of the Vehicle and Incidental Benefit

The Court observed that the service vehicle was essential to Mekeni’s business operations and that its use primarily benefited Mekeni’s business interests; any incidental personal benefit to the employee was minor. The vehicle remained under Mekeni’s control until fully paid; Locsin’s mobility served Mekeni’s sales and inventory management objectives, making the car plan fundamentally a business necessity rather than a purely employee perk.

Supreme Court’s Analysis — Quasi-Contract and Unjust Enrichment

Relying on Civil Code Art. 22 and Art. 2142, the Court found that in the absence of specific terms governing the car plan, a quasi-contractual relation arose to prevent unjust enrichment. Mekeni, ha

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