G.R. No. 181393 ; July 28, 2009
Grandteq Industrial Steel Products, Inc. and Abelardo M. Gonzales, Petitioners, vs. Edna Margallo, Respondent.

FACTS

Petitioner Grandteq Industrial Steel Products, Inc., through its President Abelardo M. Gonzales, employed respondent Edna Margallo as a Sales Engineer. Margallo availed of a company car loan program, paying a down payment and sharing monthly amortizations with Grandteq. In December 2003, Margallo was placed under preventive suspension and required to explain allegations of moonlighting and breach of trust. She submitted a written reply. Subsequently, she claimed the company’s Vice-President persuaded her to resign with a promise of payment for her commissions and a refund of her car loan payments. Relying on this, Margallo tendered an irrevocable resignation in January 2004.
After her resignation, Grandteq sold the car to another employee. Margallo filed a complaint for recovery of sales commissions, cash incentives, and her car loan payments. Grandteq resisted, arguing her commissions were based on actual collections which were outstanding, and that the car loan agreement stipulated forfeiture of payments and repossession of the vehicle upon resignation or termination for cause.

ISSUE

The core issue is whether Margallo is entitled to a refund of her car loan payments and to her claimed sales commissions despite her resignation and the terms of the car loan agreement.

RULING

The Supreme Court ruled in favor of Margallo, affirming the Court of Appeals and the NLRC. On the car loan, the Court found the forfeiture clause in the agreement contrary to public policy and the principles of equity. A contract, while respecting freedom to stipulate, must not be contrary to law, morals, or public policy. Forfeiting all of Margallo’s substantial payments, including her personal down payment, for resigning—even voluntarily—constituted unjust enrichment at her expense. The clause was deemed a penalty clause not proportionate to any damage to the employer, especially since the company resold the car, thereby recovering its value.
Regarding the sales commissions, the Court upheld the award based on the principle that doubts in the interpretation of labor contracts should be resolved in favor of labor. Grandteq failed to substantiate its claim that commissions were payable only upon collection within 180 days. As the employer, it had the burden to present proof of such a policy but failed to do so convincingly. Its failure to produce relevant documentary evidence gave rise to the presumption that such evidence would be prejudicial to its case. Therefore, Margallo’s claim for commissions based on her sales was granted.