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To what does the Recto Law apply?

This law covers contracts of sale of personal property by installments (Act No. 4122). It is also applied to contracts purporting to
be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the
thing. (PCI Leasing and Finance Inc. v. Giraffe-X Creative Imaging, Inc., G.R. No. 142618, July 12, 2007)

What are the alternative remedies in case of sale of personal property in installments?
1. Specific Performance: Exact fulfillment should the buyer fail to pay
General Rule: If availed of, the unpaid seller cannot anymore choose other remedies;
Exception: if after choosing, it has become impossible, rescission may be pursued
2. Rescission: Cancel the sale if buyer fails to pay 2 or more installments Deemed chosen when:
a. Notice of rescission is sent
b. Takes possession of subject matter of sale
c. Files action for rescission
3. Foreclosure: Foreclose on chattel mortgage if buyer fails to pay 2 or more installments
General Rule: Actual foreclosure is necessary to bar recovery of balance - Extent of barring effect: purchase price
Exception: Mortgagor refuses to deliver property to effect foreclosure; expenses incurred in attorneys fees, etc.
1. G.R. No. 142618
July 12, 2007
PCI LEASING AND FINANCE, INC., Petitioner,
vs.
GIRAFFE-X CREATIVE IMAGING, INC., Respondent.
On a pure question of law involving the application of Republic Act (R.A.) No. 5980, as amended by R.A. No. 8556 in
relation to Articles 1484 and 1485 of the Civil Code, petitioner PCI Leasing and Finance, Inc. (PCI LEASING, for short) has
directly come to this Court via this petition for review under Rule 45 of the Rules of Court to nullify and set aside the Decision and
Resolution dated December 28, 1998 and February 15, 2000, respectively, of the Regional Trial Court (RTC) of Quezon City,
Branch 227, in its Civil Case No. Q-98-34266, a suit for a sum of money and/or personal property with prayer for a writ of
replevin, thereat instituted by the petitioner against the herein respondent, Giraffe-X Creative Imaging, Inc. (GIRAFFE, for
brevity).
The facts:
On December 4, 1996, petitioner PCI LEASING and respondent GIRAFFE entered into a Lease Agreement, 1whereby the
former leased out to the latter one (1) set of Silicon High Impact Graphics and accessories worthP3,900,00.00 and one (1) unit of
Oxberry Cinescan 6400-10 worth P6,500,000.00. In connection with this agreement, the parties subsequently signed two (2)
separate documents, each denominated as Lease Schedule. 2Likewise forming parts of the basic lease agreement were two (2)
separate documents denominated Disclosure Statements of Loan/Credit Transaction (Single Payment or Installment Plan) 3 that
GIRAFFE also executed for each of the leased equipment. These disclosure statements inter alia described GIRAFFE, vis--vis the
two aforementioned equipment, as the "borrower" who acknowledged the "net proceeds of the loan," the "net amount to be
financed," the "financial charges," the "total installment payments" that it must pay monthly for thirty-six (36) months, exclusive
of the 36% per annum "late payment charges." Thus, for the Silicon High Impact Graphics, GIRAFFE agreed to pay P116,878.21
monthly, and for Oxberry Cinescan, P181.362.00 monthly. Hence, the total amount GIRAFFE has to pay PCI LEASING for 36
months of the lease, exclusive of monetary penalties imposable, if proper, is as indicated below:
P116,878.21 @ month (for the Silicon High
Impact Graphics) x 36 months =
P 4,207,615.56
-- PLUS-P181,362.00 @ month (for the Oxberry
Cinescan) x 36 months =
P 6,529,032.00
Total Amount to be paid by GIRAFFE
(or the NET CONTRACT AMOUNT)
P 10,736,647.56
By the terms, too, of the Lease Agreement, GIRAFFE undertook to remit the amount of P3,120,000.00 by way of
"guaranty deposit," a sort of performance and compliance bond for the two equipment. Furthermore, the same agreement
embodied a standard acceleration clause, operative in the event GIRAFFE fails to pay any rental and/or other accounts due.
A year into the life of the Lease Agreement, GIRAFFE defaulted in its monthly rental-payment obligations. And
following a three-month default, PCI LEASING, through one Atty. Florecita R. Gonzales, addressed a formal pay-or-surrenderequipment type of demand letter4 dated February 24, 1998 to GIRAFFE.
The demand went unheeded.
Hence, on May 4, 1998, in the RTC of Quezon City, PCI LEASING instituted the instant case against GIRAFFE. In its
complaint,5 docketed in said court as Civil Case No. 98-34266 and raffled to Branch 227 6 thereof, PCI LEASING prayed for the
issuance of a writ of replevin for the recovery of the leased property, in addition to the following relief:
2. After trial, judgment be rendered in favor of plaintiff [PCI LEASING] and against the defendant [GIRAFFE], as follows:
a. Declaring the plaintiff entitled to the possession of the subject properties;
b. Ordering the defendant to pay the balance of rental/obligation in the total amount of P8,248,657.47 inclusive of interest and
charges thereon;
c. Ordering defendant to pay plaintiff the expenses of litigation and cost of suit. (Words in bracket added.)

Upon PCI LEASINGs posting of a replevin bond, the trial court issued a writ of replevin, paving the way for PCI
LEASING to secure the seizure and delivery of the equipment covered by the basic lease agreement.
Instead of an answer, GIRAFFE, as defendant a quo, filed a Motion to Dismiss, therein arguing that the seizure of the two
(2) leased equipment stripped PCI LEASING of its cause of action. Expounding on the point, GIRAFFE argues that, pursuant to
Article 1484 of the Civil Code on installment sales of personal property, PCI LEASING is barred from further pursuing any claim
arising from the lease agreement and the companion contract documents, adding that the agreement between the parties is in reality
a lease of movables with option to buy. The given situation, GIRAFFE continues, squarely brings into applicable play Articles
1484 and 1485 of the Civil Code, commonly referred to as the Recto Law. The cited articles respectively provide:
ART. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may
exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or
more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price.
Any agreement to the contrary shall be void. (Emphasis added.)
ART. 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with option to
buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.
It is thus GIRAFFEs posture that the aforequoted Article 1484 of the Civil Code applies to its contractual relation with
PCI LEASING because the lease agreement in question, as supplemented by the schedules documents, is really a lease with option
to buy under the companion article, Article 1485. Consequently, so GIRAFFE argues, upon the seizure of the leased equipment
pursuant to the writ of replevin, which seizure is equivalent to foreclosure, PCI LEASING has no further recourse against it. In
brief, GIRAFFE asserts in its Motion to Dismiss that the civil complaint filed by PCI LEASING is proscribed by the application to
the case of Articles 1484 and 1485, supra, of the Civil Code.
In its Opposition to the motion to dismiss, PCI LEASING maintains that its contract with GIRAFFE is a straight lease
without an option to buy. Prescinding therefrom, PCI LEASING rejects the applicability to the suit of Article 1484 in relation to
Article 1485 of the Civil Code, claiming that, under the terms and conditions of the basic agreement, the relationship between the
parties is one between an ordinary lessor and an ordinary lessee.
In a decision7 dated December 28, 1998, the trial court granted GIRAFFEs motion to dismiss mainly on the interplay of
the following premises: 1) the lease agreement package, as memorialized in the contract documents, is akin to the contract
contemplated in Article 1485 of the Civil Code, and 2) GIRAFFEs loss of possession of the leased equipment consequent to the
enforcement of the writ of replevin is "akin to foreclosure, the condition precedent for application of Articles 1484 and 1485 [of
the Civil Code]." Accordingly, the trial court dismissed Civil Case No. Q-98-34266, disposing as follows:
WHEREFORE, premises considered, the defendant [GIRAFFE] having relinquished any claim to the personal properties
subject of replevin which are now in the possession of the plaintiff [PCI LEASING], plaintiff is DEEMED fully satisfied pursuant
to the provisions of Articles 1484 and 1485 of the New Civil Code. By virtue of said provisions, plaintiff is DEEMED estopped
from further action against the defendant, the plaintiff having recovered thru (replevin) the personal property sought to be
payable/leased on installments, defendants being under protection of said RECTO LAW. In view thereof, this case is hereby
DISMISSED.
With its motion for reconsideration having been denied by the trial court in its resolution of February 15, 2000, 8petitioner
has directly come to this Court via this petition for review raising the sole legal issue of whether or not the underlying Lease
Agreement, Lease Schedules and the Disclosure Statements that embody the financial leasing arrangement between the parties are
covered by and subject to the consequences of Articles 1484 and 1485 of the New Civil Code.
As in the court below, petitioner contends that the financial leasing arrangement it concluded with the respondent represents a
straight lease covered by R.A. No. 5980, the Financing Company Act, as last amended by R.A. No. 8556, otherwise known as
Financing Company Act of 1998, and is outside the application and coverage of the Recto Law. To the petitioner, R.A. No. 5980
defines and authorizes its existence and business.
The recourse is without merit.
R.A. No. 5980, in its original shape and as amended, partakes of a supervisory or regulatory legislation, merely providing
a regulatory framework for the organization, registration, and regulation of the operations of financing companies. As couched, it
does not specifically define the rights and obligations of parties to a financial leasing arrangement. In fact, it does not go beyond
defining commercial or transactional financial leasing and other financial leasing concepts. Thus, the relevancy of Article 18 of the
Civil Code which reads:
Article 18. - In matters which are governed by special laws, their deficiency shall be supplied by the provisions of this
[Civil] Code.
Petitioner foists the argument that the Recto Law, i.e., the Civil Code provisions on installment sales of movable property,
does not apply to a financial leasing agreement because such agreement, by definition, does not confer on the lessee the option to
buy the property subject of the financial lease. To the petitioner, the absence of an option-to-buy stipulation in a financial leasing
agreement, as understood under R.A. No. 8556, prevents the application thereto of Articles 1484 and 1485 of the Civil Code.
We are not persuaded.
The Court can allow that the underlying lease agreement has the earmarks or made to appear as a financial leasing, 9 a
term defined in Section 3(d) of R.A. No. 8556 as a mode of extending credit through a non-cancelable lease contract under which the lessor purchases or acquires, at the
instance of the lessee, machinery, equipment, office machines, and other movable or immovable property in consideration of
the periodic payment by the lessee of a fixed amount of money sufficient to amortize at least seventy (70%) of the purchase price
or acquisition cost, including any incidental expenses and a margin of profit over an obligatory period of not less than two (2)
years during which the lessee has the right to hold and use the leased property but with no obligation or option on his part to
purchase the leased property from the owner-lessor at the end of the lease contract.
In its previous holdings, however, the Court, taking into account the following mix: the imperatives of equity, the
contractual stipulations in question and the actuations of parties vis--vis their contract, treated disguised transactions technically
tagged as financing lease, like here, as creating a different contractual relationship. Notable among the Courts decisions because
of its parallelism with this case is BA Finance Corporation v. Court of Appeals 10 which involved a motor vehicle. Thereat, the
Court has treated a purported financial lease as actually a sale of a movable property on installments and prevented recovery
beyond the buyers arrearages. Wrote the Court in BA Finance:

The transaction involved is one of a "financial lease" or "financial leasing," where a financing company would, in
effect, initially purchase a mobile equipment and turn around to lease it to a client who gets, in addition, an option to purchase the
property at the expiry of the lease period. xxx.
xxx
xxx
xxx
The pertinent provisions of [RA] 5980, thus implemented, read:
"'Financing companies,' are primarily organized for the purpose of extending credit facilities to consumers either by
leasing of motor vehicles, and office machines and equipment, and other movable property."
"'Credit' shall mean any loan, any contract to sell, or sale or contract of sale of property or service, under which part
or all of the price is payable subsequent to the making of such sale or contract; any rental-purchase contract; .;"
The foregoing provisions indicate no less than a mere financing scheme extended by a financing company to a client in
acquiring a motor vehicle and allowing the latter to obtain the immediate possession and use thereof pending full payment of the
financial accommodation that is given.
In the case at bench, xxx. [T]he term of the contract [over a motor vehicle] was for thirty six (36) months at a "monthly
rental" (P1,689.40), or for a total amount of P60,821.28. The contract also contained [a] clause [requiring the Lessee to give a
guaranty deposit in the amount of P20,800.00] xxx
After the private respondent had paid the sum of P41,670.59, excluding the guaranty deposit of P20,800.00, he stopped
further payments. Putting the two sums together, the financing company had in its hands the amount of P62,470.59 as against the
total agreed "rentals" of P60,821.28 or an excess of P1,649.31.
The respondent appellate court considered it only just and equitable for the guaranty deposit made by the private
respondent to be applied to his arrearages and thereafter to hold the contract terminated. Adopting the ratiocination of the court a
quo, the appellate court said:
xxx In view thereof, the guaranty deposit of P20,800.00 made by the defendant should and must be credited in his favor,
in the interest of fairness, justice and equity. The plaintiff should not be allowed to unduly enrich itself at the expense of the
defendant. xxx This is even more compelling in this case where although the transaction, on its face, appear ostensibly, to be a
contract of lease, it is actually a financing agreement, with the plaintiff financing the purchase of defendant's automobile . The
Court is constrained, in the interest of truth and justice, to go into this aspect of the transaction between the plaintiff and the
defendant with all the facts and circumstances existing in this case, and which the court must consider in deciding the case, if it
is to decide the case according to all the facts. xxx.
xxx
xxx
xxx
Considering the factual findings of both the court a quo and the appellate court, the only logical conclusion is that the
private respondent did opt, as he has claimed, to acquire the motor vehicle, justifying then the application of the guarantee deposit
to the balance still due and obligating the petitioner to recognize it as an exercise of the option by the private respondent. The
result would thereby entitle said respondent to the ownership and possession of the vehicle as the buyer thereof. We, therefore, see
no reversible error in the ultimate judgment of the appellate court. 11 (Italics in the original; underscoring supplied and words in
bracket added.)
In Cebu Contractors Consortium Co. v. Court of Appeals, 12 the Court viewed and thus declared a financial lease
agreement as having been simulated to disguise a simple loan with security, it appearing that the financing company purchased
equipment already owned by a capital-strapped client, with the intention of leasing it back to the latter.
In the present case, petitioner acquired the office equipment in question for their subsequent lease to the respondent, with
the latter undertaking to pay a monthly fixed rental therefor in the total amount of P292,531.00, or a total of P10,531,116.00 for the
whole 36 months. As a measure of good faith, respondent made an up-front guarantee deposit in the amount of P3,120,000.00. The
basic agreement provides that in the event the respondent fails to pay any rental due or is in a default situation, then the petitioner
shall have cumulative remedies, such as, but not limited to, the following: 13
1. Obtain possession of the property/equipment;
2. Retain all amounts paid to it. In addition, the guaranty deposit may be applied towards the payment of "liquidated damages";
3. Recover all accrued and unpaid rentals;
4. Recover all rentals for the remaining term of the lease had it not been cancelled, as additional penalty;
5. Recovery of any and all amounts advanced by PCI LEASING for GIRAFFEs account xxx;
6. Recover all expenses incurred in repossessing, removing, repairing and storing the property; and,
7. Recover all damages suffered by PCI LEASING by reason of the default.
In addition, Sec. 6.1 of the Lease Agreement states that the guaranty deposit shall be forfeited in the event the respondent, for any
reason, returns the equipment before the expiration of the lease.
At bottom, respondent had paid the equivalent of about a years lease rentals, or a total of P3,510,372.00, more or less.
Throw in the guaranty deposit (P3,120,000.00) and the respondent had made a total cash outlay ofP6,630,372.00 in favor of the
petitioner. The replevin-seized leased equipment had, as alleged in the complaint, an estimated residual value of P6,900.000.00 at
the time Civil Case No. Q-98-34266 was instituted on May 4, 1998. Adding all cash advances thus made to the residual value of
the equipment, the total value which the petitioner had actually obtained by virtue of its lease agreement with the respondent
amounts to P13,530,372.00 (P3,510,372.00 + P3,120,000.00 + P6,900.000.00 = P13,530,372.00).
The acquisition cost for both the Silicon High Impact Graphics equipment and the Oxberry Cinescan was, as stated in no
less than the petitioners letter to the respondent dated November 11, 1996 14 approving in the latters favor a lease facility,
was P8,100,000.00. Subtracting the acquisition cost of P8,100,000.00 from the total amount, i.e.,P13,530,372.00, creditable to the
respondent, it would clearly appear that petitioner realized a gross income ofP5,430,372.00 from its lease transaction with the
respondent. The amount of P5,430,372.00 is not yet a final figure as it does not include the rentals in arrears, penalties thereon, and
interest earned by the guaranty deposit.
As may be noted, petitioners demand letter 15 fixed the amount of P8,248,657.47 as representing the respondents "rental"
balance which became due and demandable consequent to the application of the acceleration and other clauses of the lease
agreement. Assuming, then, that the respondent may be compelled to pay P8,248,657.47, then it would end up paying a total
of P21,779,029.47 (P13,530,372.00 + P8,248,657.47 =P21,779,029.47) for its use - for a year and two months at the most - of the
equipment. All in all, for an investment of P8,100,000.00, the petitioner stands to make in a years time, out of the transaction, a
total of P21,779,029.47, or a net of P13,679,029.47, if we are to believe its outlandish legal submission that the PCI LEASINGGIRAFFE Lease Agreement was an honest-to-goodness straight lease.
A financing arrangement has a purpose which is at once practical and salutary. R.A. No. 8556 was, in fact, precisely
enacted to regulate financing companies operations with the end in view of strengthening their critical role in providing credit and

services to small and medium enterprises and to curtail acts and practices prejudicial to the public interest, in general, and to their
clienteles, in particular.16 As a regulated activity, financing arrangements are not meant to quench only the thirst for profit. They
serve a higher purpose, and R.A. No. 8556 has made that abundantly clear.
We stress, however, that there is nothing in R.A. No. 8556 which defines the rights and obligations, as between each
other, of the financial lessor and the lessee. In determining the respective responsibilities of the parties to the agreement, courts,
therefore, must train a keen eye on the attendant facts and circumstances of the case in order to ascertain the intention of the
parties, in relation to the law and the written agreement. Likewise, the public interest and policy involved should be considered. It
may not be amiss to state that, normally, financing contracts come in a standard prepared form, unilaterally thought up and written
by the financing companies requiring only the personal circumstances and signature of the borrower or lessee; the rates and other
important covenants in these agreements are still largely imposed unilaterally by the financing companies. In other words, these
agreements are usually one-sided in favor of such companies. A perusal of the lease agreement in question exposes the many
remedies available to the petitioner, while there are only the standard contractual prohibitions against the respondent. This is
characteristic of standard printed form contracts.
There is more. In the adverted February 24, 1998 demand letter 17 sent to the respondent, petitioner fashioned its claim in
the alternative: payment of the full amount of P8,248,657.47, representing the unpaid balance for the entire 36-month lease period
or the surrender of the financed asset under pain of legal action. To quote the letter:
Demand is hereby made upon you to pay in full your outstanding balance in the amount of P8,248,657.47 on or before
March 04, 1998 OR to surrender to us the one (1) set Silicon High Impact Graphics and one (1) unit Oxberry Cinescan 6400-10
We trust you will give this matter your serious and preferential attention. (Emphasis added).
Evidently, the letter did not make a demand for the payment of the P8,248,657.47 AND the return of the equipment; only
either one of the two was required. The demand letter was prepared and signed by Atty. Florecita R. Gonzales, presumably
petitioners counsel. As such, the use of "or" instead of "and" in the letter could hardly be treated as a simple typographical error,
bearing in mind the nature of the demand, the amount involved, and the fact that it was made by a lawyer. Certainly Atty. Gonzales
would have known that a world of difference exists between "and" and "or" in the manner that the word was employed in the letter.
A rule in statutory construction is that the word "or" is a disjunctive term signifying dissociation and independence of one
thing from other things enumerated unless the context requires a different interpretation. 18
In its elementary sense, "or", as used in a statute, is a disjunctive article indicating an alternative. It often connects a series
of words or propositions indicating a choice of either. When "or" is used, the various members of the enumeration are to be taken
separately.19
The word "or" is a disjunctive term signifying disassociation and independence of one thing from each of the other things
enumerated.20
The demand could only be that the respondent need not return the equipment if it paid the P8,248,657.47 outstanding
balance, ineluctably suggesting that the respondent can keep possession of the equipment if it exercises its option to acquire the
same by paying the unpaid balance of the purchase price. Stated otherwise, if the respondent was not minded to exercise its option
of acquiring the equipment by returning them, then it need not pay the outstanding balance. This is the logical import of the letter:
that the transaction in this case is a lease in name only. The so-called monthly rentals are in truth monthly amortizations of the
price of the leased office equipment.
On the whole, then, we rule, as did the trial court, that the PCI LEASING- GIRAFFE lease agreement is in reality a lease
with an option to purchase the equipment. This has been made manifest by the actions of the petitioner itself, foremost of which is
the declarations made in its demand letter to the respondent. There could be no other explanation than that if the respondent paid
the balance, then it could keep the equipment for its own; if not, then it should return them. This is clearly an option to purchase
given to the respondent. Being so, Article 1485 of the Civil Code should apply.
The present case reflects a situation where the financing company can withhold and conceal - up to the last moment - its
intention to sell the property subject of the finance lease, in order that the provisions of the Recto Law may be circumvented. It
may be, as petitioner pointed out, that the basic "lease agreement" does not contain a "purchase option" clause. The absence,
however, does not necessarily argue against the idea that what the parties are into is not a straight lease, but a lease with option to
purchase. This Court has, to be sure, long been aware of the practice of vendors of personal property of denominating a contract of
sale on installment as one of lease to prevent the ownership of the object of the sale from passing to the vendee until and unless the
price is fully paid. As this Court noted in Vda. de Jose v. Barrueco: 21
Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain in that form, for one
reason or another, have frequently resorted to the device of making contracts in the form of leases either with options to the buyer
to purchase for a small consideration at the end of term, provided the so-called rent has been duly paid, or with stipulations that if
the rent throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that such transactions are leases only in
name. The so-called rent must necessarily be regarded as payment of the price in installments since the due payment of the agreed
amount results, by the terms of the bargain, in the transfer of title to the lessee.
In another old but still relevant case of U.S. Commercial v. Halili, 22 a lease agreement was declared to be in fact a sale of
personal property by installments. Said the Court:
. . . There can hardly be any question that the so-called contracts of lease on which the present action is based were
veritable leases of personal property with option to purchase, and as such come within the purview of the above article [Art. 1454A of the old Civil Code on sale of personal property by installment]. xxx
Being leases of personal property with option to purchase as contemplated in the above article, the contracts in question
are subject to the provision that when the lessor in such case "has chosen to deprive the lessee of the enjoyment of such personal
property," "he shall have no further action" against the lessee "for the recovery of any unpaid balance" owing by the latter,
"agreement to the contrary being null and void."
In choosing, through replevin, to deprive the respondent of possession of the leased equipment, the petitioner waived its
right to bring an action to recover unpaid rentals on the said leased items. Paragraph (3), Article 1484 in relation to Article 1485 of
the Civil Code, which we are hereunder re-reproducing, cannot be any clearer.
ART. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may
exercise any of the following remedies:
xxx
xxx
xxx
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover
two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the
price. Any agreement to the contrary shall be void.

ART. 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with option to
buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.
As we articulated in Elisco Tool Manufacturing Corp. v. Court of Appeals, 23 the remedies provided for in Article 1484 of
the Civil Code are alternative, not cumulative. The exercise of one bars the exercise of the others. This limitation applies to
contracts purporting to be leases of personal property with option to buy by virtue of the same Article 1485. The condition that the
lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of applying Article 1485 was fulfilled in this
case by the filing by petitioner of the complaint for a sum of money with prayer for replevin to recover possession of the office
equipment.24 By virtue of the writ of seizure issued by the trial court, the petitioner has effectively deprived respondent of their use,
a situation which, by force of the Recto Law, in turn precludes the former from maintaining an action for recovery of "accrued
rentals" or the recovery of the balance of the purchase price plus interest. 25
The imperatives of honest dealings given prominence in the Civil Code under the heading: Human Relations, provide
another reason why we must hold the petitioner to its word as embodied in its demand letter. Else, we would witness a situation
where even if the respondent surrendered the equipment voluntarily, the petitioner can still sue upon its claim. This would be most
unfair for the respondent. We cannot allow the petitioner to renege on its word. Yet more than that, the very word "or" as used in
the letter conveys distinctly its intention not to claim both the unpaid balance and the equipment. It is not difficult to discern why:
if we add up the amounts paid by the respondent, the residual value of the property recovered, and the amount claimed by the
petitioner as sued upon herein (for a total of P21,779,029.47), then it would end up making an instant killing out of the transaction
at the expense of its client, the respondent. The Recto Law was precisely enacted to prevent this kind of aberration. Moreover, due
to considerations of equity, public policy and justice, we cannot allow this to happen.1avvphil.zw+ Not only to the respondent, but
those similarly situated who may fall prey to a similar scheme.
WHEREFORE, the instant petition is DENIED and the trial courts decision is AFFIRMED. Costs against petitioner. SO
ORDERED.
DIGEST!
FACTS:
On December 4, 1996 Petitioner PCI Leasing and respondent GIRAFFE entered into a LEASE AGREEMENT, whereby
the former leased out to the latter one (1) set of Silicon High Impact Graphics and accessories worth P 3,900.000.00 and 1 unit of
Oxberry Cinescan 6400-10 worth P 6,500,000.00.
A year into the life of the Lease Agreement GIRAFFE DEFAULTED in its monthly rental payment obligations. And
following the three formal pay-or-surrender-equipment type of demand letter dated Feb 24, 1998 to GIRAFFE.
The demand was unheeded.
PCI Leasing instituted a cases against GIRAFFE. PCI prayed for the issuance of a writ of replevin for the recovery of the
property.
Upon PCI Leasings posting of a replevin bond, the trial court issued a writ of replevin, praving the way for PCI
LEASING to secure the seizure and delivery of the equipment covered by the basic lease agreement.
Instead of answer, GIRAFFE filed a MOTION to DISMISS arguing that the seizure of the two (2) leased equipment
stripped PCI LEASING of its cause of action.
GIRAFFE argues that pursuant to Article 1484 of Civil Code on installment sales of personal property, PCI Leasing is
barred from the further pursuing any claim arising from the lease agreement and the companion contract documents, adding that
the agreement between the parties is in reality a lease of movables with an option to buy.
Petitioner contends that the financial leasing arrangement it concluded with the respondent represents a straight
lease covered by RA No 5080, FINANCING COMPANY ACT, as last amend by RA No 8556 otherwise know as
FINANCING COMPANY ACT of 1998, and is outside the application of the Recto Law. To the petitioner RA 5980 defines
and authorizes its existence and business.
The Trial Court granted GIRAFFEs motion to dismiss
Motion for reconsideration was denied, hence this petition for review.
ISSUE:
Whether or not the agreement of PCI LEASING AND GIRAFFE is governed by the Articles 1484 and 1485 of Civil
Code?
HELD:
Petition is denied, RTC decision is affirmed.
RATIO:
The PCI LEASING and GIRAFFE LEASE AGREEMENT is in reality a lease with an option to purchase the
equipment. This has been the manifest by the actions of the petitioner itself, foremost of which is the declarations made in
its demand letter to the respondent. There could be no other explanation than that if the respondent paid the balance, then
it could keep the equipments for its own: if not, then it should return them. This is clearly an option to purchase given to the
respondent. Being so Article 1485 of Civil Code should apply.
The present case reflects a situation where the financing company can withhold and conceal up to the last moment its
intention to sell the property subject of finance lease, in order that the provisions of the RECTO LAW may be circumvented. IT
may be, as petitioner pointed out, that the basic lease agreement does not contain a purchase option clause. The absence,
however does not argue with the idea that what a party is into is not a straight lease but an option to purchase. This Court has, to be
sure, long been aware of the practice of vendors of personal property of denominating a contract of sale on installment as one of
the lease to prevent the passing to the vendee(buyer) until and unless the price is fully paid.
Being lease of personal property with an option to purchase as contemplated in the above article, the contracts in question
are subject to the provision that when the lessor in such case has chosen to deprive the lessee of the enjoyment of such property.
he shall have no further action of any unpaid balance owing by the latter. agreement to the contrary being null and void.
In choosing, through replevin, to deprive the respondent of possession of the lease equipment, the petitioner waived its
right to bring an action to recover unpaid rentals on the said leased items. Paragraph 3 of Article 1484 of Civil Code which we are
hereunder reproducing cannot be any clearer.

ART. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor (seller)
may exercise the following remedies:
Xxxxx xxxx xxx
(3) Foreclosure the chattel mortgage on the thing sold, if one has been instituted should the vendee(buyer)s failure to pay
cover two or more installment, In this case, he shall have no further action against the purchaser to revover any unpaid
balance of the price. Any agreement to the contrary shall be void.
ART. 1485. The preceding article shall be applied to the contracts purporting to be lease of personal property with an
option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.
As we articulated in the ELISCO TOOL MANUFACTURING CORP vs CA, the remedies provide for in the Article 1484
are alternative, not cumulative. The exercise of one bars the exercise of the others. This limitation applies to contracts purporting to
be leases of personal property with an option to buy by virtue of the same Article 1485. The condition that the lessor has deprived
the lessee of possession or enjoyment of the thing for the purpose of applying Article 1485 was fulfilled in this case by the filling
of the petitioner of the complaint of the sum of money with a prayer for replevin to recover the possession of the office
equipment. By virtue of the writ of seizure issued by the Trial Court, the petitioner has effectively depreiced respondent of their
uses, a situation which by force of RECTO LAW, in turn precludes thr forment from maintaining an action for recovery of the
balance of purchase price plus interest.
The imperatives of honest dealing given the prominence of the Civil Code under the heading: HUMAN RELATIONS,
provide another reason why we must hold the petitioner to its word as embodied in its demand letter. Else, we would witness a
situation where even if the respondent surrendered the equipment voluntarily, the petitioner can still sue upon its claim. This would
be the most unfair for the respondent. We cannot allow the petitioner to renege on its word. Yet more than that, the very word or
as used in the letter conveys distinctly its intention not to claim both the unpaid balance and the equipment. It is not difficult to
discern why: if we add the amounts paid by the respondent, the residual value of the property recovered, and the amount of the
claimed by the petitioner as sued upon herein ( for a total of P21,779,029.47), there it would end up making an instant killing out
of the transaction at the expense of the client, the respondent. The Recto Law was precisely enacted to prevent this kind of
aberration. Moreover, due to considerations of equity, public policy and justice we cannot allow this to happen. Not only to the
respondent, but to those similarly situated who may fall prey to similar scheme.
2. G.R. NO. 192105 December 9, 2013
ANTONIO LOCSIN, II, Petitioner,
vs.
MEKENI FOOD CORPORATION, Respondent
Quasi-contract; unjust enrichment; concept of; elements.In light of the foregoing, it is unfair to deny petitioner a refund of all his
contributions to the car plan. Under Article 22 of the Civil Code, [e]very 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. Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.
In the absence of specific terms and conditions governing a car plan agreement between the employer and employe
former may not retain the installment payments made by the latter on the car plan and treat them as rents for the use of the service
vehicle, in the event that the employee ceases his employment and is unable to complete the installment payments on the vehicle.
The underlying reason is that the service vehicle was precisely used in the former' s business; any personal benefit obtained by the
employee from its use is merely incidental. This Petition for Review on Certiorari1 assails the January 27, 2010 Decision 2 of the
Court of Appeals (CA) in CA-G.R. SP No. 109550, as well as its April 23, 2010 Resolution 3 denying petitioners Motion for
Partial Reconsideration.4
Factual Antecedents
In February 2004, respondent Mekeni Food Corporation(Mekeni)a Philippine company engaged in food manufacturing
and meat processing offered petitioner Antonio Locsin II the position of Regional Sales Manager to over see Mekenis National
Capital Region Supermarket/Food Service and South Luzon operations. In addition to a compensation and benefit package,
Mekeni offered petitioner a car plan, under which one-half of the cost of the vehicle is to be paid by the company and the other
half to be deducted from petitioners salary. Mekenis offer was contained in an Offer Sheet 5 which was presented to petitioner.
Petitioner began his stint as Mekeni Regional Sales Manager on March 17, 2004. To be able to effectively cover his
appointed sales territory, Mekeni furnished petitioner with a used Honda Civic car valued at P280,000.00, which used to be the
service vehicle of petitioners immediate supervisor. Petitioner paid for his 50% share through salary deductions of P5,000.00 each
month.
Subsequently, Locsin resigned effective February 25, 2006. By then, a total of P112,500.00 had been deducted from his
monthly salary and applied as part of the employees share in the car plan. Mekeni supposedly put in an equivalent amount as its
share under the car plan. In his resignation letter, petitioner made an offer to purchase his service vehicle by paying the outstanding
balance thereon. The parties negotiated, but could not agree on the terms of the proposed purchase. Petitioner thus returned the
vehicle to Mekeni on May 2, 2006.
Petitioner made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to
purchase his service vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with the
company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood at P116,380.00 if he opts
to purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a Complaint6for the recovery
of monetary claims consisting of unpaid salaries, commissions, sick/vacation leave benefits, and recovery of monthly salary
deductions which were earmarked for his cost-sharing in the car plan. The case was docketed in the National Labor Relations
Commission(NLRC), National Capital Region(NCR), Quezon City as NLRC NCR CASE NO. 00-05-04139-07.

On October 30, 2007, Labor Arbiter Cresencio G. Ramos rendered a Decision, 7 decreeing as follows: WHEREFORE, in
the light of the foregoing premises, judgment is hereby rendered directing respondents to turn-over to complainant x x x the
subject vehicle upon the said complainants payment to them of the sum ofP100,435.84.SO ORDERED.8 Ruling of the National
Labor Relations Commission On appeal, 9 the Labor Arbiters Decision was reversed in a February 27, 2009 Decision 10 of the
NLRC, thus: WHEREFORE, premises considered, the appeal is hereby Granted. The assailed Decision dated October 30, 2007 is
hereby REVERSED and SET ASIDE and a new one entered ordering respondent-appellee Mekeni Food Corporation to pay
complainant-appellee the following:
1.Unpaid Salary in the amount of P12,511.45;
2.Unpaid sick leave/vacation leave pay in the amount of P14,789.15;
3.Unpaid commission in the amount of P9,780.00; and
4.Reimbursement of complainants payment under the car plan agreement in the amount of P112,500.00; and
5.The equivalent share of the company as part of the complainants benefit under the car plan 50/50 sharing amounting
to P112,500.00.
Respondent-Appellee Mekeni Food Corporation is hereby authorized to deduct the sum of P4,736.50 representing
complainant-appellants cash advance from his total monetary award.
All other claims are dismissed for lack of merit.
SO ORDERED.11 The NLRC held that petitioners amortization payments on his service vehicle amounting
toP112,500.00 should be reimbursed; if not, unjust enrichment would result, as the vehicle remained in the possession and
ownership of Mekeni.
On October 30, 2007, Labor Arbiter Cresencio G. Ramos rendered a Decision,7 decreeing as follows:
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered directing respondents to turn-over to
complainant x x xthe subject vehicle upon the said complainants payment to them of the sum ofP100,435.84.
SO ORDERED.8
Ruling of the National Labor Relations Commission
On appeal,9 the Labor Arbiters Decision was reversedin a February 27, 2009 Decision10of the NLRC, thus:
WHEREFORE, premises considered, the appeal is hereby Granted. The assailed Decision dated October 30, 2007 is
hereby REVERSED and SET ASIDE and a new one entered ordering respondent-appellee Mekeni Food Corporation to pay
complainant-appellee the following:
1.Unpaid Salary in the amount of P12,511.45;
2.Unpaid sick leave/vacation leave pay in the amount of P14,789.15;
3.Unpaid commission in the amount of P9,780.00; and
4.Reimbursement of complainants payment under the car plan agreement in the amount of P112,500.00; and
5.The equivalent share of the company as part of the complainants benefit under the car plan 50/50 sharing amounting
to P112,500.00.
Respondent-Appellee Mekeni Food Corporation is hereby authorized to deduct the sum of P4,736.50 representing
complainant-appellants cash advance from his total monetary award.
All other claims are dismissed for lack of merit.
SO ORDERED.11
The NLRC held that petitioners amortization payments on his service vehicle amounting to P112,500.00 should be
reimbursed; if not, unjust enrichment would result, as the vehicle remained in the possession and ownership of Mekeni.
In addition, the employers share in the monthly car plan payments should likewise be awarded to petitioner because it
forms part of the latters benefits under the car plan. It held further that Mekenis claim that the company car plan benefit applied
only to employees who have been with the company for five years has not been substantiated by its evidence, in which case the car
plan agreement should be construed in petitioners favor. Mekeni moved to reconsider, but in an April 30, 2009 Resolution, 12 the
NLRC sustained its original findings.
Ruling of the Court of Appeals
Mekeni filed a Petition for Certiorari 13 with the CA assailing the NLRCs February 27, 2009 Decision, saying that the
NLRC committed grave abuse of discretion in holding it liable to petitioner as it had no jurisdiction to resolve petitioners claims,
which are civil in nature.
On January 27, 2010, the CA issued the assailed Decision, decreeing as follows:
WHEREFORE, the petition for certiorari is GRANTED. The Decision of the National Labor Relations Commission dated
27 February 2009, in NLRC NCR Case No. 00-05-04139-07, and its Resolution dated 30 April 2009 denying reconsideration
thereof, are MODIFIED in that the reimbursement of Locsins payment under the car plan in the amount of P112,500.00, and the
payment to him of Mekenis 50% share in the amount of P112,500.00 are DELETED. The rest of the decision is AFFIRMED.
SO ORDERED.14
In arriving at the above conclusion, the CA held that the NLRC possessed jurisdiction over petitioners claims, including
the amounts he paid under the car plan, since his Complaint against Mekeni is one for the payment of salaries and employee
benefits. With regard to the car plan arrangement, the CA applied the ruling in Elisco Tool Manufacturing Corporation v. Court of
Appeals,15 where it was held that
First. Petitioner does not deny that private respondent Rolando Lantan acquired the vehicle in question under a car plan
for executives of the Elizalde group of companies. Under a typical car plan, the company advances the purchase price of a car to
be paid back by the employee through monthly deductions from his salary. The company retains ownership of the motor vehicle
until it shall have been fully paid for. However, retention of registration of the car in the companys name is only a form of a lien
on the vehicle in the event that the employee would abscond before he has fully paid for it. There are also stipulations in car plan
agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully
paid, the vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement. 16
In the absence of evidence as to the stipulations of the car plan arrangement between Mekeni and petitioner, the CA
treated petitioners monthly contributions in the total amount of P112,500.00 as rentals for the use of his service vehicle for the
duration of his employment with Mekeni. The appellate court applied Articles 1484-1486 of the Civil Code, 17 and added that the
installments paid by petitioner should not be returned to him inasmuch as the amounts are not unconscionable. It made the
following pronouncement:
Having used the car in question for the duration of his employment, it is but fair that all of Locsins payments be
considered as rentals therefor which may be forfeited by Mekeni. Therefore, Mekeni has no obligation to return these payments to

Locsin. Conversely, Mekeni has no right to demand the payment of the balance of the purchase price from Locsin since the latter
has already surrendered possession of the vehicle.18
Moreover, the CA held that petitioner cannot recover Mekenis corresponding share in the purchase price of the service
vehicle, as this would constitute unjust enrichment on the part of petitioner at Mekenis expense.
The CA affirmed the NLRC judgment in all other respects. Petitioner filed his Motion for Partial Reconsideration, 19but
the CA denied the same in its April 23, 2010 Resolution.
Thus, petitioner filed the instant Petition; Mekeni, on the other hand, took no further action.
Issue
Petitioner raises the following solitary issue:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN NOT CONSIDERING THE CAR
PLAN PRIVILEGE AS PART OF THE COMPENSATION PACKAGE OFFERED TO PETITIONER AT THE INCEPTION OF
HIS EMPLOYMENT AND INSTEAD LIKENED IT TO A CAR LOAN ON INSTALLMENT, IN SPITE OF THE ABSENCE OF
EVIDENCE ONRECORD.20
Petitioners Arguments
In his Petition and Reply,21 petitioner mainly argues that the CA erred in treating his monthly contributions to the car plan,
totaling P112,500.00, as rentals for the use of his service vehicle during his employment; the car plan which he availed ofwasa
benefit and it formed part of the package of economic benefits granted to him when he was hired as Regional Sales Manager.
Petitioner submits that this is shown by the Offer Sheet which was shown to him and which became the basis for his decision to
accept the offer and work for Mekeni.
Petitioner adds that the absence of documentary or other evidence showing the terms and conditions of the Mekeni
company car plan cannot justify a reliance on Mekenis self-serving claimsthat the full terms thereof applied only to employees
who have been with the company for at least five years; in the absence of evidence, doubts should be resolved in his favor pursuant
to the policy of the law that affords protection to labor, as well asthe principle that all doubts shouldbe construed to its benefit.
Finally, petitioner submits that the ruling in the Elisco Tool casecannot apply to his case because the car plan subject of
the said case involved a car loan, which his car plan benefit was not; it was part of his compensation package, and the vehicle was
an important component of his work which required constant and uninterrupted mobility. Petitioner claims that the car plan was in
fact more beneficial to Mekeni than to him; besides, he did not choose to avail of it, as it was simply imposed upon him. He
concludes that it is only just that his payments should be refunded and returned to him.
Petitioner thus prays for the reversal of the assailed CA Decision and Resolution, and that the Court reinstate the NLRCs
February 27, 2009 Decision.
Respondents Arguments
In its Comment,22 Mekeni argues that the Petition does not raise questions of law, but merely of fact, which thus requires
the Court to review anew issues already passed upon by the CA an unauthorized exercise given that the Supreme Court is not a
trier of facts, nor is it its function to analyze or weigh the evidence of the parties all over again. 23 It adds that the issue regarding
the car plan and the conclusions of the CA drawn from the evidence on record are questions of fact.
Mekeni asserts further that the service vehicle was merely a loan which had to be paid through the monthly salary
deductions.If it is not allowed to recover on the loan, this would constitute unjust enrichment on the part of petitioner.
Our Ruling
The Petition is partially granted.
To begin with, the Court notes that Mekeni did not file a similar petition questioning the CA Decision; thus, it is deemed
to have accepted what was decreed. The only issue that must be resolved in this Petition, then, is whether petitioner is entitled to a
refund of all the amounts applied to the cost of the service vehicle under the car plan.
When the conclusions of the CA are grounded entirely on speculation, surmises and conjectures, or when the inferences made by it
are manifestly mistaken or absurd, its findings are subject to review by this Court. 24
From the evidence on record, it is seen that the Mekeni car plan offered to petitioner was subject to no other term or
condition than that Mekeni shall cover one-half of its value, and petitioner shall in turn pay the other half through deductions from
his monthly salary.Mekeni has not shown, by documentary evidence or otherwise, that there are other terms and conditions
governing its car plan agreement with petitioner. There is no evidence to suggest that if petitioner failed to completely cover onehalf of the cost of the vehicle, then all the deductions from his salary going to the cost of the vehicle will be treated as rentals for
his use thereof while working with Mekeni, and shall not be refunded. Indeed, there is no such stipulation or arrangement between
them. Thus, the CAs reliance on Elisco Tool is without basis, and its conclusions arrived at in the questioned decision are
manifestly mistaken. To repeat what was said in Elisco Tool
First. Petitioner does not deny that private respondent Rolando Lantan acquired the vehicle in question under a car plan
for executives of the Elizalde group of companies. Under a typical car plan, the company advances the purchase price of a car to
be paid back by the employee through monthly deductions from his salary. The company retains ownership of the motor vehicle
until it shall have been fully paid for. However, retention of registration of the car in the companys name is only a form of a lien
on the vehicle in the event that the employee would abscond before he has fully paid for it. There are also stipulations in car plan
agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully
paid, the vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement.25 (Emphasis
supplied)
It was made clear in the above pronouncement that installments made on the car plan may be treated as rentals only when
there is an express stipulation in the car plan agreement to such effect. It was therefore patent error for the appellate court to
assume that, even in the absence of express stipulation, petitioners payments on the car plan may be considered as rentals which
need not be returned.
Indeed, the Court cannot allow that payments made on the car plan should be forfeited by Mekeni and treated simply as
rentals for petitioners use of the company service vehicle. Nor may they be retained by it as purported loan payments, as it would
have this Court believe. In the first place, there is precisely no stipulation to such effect in their agreement. Secondly, it may not be
said that the car plan arrangement between the parties was a benefit that the petitioner enjoyed; on the contrary, it wasan absolute
necessity in Mekenis business operations, which benefit edit to the fullest extent: without the service vehicle, petitioner would
have been unable to rapidly cover the vast sales territory assigned to him, and sales or marketing of Mekenis products could not
have been booked or made fast enough to move Mekenis inventory. Poor sales, inability to market Mekenis products, a high rate

of product spoil age resulting from stagnant inventory, and poor monitoring of the sales territory are the necessary consequences of
lack of mobility. Without a service vehicle, petitioner would have been placed at the mercy of inefficient and unreliable public
transportation; his official schedule would have been dependent on the arrival and departure times of buses or jeeps, not to mention
the availability of seats in them. Clearly, without a service vehicle, Mekenis business could only prosper at a snails pace, if not
completely paralyzed. Its cost of doing business would be higher as well. The Court expressed just such a view in the past. Thus
In the case at bar, the disallowance of the subject car plan benefits would hamper the officials in the performance of their
functions to promote and develop trade which requires mobility in the performance of official business. Indeed, the car plan
benefits are supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation and
responsive to the exigencies of the service. 26 (Emphasis supplied) Any benefit or privilege enjoyed by petitioner from using the
service vehicle was merely incidental and insignificant, because for the most part the vehicle was under Mekenis control and
supervision. Free and complete disposal is given to the petitioner only after the vehicles cost is covered or paid in full. Until then,
the vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner had to cover to be able to perform his work
effectively and generate business for his employer, the service vehicle was an absolute necessity, or else Mekenis business would
suffer adversely. Thus, it is clear that while petitioner was paying for half of the vehicles value, Mekeni was reaping the full
benefits from the use thereof.
In light of the foregoing, it is unfair to deny petitioner a refund of all his contributions to the car plan. Under Article 22 of
the Civil Code, "[e]very 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." Article 214227of
the same Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise to the juridical relation
of quasi-contract, to the end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of specific
terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was
created between them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is
otherwise absolutely necessaryto the full and effective promotion of its business. It may not, under the claim that petitioners
payments constitute rents for the use of the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car
plan did not carry such a condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan
arrangement benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using the vehicle was
merely incidental.
Conversely, petitioner cannot recover the monetary value of Mekenis counterpart contribution to the cost of the vehicle;
that is not property or money that belongs to him, nor was it intended to be given to him in lieu of the car plan. In other words,
Mekenis share of the vehicles cost was not part of petitioners compensation package. To start with, the vehicle is an asset that
belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to refund petitioners payments, so should petitioner not be
awarded the value of Mekenis counter part contribution to the car plan, as this would unjustly enrich him at Mekenis expense.
There is unjust enrichment ''when a person unjustly retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity and good conscience." The principle of unjust
enrichment requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is
derived at the expense of another. The main objective of the principle against unjust enrichment is to prevent one from enriching
himself at the expense of another without just cause or consideration. x x x28
WHEREFORE, the Petition is GRANTED IN PART. The assailed January 27, 2010 Decision and April 23, 2010
Resolution of the Court of Appeals in CA-G.R. SP No. 109550 are MODIFIED, in that respondent Mekeni Food Corporation is
hereby ordered to REFUND petitioner Antonio Locsin II's payments under the car plan agreement in the total amount
ofP112,500.00.
Thus, except for the counterpart or equivalent share of Mekeni Food Corporation in the car plan agreement amounting
to P112,500.00, which is DELETED, the February 27, 2009 Decision of the National Labor Relations Commission is affirmed in
all respects. SO ORDERED.