G.R. No.

L-29155 | May 13, 1970

UNIVERSAL FOOD CORPORATION, petitioner,

vs.

THE COURT OF APPEALS, MAGDALO V. FRANCISCO, SR., and

VICTORIANO N. FRANCISCO, respondents.

Wigberto E. Tañada for petitioner.

Teofilo Mendoza for respondents.

 FACTS:

1. Petitioner's/Plaintiff's claim/s: 
This is a petition for certiorari by the UFC against the CA decision of
February 13, 1968, declaring the Bill of Assignment rescinded, ordering the
petitioner to return to Magdalo Francisco, Sr his Mafran sauce trademark
and to pay his monthly salary of P300.00 from Dec. 1, 1960 until the return
to him of said trademark and formula.

2. Respondent's/Defendant's claim/s: 
On February 14, 1961, Magdalo V. Francisco, Sr. and Victoriano V.
Francisco filed with the Court of First Instance of Manila, against, the
Universal Food Corporation, an action for rescission of a contract entitled
"Bill of Assignment." The plaintiffs prayed the court to adjudge the
defendant as without any right to the use of the Mafran trademark and
formula, and order the latter to restore to them the said right of user; to
order the defendant to pay Magdalo V. Francisco, Sr. his unpaid salary
from December 1, 1960, as well as damages in the sum of P40,000, and to
pay the costs of suit.
3. Decisions of the lower courts: 
The lower court dismissed the plaintiffs' complaint as well as the
defendant's claim for damages and attorney's fees, with costs against the
former, who promptly appealed to the Court of Appeals. On February 13,
1969 the appellate court rendered the judgment now the subject of the
present recourse.

ISSUE/S:
Whether or not petitioner’s contention that Magdalo Francisco is not
entitled to rescission valid.

HELD:
4. Disposition of the case: 
ACCORDINGLY, conformably with the observations we have above
made, the judgment of the Court of Appeals is modified.

5. Dictum:
No. The petitioner’s contention that Magdalo’s petition for rescission
should be denied because under Art. 1383 of the Civil Code, rescission
cannot be demanded except when the party suffering damage has no other
legal means to obtain reparation, was of no merit since it is predicated on a
failure to distinguish between a rescission for a breach of contract under
Art. 1191 and a recission by reason of lesion or economic prejudice under
Art. 1381. The case at bar was a case of reciprocal obligation. The
petitioner corporation violated the Bill of Assignment by terminating the
services Magdalo Francisco, Sr. without lawful and justifiable cause. Thus,
apart from the legal principle that the option to demand performance or ask
for rescission of a contract belongs to the injured party, the fact remains
that the respondents-appellees had no alternative but to file the present
action for rescission and damages.