UNIVERSAL FOOD CORPORATION VS.
CA another memorandum was issued by the President and
33 SCRA 1
FACTS:
This is a petition for certiorari by the UFC against
the CA decision of February 13, 1968 declaring the BILL
OF ASSIGNMENT rescinded, ordering UFC to return to
Magdalo Francisco 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.
In 1938, plaintiff Magdalo V. Francisco, Sr.
discovered a formula for the manufacture of a food
seasoning (sauce) derived from banana fruits popularly
known as MAFRAN sauce. It was used commercially
since
1942, and in the same year plaintiff registered his
trademark in his name as owner and inventor with the
Bureau of Patents. However, due to lack of sufficient
capital to finance the expansion of the business, in 1960,
said plaintiff secured the financial assistance of Tirso T.
Reyes who, after a series of negotiations, formed with
others defendant Universal Food Corporation eventually
leading to the execution on May 11, 1960 of the
aforequoted "Bill of Assignment" (Exhibit A or 1).
On May 31, 1960, Magdalo Francisco entered into
contract with UFC stipulating among other things that
he
be the Chief Chemist and Second Vice-President of UFC
and shall have absolute control and supervision over the
laboratory assistants and personnel and in the purchase
and safekeeping of the chemicals used in the
preparation
of said Mafran sauce and that said positions are
permanent
in nature.
In line with the terms and conditions of the Bill of
Assignment, Magdalo Francisco was appointed Chief
Chemist with a salary of P300.00 a month. Magdalo
Francisco kept the formula of the Mafran sauce secret to
himself. Thereafter, however, due to the alleged scarcity
and high prices of raw materials, on November 28, 1960,
Secretary-Treasurer Ciriaco L. de Guzman of UFC issued a
Memorandum duly approved by the President and
General
Manager Tirso T. Reyes that only Supervisor Ricardo
Francisco should be retained in the factory and that the
salary of plaintiff Magdalo V. Francisco, Sr., should be
stopped for the time being until the corporation should
resume its operation. On December 3, 1960, President
and
General Manager Tirso T. Reyes, issued a memorandum
to
Victoriano Francisco ordering him to report to the
factory
and produce "Mafran Sauce" at the rate of not less than
100 cases a day so as to cope with the orders of the
corporation's various distributors and dealers, and with
instructions to take only the necessary daily employees
without employing permanent employees. Again, on
December 6, 1961, another memorandum was issued by
the same President and General Manager instructing the
Assistant Chief Chemist Ricardo Francisco, to recall all
daily employees who are connected in the production of
Mafran Sauce and also some additional daily employees
for the production of Porky Pops. On December 29,
1960,
General Manager instructing Ricardo Francisco, as Chief
Chemist, and Porfirio Zarraga, as Acting Superintendent,
to produce Mafran Sauce and Porky Pops in full swing
starting January 2, 1961 with further instructions to hire
daily laborers in order to cope with the full blast
operation.
Magdalo V. Francisco, Sr. received his salary as Chief
Chemist in the amount of P300.00 a month only until his
services were terminated on November 30, 1960. On
January 9 and 16, 1961, UFC, acting thru its President and
General Manager, authorized Porfirio Zarraga and Paula
de Bacula to look for a buyer of the corporation
including
its trademarks, formula and assets at a price of not less
than P300,000.00. Due to these successive memoranda,
without plaintiff Magdalo V. Francisco, Sr. being recalled
back to work, he filed the present action on February 14,
1961. Then in a letter dated March 20, 1961, UFC
requested
said plaintiff to report for duty, but the latter declined
the
request because the present action was already filed in
court.
ISSUES:
1. Was the Bill of Assignment really one that
involves transfer of the formula for Mafran sauce itself?
2. Was petitioner’s contention that Magdalo
Francisco is not entitled to rescission valid?
RULING:
1. No. Certain provisions of the bill would lead
one to believe that the formula itself was transferred. To
quote, “the respondent patentee "assign, transfer and
convey all its property rights and interest over said
Mafran trademark and formula for MAFRAN SAUCE
unto the Party of the Second Part," and the last
paragraph states that such "assignment, transfer and
conveyance is absolute and irrevocable (and) in no case
shall the PARTY OF THE First Part ask, demand or sue
for the surrender of its rights and interest over said
MAFRAN trademark and mafran formula."
“However, a perceptive analysis of the entire
instrument and the language employed therein would
lead
one to the conclusion that what was actually ceded and
transferred was only the use of the Mafran sauce
formula.
This was the precise intention of the parties.”
The SC had the following reasons to back up the
above conclusion. First, royalty was paid by UFC to
Magdalo Francisco. Second, the formula of said Mafran
sauce was never disclosed to anybody else. Third, the Bill
acknowledged the fact that upon dissolution of said
Corporation, the patentee rights and interests of said
trademark shall automatically revert back to Magdalo
Francisco. Fourth, paragraph 3 of the Bill declared only
the transfer of the use of the Mafran sauce and not the
formula itself which was admitted by UFC in its answer.
Fifth, the facts of the case undeniably show that what
was
transferred was only the use. Finally, our Civil Code
allows
only “the least transmission of right, hence, what better
way is there to show the least transmission of right of
the
transfer of the use of the transfer of the formula itself.”
2. No. Petitioner’s contention that Magdalo
Francisco’s petition for rescission should be denied
because under Article 1383 of the Civil Code of the
Philippines rescission can not be demanded except when
the party suffering damage has no other legal means to
obtain reparation, was of no merit because “it is
predicated
on a failure to distinguish between a rescission for
breach
of contract under Article 1191 of the Civil Code and a
rescission by reason of lesion or economic prejudice,
under
Article 1381, et seq.” This was a case of reciprocal
obligation. Article 1191 may be scanned without
disclosing
anywhere that the action for rescission thereunder was
subordinated to anything other than the culpable breach
of
his obligations by the defendant. Hence, the reparation
of
damages for the breach was purely secondary. Simply
put,
unlike Art. 1383, Art. 1191 allows both the rescission and
the payment for damages. Rescission is not given to the
party as a last resort, hence, it is not subsidiary in nature.
MAGDALENA ESTATE VS. MYRICK
failure of the vendee to continue in the
payment of the stipulated monthly installments,
to retain the amounts paid to him because of
the purchase price. The claim therefore, of the
petitioner that it has the right to forfeit said
sums in its favor is untenable. Under Article
1124 of the Civil Code, however, he may choose
between demanding the fulfillment of the
contract or its resolution. These remedies are
alternative and not cumulative, and the
petitioner in this case, having elected to cancel
the contract cannot avail himself of the other
remedy of exacting performance. As a
consequence of the resolution, the parties
should be restored, as far as practicable, to their
original situation which can be approximated
only be ordering the return of the things which
were the object of the contract, with their fruits
and of the price, with its interest, computed
from the date of institution of the action.

71 PHIL. 344

FACTS:

Magdalena Estate, Inc. sold to Louis

Myrick lots No. 28 and 29 of Block 1, Parcel 9 of
the San Juan Subdivision, San Juan, Rizal. Their
contract of sale provides that the Price of
P7,953 shall be payable in 120 equal monthly
installments of P96.39 each on the second day
of every month beginning the date of execution
of the agreement.

In pursuance of said agreement, the

vendee made several payments amounting to
P2,596.08, the last being due and unpaid was
that of May 2, 1930. By reason of this, the
vendor, through its president, notified the
vendee that, in view of his inability to comply
with the terms of their contract, said agreement
had been cancelled, relieving him of any further
obligation thereunder, and that all amounts
paid by him had been forfeited in favor of the
vendor. To this communication, the vendee did
not reply, and it appears likewise that the
vendor thereafter did not require him to make
any further disbursements because of the
purchase price.

ISSUE: Was the petitioner authorized to forfeit

the purchase price paid?

RULING:

No. The contract of sale contains no

provision authorizing the vendor, in the event of