Case Digest (G.R. No. 174882)
Facts:
Mondragon Personal Sales, Inc. v. Victoriano S. Sola, Jr., G.R. No. 174882, January 30, 2013, Supreme Court Third Division, Peralta, J., writing for the Court.Mondragon Personal Sales, Inc. (petitioner), a distributor of consumer products, entered into a three‑year Contract of Services with Victoriano S. Sola, Jr. (respondent) effective October 2, 1994, under which respondent would provide warehouse/office facilities in General Santos City and receive monthly service fees computed on a sliding scale tied to monthly sales. Prior to that contract, respondent’s wife, Lina Sola, had a separate indebtedness to petitioner under a Franchise Distributorship Agreement.
On January 26, 1995 respondent sent a signed letter to petitioner’s Vice‑President for Finance acknowledging and confirming his wife’s indebtedness in the amount of P1,973,154.73 (with another P1,490,091.15 subject to reconciliation) and undertaking to pay by installments with postdated checks. After that undertaking, petitioner withheld respondent’s service fees for February–April 1995 and applied them against the indebtedness. Respondent closed and padlocked the bodega on April 29, 1995.
Respondent then filed a Complaint for accounting and rescission with the Regional Trial Court (RTC), Davao (Civil Case No. 23,625‑95), claiming withheld commissions totaling P222,202.84 and seeking rescission of the contract. Petitioner answered and counterclaimed for payment of the confirmed indebtedness and related reliefs. Pretrial motions resulted in the RTC granting a preliminary attachment and replevin; respondent’s certiorari petition to the Supreme Court challenging those interlocutory orders (G.R. No. 126427) was dismissed on procedural grounds.
After trial, the RTC rendered judgment on July 6, 2000, holding for defendant (petitioner on counterclaim) and ordering respondent to pay P1,543,643.96 (the principal balance after credits), plus legal interest, attorney’s fees and costs; the RTC found the contract’s service‑fee schedule controlling and denied rescission. Respondent appealed to the Court of Appeals (CA).
On February 10, 2006 the CA reversed in part and granted rescission, holding that under Article 1191 of the Civil Code respondent was entitled to rescind because petitioner unlawfully withheld his service fees, and ruled that no legal compensation occurred; the CA remanded the case to the RTC to determine the amount unlawfully withheld and awarded attorney’s fees to respondent while deleting the RTC’s award on petitioner’s counterclaim. Petitioner’s motion for reconsideration before the CA was denied on September 6, 2006.
Petitioner filed a petition for review on certiorari under Rule 45 to the Supreme Court, assaili...(Pro-only)
Issues:
- Did the Court of Appeals err in finding that petitioner breached the contract and that legal compensation under Article 1279 of the Civil Code did not apply?
- Did the Court of Appeals err in finding that respondent did not assume his wife’s obligation to petitioner?
- Did the Court of Appeals err in remanding the case to the RTC for determination of the amount of service fees unlawfully withheld when that amount had already been determined?
- Did the Court of Appeals err in deleting petitioner’s counterclaim...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
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Doctrine:
- (Pro-only)