PROFESSIONAL ACADEMIC PLANS, INC. v. CRISOSTOMO

FACTS: Respondent Crisostomo was the PAPI District Manager for Metro Manila who was later promoted to Regional Manager. She did not receive any salary but was entitled to a franchise commission of 10% of the payments on remittances of clients that had been negotiated by her. PAPI initiated negotiations with the Armed Forces of the Philippines Savings and Loan Association (AFPSLAI), thru Col. Andaya, offering academic assistance programs. Respondent Crisostomo continued the negotiations until a Memorandum of Agreement (MOA) was executed between PAPI and AFPSLAI. Initially, Crisostomo received the 10% commission from Dec. 1988 – April 1989. However, PAPI kept on asking for deductions from the commission until it was finally reduced to 2%. When Col. Punzalan replaced Col. Andaya, he requested for a review of the MOA with PAPI. As a result, PAPI and AFPSLAI executed a new MOA amending the prior MOA on January 1992.

In an inter-office memorandum, Crisostomo was informed that his commission has been terminated because of the following: (1) the new MOA was negotiated by PAPI directly and without his intervention, and (2) she was not able to meet her monthly quota of 100 clients. Crisostomo tried to convince her immediate supervisor and the President to reinstate her commission, but her request was not heeded. On Jan. 21, 1993, Crisostomo filed a complaint for sum of money and damages against PAPI and the President of PAPI. The Trial court ruled in favor of Crisostomo and ordered PAPI to pay her the commission due. The Court of Appeals affirmed the decision of the lower court further explaining that the amendment of the first MOA did not extinguish nor supersede the latter. What was executed was a mere modification. PAPI filed a petition for review on certiorari. ISSUES:

(1) WON the old MOA had been cancelled by the AFPSLAI.(2) WON Crisostomo is entitled to the franchise commission under the new MOA.

HELD:(1) No. Col. Punzalan did not unilaterally cancel the first MOA.(2) Yes. She is still entitled as the first MOA is still valid.

RATIO:(1) The letter of Col. Punzalan merely shows that there is a suspension of the acceptance of new

application under the first MOA until a new agreement is made. Once a contract is entered into, no party can renounce it unilaterally or without the consent of the other. This is the essence of the principle of mutuality of contracts embodied in Article 1308 of the Civil Code. To effect abandonment of contract, mutual assent is always required.

(2) PAPI is already in estoppel to question its entitlement to the franchise agreement under the old MOA. The franchise commission was granted on two conditions only: (1) that Crisostomo be connected to the company and (2) that it is not transferable. At the time the new MOA was executed she was still connected to the company thus entitled to commission.