CASE DIGEST: ACE FOODS INC V. MICRO PACIFIC TECHNOLOGIES - G.R. NO. 200602

 CASE DIGEST: ACE FOODS INC V. MICRO PACIFIC TECHNOLOGIES

Ace Foods, Inc. vs. Micro Pacific Technologies Co., Ltd.,

712 SCRA 679, G.R. No. 200602 December 11, 2013

DOCTRINES:

• A contract of sale is classified as a consensual contract, which means that the sale is perfected by mere consent. No particular form is required for its validity. Upon perfection of the contract, the parties may reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold.

• The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised.

• The real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the contracting parties.—A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it.

• In the construction or interpretation of an instrument, the intention of the parties is primordial and is to be pursued.

• In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur.

FACTS:

MTCL sent to ACE Foods a letter-proposal for the delivery and sale of Cisco Routers and Frame Relay products. ACE Foods accepted MTCL’s proposal and accordingly issued Purchase Order for the subject products amounting to P646,464.00.

Thereafter, MTCL delivered the said products to ACE Foods. The invoice states that "title to sold property is reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above and payment of the price".

After the delivery and installation of the products, ACE Foods lodged a Complaint against MTCL before the RTC, praying that the latter pull out the products since MTCL breached its "after delivery services" obligations to it.

MTCL, in its Answer, denied the allegations of ACE Foods and prayed that ACE Foods be compelled to pay the purchase price, as well as damages related to the transaction.

RTC observed that the agreement between ACE Foods and MTCL is in the nature of a contract to sell. CA reversed and set aside the RTC’s ruling, and found that the agreement between the parties is in the nature of a contract of sale.

ISSUE:

Whether or not the there was a contract of sale between MTCL and ACE Foods.

HELD:

The parties have agreed to a contract of sale and not to a contract to sell. Bearing in mind its consensual nature, a contract of sale had been perfected at the precise moment ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the latter’s proposal to sell the subject products in consideration of the purchase price of P646,464.00. From that point in time, the reciprocal obligations of the parties already arose and consequently may be demanded.