Title
Ace Foods, Inc. vs. Micro Pacific Technologies Co., Ltd.
Case
G.R. No. 200602
Decision Date
Dec 11, 2013
ACE Foods refused payment to MTCL, alleging breach of contract and defective products. Court ruled ACE Foods must pay, as contract was a sale, obligations fulfilled, and claims unproven.
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Case Digest (G.R. No. 200602)

Facts:

Parties Involved:

  • ACE Foods, Inc. (Petitioner): A domestic corporation engaged in the trading and distribution of consumer goods.
  • Micro Pacific Technologies Co., Ltd. (MTCL) (Respondent): A company engaged in the supply of computer hardware and equipment.

Transaction Details:

  • On September 26, 2001, MTCL sent a letter-proposal to ACE Foods for the delivery and sale of Cisco Routers and Frame Relay Products (subject products) to be installed at ACE Foods' offices. The proposal included terms such as:
    • Terms: Payment within 30 days upon delivery.
    • Validity: Prices based on the current dollar rate and subject to change without prior notice.
    • Delivery: Immediate for items in stock, otherwise 30 to 45 days upon receipt of the Purchase Order.
    • Warranty: One year on parts and services.

Purchase Order and Delivery:

  • On October 29, 2001, ACE Foods accepted MTCL's proposal and issued Purchase Order No. 100023 for the subject products amounting to P646,464.00.
  • On March 4, 2002, MTCL delivered the products to ACE Foods, as reflected in Invoice No. 7733. The invoice included a title reservation stipulation, stating that title to the sold property is reserved in MTCL until full payment of the price.

Dispute:

  • ACE Foods refused to pay the purchase price, claiming that MTCL breached its "after delivery services" obligations, including:
    • Failure to install and configure the products properly.
    • Failure to submit a cost-benefit study.
    • Failure to train ACE Foods' technicians.
  • ACE Foods also claimed that the products were defective and not working.
  • On October 16, 2002, ACE Foods filed a complaint against MTCL, seeking the removal of the products from its premises.

MTCL's Defense:

  • MTCL countered that it had fulfilled its obligations, including delivering the products in good working condition, installing and configuring them, and conducting training for ACE Foods' employees.
  • MTCL argued that there was no agreement regarding "after delivery services" and that ACE Foods had used the products for nine months without payment.

Issue:

The primary issue before the Court was whether ACE Foods should pay MTCL the purchase price for the subject products, despite ACE Foods' claims of breach of contract and defective products.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Conclusion:

The Supreme Court upheld the Court of Appeals' decision, ruling that ACE Foods must pay MTCL the purchase price for the subject products, along with legal interest and attorney's fees. The Court emphasized that the contract between the parties was a contract of sale, and ACE Foods' refusal to pay constituted a breach of its obligations under the contract.


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