Facts:

The case involves ACE Foods, Inc. (ACE Foods) as the petitioner and Micro Pacific Technologies Co., Ltd. (MTCL) as the respondent. ACE Foods is a domestic corporation engaged in the wholesale and retail trading of consumer goods, while MTCL specializes in supplying computer hardware and equipment. On September 26, 2001, MTCL sent a letter-proposal to ACE Foods for the sale and delivery of Cisco Routers and Frame Relay Products, which were to be installed at various offices of ACE Foods. The proposal included terms such as payment due within thirty days upon delivery, validity based on current dollar rates, immediate delivery for items in stock, and a one-year warranty on parts and services.

ACE Foods accepted the proposal on October 29, 2001, issuing Purchase Order No. 100023 for the total amount of P646,464.00. MTCL delivered the products on March 4, 2002, as indicated in Invoice No. 7733, which contained a stipulation reserving title to the products until full payment was...

Facts:

Parties and Background

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

The Transaction and Contractual Documents

• On September 26, 2001, MTCL sent a letter-proposal for the sale and delivery of Cisco Routers and Frame Relay Products (the subject products) to be installed at various offices of ACE Foods.
• The proposal included detailed specifications and terms such as:
• Payment due thirty (30) days upon delivery;

ii. Validity statement indicating prices based on the current dollar rate and subject to change without notice; iii. Immediate delivery for items in stock (or within thirty (30) to forty-five days for items not in stock); iv. Warranty for one (1) year on parts and services (excluding accessories).

Delivery, Installation, and Subsequent Developments

• Post-delivery, the subject products were installed and configured in the premises of ACE Foods.
• Instead of paying the agreed purchase price within the stipulated period, ACE Foods failed to pay MTCL.
• On September 19, 2002, ACE Foods sent a letter indicating that it was returning the products through its sales representative, although the products had not been removed.
• On October 16, 2002, ACE Foods initiated a Complaint before the Regional Trial Court (RTC) against MTCL, seeking:
• The removal of the subject products from its premises;
• Alleged performance failures by MTCL regarding after-delivery services including installation, cost benefit study submission, and training on proper use and maintenance;
• A claim that the delivered products were defective and nonfunctional.
• In its Answer with Counterclaim, MTCL claimed:
• Full compliance with its contractual obligations, including proper delivery, installation, and configuration;
• That there was no agreed arrangement regarding after-delivery services;
• That despite ACE Foods’ prolonged use of the products (nine months), the purchase price remained unpaid.

Lower Court Proceedings

• RTC Decision (February 28, 2007):
• The RTC characterized the agreement as a contract to sell, emphasizing the title reservation stipulated in the Invoice.
• Based on the view that title had not passed to ACE Foods, the RTC ordered MTCL to remove the products from ACE Foods’ premises and awarded damages and attorney fees totaling P300,000.00.
• Court of Appeals (CA) Ruling (October 21, 2011):
• The CA reversed the RTC decision, holding that a contract of sale had been perfected upon the exchange of the Purchase Order and receipt of the products, notwithstanding the title reservation clause.
• It ordered ACE Foods to pay MTCL the purchase price of P646,464.00, with legal interest computed from April 4, 2002, and attorney fees of P50,000.00.
• The CA dismissed ACE Foods’ claim regarding MTCL’s alleged after-delivery service obligations as unsupported by the contract documents.
• ACE Foods’ unsuccessful motion for reconsideration was made via a Resolution dated February 8, 2012, leading to the petition for review.

Issue:

Nature of the Contract

• Whether the agreement between ACE Foods and MTCL constituted a contract of sale or a contract to sell, considering the inclusion of a title reservation stipulation in the Invoice Receipt.

Obligations Under the Contract

• Whether ACE Foods was obligated to pay the purchase price for the subject products based on the perfected contract of sale.
• Whether the title reservation clause affected (“novated” or modified) the parties’ contractual obligations, particularly regarding the transfer of title and the duty to pay.

Claims of Breach and After-Delivery Services

• Whether ACE Foods’ claims of MTCL’s failure to perform after-delivery services, including installation, cost-benefit study submission, and training, were valid or had any contractual basis.
• Whether the alleged defects in the subject products justified ACE Foods’ return of the goods and non-payment of the purchase price.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)