Case Summary (A.M. No. MTJ-99-1211)
Petitioner
ACE Foods, Inc.
Respondent
Micro Pacific Technologies Co., Ltd.
Key Dates
• September 26, 2001 – MTCL issues letter-proposal with terms of sale.
• October 29, 2001 – ACE Foods issues Purchase Order No. 100023 for P646,464.00.
• March 4, 2002 – MTCL delivers and installs subject products; issues Invoice No. 7733.
• February 28, 2007 – RTC of Makati (Branch 148) renders decision directing MTCL to remove products and awarding damages to ACE Foods.
• October 21, 2011 – Court of Appeals reverses RTC, orders ACE Foods to pay MTCL the purchase price with interest and attorney’s fees.
• February 8, 2012 – CA denies ACE Foods’ motion for reconsideration.
• December 11, 2013 – Supreme Court issues final decision.
Applicable Law
• 1987 Philippine Constitution
• Civil Code of the Philippines:
– Article 1458 (Definition of contract of sale)
– Article 1475 (Perfection of contract of sale)
– Article 1582 (Obligations of the vendee)
• Rule 8, Section 7, Rules of Court (Actionable documents)
Facts
MTCL sent ACE Foods a proposal specifying price validity, delivery, payment terms (30 days upon delivery), and one-year warranty. ACE Foods accepted by issuing a purchase order for P646,464.00. Upon delivery and installation, MTCL’s invoice reserved title “until full compliance” of payment. ACE Foods used the equipment for nine months but refused payment, alleging defective products and MTCL’s failure to render agreed “after-delivery services” (installation/configuration, cost-benefit study, technician training). ACE Foods then sued MTCL to compel removal of the equipment; MTCL counterclaimed for payment and damages.
RTC Ruling
The Regional Trial Court characterized the transaction as a contract to sell, relying on the invoice’s title reservation clause as a suspensive condition. It held that title remained with MTCL until full payment, thus no obligation to pay arose. The RTC ordered MTCL to remove the equipment and awarded ACE Foods P200,000 actual damages and P100,000 attorney’s fees.
CA Ruling
The Court of Appeals found a perfected contract of sale upon ACE Foods’ acceptance of the proposal and MTCL’s delivery and installation. It ruled that MTCL had fully performed, thereby triggering ACE Foods’ obligation to pay within 30 days of delivery. The CA ordered ACE Foods to pay P646,464.00 plus 6% annual interest from April 4, 2002, and P50,000 attorney’s fees. The CA also dismissed ACE Foods’ after-delivery claims for lack of contractual basis.
Issue
Whether ACE Foods is obligated to pay MTCL the agreed purchase price for the subject products.
Supreme Court Ruling
The petition lacks merit. Under Article 1458, a contract of sale is perfected by consent, obligating one party to transfer ownership and the other t
...continue readingCase Syllabus (A.M. No. MTJ-99-1211)
Facts
- ACE Foods, Inc. (ACE Foods) is a domestic corporation engaged in trading and distribution of consumer goods; Micro Pacific Technologies Co., Ltd. (MTCL) supplies computer hardware and equipment.
- On September 26, 2001, MTCL submitted a letter-proposal offering sale and delivery of Cisco Routers and Frame Relay Products (subject products) to be installed at ACE Foods’ offices.
- Proposal terms included:
• Payment due thirty (30) days upon delivery
• Prices based on current dollar rate, subject to change without notice
• Immediate delivery for in-stock items, 30–45 days otherwise
• One (1) year warranty on parts and services (excluding accessories) - ACE Foods accepted on October 29, 2001, issuing Purchase Order No. 100023 for ₱646,464.00.
- MTCL delivered the products on March 4, 2002, as evidenced by Invoice No. 7733, containing a fine-print “title reservation stipulation” reserving ownership with MTCL until full payment.
- MTCL installed and configured the products at ACE Foods’ premises; ACE Foods used the equipment for nine months without paying.
- MTCL’s payment demand went unanswered; instead, ACE Foods on September 19, 2002, claimed it was returning the products due to MTCL’s failure to perform post-delivery obligations.
- On October 16, 2002, ACE Foods filed a complaint before the RTC seeking removal of the products and alleging breach regarding installation, cost-benefit study, training, and product defects.
- MTCL answered with a counterclaim asserting full compliance, good working condition of products, and that no agreement existed for additional “after-delivery services.” It sought payment of the purchase price plus damages.
Regional Trial Court Ruling
- RTC of Makati, Branch 148, in Civil Case No. 02-1248 (February 28, 2007) classified the agreement as a contract to sell: • Relied on the title reservation stipulation in t