ACE FOODS, INC. vs. MICRO PACIFIC TECHNOLOGIES CO., LTD. G.R. No.

200602 December 11, 2013

FACTS:

Ace Foods is a domestic corporation engaged in the trading and distribution of consumer goods in
wholesale and retail bases, while MTCL is engaged in the supply of computer hardware and equipment.
MTCL sent a letter & proposal for the delivery and sale of the subject products to be installed at various
offices of Ace Foods. Ace Foods accepted MTCL’s proposal and accordingly issued Purchase Order No.
100023 (Purchase Order) for the subject products amounting to P646,464.00 (purchase price). MTCL
delivered the said products to Ace Foods. The fine print of the invoice states, inter alia, that title to sold
property is reserved in MCTL until full compliance of the terms and conditions of above and payment of
the price (title reservation stipulation).

After delivery, the subject products were then installed and configured in Ace Foods’s premises. MTCL’s
demands against Ace Foods to pay the purchase price, however, remained unheeded. Instead of paying
the purchase price, Ace Foods sent MTCL a letter stating that it “has been returning the subject products
to MTCL thru its sales representative Mr. Mark Anteola who has agreed to pull out the said products but
had failed to do so up to now.”

Ace Foods lodged a complaint against MTCL before the RTC, praying that the latter pull out from its
premises the subject products since MTCL breached its after delivery services obligations to it, particularly,
to (a) install and configure the subject products; (b) submit a cost benefit study to justify the purchase of
the subject products; and (c) train Ace Foods’ technicians on how to use and maintain the subject
products. Ace Foods likewise claimed that the subject products MTCL delivered are defective and not
working.

RTC rendered decision in favor of Ace Foods. CA reversed and set aside the RTC’s ruling.

ISSUE:

Whether Ace Foods should pay MTCL the purchase price for the subject products?

RULING:

Parties agreed to a contract of sale. A contract of sale had been perfected at the precise moment Ace
Foods 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 to deliver and to pay
respectively already arose and consequently may be demanded. At this juncture, the Court must dispel
the notion that the stipulation anent MTCL’s reservation of ownership of the subject products as reflected
in the Invoice Receipt, i.e., the title reservation stipulation, changed the complexion of the transaction
from a contract of sale into a contract to sell. Records are bereft of any showing that the said stipulation
novated the contract of sale between the parties which, to repeat, already existed at the precise moment
Ace Foods accepted MTCL’s proposal. To be sure, novation, in its broad concept, may either be extinctive
or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation
that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent
it remains compatible with the amendatory agreement. In either case, however, novation is never
presumed, and the animus novandi, whether totally or partially, must appear by express agreement of
the parties, or by their acts that are too clear and unequivocal to be mistaken. In the present case, it has
not been shown that the title reservation stipulation appearing in the Invoice Receipt had been included
or had subsequently modified or superseded the original agreement of the parties. The fact that the
Invoice Receipt was signed by a representative of Ace Foods does not, by and of itself, prove animus
novandi since (1) it was not shown that the signatory was authorized by Ace Foods, the actual party to the
transaction, to novate the original agreement; (2) the signature only proves that the Invoice Receipt was
received by a representative of Ace Foods to show the fact of delivery; and (3) as matter of judicial notice,
invoices are generally issued at the consummation stage of the contract and not its perfection, and have
been even treated as documents which are not actionable per se, although they may prove sufficient
delivery. Thus, absent any clear indication that the title reservation stipulation was actually agreed upon,
the Court must deem the same to be a mere unilateral imposition on the part of MTCL which has no effect
on the nature of the parties’ original agreement as a contract of sale. Perforce, the obligations arising
thereto, among others, Ace Foods’ obligation to pay the purchase price as well as to accept the delivery
of goods, remain enforceable and subsisting. Petition is denied. CA decision is affirmed.