Ace Foods vs Micro Pacific 200602 (Article 1458)

ACE Foods is a domestic corporation engaged in the trading and distribution of consumer
goods in wholesale and retail bases, while MTCL is one engaged in the supply of computer
hardware and equipment.

ACE Foods accepted MTCL’s proposal for the delivery and sale of computer products to
be installed at various offices of the former and issued a Purchase Order to that effect
(P646,464.00). MTCL delivered the products to ACE as reflected in the Invoice Receipt. The
invoice state that title to the property delivered is reserved in MTCL until ACE pays in full the
purchase price. After delivery, the subject products were then installed and configured in ACE
Foods’ premises. MTCL’s demands against ACE Foods to pay the purchase price, however,
remained unheeded.
ACE Foods eventually sent a Letter stating that it had been trying to return the products
due to defect thru MTCL’s sales rep, but the latter failed to pull them out. Later, ACE lodged a
complaint with RTC, praying that
MTCL be ordered to pull out the products from the premises since MTCL breached its “after-
delivery services” obligations to it such as installation and configuration of the products,
submission of cost-benefit study to justify purchase, and conduct of training on how to use
products. ACE likewise claimed that the products are defective.
MTCL answered that it complied with its obligations and that the products are working
properly. It installed and configured the products and conducted training. MTCL alleged that there
was no agreement as to the purported “after delivery-services.” Furthermore, ACE failed to pay
despite using the products for 9 months.
RTC ruled in favor of ACE Foods, holding that it was a contract to sell and that the
suspensive condition of payment of price was not fulfilled. The reservation of title to MTCL was
evidenced by the Invoice Receipt it issued to ACE Foods upon delivery to the latter and which was
signed by a rep of the latter. Thus, it ordered
MTCL to pull out the products since title still remained with it due to ACE’s nonpayment. CA
reversed, ruling in favor of MTCL. It held that it was a contract of sale.
Issue:
W/N ACE Foods failed to comply with its obligation as buyer.
Held:
YES. The Court held that a contract is what the defines it to be, taking into consideration its
essential elements, and not what the contracting parties call it. The intention of the parties is a
primordial consideration. Indeed, a contract of sale is a consensual contract, which means that the
sale is perfected by mere consent. The seller is obliged to deliver the thing sold and the buyer to
pay in full the purchase price.
Here, the Court concurs with the CA that the contract is one of sale, and not 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.
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.
Animus Novandi on the part of Ace Foods was never shown. The Court must deem the title
reservation stipulation in the Invoice 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 the goods, remain enforceable and subsisting