DAVID V. MISAMIS OCCIDENTAL II ELECTRIC COOPERATIVE INC.

G.R. No. 194785, July 11, 2012

FACTS: VSD Electric Sales with office located in Ozamis City, is a company engaged in
supplying electrical hardware including transformers for rural electric cooperatives like
MOELCI. In Quezon City, the proprietor Virgilio S. David met with MOELCI’s General
Manage, Engr. Reynaldo Rada, to solve MOELCI’s power shortage problem wherein
David agreed to supply the 10 MVA power transformer. Engr. Rada and Director Jose
Jimenez, in-charge of procurement, returned to Manila to present the board resolution
affirming the purchase of the said transformer. David, in exchange had a proposal which
he would usually give to his clients, the transformer together with its accessories, valued
at P5,200,000.00 would be shipped and the costs would be shouldered by the buyer, it
is also stipulated that 50% should be paid as down payment and the balance be paid
after delivery, wherein Engr. Rada and Director Jimenez agreed. The Board Resolution
however stated that the transformer be financed by the National Electrification
Administration but there was no immediate action, Engr. Rada then requested David to
deliver the transformer without the down payment, wherein David agreed provided that
MOELCI would pay interest at 24% per annum, also stated in the bill of lading. After no
payment was made after several months, demand letters were subsequently sent to
MOELCI. David then filed a complaint for specific performance with damages in the
RTC.
ISSUES: I. Whether or not there was a perfected contract of sale.
II. Whether or not there was a delivery that consummated the contract.
RULING:I. Yes, Rada and Jimenez signed a contract as “Conforme”, there was consent
on part of David to transfer the ownership of the transformer to MOELCI in exchange for
the price. The document though appearing to be a mere proposal is not what it seemed.
The contract is considered a perfected contract of sale not a contract to sell.
II. Yes, MOELCI, arguing that there was no delivery stated that the bill of lading though
stamped “released” was not conclusive since there was no indication that the goods
were released to MOELCI. CA affirmed that there was no delivery indeed but the SC
disagrees, MOELCI thru Engr. Rada agreed to the proposal of David regarding the
payment of freight. In the case of Behn, Meyer & Co. v Yangco it is pointed out that
specification in a contract regarding payment of freight can be taken to indicate the
intention of the parties with regards to the place of delivery. For this reason, if the buyer
is to pay the freight it is reasonable to conclude that upon the point of shipment the
ownership is transferred to the buyer. There is enough conclusive evidence that the
goods were delivered.