G.R. No. 200602 (December 11, 2013)
Topics: Contract of sale; contract to sell; conditional contract of sale; reciprocal obligations
Summary:
ACE FOODS is a domestic corporation of wholesale and retail. MICRO PACIFIC (MTCL) is engaged in the supply of computer hardware and equipment. MTCL sent a letter-proposal (delivery and sale) of the subject products to ACE Foods.
The petition is denied on the grounds that the parties have entered into a contract of sale.
Doctrines:
The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised.
Article 1458 of the Civil Code defines a contract of sale as an arrangement where one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. A contract of sale may be absolute or conditional.
Facts:
ACE FOODS is a domestic corporation of wholesale and retail. MICRO PACIFIC (MTCL) is engaged in the supply of computer hardware and equipment. MTCL sent a letter-proposal (delivery and sale) of the subject products to be installed at various offices of ACE Foods which then were delivered.
ACE Foods issued Purchase Order, and MTCL delivered invoice with a fine print of “to sell property is reserved in MICRO PACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above and payment of the price.”
Instead of paying the purchase price, ACE Foods sent a Letter on returning products. ACE Foods’ complaint against MTCL was due to Breach.
MTCL counterclaimed that they delivered subject products in good working condition, installed and configured in ACE Foods’s premises, even conducted a training course, and said there was actually no agreement as to the purported “after delivery services.”
ACE Foods refused and failed to pay the purchase price despite their use for a period of nine (9) months.
RTC directed MTCL to remove the products from ACE Foods and pay actual damages and attorney fees. RTC held that the agreement is in the nature of a contract to sell (it is still the former who holds title to the products until full payment of the purchase price therefor), and that the Invoice Receipt -full payment of the price is a positive suspensive condition, the non-payment of which prevents the obligation to sell on the part of the seller/vendor from materializing at all.
CA reversed and set aside the RTCs ruling and held that said contract had been perfected from the time ACE Foods sent the PO to MTCL in which MTCL delivered also. The corresponding obligation is the agreed purchase price within thirty (30) days; hence, refusal to pay disregards the very essence of reciprocity in a contract of sale.
Issue:
Whether ACE Foods should pay MTCL the purchase price for the subject products.
Ruling:
The petition is DENIED and the decision of CA was AFFIRMED.
The real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the contracting parties.
The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised.
Article 1458 of the Civil Code defines a contract of sale as an arrangement where one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. A contract of sale may be absolute or conditional.
Contract of sale is classified as a consensual contract, which means that the sale is perfected by mere consent. No particular form is required for its validity. Vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold.
Contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving Che ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full payment of the purchase price.
A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur.
Court concurs with the CA that the parties have agreed to a contract of sale and not to 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.
Reciprocal obligations of the parties MTCL to deliver the said products to ACE Foods, and, on the other hand, of ACE Foods to pay the purchase price therefore within thirty (30) days from delivery already arose and consequently may be demanded.