GR 170633; (October, 2007) (Digest)
G.R. No. 170633 October 17, 2007
MCC INDUSTRIAL SALES CORPORATION, petitioner, vs. SSANGYONG CORPORATION, respondent.
FACTS
Petitioner MCC Industrial Sales Corporation and respondent Ssangyong Corporation, through fax communications, entered into a contract for the sale of 220 metric tons of stainless steel. MCC, through its manager Gregory Chan, conformed to pro forma invoices detailing the terms, including payment via an irrevocable letter of credit (L/C). Ssangyong procured the goods from its supplier upon MCC’s confirmation. MCC, however, encountered financial difficulties and repeatedly failed to open the required L/C despite Ssangyong’s extensions and even a price discount offer. Eventually, MCC opened an L/C for only 100 MT, which Ssangyong delivered. MCC refused to open the L/C for the remaining 120 MT, requesting a further price reduction. Ssangyong demanded compliance and, upon MCC’s failure, canceled the contract and filed a complaint for damages.
ISSUE
Whether a perfected contract of sale existed between the parties, and if so, whether MCC’s failure to open the required letter of credit constituted a breach thereof.
RULING
Yes, a contract of sale was perfected. The Supreme Court affirmed the Court of Appeals’ decision holding MCC liable for breach of contract. A contract is perfected by mere consent, which is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. The exchange of faxed documents, specifically the pro forma invoices signed by MCC’s authorized representative, clearly established the parties’ consent to the material terms of the sale: the specific goods, quantity, price, and the mode of payment via L/C. The Court emphasized that the agreement on the L/C as the payment mechanism was a fundamental term of the contract, not a mere suspensive condition. MCC’s obligation to open the L/C was therefore an integral part of its duty as buyer. Its unjustified failure to do so for the balance of the goods constituted a substantial breach, entitling Ssangyong to cancel the contract and claim damages. The Court rejected MCC’s defense that no contract existed due to the lack of a formal signed document, ruling that the faxed correspondence sufficed to prove a binding agreement under the Statute of Frauds, as there was a written note or memorandum signed by the party to be charged. Consequently, MCC was ordered to pay actual damages representing Ssangyong’s losses.