ENGINEERING &
MACHINERY CORPORATION, petitioner, vs. COURT OF APPEALS AND PONCIANO L. ALMEDA,
respondents
G. R. No. 52267 | January 24, 1996
DOCTRINE(S):
Special Contracts; Prescription
PONENTE:
Panganiban
FACTS:
Pursuant to the contract dated Sept. 10, 1962, Engineering
& Machinery Corp. undertook to fabricate, furnish and install the
air-conditioning system of Almeda’s building along Buendia Ave., Makati for
P210,000.00. Petitioner was to furnish the materials, labor, tools and all
services required in order to so fabricate and install said system. The system
was complete in 1963 and accepted by private respondent who paid in full the
contract price.
In 1971, Almeda learned that there are defects in the
air-conditioning system of the building. He commissioned Engr. David Sapico to
render a technical evaluation of the system in relation to the contract with
petitioner. In his report, Sapico enumerated the defects of the system and
concluded that it was not capable of maintaining the desired room temperature
of -2 degree Celsius.
On the basis of this report, private respondent filed on May
8, 1971 an action for damages against petitioner with the CFI of Rizal. The complaint
alleged that the air-conditioning system installed by petitioner did not comply
with the agreed plans and specifications.
Petitioner moved to dismiss the complaint alleging that the
prescriptive period of 6 months had set in pursuant to Art. 1566 & 1567, in
relation to Art. 1571 of the Civil Code, regarding the responsibility of a
vendor for any hidden faults or defects in the thing sold.
Private respondent countered that the contract dated Sept.
10, 1961 was not a contract of sale but a contract for a piece of work under
Art. 1713 of the Civil Code. Thus, in accordance with Art. 1144(1) of the same Code, the
complaint was timely brought within the 10-year prescriptive period.
In its reply, petitioner argued that Art. 1571 of the Civil
Code providing for a 6-month prescriptive period is applicable to a contract
for a piece of work by virtue of Art. 1714, which provides that such a contract
shall be governed by the pertinent provisions on warranty of title and against
hidden defects and the payment of price in a contract of sale.
ISSUE(S):
1.
Whether the contract is a contract of sale or a
contract for a piece of work
2.
Whether or not the action was filed within the
prescriptive period
RULING:
A contract for a piece of work, labor and materials may be
distinguished from a contract of sale by the inquiry as to whether the thing
transferred is one not in existence and which would never have existed but for
the order of the person desiring it. In such case, the contract is one for a
piece of work, not a sale. On the other hand, if the thing subject of the
contract would have existed and have been the subject of a sale to some other
person even if the order had not been given, then the contract is one of sale.
To Tolentino, the distinction between the two contracts
depends on the intention of the parties. Thus, if the parties intended that at
some future date an object has to be delivered, without considering the work or
labor of the party bound to deliver, the contract is one of sale. But if one of
the parties accepts the undertaking on the basis of some plan, taking into
account the work he will employ personally or through another, there is a
contract for a piece of work.
Clearly, the contract in question is one for a piece of
work. It is not petitioner’s line of business to manufacture air-conditioning
systems to be sold “off-the-shelf”. Its business and particular field of
expertise is the fabrication and installation of such systems as ordered by
customers and in accordance with the particular plans and specifications
provided by customers.
The obligations of a contractor for a piece of work are set
forth in Articles 1714 & 1715 of the Civil Code.
In Villostas v. Court of Appeals, the Court held that “while
it is true that Article 1571 of the Civil Code provides for a prescriptive
period of six months for a redhibitory action, a cursory readying of the ten
preceding article to which it refers will reveal that said rule may be applied
only in case of implied warranties”; and where there is an express warranty in
the contract, as in the case at bench, the prescriptive period is the one
specified in the express warranty, and in the absence of such period, “the
general rule on rescission of contract, which is four years (Article 1389,
Civil Code) shall apply”.
Consistent with the above discussion, it would appear that
this suit is barred by prescription because the complaint was file more than 4
years after the execution of the contract and the completion of the
air-conditioning system.
However, a close scrutiny of the complaint filed in the
trial court reveals that the original action is not really for enforcement of
the warranties against hidden defects, but one for breach of the contract itself.
It alleged that the petitioner, “in the installation of the air-conditioning
system did not comply with the specifications provided” in the written
agreement between the parties, “and an evaluation of the air-conditioning
system as installed by the defendant showed defects and violations of the
specifications of the agreement.
Having concluded that the original complaint is one for
damages arising from breach of a written contract – and not a suit to enforce
warranties against hidden defects – the Court declared that the governing law
is Art. 1715. However, inasmuch as this provision does not contain a specific
period, the general law on prescription, which is Art. 1144 of the Civil Code,
will apply. Said provision states, inter
alia, that actions “upon a written contract” prescribe in ten (10) years. Since
the governing contract was executed on Sept. 10, 1962 and the complaint was
filed on May 8, 1971, it is clear that the action has not prescribed.
Comments
Post a Comment