G.R. No. 52267 (1996)
Topics:
Contract of sale v. contract of a piece of work
Summary:
Petition for Review on Certiorari assailing CA Decision that affirmed RTC decision which ordered EMC to pay Almeda the amounts for the fault and deficiencies of the airconditioning system installed in Almeda’s building, among others.
Doctrines:
Contract of sale v. contract of a piece of work
Facts:
EMC installed an air conditioning system in Almeda’s building which was completed in 1963. Almeda paid the full price and eventually sold the building to the National Investment and Development Corporation (NIDC). However, NIDC failed to comply with the terms and conditions of the deed of sale, prompting Almeda to secure judicial rescission. Subsequently, Almeda reacquired possession of the building and learned from NIDC employees some defects in the air conditioning system.
Almeda acted on the information and requested an evaluation of the system in relation to the contract with EMC. Eventually, Engr. Sapico conducted a technical evaluation where he found defects of the system and concluded that it was “not capable of maintaining the desired room temperature.
Almeda filed an action for damages against EMC alleging that the air-conditioning system installed by petitioner did not comply with the agreed plans and specifications. EMC moved to dismiss the complaint alleging that the action against its responsibility for hidden faults or defects to the thing sold to Almeda has already prescribed.
Almeda argued that the contract between them is not a contract for sale but a contract for a piece of work under Article 1713 of the Civil Code. Thus, the complaint was timely brought within the ten-year prescriptive period.
In its reply, petitioner argued that Article 1571 of the Civil Code providing for a six-month prescriptive period is applicable to a contract for a piece of work by virtue of Article 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:
Whether the contract entered into by EMC and Almeda is a contract of sale or for a piece of work
Ruling:
The Court found that the contract between the parties is one for a piece of work.
The Court cited Tolentino as to the distinction between the two contracts, illustrating that it depends on the intention of the parties. It is a contract of sale if the parties intended an object to be delivered at a future date without considering the work or labor of the party bound to deliver. It is a contract for a piece of work 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. Article 1713 of the Civil Code defines a contract for a piece of work as a contract where the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material.
In this case, EMC is not in the business of manufacturing air-conditioning systems to be sold “off-the-shelf”–its business and particular field of expertise is the fabrication and installation of such systems per order and based on particular plans and specifications provided by the customers to which the price or compensation is greatly dependent. Thus, it has an obligation under Articles 1714 and 1715 in case of defects or otherwise different quality than what is required. While the remedy against violations of the warranty against hidden defects is payment of damages and either to withdraw from the contract or to demand a proportionate reduction of the price, the Court found that the action filed by Almeda is one for breach of contract not against violations of warranties. Such action does not prescribe until the 10-year period. Thus, Almeda’s complaint and prayer is within the prescriptive period.
It is also material to note that the contention of EMC that Almeda accepted the work and therefore EMC should be relieved of any defect does not hold any merit. The Court held that acceptance does not ipso fact relieve EMC from its liability for deviations and violations of the written contract.