G.R. No. L-24069 June 28, 1968
LA FUERZA, INC., petitioner, vs. THE HON. COURT OF APPEALS and ASSOCIATED ENGINEERING CO., INC., respondents.

FACTS

Petitioner La Fuerza, Inc. (defendant) and respondent Associated Engineering Co., Inc. (plaintiff) entered into a contract whereby the plaintiff agreed to manufacture and install a flat belt conveyor system in the defendant’s plant. The defendant made a down payment of P5,000. The plaintiff delivered and installed the conveyor units, with the work completed around May 1960, leaving a balance of P8,250. Several trial runs were conducted up to July 1960. The defendant found the system defective, as bottles collided, jumped off the belt, and broke, and the flow was sluggish. When the plaintiff billed for the balance, the defendant refused to pay. The plaintiff filed an action to recover the balance. The defendant, in its answer, sought rescission of the contract and a refund of the down payment, alleging the conveyors did not meet the warranted conditions. The Court of First Instance rescinded the contract and ordered the plaintiff to refund the down payment. The Court of Appeals initially affirmed but, on reconsideration, reversed and ordered the defendant to pay the balance. The Court of Appeals held that the defendant’s action for rescission based on hidden defects had prescribed under Article 1571 of the Civil Code, as it was filed over ten months after delivery, beyond the six-month prescriptive period.

ISSUE

Whether the defendant’s action for rescission of the contract based on hidden defects of the conveyor system had prescribed.

RULING

Yes, the action had prescribed. The Supreme Court affirmed the resolution of the Court of Appeals. The contract for a piece of work is governed by the provisions on warranty against hidden defects in a contract of sale pursuant to Article 1714 of the Civil Code. Article 1571 provides that actions arising from such warranty, including the action to rescind or withdraw from the contract under Article 1567, are barred after six months from the delivery of the thing. Delivery is complete when the thing is placed in the control and possession of the vendee (or in this case, the buyer of the piece of work), which occurred upon completion of installation around May 1960, and acceptance by the buyer is not a condition for delivery to be deemed complete. The defendant’s action, filed when it asserted rescission in its answer in April 1961, was initiated over ten months after delivery, thus beyond the six-month prescriptive period. The general four-year period for rescission under Article 1389 yields to the specific six-month period for sales. The Court ordered the defendant to pay the plaintiff the balance of P8,250 with interest, attorney’s fees, and costs.