Case Digest (G.R. No. L-35474)
Facts:
In Engineering & Machinery Corporation v. Court of Appeals and Almeda, the petitioner, Engineering & Machinery Corporation (EMC), entered into a written agreement dated September 10, 1962 with respondent Ponciano L. Almeda to fabricate, furnish, and install a central air-conditioning system in Almeda’s building on Buendia Avenue, Makati, for ₱210,000.00. EMC completed the project in 1963, after which Almeda accepted the work and paid the full contract price. In 1965, Almeda sold the building to the National Investment and Development Corporation (NIDC), but later rescinded the sale and regained possession in 1971. Upon repossession, Almeda learned from NIDC employees of serious defects in the system. He commissioned an evaluation by Engineer David R. Sapico, who reported numerous deviations from the agreed plans and inadequate temperature control. On May 8, 1971, Almeda filed a complaint for damages in the Court of First Instance of Rizal, Branch II, alleging breach of contractCase Digest (G.R. No. L-35474)
Facts:
- Contract Formation and Scope
- On September 10, 1962, Engineering & Machinery Corporation (petitioner) and Ponciano L. Almeda (private respondent) entered into a written agreement.
- Petitioner undertook to fabricate, furnish and install a central air-conditioning system in private respondent’s building on Buendia Avenue, Makati, for a total price of ₱210,000.00.
- Under the contract, petitioner was to provide all materials, labor, tools and services necessary for fabrication and installation.
- Completion, Acceptance and Initial Payment
- Petitioner completed the system in 1963.
- Private respondent inspected, accepted the work and paid the full contract price.
- Subsequent Sale, Rescission and Repossession
- On September 2, 1965, private respondent sold the building to the National Investment and Development Corporation (NIDC), which took possession.
- Due to NIDC’s noncompliance with the deed terms, private respondent obtained judicial rescission and reacquired possession circa 1971.
- Upon repossession, NIDC employees alerted private respondent to defects in the installed air-conditioning system.
- Technical Evaluation and Findings
- Private respondent commissioned Engineer David R. Sapico to conduct a technical evaluation.
- Sapico’s report (Exhibit C) detailed multiple defects: corroded condenser coils, missing dampers, lack of fresh-air provisions, absence of key accessories and inability to maintain 76°F ± 2°F.
- To compensate, tenants had resorted to installing 35 window-type units throughout the building.
- Trial Court Proceedings
- On May 8, 1971, private respondent filed Civil Case No. 14712 in the Court of First Instance of Rizal seeking:
- ₱210,000.00 for rectification costs;
- ₱100,000.00 as damages;
- ₱15,000.00 attorney’s fees.
- Petitioner moved to dismiss, invoking a six-month prescriptive period for hidden defects under Articles 1566, 1567 and 1571 (warranty of sale).
- Private respondent countered that the contract was one “for a piece of work” under Article 1713, subject to a ten-year prescription per Article 1144.
- The trial court denied the motion, held that the action was within ten years because the system was fabricated and installed by petitioner itself, and issued a writ of attachment upon private respondent’s ex-parte motion.
- On the merits, the trial court found petitioner had omitted required parts, installed non-specification components and thereby diminished the system’s effectiveness, ordering petitioner to pay the cost of rectification, damages, attorney’s fees and costs.
- Appellate History and Petition for Review
- The Court of Appeals affirmed the trial court’s findings and disposition.
- Petitioner then filed a petition for review under Rule 45 before the Supreme Court, raising three issues:
- Whether acceptance and full payment extinguish liability for defects;
- Whether the defects were patent or discoverable at acceptance;
- Whether the complaint was barred by the six-month prescriptive period for hidden defects.
Issues:
- Effect of Acceptance and Payment
- Does private respondent’s acceptance of the installed system and payment of the contract price extinguish petitioner’s liability for any defects?
- Patent Versus Hidden Defects
- Were the alleged defects patent or could private respondent, a non-expert, have discovered them upon inspection at acceptance?
- Prescriptive Period
- Does the action for breach of the air-conditioning contract prescribe in six months under Articles 1566, 1567 and 1571 (warranty of sale) or in ten years under Article 1144 (written contract for a piece of work)?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)