LA FUERZA, INC., PETITIONER, VS. THE HON. COURT OF APPEALS AND ASSOCIATED ENGINEERING CO., INC., RESPONDENTS.

Ordinary action for the recovery of a sum of
money.  In due course, the Court
of First Instance of Manila rendered judgment for defendant, La Fuerza, Inc. – hereinafter referred to as La Fuerza – which was at first affirmed by the Court of
Appeals.  On motion for reconsideration,
the latter, however, set aside its ori­ginal decision and sentenced La Fuerza to pay to the plaintiff, As­sociated Engineering
Co., – hereinafter referred to as the Plaintiff the sum of P8,250.00,
with interest at the rate of 1% per month, from July, 1960 until fully paid,
plus P500.00 as attorney’s fees and the costs. 
Hence, this Petition for review on certiorari.

The facts, as found by the Court of First Instance and adopted by
the Court of Appeals, are:

“The plaintiff (Associated Engineering Co., Inc.) is a
corporation engaged in the manufacture and install­ation of flat belt
conveyors.  The defendant (La Fuerza, Inc.) is also a corporation engaged in the
manufacture of wines.  Sometime in the
month of January, 1960, Antonio Co, the manager of the plaintiff corporation,
who is an engineer, called at the office of the defendant located at 399 Muelle de Binondo, Manila and
told Mariano Lim, the President and general manager of the defendant that he
had just visited the de­fendant’s plant at Pasong Tamo, Makati, Rizal
and was impressed by its size and beauty but he believed it needed a conveyor
system to convey empty bottles from the storage room in the plant to the bottle
washers in the production room thereof. 
He therefore offered his services to manufacture and install a conveyor
system which, according to him, would increase production and efficiency of his
business.  The president of the defendant
corporation did not make up his mind then but suggested to Antonio Co to put
down his offer in writing.  Effectively,
on February 4, 1960, Antonio
Co submitted his offer in writing in a letter dated February 4, 1960, marked as Exhibit A in this
case.  Mariano Lim did not act on the
said offer until February 11, 1960,
when Antonio Co returned to inquire about the action of the defendant on his
said offer.  The defend­ant’s president
and general manager then ex­pressed his conformity to the offer made in Ex­hibit
A by writing at the foot thereof under the word “confirmation” his
signature.  He caused, however, to be
added to this offer at the foot a note which reads:“  All specifications shall be in strict
accordance with the approved plan made part of this agreement
hereof”.  A few days later, Antonio
Co made the demand for the down payment of P5,000.00
which was readily delivered by the defendant in the form of a check for the
said amount.  After that agreement, the
plaintiff start­ed to prepare the premises for the installations of the
conveyor system by digging holes in the ce­ment floor of the plant and on April
18, 1960, they delivered one unit of 110′ 26″ wide flat belt conveyor,
valued at P3, 750.00, and another unit mea­suring 190′ and 4″ wide flat
conveyor, valued at P4,500.00, or a total of P13,250.00.  Deducting the down payment of P5,000.00 from this value, there is a balance of P8,250.00 to
be paid by the defendant upon the completion of the installation, Exhibit B.

“The work went under way during the months of March and April,
during which time the president and general manager of the defendant
corporation was duly apprised of the progress of the same because his plant
mechanic, one Mr. Santos, had kept him informed of the ins­tallation for which
he gave the go signal.  It seems that the
work was completed during the month of May, 1960.  Trial runs were made in the presence of the
president and general manager of the defend­ant corporation, Antonio Co, the
technical manager of the plaintiff, and some other people.  Several trial runs were made then totalling about five. 
These runs were continued during the month of June where about three
trial runs were made and, lastly, during the month of July, 1960.

“As a result of this trial or experimental runs, it was
discovered, according to the defendant’s general manager, that the conveyor
system did not function to their satisfaction as represent­ed by the technical
manager of the plaintiff Antonio Co for the reason that, when operated several
bot­tles collided with each other, some jumping off the conveyor belt and were
broken, causing consider­able damage.  It
was further observed that the flow of the system was so sluggish that in the
opinion of the said general manager of the defendant their old system of
carrying the bottles from the storage room to the washers by hand carrying them
was even more efficient and faster.

“After the last trial run made in the month of July and after
the plaintiff’s technical manager had been advised several times to make the
neces­sary and proper adjustments or corrections in or­der to improve the
efficiency of the conveyors system, it seems that the defects indicated by the
said president and general manager of the defendant had not been remedied so
that they came to the parting of the ways with the result that when the
plaintiff billed the defendant for the balance of the contract price, the
latter refused to pay for the reason that according to the defendant the
conveyor system ins­talled by the plaintiff did not serve the purpose for which
the same was manufactured and installed at such a heavy expense.  The flat belt conveyors installed in the
factory of the defendant are still there. 
x x x

                 x          x         x          x          x
         x          x          x          x”

On March 22, 1961,
the contractor commenced the present action to recover the sums of P8,250, balance of the stipulated price of the aforementioned
conveyors, and P2,000, as attorney’s fees, in addition to the costs.

In its answer to the complaint, La Fuerza
alleged that the “conveyors furnished and installed by the plaintiff do
not meet the conditions and warrantings”
(warranties?) of the latter, and set up a counterclaim for the P5,000 advanced
by La Fuerza, which prayed that the complaint be
dismissed; that its contract with the plaintiff be rescinded; and that
plaintiff be sentenced to refund said sum of P5,000 to La Fuerza
as well as to pay thereto P1,000 as attorney’s fees, apart from the costs.

After appropriate proceedings, the Court of First Instance of
Manila rendered a decision the dispositive part of
which reads:

“WHEREFORE, judgment is hereby rendered rescinding the
contract entered into by the parties in this case, marked as Exhibit A, and
ordering the plaintiff to refund or return to the defendant the amount of P5,000.00 which they had received as down payment, and the
costs of this action.  On the other hand,
defend­ant is ordered to permit the plaintiff to remove the flat belt conveyors
installed in their premises. “

As above indicated, this decision was affirmed by the Court of
Appeals, which, on motion for reconsideration of the plaintiff, later set aside
its original decision and rendered another in plaintiff’s s favor, as stated in
the opening paragraph hereof.

The appealed resolution of the Court of Appeals was, in effect,
based upon the theory of prescription of La Fuerza’s
right of action for rescission of its contract with the plaintiff, for – in the
language of said resolution – “Article 1571 of the Civil Code provides
that an action to rescind ‘shall be barred after six months from delivery of
the thing sold’ “, and, in the case at bar, La Fuerza
did not avail of the right to demand rescission until the filing of its answer
in the Court of First Instance, on April 17, 1961, or over ten (10) months
after the installation of the conveyors in question had been completed on May
30, 1960.

La Fuerza assails the view taken by the
Court of Appeals, u the ground:  1) that
there has been, in contemplation of law, no very of the conveyors by the
plaintiff; and 2) that, assuming that there has been such delivery, the period
of six (6) months prescribed in said Art. 1571 refers to the “period
within which” La Fuerza may “bring an
action to demand compliance of the warranty against hidden defects”, not
the action for rescission of the contract. 
Both grounds are untenable.

With respect to the first point, La Fuerza
maintains that plaintiff is deemed not to have delivered the conveyors, within
the purview of Art. 1571, until it shall have complied with the conditions or
requirements of the contract between them – that is to say, until the conveyors
shall meet La Fuerza’s “need of a conveyor
system that would mechanically transport empty bottles from the storage room to
the bottle workers in the production room thus increasing the production and
efficiency” of its business – and La Fuerza had
accepted said conveyors.

On this point, the Court of Appeals had the following to say:

“Article 1571 of the Civil Code provides that an action to
rescind “shall be barred after six months, from delivery of the thing
sold”.  This article is made
applicable to the case at bar by Article 1714 which pro­vides that “the
pertinent provisions on warranty of title against hidden defect in a contract
of sale” shall be applicable to a contract for a piece of work.  Con­sidering that Article 1571 is a provision
on sales, the delivery mentioned therein should be construed in the light of
the provisions on sales.  Article 1497
provides that the thing sold shall be understood as delivered when it is placed
in the control and possession of the vendee. 
Therefore, when the thing subject of the sale is placed in the control
and possession of the vendee, delivery is complete.  Delivery is an act of the vendor.  Thus, one of the obligations of the vendor is
the delivery of the thing sold (Art. 1495). 
The vendee has nothing to do with the act of delivery by the
vendor.  On the other hand, acceptance is
an obligation on the part of the vendee (art. 1582).  Delivery and accep­tance are two distinct and
separate acts of different parties. 
Consequently, acceptance cannot be regard­ed as a condition to complete
delivery.

x        x         x        
x         x         x         x          x        
x “

We find no plausible reason to disagree with this view.  Upon the completion of the installation of
the conveyors, in May, 1960, particularly after the last trial run, in July,
1960, La Fuerza was in a position to decide whether
or not it was satisfied with said conveyors, and, hence, to state whether the
same were accepted or reject­ed.  The
failure of La Fuerza to express categorically whether
they accepted or rejected the conveyors does not detract from the fact that the
same were actually in its possession and control; that, ac­cordingly, the
conveyors had already been delivered by the plaintiff; and that, the period
prescribed in said Art. 1571 had begun to run.

With respect to the second point raised by La Fuerza, Art. 1571 of the Civil Code provides:

“Actions arising from the provisions of the preceding ten
articles shall be barred after six months, from the delivery of the thing sold.

x        x        
x         x         x         x         x         x
         x”

Among the “ten articles” referred to in this provision,
are Articles 1566 and 1567, reading:

“Art. 1566.  The vendor
is responsible to the vendee for any hidden faults or defects in the thing
sold, even though he was not aware thereof.

“This provision shall not apply if the con­trary has been
stipulated, and the vendor was not aware of the hidden faults or defects in the
thing sold.

“Art. 1567.  In the
cases of articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between
withdrawing from the contract and demanding a proportionate reduction of the
price, with damages in either case.

x        x        
x         x         x         x         x          
x        x “

Pursuant to these two (2) articles, if the thing sold has hid­den
faults or defects – as the conveyors are claimed to have – the vendor – in the
case at bar, the plaintiff – shall be responsible therefor
and the vendee – or La Fuerza, in the present case – “may
elect between withdrawing from the contract and demanding a pro­portional
reduction of the price, with damages in either case.”  In the exercise of this right of election, La
Fuerza had chosen to with­draw from the contract, by
praying for its rescission; but the action therefor –
in the language of Art. 1571 – “shall be barred
after six months, from the delivery of the thing sold.”  The period of four (4)
years, provided in Art. 1389 of said Code, for “the action to claim
rescission,” applies to contracts, in general, and must yield, in
the, instant case, to said Art. 1571, which refers to sales
in particular.

Indeed, in contracts of the latter type, especially when goods
merchandise, machinery or parts or equipment thereof are involved, it is
obviously wise to require the parties to define their position, in relation
thereto, within the shortest possible time. 
Public interest demands that the status of the relations between the
vendor and the vendee be not left in a condition of uncertainty for an unreasonable
length of time, which would be the case, if the lifetime of the vendee’s right
of rescission were four (4) years.

WHEREFORE, the appealed resolution of the Court of Appeals
is hereby affirmed, with costs against appellant, La Fuerza,
Inc.

IT IS SO ORDERED.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,
Angeles and Fernando, JJ.,
concur.

Castro, J., did not take part.