SALES DIGESTS ASSIGNMENT # 4 petition 

that it is willing to sell to Ramon Rivera the lot in the sum of P60.00/ square meter.
This again reveals how fair petitioner would want to not to defraud them.
JM TUAZON & CO., INC. VS. CA, 94 SCRA 413  
FACTS:  The prior right of Ramon Rivera to purchase the lot in litigation was based more on his prior
J.M. Tuason & Co., Inc. executed, in favor of Ricardo de Leon, a contract to sell in Sta. Mesa occupancy to the same since 1949, about which fact respondents De Leon were informed by
Heights Subdivision containing an area of 1,703.6sqm. He paid the down payment and agreed petitioner at the time of the execution of the contract to sell. Hence, private respondents were
to pay the rest in monthly installments. Meanwhile, JM Tuason entered into a compromise lacking in good faith for knowing beforehand, at the time of the sale, the presence of an
agreement with Deudors (in another civil case) which affect the subject lot. This lot was later obstacle to their taking over the possession of the land, which, in effect, would amount to
on sold to Ramon Rivera.  eviction from said land, and still they bought the land without first removing that obstacle.
   
On the other hand, De Leon transferred all his rights to the lot in favor of his parents, herein Without being shown to be vendees in good faith, respondents are not entitled to the warranty
private respondents Alfonso and Rosario de Leon. The parents paid the outstanding balance. against eviction nor are they entitled to recover damages (Article 1555 of the Civil Code).
JM Tuason issued a deed of sale over the lot and upon its registration, the Register of Deeds However, for justice and equity sake, and in consonance with the salutary principle of non-
issued to the TCT.  enrichment at another's expense, herein petitioner J.M. Tuason & Co., Inc. should compensate
  respondents De Leons in the total sum of P126,000, representing the aggregate value of the
At the time of the execution of the contract to sell, the contracting parties knew that a portion 1,050 square meters.
of the lot in question was actually occupied by Ramon Rivera. However, it was their
understanding that the latter will be ejected by the petitioner from the premises. Hence,
JM Tuason filed a complaint of ejectment. The CFI dismissed and ordered JM Tuason to enter ESCALER VS. CA, 138 SCRA 1
into an agreement allowing Rivera to purchase 1,050 sqm.  FACTS:
  On March 7, 1958, the spouses Africa V. Reynoso and Jose L. Reynoso sold to petitioners
The CA affirmed the decision and advised the De Leons tofile a case against JM Tuason. several others, a parcel of land, situated in Antipolo, Rizal with an area of 239,479 square
  meters and covered by TCT No. 57400 of the Register of Deeds of the Province of Rizal.
De Leons filed a case to enforce the vendor's warranty against eviction or to recover the value
of the land. The CFI ruled in favor of De Leon and ordered JM Tuason to pay. CA affirmed.  On April 21, 1961, the Register of Deeds of Rizal and A. Doronilla Resources Development,
  Inc. filed Case No. 4252 before the Court of First Instance of Rizal for the cancellation of
ISSUE:  OCT No. 1526 issued in the name of Angelina C. Reynoso (predecessorin-interest of private
Whether respondents De Leon are entitled to the vendor's warranty against eviction and respondents-vendors) on February 26, 1958 under Decree No. 62373, LRC Record No. N-
damages. 13783, on the ground that the property covered by said title is already previously registered
  under Transfer Certificate of Title No. 42999 issued in the name of A. Doronilla
HELD:  Development, Inc. Petitioners as vendees filed their opposition to the said petition.
No. One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith, as against the true owner of the On August 31, 1965, herein petitioners, spouses Maria de Leon Escaler and Ernesto Escaler
land or of an interest therein; and the same rule must be applied to one who has knowledge of and spouses Cecilia J. Roxas and Pedro Roxas, filed Civil Case No. 9014 before the Court of
facts which should have put him upon such inquiry and investigation as might be necessary to First Instance of Rizal against their vendors, herein private respondents, spouses Jose L.
acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to Reynoso and Africa Reynoso for the recovery of the value of the property sold to them plus
facts which should put a reasonable man upon his guard and then claim that he acted in good damages on the ground that the latter have violated the vendors' "warranty against eviction.
faith under the belief that there was no defect in the title of the vendor. 
  ISSUE:
The appellate court, in this action of warranty against eviction, found that petitioner Whether or not the CA erred in applying strictly to the instant case the provisions of Articles
J.M. Tuason & Co., Inc. failed to comply with its obligation to transfer ownership over the lot 1558 and 1559 of the new Civil Code; and
to the De Leons due to the compromise agreement it entered with the Deudors, and that
petitioner is guilty of "wilful deception, intentional forsaking of one to whom defendant was
bound in a contract to convey, and worse yet, even at that, after the compromise, defendant RULING:
still continued to collect installments from buyer.” Contrary to these findings, this Court holds In order that a vendor's liability for eviction may be enforced, the following requisites must
that it was not petitioner's own making that it executed the compromise agreement with concur — a) there must be a final judgment; b) the purchaser has been deprived of the whole
the Deudors. This agreement was sanctioned by the court after the Deudors filed an action or part of the thing sold; c) said deprivation was by virtue of a right prior to the sale made by
against petitioner. JM Tuason also believed that the compromise agreement did not include the vendor; and d) the vendor has been summoned and made co-defendant in the suit for
lots that havealready been sold to third parties. Its continuous receipt of payment from the eviction at the instance of the vendee. 6 In the case at bar, the fourth requisite — that of being
De Leons only proved its honest belief that it found no barrier against the enforceability of the summoned in the suit for eviction (Case No. 4252) at the instance of the vendee — is not
contract to sell. It also desired to compensate respondentsas disclosed by prayer in the instant present. All that the petitioners did, per their very admission, was to furnish respondents, by
registered mail, with a copy of the opposition they (petitioners filed in the eviction suit.
Decidedly, this is not the kind of notice prescribed by the aforequoted Articles 1558 and 1559
of the New Civil Code. The term "unless he is summoned in the suit for eviction at the
instance of the vendee" means that the respondents as vendor/s should be made parties to the
suit at the instance of petitioners-vendees, either by way of asking that the former be made a
co-defendant or by the filing of a third-party complaint against said vendors. Nothing of that
sort appeared to have been done by the petitioners in the instant case.cdll
MOLES VS. IAC, 169 SCRA 777
FACTS:
In April 1977, petitioner entered into an oral contract of sale of a printing machine for his
printing business from private respondent Diolosa. To facilitate a loan application with the
DBP for the payment of the said equipment, a pro forma invoice reflecting the amount of Php
50,000 as consideration of the sale was signed by petitioner. By the end of the same month,
the equipment was delivered to petitioner’s publishing house where it was installed by an
employee of the respondent. In August 1977, private respondent issued a certification wherein
he warranted that the machine sold was in A-1 condition, together with other express
warranties.
In November 1977, petitioner informed private respondent of the machine’s malfunction but
the latter did not reply. It was only in March 1978 that private respondent sent two employees
to fix the machine but to no avail. An expert witness for petitioner declared that the linotype
machine was too defective and repairs will be very costly.
Hence, petitioner filed for the rescission of the contract with damages. Respondents answer
questioned the issue of jurisdiction of the case.
ISSUE:
Whether or not petitioner is entitled to the relief prayed for
HELD:
When an article is sold as a secondhand item, a question arises as to whether there is an
implied warranty of its quality or fitness. It is generally held that in the sale of a designated
and specific article sold as secondhand, there is no implied warranty as to its quality or fitness
for the purpose intended, at least where it is subject to inspection at the time of the sale. On the
other hand, there is also authority to the effect that in a sale of a secondhand articles there may
be, under some circumstances, an implied warranty of fitness for the ordinary purpose of the
article sold or for the particular purpose of the buyer.
In the instant case, a certification to the effect that the linotype machine bought by petitioner
was in A-1 condition was issued by private respondent in favor of the former. This cannot but
be considered as an express warranty. However, it is private respondent’s submission that the
same is not binding on him, not being a part of the contract of sale between them. This
contention is bereft of substance.
It must be remembered that the certification was a condition sine qua non for the release of
petitioner’s loan which was to be used as payment for the purchase price of the machine.
Private respondent failed to refute this material fact. Neither does he explain why he made that
express warranty on the condition of the machine if he had not intended to be bound by it.
We disagree with respondent court that private respondents express warranty as to the A-1
condition of the machine was merely dealer’s talk. Private respondent was not a dealer of
printing or linotype machines to whom could be ascribed the supposed resort to the usual
exaggerations of trade in said items. His certification as to the condition of the machine was
not made to induce petitioner to purchase it but to confirm in writing for purposes of the
financing aspect of the transaction his representations thereon. Ordinarily, what does not
appear on the face of the written instrument should be regarded as dealer’s or trader’s
talk; 25 conversely, what is specifically represented as true in said document, as in the instant
case, cannot be considered as mere dealer’s talk.
At a belated stage of this appeal, private respondent came up for the first time with the
contention that the action for rescission is barred by prescription. 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 reading of the ten preceding articles to which it refers will reveal that said rule may
be applied only in case of implied warranties. The present case involves one with and express
warranty. Consequently, the general rule on rescission of contract, which is four years shall
apply
NUTRIMIX FEEDS CORP. VS. CA, 25 OCTOBER 2004
FACTS:
In 1993, private respondent spouses Evangelista procured various animal feeds from petitioner
Nutrimix Feeds Corp. the petitioner gave the respondents a credit period of 30-45 days to
postdate checks to be issued as payment for the feeds. The accommodation was made
apparently because the company‘s president was a close friend of Evangelista. The various
animal feeds were paid and covered by checks with due dates from July 1993-September
1993. 1. Initially, the spouses were good paying customers. However, there were instances
when they failed to issue checks despite the delivery of goods. Consequently, the respondents
incurred an aggregate unsettled account with Nutrimix amounting to P766,151 2. When the
checks were deposited by the petitioner, the same were dishonored (closed account). Despite
several demands from the petitioner, the spouses refused to pay the remaining balance 3.
Thereafter, Nutrimix filed a complaint against Evangelista for collection of money with
damages. 4. The respondents admitted their unpaid obligation but impugned their liability. The
nine checks issued were made to guarantee the payment of the purchases, which was
previously determined to be procured from the expected proceeds in the sale of their broilers
and hogs. They contended that inasmuch as the sudden and massive death of their animals was
caused by the contaminated products of the petitioner, the nonpayment of their obligation was
based on a just and legal ground. 5. The respondents also lodged a complaint for damages
against the petitioner, for the untimely and unforeseen death of their animals supposedly
effected by the adulterated animal feeds the petitioner sold to them. 6. Nutrimix alleged that
the death of the respondents‘ animals was due to the widespread pestilence in their farm. The
petitioner, likewise, maintained that it received information that the respondents were in an
unstable financial condition and even sold their animals to settle their obligations from other
enraged and insistent creditors. It, moreover, theorized that it was the respondents who mixed
poison to its feeds to make it appear that the feeds were contaminated. 7. The trial court held
in favor of petitioner on the ground that it cannot be held liable under Articles 1561 and 1566
of the Civil Code governing ―hidden defects‖ of commodities sold. The trial court is
predisposed to believe that the subject feeds were contaminated sometime between their
storage at the bodega of the Evangelistas and their consumption by the poultry and hogs fed
therewith, and that the contamination was perpetrated by unidentified or unidentifiable ill-
meaning mischief-maker(s) over whom Nutrimix had no control in whichever way. 8. CA
modified the decision of the trial court, citing that respondents were not obligated to pay their
outstanding obligation to the petitioner in view of its breach of warranty against hidden
defects. The CA gave much credence to the testimony of Dr. Rodrigo Diaz, who attested that
the sample feeds distributed to the various governmental agencies for laboratory examination
were taken from a sealed sack bearing the brand name Nutrimix
ISSUE:
WON Nutrimix is guilty of breach of warranty due to hidden defects
HELD:
NO. The provisions on warranty against hidden defects are found in Articles 1561 and 1566 of
the New Civil Code of the Philippines. A hidden defect is one which is unknown or could not
have been known to the vendee. Under the law, the requisites to recover on account of hidden
defects are as follows: a) the defect must be hidden; b) the defect must exist at the time the
sale was made; c) the defect must ordinarily have been excluded from the contract; d) the
defect, must be important (renders thing UNFIT or considerably decreases FITNESS); e) the
action must be instituted within the statute of limitations In the sale of animal feeds, there is an
implied warranty that it is reasonably fit and suitable to be used for the purpose which both
parties contemplated. To be able to prove liability on the basis of breach of implied warranty,
three things must be established by the respondents. The first is that they sustained injury
because of the product; the second is that the injury occurred because the product was
defective or unreasonably unsafe; and finally, the defect existed when the product left the
hands of the petitioner. A manufacturer or seller of a product cannot be held liable for any
damage allegedly caused by the product in the absence of any proof that the product in
question was defective. The defect must be present upon the delivery or manufacture of the
product; or when the product left the seller‘s or manufacturer‘s control; or when the product
was sold to the purchaser; or the product must have reached the user or consumer without
substantial change in the condition it was sold. Tracing the defect to the petitioner requires
some evidence that there was no tampering with, or changing of the animal feeds. The nature
of the animal feeds makes it necessarily difficult for the respondents to prove that the defect
was existing when the product left the premises of the petitioner. A review of the facts of the
case would reveal that the petitioner delivered the animal feeds, allegedly containing rat
poison, on July 26, 1993; but it is astonishing that the respondents had the animal feeds
examined only on October 20, 1993, or barely three months after their broilers and hogs had
died. A difference of approximately three months enfeebles the respondents‘ theory that the
petitioner is guilty of breach of warranty by virtue of hidden defects. In a span of three
months, the feeds could have already been contaminated by outside factors and subjected to
many conditions unquestionably beyond the control of the petitioner
PHIL. STEEL COATING CORP. VS. QUINONES, G.R. NO. 194533
FACTS: 
A complaint for damages was filed by respondent Quinones (owner of Amianan Motors)
against petitioner PhilSteel. Richard Lopez, a sales engineer of PhilSteel, offered Quinones
their new product: primer-coated, long-span, rolled galvanized iron (G.I.) sheets. The latter
showed interest but asked if the primer-coated sheets were compatible with the Guilder acrylic
paint process used by Amianan Motors in the finishing of its assembled buses. Uncertain,
Lopez referred the query to his immediate superior, Ferdinand Angbengco, PhilSteel’s sales
manager.
Angbengco assured Quinones that the quality of their new product was superior to that of the
non-primer coated G.I. sheets being used by the latter in his business. He further guaranteed
that a laboratory test had in fact been conducted by PhilSteel, and that the results proved that
the two products were compatible. However, Quinones received several complaints from
customers who had bought bus units, claiming that the paint or finish used on the purchased
vehicles was breaking and peeling off. Quinones sent a letter-complaint to PhilSteel claiming
that the damage to the vehicles was attributable to the hidden defects of the primer-coated
sheets and/or their incompatibility with the Guilder acrylic paint process used by the Amianan
Motors. Because of the barrage of complaints, Quinones was forced to repair the damaged
buses.
PhilSteel counters that that the breaking and peeling off of the paint was caused by the
erroneous painting application done by Quinones. The RTC rendered a Decision in favor of
Quinones and ordered PhilSteel to pay damages. The trial court concluded that the paint
blistering and peeling off were due to the incompatibility of the painting process with the
primer-coated G.I. sheets. It also found out that the assurance made by Angbengco constituted
an express warranty under Article 1546.The CA affirmed the ruling of the RTC in toto.
ISSUES:
Were the oral statements made by Angbengco a case of express warranty under Article 1546
of the Civil Code that may be invoked to warrant payment of damages?
Is non-payment of price justified on allegations of breach of warranty?
RULING:
Yes. Article 1546 of the Civil Code provides that any affirmation of fact or any promise by the
seller relating to the thing is an express warranty if the natural tendency of such affirmation or
promise if to induce the buyer to purchase the same, and if the buyer purchases the thing
relying thereon. As held in Carrascoso, Jr. vs. CA, the following requisites must be established
in order to prove that there is an express warranty in a contract of sale: (1) the express
warranty must be an affirmation of fact or any promise by the seller relating to the subject
matter of the sale; (2) the natural effect of the affirmation or promise is to induce the buyer to
purchase the thing; and (3) the buyer purchases the thing relying on that affirmation or
promise. Here, the oral statements of Angbengco created an express warranty. hey were
positive affirmations of fact that the buyer relied on, and that induced him to buy petitioner’s
primer-coated G.I. sheets. Seller is expert in the eyes of the buyer.
Yes, the non-payment of the unpaid purchase price was justified since a breach of warranty
was proven. Quinones has opted for a reduction in price or non-payment of the unpaid balance
of the purchase price. According to Article 1599, Civil Code, recoupment refers to the
reduction of extinction of the price of the same item, unit, transaction or contract upon which a
plaintiff’s claim is founded.
SPOUSES BATALLA VS. PRUDENTIAL BANK, G.R. NO. 200676
FACTS:
In March 1998, petitioner Spouses Luis G. Batalla and Salvacion Batalla (Spouses Batalla)
purchased a brand new Honda Civic from respondent Honda Cars San Pablo, Inc. (Honda).
Respondent Alicia Rantael (Rantael), then acting manager of Pilipinas Bank, now merged with
respondent Prudential Bank (Prudential), brokered the deal.
To finance the purchase of the said motor vehicle, Spouses Batalla applied for a car loan with
Prudential. On March 23, 1998, they executed a promissory note for the sum of P292,200.00
payable within 36 months. On May 29, 1998, the Car Loan Agreement was approved. As
such, Prudential issued a Manager's Check in the said amount payable to Honda. For their part,
Spouses Batalla paid P214,000.00 corresponding to the remaining portion of the purchase
price for the Honda Civic. In addition, they also paid P11,000,000.00 for delivery cost and the
installation of a remote control door mechanism, and P28,333.56 for insurance. On April 21,
1998, Spouses Batalla received the car after Rantael informed them that it was parked near
Prudential. However, after three days, the rear right door of the car broke down. The Spouses
Batalla consulted a certain Jojo Sanchez (Sanchez), who claimed that the power lock of the
rear right door was defective and that the car was no longer brand new because the paint of the
roof was merely retouched.

Unable to secure a brand new car in replacement of the alleged defective vehicle, Spouses
Batalla filed a Complaint for Rescission of Contracts and Damages against Prudential and
Honda.
ISSUE:
Whether the motor vehicle delivered by honda had hidden defects; and
Whether or not spouses Batalla may rescind the contract of sale, car loan agreement and
promissory note due to the defects of the motor vehicle sold.
RULING:
The petition is without merit.
A contract of loan is one where one of the parties delivers money or other consumable thing
upon the condition that the same amount of the same kind and quality shall be paid. It is
perfected upon delivery of the object of the contract. On the other hand, a contract of sale is a
special contract whereby the seller obligates himself to deliver a determinate thing and to
transfer its ownership to the buyer. The same is perfected by mere consent of the parties.
Thus, it is readily apparent that a contract of loan is distinct and separate from a contract of
sale. In a loan, the object certain is the money or consumable thing borrowed by the obligor,
while in a sale the object is a determinate thing to be sold to the vendee for a consideration. In
addition, a loan agreement is perfected only upon the delivery of the object i.e., money or
another consumable thing, while a contract of sale is perfected by mere consent of the parties.
Under this premise, it is not hard to see the absurdity in the position of Spouses Batalla that
they could rescind the car loan agreement and promissory note with Prudential on the ground
of alleged defects of the car delivered to them by Honda. The transactions of Spouses Batalla
with Prudential and Honda are distinct and separate from each other. From the time Spouses
Batalla accepted the loan proceeds from Prudential, the loan agreement had been perfected. As
such, they were bound to comply with their obligations under the loan agreement regardless of
the outcome of the contract of sale with Honda. Even assuming that the car that Spouses
Batalla received was not brand new or had hidden defects, they could not renege on their
obligation of paying Prudential the loan amount.
Spouses Batalla erroneously relies on Supercars Management & Development Corporation v.
Flores as basis to rescind the loan agreement with Prudential on account of the perceived
defects of the car delivered to them. In the said case, only the contract of sale with the car
dealer was rescinded on account of breach of contract for delivering a defective vehicle. While
therein lendee-bank was originally impleaded for rescission of contract, the trial court dropped
it as party-defendant because the breach of contract pertained to the contract of sale and not to
the car loan agreement. In the same vein, Spouses Batalla's recourse in case of defects in the
motor vehicle delivered to them was limited against Honda and does not extend to Prudential
as it merely lent the money to purchase the car.
JURADO VS. SPOUSES CHAI, G.R. NO. 236516
FACTS:
Petitioners Asuncion and Catalina claimed to be the registered owners, together with their
deceased brother Fernando Zamora (Fernando; collectively, the Zamoras), of a 7,086-square
meter (sq. m.) parcel of land denominated as Lot 4900 of the Cadastral Survey of Santiago,
located in Santiago City, Isabela (Lot 4900), covered by TCT No. T65150 which they
inherited from their father, Dominador Zamora (Dominador). Dominador held the same under
TCT No. T-2291 after acquiring it from the original owners, Spouses Antonio Pariñas and
Maura Balbin (Spouses Pariñas).
Sometime in 1997, they discovered that respondents unlawfully caused the subdivision of Lot
4900 into several parcels of land under four (4) certificates of title (derivative titles). This
prompted the Zamoras to Ale an annulment case against respondents, Spouses Sarmiento,
Anastacio, the Pariñas heirs with their spouses, and the Register of Deeds (RD) for Isabela in
Santiago City, Isabela (RD-Santiago), which was later amended to include the lessee, Petron
Corporation (Petron), as defendant (collectively, Chai, et al.). They claimed that the titles of
Chai, et a l . proceeded from a fake Original CertiAcate of Title (OCT) No. 3429 that was
reconstituted judicially and administratively without notice to all concerned parties, and
without following the prescribed procedure.
For their part, respondents raised the defense of denial, and claimed that a portion of Lot 4900,
which was originally registered under OCT No. 3429 in the names of Spouses Pariñas (Pariñas
OCT 3429), was transferred to them on October 19, 1990, through an Extrajudicial Settlement
of Estate with Simultaneous Sale executed by the Heirs of Spouses Pariñas who gave them a
photocopy of Pariñas OCT 3429.
ISSUE:
Whether or not the CA erred in declaring that:
(a) Respondents are purchases in good faith;
RULING:
Case law states that reconstituted titles shall have the same validity and legal effect as to the
originals thereof unless the reconstitution was made extrajudicially, or administratively . This
is because administrative reconstitution is essentially ex-parte and without notice, and thus,
administratively reconstituted titles do not share the same indefeasible character of the original
certiAcates of title. Anyone dealing with such copies are put on notice of such fact and warned
to be extra-careful.
In this case, Pariñas OCT 3429 was judicially reconstituted on February 28, 1974. 88
However, following the Are that razed the RD-Ilagan on December 4, 1976, 89 the same was
administratively reconstituted on June 2, 1977. 90 As such, said reconstituted title does not
share the same indefeasible character of the original certificates of title and such fact should
have alerted respondents to conduct an inquiry or investigation as might be necessary to
acquaint themselves with the defects therein.
Respondents only relied on a mere plain photocopy of Pariñas OCT 3429 when they
purchased Lot 4900. Aside from instructing Ms. Masa to verify the existence and genuineness
of the said title with the RD-Ilagan, who claimed that she was shown the original copy thereof,
respondents had not conducted any other inquiry or investigation to acquaint themselves with
the defects of the said title. They had not even secured a certiAed true copy thereof, and
merely relied on the RD-Ilagan CertiAcation stating that the 7,086-sq. m. Lot 4900 situated in
Poblacion, Santiago, Isabela covered by Pariñas OCT 3429 is free from any liens and
encumbrances except Section 7 of RA 26 inscribed at the back of said title on June 2, 1977.
Considering the foregoing, it is therefore apparent that Spouses Pariñas were not issued
Pariñas OCT 3429, and said title is totally inexistent. That it was reconstituted is of no
moment because an administrative reconstitution of title is merely a restoration or replacement
of a lost or destroyed title in its original form at the time of the loss or destruction. The
issuance of a reconstituted title vests no new rights and determines no ownership issues, and
shall always be without prejudice to any party whose right or interest in the property was duly
noted in the original, at the time it was lost or destroyed, but entry or notation of which has not
been made on the reconstituted certiAcate of title, as expressly provided under Section 7 of
RA 26, which was duly noted on the reconstituted Pariñas OCT 3429. Consequently, this
Court finds respondents not to be innocent purchasers for value, and as such, acquired no
better title to Lot 4900 than what their predecessors-in-interest had, and which is without
prejudice to the rights of another person who may prove a better right thereto than their
transferors.
In addition, the Court notes that while Pariñas OCT 3429 was supposedly issued on February
19, 1937, its issuance in the derivative titles was reflected as February 19, 1930. Moreover, the
reconstituted Pariñas OCT 3429, and the derivative titles do not contain the required
annotation of the two-year lien under Section 4, Rule 74 of the Rules of Court.
ENGINEERING AND MACHINERY CORP. VS. CA, G.R. NO. 52267
FACTS:
Almeda and Engineering signed a contract, wherein Engineering undertook to fabricate,
furnish and install the air-conditioning system in the latter’s building along Buendia Avenue,
Makati in consideration of 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
completed in 1963 and accepted by private respondent, who paid in full the contract price.
for the customer and upon his special order, and not for the general market, it is a contract for
a piece of work .
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 the customers.
Naturally, the price or compensation for the system manufactured and installed will depend
greatly on the particular plans and specifications agreed upon with the customers.
2)The original complaint is one for damages arising from breach of a written contract – and
not a suit to enforce warranties against hidden defects – we here – with declare that the
governing law is Article 1715 (supra). However, inasmuch as this provision does not contain a
specific prescriptive period, the general law on prescription, which is Article 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 September 10, 1962
and the complaint was filed on May 8, 1971, it is clear that the action has not prescribed.

Almeda learned from the employees of NIDC of the defects of the air-conditioning system of
the building. Almeda spent for the repair of the air-conditioning system. He now sues
Engineering for the refund of the repair. Engineering contends that the contract was of sale
and the claim is barred by prescription since the responsibility of a vendor for any hidden
faults or defects in the thing sold runs only for 6 months (Arts 1566, 1567, 1571). Almeda
contends that since it was a contract for a piece of work, hence the prescription period was ten
years (Hence Art 1144 should apply on written contracts).
RTC found that Engineering failed to install certain parts and accessories called for by the
contract, and deviated from the plans of the system, thus reducing its operational effectiveness
to achieve a fairly desirable room temperature.

ISSUE:
1) Whether the contract for the fabrication and installation of a central air-conditioning system
in a building, one of “sale” or “for a piece of work”? CONTRACT FOR PIECE OF WORK.
2) Corrollarily whether the claim for refund was extinguished by prescription? NO.

HELD:
1) 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 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.

A contract for the delivery at a certain price of an article which the vendor in the ordinary
course of his business manufactures or procures for the general market, whether the same is on
hand at the time or not is a contract of sale, but if the goods are to be manufactured specially