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Puno:FirstDivision

FIRSTDIVISION

[G.R.No.113564.June20,2001]

INOCENCIA YU DINO and her HUSBAND doing business under the trade name
"CANDY CLAIRE FASHION GARMENTS", petitioners, vs. COURT OF
APPEALSandROMANSIO,doingbusinessunderthename"UNIVERSALTOY
MASTERMANUFACTURING",respondents.

DECISION*
PUNO,J.:

Though people say, "better late than never", the law frowns upon those who assert their rights past the
eleventhhour.Forfailingtotimelyinstitutetheiraction,thepetitionersareforeverbarredfromclaimingasum
ofmoneyfromtherespondent.
This is a petition for review on certiorari to annul and set aside the amended decision of the respondent
court dated January 24, 1994 reversing its April 30, 1993 decision and dismissing the plaintiffpetitioners'
Complaintonthegroundofprescription.
Thefollowingundisputedfactsgaverisetothecaseatbar:
Petitioners spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are
engaged in the business of manufacturing and selling shirts.[1] Respondent Sio is part owner and general
manager of a manufacturing corporation doing business under the trade name "Universal Toy Master
Manufacturing."[2]
Petitioners and respondent Sio entered into a contract whereby the latter would manufacture for the
petitioners20,000piecesofvinylfrogsand20,000piecesofvinylmooseheadsatP7.00perpieceinaccordance
with the sample approved by the petitioners. These frogs and mooseheads were to be attached to the shirts
petitionerswouldmanufactureandsell.[3]
Respondent Sio delivered in several installments the 40,000 pieces of frogs and mooseheads. The last
delivery was made on September 28, 1988.Petitioner fully paid the agreed price.[4] Subsequently, petitioners
returnedtorespondent29,772piecesoffrogsandmooseheadsforfailingtocomplywiththeapprovedsample.
[5]Thereturnwasmadeondifferentdates:theinitialoneonDecember12,1988consistingof1,720pieces,[6]

thesecondonJanuary11,1989,[7]andthelastonJanuary17,1989.[8]
Petitionersthendemandedfromtherespondentarefundofthepurchasepriceofthereturnedgoodsinthe
amount of P208,404.00. As respondent Sio refused to pay,[9] petitioners filed on July 24, 1989 an action for
collectionofasumofmoneyintheRegionalTrialCourtofManila,Branch38.
Thetrialcourtruledinfavorofthepetitioners,viz:

"WHEREFORE,judgmentisherebyrenderedinfavoroftheplaintiffsVicenteandInocenciaDinoandagainst
defendantToyMasterManufacturing,Inc.orderingthelattertopaytheformer:

1.TheamountofTwoHundredEightThousandFourHundredFour(P208,404.00)Pesoswithlegalinterest
thereonfromJuly5,1989,untilfullypaidand

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2.TheamountofTwentyThousand(P20,000.00)Pesosasattorney'sfeesandthecostsofthissuit.

Thecounterclaimontheotherhandisherebydismissedforlackofmerit."[10]

RespondentSiosoughtrecourseintheCourtofAppeals.InitsApril30,1993decision,theappellatecourt
affirmed the trial court decision. Respondent then filed a Motion for Reconsideration and a Supplemental
MotionforReconsiderationallegingthereinthatthepetitioners'actionforcollectionofsumofmoneybasedon
abreachofwarrantyhadalreadyprescribed.OnJanuary24,1994,therespondentcourtreverseditsdecisionand
dismissed petitioners' Complaint for having been filed beyond the prescriptive period. The amended decision
readinpart,viz:

"Evenifthereisfailuretoraisetheaffirmativedefenseofprescriptioninamotiontodismissorinan
appropriatepleading(answer,amendedorsupplementalanswer)andanamendmentwouldnolongerbe
feasible,stillprescription,ifapparentonthefaceofthecomplaintmaybefavorablyconsidered(SpousesMatias
B.Aznar,III,etal.vs.Hon.JuanitoA.Bernad,etc.,supra,G.R.81190,May9,1988).TheruleinGicanovs.
Gegato(supra)wasreiteratedinSeverov.CourtofAppeals,(G.R.No.84051,May19,1989).

WHEREFOREtheMotionForReconsiderationisgranted.ThejudgmentofthisCourtissetasideandjudgment
isherebyrenderedREVERSINGthejudgmentofthetrialcourtanddismissingplaintiff'scomplaint."[11]

Hence,thispetitionwiththefollowingassignmentoferrors:
I.

TherespondentCourtofAppealsseriouslyerredindismissingthecomplaintofthePetitionersonthe
groundthattheactionhadprescribed.

II.

TherespondentCourtofAppealsseriouslyerredinholdingthatthedefenseofprescriptionwouldstillbe
considereddespitethefactthatitwasnotraisedintheanswer,ifapparentonthefaceofthecomplaint.

We first determine the nature of the action filed in the trial court to resolve the issue of prescription.
PetitionersclaimthattheComplainttheyfiledinthetrialcourtonJuly24,1989wasoneforthecollectionofa
sumofmoney.Respondentcontendsthatitwasanactionforbreachofwarrantyasthesumofmoneypetitioners
sought to collect was actually a refund of the purchase price they paid for the alleged defective goods they
boughtfromtherespondent.
Weupholdtherespondent'scontention.
ThefollowingprovisionsoftheNewCivilCodeareapropos:

"Art.1467.Acontractforthedeliveryatacertainpriceofanarticlewhichthevendorintheordinarycourseof
hisbusinessmanufacturesorprocuresforthegeneralmarket,whetherthesameisonhandatthetimeornot,isa
contractofsale,butifthegoodsaretobemanufacturedspeciallyforthecustomeranduponhisspecialorder,
andnotforthegeneralmarket,itisacontractforapieceofwork."

"Art.1713.Bythecontractforapieceofworkthecontractorbindshimselftoexecuteapieceofworkforthe
employer,inconsiderationofacertainpriceorcompensation.Thecontractormayeitheremployonlyhislabor
orskill,oralsofurnishthematerial."

AsthisCourtruledinEngineering&MachineryCorporationv.CourtofAppeals,etal.,[12]"acontract
for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry as to
whetherthethingtransferredisonenotinexistenceandwhichwouldneverhaveexistedbutfortheorderofthe
persondesiringit.Insuchcase,thecontractisoneforapieceofwork,notasale.Ontheotherhand,ifthething
subjectofthecontractwouldhaveexistedandbeenthesubjectofasaletosomeotherpersoneveniftheorder
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had not been given then the contract is one of sale."[13]The contract between the petitioners and respondent
stipulated that respondent would manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and
20,000 pieces of vinyl mooseheads according to the samples specified and approved by the petitioners.
RespondentSiodidnotordinarilymanufacturetheseproducts,butonlyuponorderofthepetitionersandatthe
priceagreedupon.[14]Clearly,thecontractexecutedbyandbetweenthepetitionersandtherespondentwasa
contractforapieceofwork.Atanyrate,whethertheagreementbetweenthepartieswasoneofacontractof
saleorapieceofwork,theprovisionsonwarrantyoftitleagainsthiddendefectsinacontractofsaleapplyto
thecaseatbar,viz:

"Art.1714.Ifthecontractoragreestoproducetheworkfrommaterialfurnishedbyhim,heshalldeliverthe
thingproducedtotheemployerandtransferdominionoverthething.Thiscontractshallbegovernedbythe
followingarticlesaswellasbythepertinentprovisionsonwarrantyoftitleandagainsthiddendefectsandthe
paymentofpriceinacontractofsale."

"Art.1561.Thevendorshallberesponsibleforwarrantyagainstthehiddendefectswhichthethingsoldmay
have,shouldtheyrenderitunfitfortheuseforwhichitisintended,orshouldtheydiminishitsfitnessforsuch
usetosuchanextentthat,hadthevendeebeenawarethereof,hewouldnothaveacquireditorwouldhave
givenalowerpriceforitbutsaidvendorshallnotbeanswerableforpatentdefectsorthosewhichmaybe
visible,orforthosewhicharenotvisibleifthevendeeisanexpertwho,byreasonofhistradeorprofession,
shouldhaveknownthem."

Petitioners aver that they discovered the defects in respondent's products when customers in their
(petitioners')shirtbusinesscamebacktothemcomplainingthatthefrogandmooseheadfiguresattachedtothe
shirts they bought were torn. Petitioners allege that they did not readily see these hidden defects upon their
acceptance. A hidden defect is one which is unknown or could not have been known to the vendee.[15]
Petitionersthenreturnedtotherespondent29,772defectivepiecesofvinylproductsanddemandedarefundof
theirpurchasepriceintheamountofP208,404.00.Havingfailedtocollectthisamount,theyfiledanactionfor
collectionofasumofmoney.
Article1567providesfortheremediesavailabletothevendeeincaseofhiddendefects,viz:

"Art.1567.InthecasesofArticles1561,1562,1564,1565and1566,thevendeemayelectbetween
withdrawingfromthecontractanddemandingaproportionatereductionoftheprice,withdamagesineither
case."

By returning the 29,772 pieces of vinyl products to respondent and asking for a return of their purchase
price, petitioners were in effect "withdrawing from the contract" as provided in Art. 1567. The prescriptive
periodforthiskindofactionisprovidedinArt.1571oftheNewCivilCode,viz:

"Art.1571.Actionsarisingfromtheprovisionsoftheprecedingtenarticlesshallbebarredaftersixmonths
fromthedeliveryofthethingsold."(Emphasissupplied)

ThereisnodisputethatrespondentmadethelastdeliveryofthevinylproductstopetitionersonSeptember
28,1988.Itisalsosettledthattheactiontorecoverthepurchasepriceofthegoodspetitionersreturnedtothe
respondent was filed on July 24, 1989,[16] more than nine months from the date of last delivery. Petitioners
havingfiledtheactionthreemonthsafterthesixmonthperiodforfilingactionsforbreachofwarrantyagainst
hiddendefectsstatedinArt.1571,[17]theappellatecourtdismissedtheaction.
Petitionersfaulttherulingonthegroundthatitwastoolateinthedayforrespondenttoraisethedefenseof
prescription.Thelawthenapplicabletothecaseatbar,Rule9,Sec.2oftheRulesofCourt,provides:

"Defensesandobjectionsnotpleadedeitherinamotiontodismissorintheansweraredeemedwaived
exceptthefailuretostateacauseofaction..."

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Thus,theyclaimthatsincetherespondentfailedtoraisethedefenseofprescriptioninamotiontodismissorin
itsanswer,itisdeemedwaivedandcannotberaisedforthefirsttimeonappealinamotionforreconsideration
oftheappellatecourt'sdecision.
Asarule,thedefenseofprescriptioncannotberaisedforthefirsttimeonappeal.Thus,weheldinRamos
v.Osorio,[18]viz:

"Itissettledlawinthisjurisdictionthatthedefenseofprescriptioniswaivable,andthatifitwasnotraisedasa
defenseinthetrialcourt,itcannotbeconsideredonappeal,thegeneralrulebeingthattheappellatecourtisnot
authorizedtoconsiderandresolveanyquestionnotproperlyraisedinthelowercourt(Subidovs.Lacson,55
O.G.8281,8285Moran,CommentsontheRulesofCourt,Vol.I,p.784,1947Edition)."

However,thisisnotahardandfastrule.InGicanov.Gegato,[19]weheld:

"...(T)rialcourtshaveauthorityanddiscretiontodimissanactiononthegroundofprescriptionwhenthe
parties'pleadingsorotherfactsonrecordshowittobeindeedtimebarred(Franciscov.Robles,Feb,15,1954
Sisonv.McQuaid,50O.G.97Bambaov.Lednicky,Jan.28,1961Cordovav.Cordova,Jan.14,1958
Convets,Inc.v.NDC,Feb.28,195832SCRA529Sinaonv.Sorongan,136SCRA408)anditmaydosoon
thebasisofamotiontodismiss(Sec.1,f,Rule16,RulesofCourt),orananswerwhichsetsupsuchgroundas
anaffirmativedefense(Sec.5,Rule16),orevenifthegroundisallegedafterjudgmentonthemerits,asin
amotionforreconsideration(Ferrerv.Ericta,84SCRA705)orevenifthedefensehasnotbeenasserted
atall,aswherenostatementthereofisfoundinthepleadings(Garciav.Mathis,100SCRA250PNBv.
PacificCommissionHouse,27SCRA766ChuaLamcov.Dioso,etal.,97Phil.821)orwhereadefendant
hasbeendeclaredindefault(PNBv.Perez,16SCRA270).Whatisessentialonly,torepeat,isthatthefacts
demonstratingthelapseoftheprescriptiveperiodbeotherwisesufficientlyandsatisfactorilyapparenton
therecordeitherintheavermentsoftheplaintiff'scomplaint,orotherwiseestablishedbytheevidence."
(emphasissupplied)

InAldovino,etal.v.Alunan,etal.,[20]theCourtenbancreiteratedtheGarciav.Mathisdoctrinecitedin
theGicanocasethatwhentheplaintiff'sowncomplaintshowsclearlythattheactionhasprescribed,theaction
maybedismissedevenifthedefenseofprescriptionwasnotinvokedbythedefendant.
Itisapparentintherecordsthatrespondentmadethelastdeliveryofvinylproductstothepetitionerson
September28,1988.PetitionersadmitthisintheirMemorandumsubmittedtothetrialcourtandreiterateitin
theirPetitionforReview.[21]ItisalsoapparentintheComplaintthatpetitionersinstitutedtheiractiononJuly
24, 1989. The issue for resolution is whether or not the respondent Court of Appeals could dismiss the
petitioners' action if the defense of prescription was raised for the first time on appeal but is apparent in the
records.
FollowingtheGicanodoctrinethatallowsdismissalofanactiononthegroundofprescriptionevenafter
judgmentonthemerits,orevenifthedefensewasnotraisedatallsolongastherelevantdatesareclearonthe
record,werulethattheactionfiledbythepetitionershasprescribed.Thedatesofdeliveryandinstitutionofthe
actionareundisputed.Therearenonewissuesoffactarisinginconnectionwiththequestionofprescription,
thuscarvingoutthecaseatbarasanexceptionfromthegeneralrulethatprescriptionifnotimpleadedinthe
answerisdeemedwaived.[22]
Even if the defense of prescription was raised for the first time on appeal in respondent's Supplemental
MotionforReconsiderationoftheappellatecourt'sdecision,thisdoesnotmilitateagainstthedueprocessright
of the petitioners. On appeal, there was no new issue of fact that arose in connection with the question of
prescription,thusitcannotbesaidthatpetitionerswerenotgiventheopportunitytopresentevidenceinthetrial
court to meet a factual issue. Equally important, petitioners had the opportunity to oppose the defense of
prescriptionintheirOppositiontotheSupplementalMotionforReconsiderationfiledintheappellatecourtand
intheirPetitionforReviewinthisCourt.
This Court's application of the Osorio and Gicano doctrines to the case at bar is confirmed and now
enshrinedinRule9,Sec.1ofthe1997RulesofCivilProcedure,viz:
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"Section1.Defenseandobjectionsnotpleaded.Defensesandobjectionsnotpleadedwhetherinamotionto
dismissorintheansweraredeemedwaived.However,whenitappearsfromthepleadingsthatthecourthasno
jurisdictionoverthesubjectmatter,thatthereisanotheractionpendingbetweenthesamepartiesforthesame
cause,orthattheactionisbarredbyapriorjudgmentorbystatuteoflimitations,thecourtshalldismissthe
claim."(Emphasissupplied)

WHEREFORE,thepetitionisDENIEDandtheimpugneddecisionoftheCourtofAppealsdatedJanuary
24,1994isAFFIRMED.Nocosts.
SOORDERED.
Davide,Jr.,C.J.,(Chairman),Kapunan,Pardo,andYnaresSantiago,JJ.,concur.

*ThiscasewastransferredtotheponenteonMarch14,2001pursuanttoResolutioninA.M.No.00903SC.Re:Creationof
SpecialCommitteeonCaseBacklogdatedFebruary27,2001.
[1]Rollo,p.20Complaint,p.1.

[2]TSN,April27,1990,pp.34.

[3]Rollo,p.37MemorandumforthePlaintiffintheRTC,p.1Exhibit"1".

[4]Rollo,pp.13,3738PetitionforReview,p.13OriginalRecords,pp.7172MemorandumforthePlaintiffintheRegionalTrial
Court,pp.12TSN,VenerandodelaCruz,September3,1990,p.27.
[5]Rollo,p.31Plaintiff'sPretrialBrief,p.1.

[6]Exhibit"F".

[7]Exhibit"F1".

[8]Exhibit"F2".

[9]Rollo,p.38MemorandumforthePlaintiff,RegionalTrialCourt,p.2.

[10]OriginalRecords,p.105.

[11]Rollo,pp.1213.

[12]252SCRA156(1996).

[13]Id.,p.164,footnotesomitted.

[14]Rollo,p.36Exhibit"1"TSN,RomanSio,April27,1990,pp.615,21.

[15]Knechtv.CourtofAppeals,etal.,158SCRA80(1988).

[16]OriginalRecords,p.1Complaint,p.1TSN,VenerandodelaCruz,September3,1990,p.37Rollo,p.13PetitionforReview,
p.7.
[17]G.A.Machineries,Inc.v.Yaptinchay,etal.,126SCRA78(1983)Molesv.IAC,etal.,169SCRA777(1989).

[18]38SCRA469(1971).

[19]157SCRA140(1988).

[20]230SCRA825(1994).

[21]OriginalRecords,p.76MemorandumforthePlaintiffintheRegionalTrialCourt,p.6Rollo,p.13PetitionforReview,p.7.

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[22]LuzonSuretyCompany,Inc.v.IAC,etal.,151SCRA652(1987),citingFerrerv.Ericta,84SCRA706andGarciav.Mathis,100
SCRA250.

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