CASE DIGEST: DINO V. COURT OF APPEALS (CA) - G.R. NO. 113564

 CASE DIGEST: DINO V. CA

Dino vs. Court of Appeals

359 SCRA 91, G.R. No. 113564 June 20, 2001

DOCTRINES:

• 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.

• Art. 1467. 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 for the customer and upon his special order, and not for the general market, it is a contract for a piece of work.

• Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material.

FACTS:

Spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are engaged in the business of manufacturing and selling shirts. Sio is part owner and general manager of a manufacturing corporation doing business under the trade name "Universal Toy Master Manufacturing."

Spouses Dino and respondent Sio entered into a contract whereby the latter would manufacture for the former 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in accordance with the sample approved by the petitioners.

Sio delivered in several installments the 40,000 pieces of frogs and mooseheads. The last delivery was made on September 28, 1988. After full payment, Dino returned the 29,772 pieces of products for failing to comply with the approved sample, and demanded from Sio a refund of the purchase price of the returned goods. As respondent Sio refused to pay, Dino filed an action for collection of a sum of money in the RTC on July 24, 1989.

RTC ruled in favor of Dino. CA reversed RTC's decision and dismissed Dino's Complaint for having been filed beyond the prescriptive period.

ISSUE:

Whether the contract entered into by the parties is a contract of sale or a contract of piece of work.

HELD:

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. Respondent Sio did not ordinarily manufacture these products, but only upon order of the petitioners and at the price agreed upon. Clearly, the contract executed by and between the petitioners and the respondent was a contract for a piece of work.

Petitioners having filed the action three months after the six-month period for filing actions for breach of warranty against hidden defects stated in Art. 1571, SC affirmed CA's decision.