CASE DIGEST: ENGINEERING & MACHINERY CORPORATION (EMC) V. COURT OF APPEALS (CA) - G.R. NO. 52267

 CASE DIGEST: EMC V. CA

Engineering & Machinery Corporation vs. Court of Appeals

252 SCRA 156, G.R. No. 52267 January 24, 1996

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.

• If the parties intended that at some future date an object has to be delivered, without considering the work or labor of the party bound to deliver, the contract is one of sale. But if one of the parties accepts the undertaking on the basis of some plan, taking into account the work he will employ personally or through another, there is a contract for a piece of work

FACTS:

Engineering & Machinery Corporation (EMC) undertook to fabricate, furnish and install the air-conditioning system in Ponciano Almeda's building in Makati in consideration of P210,000.00. The system was completed in 1963 and accepted by private respondent, who paid in full the contract price.

In 1971, Almeda learned about the defects of the air-conditioning system of the building. This was confirmed by an engineer who was hired by Almeda.

On May 8, 1971, Almeda filed an action for damages against petitioner with the then CFI. The complaint alleged that the air-conditioning system installed by petitioner did not comply with the agreed plans and specifications. EMC moved to dismiss the complaint, alleging that the prescriptive period of six months had set in pursuant to Articles 1566 and 1567, in relation to Article 1571 of the Civil Code, regarding the responsibility of a vendor for any hidden faults or defects in the thing sold. Almeda countered that the contract between the parties was not a contract for sale but a contract for a piece of work. Thus, in accordance with Article 1144 of the same Code, the complaint was timely brought within the ten-year prescriptive period.

ISSUE:

Was the contract between the parties a contract of sale, or a contract of piece of work?

HELD:

Clearly, 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.

Article 1713 of the Civil Code defines a contract for a piece of work thus:

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.