Moles v. Diolosa
REITERATIONFacts
The Antecedents: Petitioner Jerry T. Moles commenced a suit against private respondent Mariano M. Diolosa for rescission of contract with damages concerning the sale of a secondhand linotype printing machine. The transaction was primarily verbal, with a pro forma invoice reflecting P50,000.00, though the agreed price was P40,000.00 plus P10,000.00 for new matrices. The machine was delivered and installed, and private respondent issued a certification warranting the machine to be in A-1 condition. Petitioner's loan from DBP was released, and payment was made to private respondent. Subsequently, petitioner discovered defects in the machine, including a worn-out distributor bar and other issues requiring major repairs. Despite attempts at repair by private respondent's technicians, the machine remained unusable. Petitioner demanded action, and after private respondent offered to share the cost of a new distributor bar, petitioner sought legal remedies. Procedural History: The trial court (CFI of Negros Occidental) initially denied private respondent's motion to dismiss based on improper venue. After the Supreme Court dismissed private respondent's petition for prohibition questioning the venue ruling, the case proceeded to trial. The trial court rendered a decision decreeing the rescission of the contract, ordering the return of the machine and the P40,000.00 purchase price with legal interest, and awarding damages and attorney's fees. The Intermediate Appellate Court (IAC) reversed this decision, dismissing petitioner's complaint. The Petition: Petitioner filed a petition for review on certiorari with the Supreme Court, assailing the IAC's decision.
Issue(s)
Whether the venue stipulation in the pro forma invoice is binding. Whether there is an implied warranty of quality or fitness in the sale of secondhand articles. Whether the express warranty issued by the private respondent regarding the A-1 condition of the machine is binding. Whether the defects found in the machine constitute redhibitory defects sufficient to warrant rescission of the contract. Whether the action for rescission is barred by prescription.
Ruling
The Supreme Court reversed and set aside the judgment of the respondent court and reinstated the decision of the court a quo. It held that the venue stipulation was not binding, that the express warranty was valid and binding, that the defects constituted redhibitory defects, and that the action for rescission was not barred by prescription.
Ratio Decidendi
On the Venue Stipulation: The Court found that the Sales Invoice No. 075A was merely a pro forma invoice and not the contract evidencing the sale. It was a preliminary memorandum of a proposal to buy. The Court noted that the issue of venue had already been dismissed by the Supreme Court in a prior petition (G.R. No. 49078), and the IAC erred in reopening it. Furthermore, even if considered, venue stipulations must be intelligently and deliberately intended to exclude other venues, which was not evident here, especially in contracts of adhesion. The printed provisions of a pro forma invoice, used for other types of transactions, could not govern the sale of the printing machine. On Implied Warranty in Secondhand Sales: While the general rule is that there is no implied warranty as to quality or fitness in the sale of secondhand articles subject to inspection, this rule is not absolute. Article 1562 of the Civil Code provides for implied warranties when the buyer makes known the particular purpose for which the goods are acquired and relies on the seller's skill or judgment. The Court cited authority suggesting that implied warranties of fitness may exist under certain circumstances even in sales of secondhand articles. On the Binding Effect of Express Warranty: The Court held that the certification issued by the private respondent warranting the machine to be in A-1 condition constituted an express warranty. This warranty was a condition sine qua non for the release of the petitioner's loan, and the private respondent failed to refute this material fact or explain why he made the warranty if he did not intend to be bound. The respondent court itself considered the certification as part of the verbal contract by suggesting the remedy of repairs. Therefore, the private respondent was bound by this express warranty. On Redhibitory Defects and Rescission: The Court agreed with the trial court that the machine had major defects, as established by an expert witness. These defects, including a worn-out vertical automatic stop lever, a breach in the justification lever, a worn-out distributor bar, a tear in the partition, absence of a "pie stacker" tube entrance, and a worn-out slouch arm lever, rendered the machine not reasonably fit for its intended purpose. The fact that the machine required major repairs and remained unusable from purchase until the filing of the action attested to the significance of these defects, which were sufficient to warrant rescission under the rule on redhibitory defects. On Prescription: The Court clarified that the six-month prescriptive period under Article 1571 of the Civil Code applies only to implied warranties. In cases involving an express warranty, the general rule on rescission of contract, which is four years under Article 1389, applies. Since the action was filed only one year after the delivery of the machine, it was well within the prescriptive period. Furthermore, the defense of prescription was not raised in the trial court and was therefore waived.
Main Doctrine
In the sale of secondhand articles, an express warranty, even if not part of the original written contract, is binding on the seller if it was a condition for the buyer's financing and was relied upon by the buyer. The general rule on prescription for redhibitory actions does not apply to cases involving express warranties, where the four-year period for rescission of contract applies.