Villostas v. Court of Appeals
REITERATIONFacts
The Antecedents: Natividad Villostas purchased an Electrolux Aqua Guard water purifier on an installment basis, with a warranty that the product would perform efficiently for one year. Shortly after delivery and installation, Villostas began experiencing issues with the unit producing dirty water and emitting a bad odor. Despite multiple complaints and filter replacements by Electrolux technicians, the problem persisted. Villostas found the required frequent filter changes uneconomical and decided to return the unit, demanding a refund, but Electrolux refused. Procedural History: Electrolux Marketing, Inc. filed a complaint with the Metropolitan Trial Court (MTC) of Makati to recover the unpaid balance of P14,540.00. Villostas, in her amended answer, asserted rescission of the contract due to breach of warranty and sought a refund. The MTC ruled in favor of Electrolux, ordering Villostas to pay the outstanding balance and attorney's fees, while dismissing her counterclaim. Villostas appealed to the Regional Trial Court (RTC), which affirmed the MTC's decision. Subsequently, Villostas elevated the case to the Court of Appeals (CA), but her request for an extension to file her petition for review was denied. The Petition: This case is before the Supreme Court on a petition for review on certiorari seeking to annul the resolution of the Court of Appeals that denied Villostas' appeal. Villostas argues that the Regional Trial Court erred in ruling that her claim for rescission had prescribed and questions whether she is bound to pay the remaining balance and attorney's fees. The core issue is whether Villostas is entitled to rescind the contract due to the violation of the warranty for hidden defects, considering the express warranty provided by Electrolux.
Issue(s)
Whether the petition is proper and ripe for judicial review. Whether petitioner is entitled to rescind the contract due to violation of warranty for hidden defects. Whether petitioner is bound to pay the remaining balance plus interest. Whether petitioner is liable for attorney's fees and costs of suit.
Ruling
The petition is granted. The decision of the Regional Trial Court is reversed and set aside, and the complaint of the private respondent is dismissed. The sale of the water purifier is rescinded.
Ratio Decidendi
On the propriety of the petition and ripeness for review: The Court found the petition impressed with merit, indicating it was proper and ripe for judicial review, leading to the reversal of the lower courts' decisions. On the entitlement to rescind the contract due to violation of warranty for hidden defects: The Court held that petitioner was entitled to rescind the contract. The issue of rescission was properly raised in the MTC as it was a counterclaim in a collection case within the MTC's jurisdiction. The Court clarified that the six-month prescriptive period under Article 1571 of the Civil Code applies only to implied warranties, not to express warranties. Since the water purifier came with an express warranty to perform efficiently for one year, the general rule on rescission of contract, which allows four years (Article 1389, Civil Code), applied. Petitioner's amended answer, filed within four years from the delivery date, was timely. The Court found that the water purifier did not perform as warranted, justifying rescission. On the obligation to pay the remaining balance plus interest: As the contract was rescinded due to breach of warranty, petitioner was no longer obligated to pay the remaining balance. The Court dismissed the private respondent's complaint for collection of the unpaid balance. On the liability for attorney's fees and costs of suit: Since the complaint for collection was dismissed and the contract was rescinded, petitioner was not liable for attorney's fees or costs of suit awarded by the lower courts.
Main Doctrine
A contract with an express warranty is governed by the general rule on rescission of contract, which is four years, and not by the six-month prescriptive period for redhibitory actions under Article 1571 of the Civil Code, which applies only to implied warranties.