G.R. No. 113564. June 20, 2001.

INOCENCIA YU DINO and her HUSBAND doing business under the trade name “CANDY CLAIRE FASHION
GARMENTS,” petitioners, vs. COURT OF APPEALS and ROMAN SIO, doing business under the name
“UNIVERSAL TOY MASTER MANUFACTUR-ING,” respondents.

Civil Law; Contracts; The contract executed by and between the petitioners and the respondents was a
contract for a piece of work.—As this Court ruled in Engineering & Machinery Corporation v. Court of
Appeals, et al., “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

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* FIRST DIVISION.

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SUPREME COURT REPORTS ANNOTATED

Dino vs. Court of Appeals

person even if the order had not been given then the contract is one of sale.” 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.
Remedial Law; Actions; Prescription; As a rule, the defense of prescription cannot be raised for the first
time on appeal; Trial courts have authority and discretion to dismiss an action on the ground of
prescription when the parties’ pleadings or other facts on record show it to be indeed time-barred,—As
a rule, the defense of prescription cannot be raised for the first time on appeal. Thus, we held in Ramos
v. Osorio, viz.: “It is settled law in this jurisdiction that the defense of prescription is waivable, and that if
it was not raised as a defense in the trial court, it cannot be considered on appeal, the general rule being
that the appellate court is not authorized to consider and resolve any question not properly raised in the
lower court (Subido vs. Lacson, 55 O.G. 8281, 8285; Moran, Comments on the Rules of Court, Vol. I, p.
784, 1947 Edition).” However, this is not a hard and fast rule. In Gicano v. Gegato, we held: “. . . (T)rial
courts have authority and discretion to dismiss an action on the ground of prescription when the parties’
pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954;
Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan. 14, 1958;
Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136 SCRA 408); and it may do so
on the basis of a motion to dismiss (Sec. 1, f, Rule 16, Rules of Court), or an answer which sets up such
ground as an affirmative defense (Sec. 5, Rule 16), or even if the ground is alleged after judgment on the
merits, as in a motion for reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not
been asserted at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100
SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or
where a defendant has been declared in default (PNB v. Perez, 16 SCRA 270). What is essential only, to
repeat, is that the facts demonstrating the lapse of the prescriptive period be otherwise sufficiently and
satisfactorily apparent on the record; either in the averments of the plaintiffs complaint, or otherwise
established by the evidence.” (emphasis supplied)

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Same; Same; Same; When the plaintiffs own complaint shows clearly that the action has prescribed, the
action may be dismissed even if the defense of prescription was not invoked by the defendant.—In
Aldovino, et al. v. Alunan, et al., the Court en banc reiterated the Garcia v. Mathis doctrine cited in the
Gicano case that when the plaintiff’s own complaint shows clearly that the action has prescribed, the
action may be dismissed even if the defense of prescription was not invoked by the defendant. It is
apparent in the records that respondent made the last delivery of vinyl products to the petitioners on
September 28, 1988. Petitioners admit this in their Memorandum submitted to the trial court and
reiterate it in their Petition for Review. It is also apparent in the Complaint that petitioners instituted
their action on July 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.

Same; Same; Same; Court’s application of the Osorio and Gicano doctrines to the case at bar is
confirmed and now enshrined in Rule 9, Sec. 1 of the 1997 Rules of Civil Procedure.—This Court’s
application of the Osorio and Gicano doctrines to the case at bar is confirmed and now enshrined in Rule
9, Sec. 1 of the 1997 Rules of Civil Procedure, viz.: “Section 1. Defense and objections not pleaded.—
Defenses and objections not pleaded whether in a motion to dismiss or in the answer are deemed
waived. However, when it appears from the pleadings that the court has no jurisdiction over the subject
matter, that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.”
(Emphasis supplied)

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

      Abdul & Maningas Law Offices for petitioners.

      Julian S. Yap for private respondent.

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SUPREME COURT REPORTS ANNOTATED

Dino vs. Court of Appeals

D E C I S I O N**
PUNO, J.:

Though people say, “better late than never,” the law frowns upon those who assert their rights past the
eleventh hour. For failing to timely institute their action, the petitioners are forever barred from
claiming a sum of money from the respondent.

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 plaintiff-
petitioners’ Complaint on the ground of prescription.

The following undisputed facts gave rise to the case at bar:

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 petitioners 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. These frogs and
mooseheads were to be attached to the shirts petitioners would manufacture and sell.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 returned to respondent 29,772 pieces of frogs

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**This case was transferred to the ponente on March 14, 2001 pursuant to Resolution in A.M. No. 00-9-
03-SC—Re: Creation of Special Committee on Case Backlog dated February 27, 2001.

1 Rollo, p. 20; Complaint, p. 1.

2 TSN, April 27, 1990, pp. 3-4.

3 Rollo, p. 37; Memorandum for the Plaintiff in the RTC, P. 1; Exhibit “1.”

4 Rollo, pp. 13, 37-38; Petition for Review, p. 13; Original Records, pp. 71-72; Memorandum for the
Plaintiff in the Regional Trial Court, pp. 1-2; TSN, Venerando dela Cruz, September 3, 1990, p. 27.

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and mooseheads for failing to comply with the approved sample.5 The return was made on different
dates: the initial one on December 12, 1988 consisting of 1,720 pieces,6 the second on January 11,
1989,7 and the last on January 17, 1989.8

Petitioners then demanded from the respondent a refund of the purchase price of the returned goods in
the amount of P208,404.00. As respondent Sio refused to pay,9 petitioners filed on July 24, 1989 an
action for collection of a sum of money in the Regional Trial Court of Manila, Branch 38.

The trial court ruled in favor of the petitioners, viz.:

“WHEREFORE, judgment is hereby rendered in favor of the plaintiffs Vicente and Inocencia Dino and
against defendant Toy Master Manufacturing, Inc. ordering the latter to pay the former:

1.The amount of Two Hundred Eight Thousand Four Hundred Four (P208,404.00) Pesos with legal
interest thereon from July 5, 1989, until fully paid; and

2.The amount of Twenty Thousand (P20,000.00) Pesos as attorney’s fees and the costs of this suit.

The counterclaim on the other hand is hereby dismissed for lack of merit.”10
Respondent Sio sought recourse in the Court of Appeals. In its April 30, 1993 decision, the appellate
court affirmed the trial court decision. Respondent then filed a Motion for Reconsideration and a
Supplemental Motion for Reconsideration alleging therein that the petitioners’ action for collection of
sum of money based on a breach of warranty had already prescribed. On January 24, 1994, the
respondent court reversed its decision and dismissed petitioners’ Complaint for having been filed
beyond the prescriptive period. The amended decision read in part, viz.

_______________

5 Rollo, p. 31; Plaintiffs Pre-trial Brief, p. 1.

6 Exhibit “F.”

7 Exhibit “F-1.”

8 Exhibit “F-2.”

9 Rollo, p. 38; Memorandum for the Plaintiff, Regional Trial Court, p. 2.

10 Original Records, p. 105.

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Dino vs. Court of Appeals

“Even if there is failure to raise the affirmative defense of prescription in a motion to dismiss or in an
appropriate pleading (answer, amended or supplemental answer) and an amendment would no longer
be feasible, still prescription, if apparent on the face of the complaint may be favorably considered
(Spouses Matias B. Aznar, III, et al. vs. Hon. Juanito A. Bernad, etc., supra, G.R. 81190, May 9, 1988). The
rule in Gicano vs. Gegato (supra) was reiterated in Severo v. Court of Appeals, (G.R. No. 84051, May 19,
1989).

WHEREFORE the Motion for Reconsideration is granted. The judgment of this Court is set aside and
judgment is hereby rendered REVERSING the judgment of the trial court and dismissing plaintiff’s
complaint.”11

Hence, this petition with the following assignment of errors:

I.

The respondent Court of Appeals seriously erred in dismissing the complaint of the Petitioners on the
ground that the action had prescribed.

II.

The respondent Court of Appeals seriously erred in holding that the defense of prescription would still
be considered despite the fact that it was not raised in the answer, if apparent on the face of the
complaint.

We first determine the nature of the action filed in the trial court to resolve the issue of prescription.
Petitioners claim that the Complaint they filed in the trial court on July 24, 1989 was one for the
collection of a sum of money. Respondent contends that it was an action for breach of warranty as the
sum of money petitioners sought to collect was actually a refund of the purchase price they paid for the
alleged defective goods they bought from the respondent.

We uphold the respondent’s contention.

The following provisions of the New Civil Code are apropos:

“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

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11 Rollo, pp. 12-13.

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Dino vs. Court of Appeals

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.”

As this Court ruled in Engineering & Machinery Corporation v. Court of Appeals, et al.,12 “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.”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. Respondent Sio did not ordinarily manufacture
these products, but only upon order of the petitioners and at the price agreed upon.14 Clearly, the
contract executed by and between the petitioners and the respondent was a contract for a piece of
work. At any rate, whether the agreement between the parties was one of a contract of sale or a piece
of work, the provisions on warranty of title against hidden defects in a contract of sale apply to the case
at bar, viz.:

“Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall deliver
the thing produced to the employer and transfer dominion over the thing. This contract shall be
governed by the following articles as well as by the pertinent provisions on warranty of title and against
hidden defects and the payment of price in a contract of sale.”

_______________

12 252 SCRA 156 (1996).

13 Id., p. 164, footnotes omitted.

14 Rollo, p. 36, Exhibit “1”; TSN, Roman Sio, April 27, 1990, pp. 6-15, 21.

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Dino vs. Court of Appeals

“Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold
may have, should they render it unfit for the use for which it is intended, or should they diminish its
fitness for such use to such an extent that, had the vendee been aware thereof, he would not have
acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent
defects or those which may be visible, or for those which are not visible if the vendee is an expert who,
by reason of his trade or profession, should have known them.”
Petitioners aver that they discovered the defects in respondent’s products when customers in their
(petitioners’) shirt business came back to them complaining that the frog and moosehead figures
attached to the 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 Petitioners then returned to the respondent 29,772 defective pieces of vinyl
products and demanded a refund of their purchase price in the amount of P208,404.00. Having failed to
collect this amount, they filed an action for collection of a sum of money.

Article 1567 provides for the remedies available to the vendee in case of hidden defects, viz.:

“Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between
withdrawing from the contract and demanding a proportionate reduction of the price, with damages in
either 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 period for this kind of action is provided in Art. 1571 of the New Civil Code, viz.:

“Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six
months from the delivery of the thing sold.” (Emphasis supplied)

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15 Knecht v. Court of Appeals, et al., 158 SCRA 80 (1988).

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There is no dispute that respondent made the last delivery of the vinyl products to petitioners on
September 28, 1988. It is also settled that the action to recover the purchase price of the goods
petitioners returned to the respondent was filed on July 24, 1989,16 more than nine months from the
date of last delivery. 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. 1571,17 the appellate court
dismissed the action.

Petitioners fault the ruling on the ground that it was too late in the day for respondent to raise the
defense of prescription. The law then applicable to the case at bar, Rule 9, Sec. 2 of the Rules of Court,
provides:

“Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed
waived; except the failure to state a cause of action . . .”

Thus, they claim that since the respondent failed to raise the defense of prescription in a motion to
dismiss or in its answer, it is deemed waived and cannot be raised for the first time on appeal in a
motion for reconsideration of the appellate court’s decision.

As a rule, the defense of prescription cannot be raised for the first time on appeal. Thus, we held in
Ramos v. Osorio,18 viz.:

“It is settled law in this jurisdiction that the defense of prescription is waivable, and that if it was not
raised as a defense in the trial court, it cannot be considered on appeal, the general rule being that the
appellate court is not authorized to consider and resolve any question not properly raised in the lower
court (Subido vs. Lacson, 55 O.G, 8281, 8285; Moran, Comments on the Rules of Court, Vol. I, p. 784,
1947 Edition).”

However, this is not a hard and fast rule. In Gicano v. Gegato,19 we held:

_______________

16 Original Records, p. 1; Complaint, p. 1; TSN, Venerando dela Cruz, September 3, 1990, p. 37; Rollo, p.
13; Petition for Review, p. 7.
17 G.A. Machineries, Inc. v. Yaptinchay, et al., 126 SCRA 78 (1983); Moles v. IAC, et al., 169 SCRA 777
(1989).

18 38 SCRA 469 (1971).

19 157 SCRA 140 (1988).

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Dino vs. Court of Appeals

“. . . (T)rial courts have authority and discretion to dismiss an action on the ground of prescription when
the parties’ pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles
Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan.
14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136 SCRA 408); and it
may do so on the basis of a motion to dismiss (Sec. 1, f, Rule 16, Rules of Court), or an answer which sets
up such ground as an affirmative defense (Sec. 5, Rule 16), or even if the ground is alleged after
judgment on the merits, as in a motion for reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the
defense has not been asserted at all, as where no statement thereof is found in the pleadings (Garcia v.
Mathis, 100 SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97
Phil. 821); or where a defendant has been declared in default (PNB v. Perez, 16 SCRA 270). What is
essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period be
otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the plaintiffs
complaint, or otherwise established by the evidence.” (emphasis supplied)

In Aldovino, et al. v. Alunan, et al.,20 the Court en banc reiterated the Garcia v. Mathis doctrine cited in
the Gicano case that when the plaintiffs own complaint shows clearly that the action has prescribed, the
action may be dismissed even if the defense of prescription was not invoked by the defendant.
It is apparent in the records that respondent made the last delivery of vinyl products to the petitioners
on September 28, 1988. Petitioners admit this in their Memorandum submitted to the trial court and
reiterate it in their Petition for Review.21 It is also apparent in the Complaint that petitioners instituted
their action on July 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.

Following the Gicano doctrine that allows dismissal of an action on the ground of prescription even after
judgment on the merits, or even if the defense was not raised at all so long as the relevant

_______________

20 230 SCRA 825 (1994).

21 Original Records, p. 76; Memorandum for the Plaintiff in the Regional Trial Court, p. 6; Rollo, p. 13;
Petition for Review, p. 7.

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dates are clear on the record, we rule that the action filed by the petitioners has prescribed. The dates
of delivery and institution of the action are undisputed. There are no new issues of fact arising in
connection with the question of prescription, thus carving out the case at bar as an exception from the
general rule that prescription if not impleaded in the answer is deemed waived.22

Even if the defense of prescription was raised for the first time on appeal in respondent’s Supplemental
Motion for Reconsideration of the appellate court’s decision, this does not militate against the due
process right of the petitioners. On appeal, there was no new issue of fact that arose in connection with
the question of prescription, thus it cannot be said that petitioners were not given the opportunity to
present evidence in the trial court to meet a factual issue. Equally important, petitioners had the
opportunity to oppose the defense of prescription in their Opposition to the Supplemental Motion for
Reconsideration filed in the appellate court and in their Petition for Review in this Court.

This Court’s application of the Osorio and Gicano doctrines to the case at bar is confirmed and now
enshrined in Rule 9, Sec. 1 of the 1997 Rules of Civil Procedure, viz.:

“Section 1. Defense and objections not pleaded.—Defenses and objections not pleaded whether in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings
that the court has no jurisdiction over the subject matter, that there is another action pending between
the same parties for the same cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim.” (Emphasis supplied)

WHEREFORE, the petition is DENIED and the impugned decision of the Court of Appeals dated January
24, 1994 is AFFIRMED. No costs.

_______________

22 Luzon Surety Company, Inc. v. IAC, et al., 151 SCRA 652 (1987), citing Ferrer v. Ericta, 84 SCRA 706
(1978) and Garcia v. Mathis, 100 SCRA 250 (1980).

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SUPREME COURT REPORTS ANNOTATED

La Jolla, Inc. vs. Court of Appeals

SO ORDERED.
      Davide, Jr. (C.J., Chairman), Kapunan, Pardo and Ynares-Santiago, JJ., concur.

Petition denied, judgment affirmed.

Note.—Rights and actions can be lost by the fact of delay and by the effect of delay. (Ochagabia vs.
Court of Appeals, 304 SCRA 587 [1999])

——o0o—— Dino vs. Court of Appeals, 359 SCRA 91, G.R. No. 113564 June 20, 2001