FACTS: In 1993, private respondent spouses Evangelista procured various animal feeds from petitioner Nutrimix Feeds Corp. the petitioner gave the respondents a credit period of 30-45 days to postdate checks to be issued as payment for the feeds. The accommodation was made apparently because the company’s president was a close friend of Evangelista. The various animal feeds were paid and covered by checks with due dates from July 1993-September 1993.
1. Initially, the spouses were good paying customers. However, there were instances when they failed to issue checks despite the delivery of goods. Consequently, the respondents incurred an aggregate unsettled account with Nutrimix amounting to P766,151
2. When the checks were deposited by the petitioner, the same were dishonored (closed account). Despite several demands from the petitioner, the spouses refused to pay the remaining balance
3. Thereafter, Nutrimix filed a complaint against Evangelista for collection of money with damages.
4. The respondents admitted their unpaid obligation but impugned their liability. The nine checks issued were made to guarantee the payment of the purchases, which was previously determined to be procured from the expected proceeds in the sale of their broilers and hogs. They contended that inasmuch as the sudden and massive death of their animals was caused by the contaminated products of the petitioner, the nonpayment of their obligation was based on a just and legal ground.
5. The respondents also lodged a complaint for damages against the petitioner, for the untimely and unforeseen death of their animals supposedly effected by the adulterated animal feeds the petitioner sold to them.
6. Nutrimix alleged that the death of the respondents’ animals was due to the widespread pestilence in their farm. The petitioner, likewise, maintained that it received information that the respondents were in an unstable financial condition and even sold their animals to settle their obligations from other enraged and insistent creditors. It, moreover, theorized that it was the respondents who mixed poison to its feeds to make it appear that the feeds were contaminated.
7. The trial court held in favor of petitioner on the ground that it cannot be held liable under Articles 1561 and 1566 of the Civil Code governing “hidden defects” of commodities sold. The trial court is predisposed to believe that the subject feeds were contaminated sometime between their storage at the bodega of the Evangelistas and their consumption by the poultry and hogs fed therewith, and that the contamination was perpetrated by unidentified or unidentifiable ill-meaning mischief-maker(s) over whom Nutrimix had no control in whichever way.
8. CA modified the decision of the trial court, citing that respondents were not obligated to pay their outstanding obligation to the petitioner in view of its breach of warranty against hidden defects. The CA gave much credence to the testimony of Dr. Rodrigo Diaz, who attested that the sample feeds distributed to the various governmental agencies for laboratory examination were taken from a sealed sack bearing the brand name Nutrimix
ISSUE: WON Nutrimix is guilty of breach of warranty due to hidden defects
HELD: NO.
The provisions on warranty against hidden defects are found in Articles 1561 and 1566 of the New Civil Code of the Philippines. A hidden defect is one which is unknown or could not have been known to the vendee. Under the law, the requisites to recover on account of hidden defects are as follows:
a) the defect must be hidden;
b) the defect must exist at the time the sale was made;
c) the defect must ordinarily have been excluded from the contract;
d) the defect, must be important (renders thing UNFIT or considerably decreases FITNESS);
e) the action must be instituted within the statute of limitations
In the sale of animal feeds, there is an implied warranty that it is reasonably fit and suitable to be used for the purpose which both parties contemplated. To be able to prove liability on the basis of breach of implied warranty, three things must be established by the respondents. The first is that they sustained injury because of the product; the second is that the injury occurred because the product was defective or unreasonably unsafe; and finally, the defect existed when the product left the hands of the petitioner. A manufacturer or seller of a product cannot be held liable for any damage allegedly caused by the product in the absence of any proof that the product in question was defective. The defect must be present upon the delivery or manufacture of the product; or when the product left the seller’s or manufacturer’s control; or when the product was sold to the purchaser; or the product must have reached the user or consumer without substantial change in the condition it was sold. Tracing the defect to the petitioner requires some evidence that there was no tampering with, or changing of the animal feeds. The nature of the animal feeds makes it necessarily difficult for the respondents to prove that the defect was existing when the product left the premises of the petitioner.
A review of the facts of the case would reveal that the petitioner delivered the animal feeds, allegedly containing rat poison, on July 26, 1993; but it is astonishing that the respondents had the animal feeds examined only on October 20, 1993, or barely three months after their broilers and hogs had died. A difference of approximately three months enfeebles the respondents’ theory that the petitioner is guilty of breach of warranty by virtue of hidden defects. In a span of three months, the feeds could have already been contaminated by outside factors and subjected to many conditions unquestionably beyond the control of the petitioner.
Even more surprising is the fact that during the meeting with Nutrimix President Mr. Bartolome, the respondents claimed that their animals were plagued by disease, and that they needed more time to settle their obligations with the petitioner. It was only after a few months that the respondents changed their justification for not paying their unsettled accounts, claiming anew that their animals were poisoned with the animal feeds supplied by the petitioner.
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