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AUTOZENTRUM vs SPS. BERNARDO 1.

YES

Petitioner: Autozentrum Alabang, Inc Article 97. Liability for the Defective Products. - Any Filipino or
Respondents: SPS. Miamar Bernardo and Genao Bernardo, foreign manufacturer, producer, and any importer, shall be liable
DTI, Asian Carmakers Corporation, Bayerishe Motoren for redress, independently of fault, for damages caused to
Citation: GR No. 214122 consumers by defects resulting from design, manufacture,
Date of Promulgation: June 08, 2016 construction, assembly and erection, formulas and handling and
Ponente: making up, presentation or packing of their products, as well as
for the insufficient or inadequate information on the use and
FACTS: hazards thereof.
 SPS. Bernardo: on November 12, 2008, bought a 2008
BMW 320i sports car in the amount of P2, 990, 000 from A product is defective when it does not offer the safety
Autozentrum rightfully expected of it, taking relevant circumstances into
- Autozentrum: consideration, including but not limited to:
o Authorized dealer of BMW
o Authorized to deliver the brand new car to SPS. a) presentation of product;
Bernardo b) use and hazards reasonably expected of it;
 October 12, 2009: SPS. Bernardo brought the car to BMW c) the time it was put into circulation.
Authohaus service of Asian Carmakers because its ABS
Brake systeme and steering column malfunctioned A product is not considered defective because another better
 October 26, 2009: 6 days after the car’s release, SPS. quality product has been placed in the market.
Bernardo returned the car to BMW Autohaus due to
malfunctioning of the electric warning system and door lock The manufacturer, builder, producer or importer shall not be held
system. liable when it evidences:
 March 2010: the car was brought again to BMW Autohaus
because its airconditioning unit bogged down a) that it did not place the product on the market;
- BMW Autohaus: repaired the car under us warranty b) that although it did place the product on the market such
 September 2010: SPS. Bernardo brought the car to BMW product has no defect;
Autohaus, under an insurance claim, for the replacement of c) that the consumer or a third party is solely at fault.11 (Emphasis
its two front wheels due to the damage of its wishbone supplied)crala
component. RA 7394 specifically provides that an act of a seller
- BMW Autohaus performed the repairs and discovered is deceptive when it represents to a consumer that a product is
that one of the rear tires did not have Running Flat new, original or unused, when in fact, it is deteriorated, altered,
Technology (RFT), when all of its tires should have RFT. reconditioned, reclaimed or second-hand. A representation is not
Upon being informed, Autozentrum replaced the ordinary confined to words or positive assertions; it may consist as well of
tire with an RFT tire. deeds, acts or artifacts of a nature calculated to mislead another
 January 13, 2011: pouses Bernardo brought the car to ACC and thus allow the fraud-feasor to obtain an undue
because the car's fuel tank was leaking. ACC replaced the advantage.12 Failure to reveal a fact which the seller is, in good
fuel tank without cost to the Spouses Bernardo. On 17 faith, bound to disclose may generally be classified as a deceptive
January and 26 January 2011, Spouses Bernardo sent letters act due to its inherent capacity to deceive.13Suppression of a
to Autozentrum, demanding for the replacement of the car or material fact which a party is bound in good faith to disclose is
the refund of their payment. equivalent to a false representation.14ChanRoblesVirtualawlibrary
 In his letter dated 29 January 2011: Autozentrum's
Aftersales Manager Ron T. Campilan (Campilan) replied that A case where the defendant repainted an automobile, worked it
the car purchased by Spouses Bernardo was certified pre- over to resemble a new one and represented that the automobile
owned or used, and that Autozentrum's legal department was being sold was new, was found to be "a false representation of an
still examining their demand. existing fact; and, if it was material and induced the plaintiff to
 February 24, 2011: Spouses Bernardo filed a complaint for accept something entirely different from that which he had
refund or replacement of the car and damages with the DTI contracted for, it clearly was a fraud which, upon its discovery and
against respondents Autozentrum, ACC, and Bayerishe a tender of the property back to the seller, entitled the plaintiff to
Motoren Werke (BMW) A.G. for violation of Article 50(b) and rescind the trade and recover the purchase
(c), in relation to Article 97, of the Consumer Act of the money."15ChanRoblesVirtualawlibrary
Philippines or Republic Act No. (RA) 7394.
 DTI RULING: DTI Hearing Officer Maria Fatima B. In the present case, both the DTI and the CA found that
Pacampara (Hearing Officer) ruled that: Autozentrum sold a defective car and represented a second-hand
1. Autozentrum violated the Consumer Act of the car as brand new to Spouses Bernardo. In finding that the
Philippines particularly the provisions on defective evidence weighs heavily in favor of Spouses Bernardo, the DTI
products and deceptive sales. In concluding that the car and the CA gave considerable weight to the following facts: (1) the
was defective, the Hearing Officer considered that the condition of the car in just 11 months from the date of purchase;
major malfunctions in the car do not usually happen in (2) Autozentrum's Aftersales Manager Campilan's letter declaring
such a short period of usage, and Autozentrum did not that the vehicle was certified pre-owned or used; (3) one of the
present proof that the malfunctions were caused by tires was not RFT; and (4) the Land Transportation Office (LTO)
ordinary wear and tear. registration papers stating that Autozentrum was the previous
2. The Hearing Officer further held Autozentrum liable for owner of the car. As public documents, the LTO registration
deceptive sales because the car was not brand new at papers are prima facie evidence of the facts stated
the time of sale, contrary to what Autozentrum therein.16ChanRoblesVirtualawlibrary
represented to Spouses Bernardo.
3. However, the Hearing Officer exculpated ACC and By reason of the special knowledge and expertise of the DTI over
BMW, since there was no proof that the defects were due matters falling under its jurisdiction, it is in a better position to pass
to design and manufacturing, and they were not privy to judgment on the issues; and its findings of fact in that regard,
the sale of the car. especially when affirmed by the CA, are generally accorded
 DTI APPEALS: affirmed respect, if not finality, by this Court.17ChanRoblesVirtualawlibrary
 CA: in favor SPS. Bernardo; car was defective and not brand
new Moreover, by claiming that its initial intention was for the car to be
used by one of its executive officers, Autozentrum effectively
ISSUES: admitted ownership of the car prior to its purchase by Spouses
1. W/N the car sold was defective and not brand new? Bernardo. Autozentrum failed to present evidence that its intention
2. W/N Autozentrum shall be held liable under Article 97 of did not occur. On the other hand, Autozentrum's registration of the
RA 7394? car under its name and Campilan's letter bolster the fact that the
car was pre-owned and used by Autozentrum. For failure to reveal
HELD: its prior registration of the car in its name, and for representing an
altered and second-hand car as brand new to Spouses Bernardo,
Autozentrum committed a deceptive sales act, in violation of imposition of an administrative fine in such amount as deemed
Section 50 of RA 7394 reasonable by the Adjudication Officer, which shall in no case be
less than Five Hundred Pesos (P500.00) nor more than Three
2. NO Hundred Thousand Pesos (P300,000.00) depending on the
gravity of the offense, and [an] additional administrative fine of not
However, Autozentrum cannot be liable under Article 97 of RA more than One Thousand Pesos (P1,000.00) for each day of
7394 because Spouses Bernardo failed to present evidence that continuing violation x x x."
Autozentrum is the manufacturer, producer, or importer of the car
and that damages were caused to them due to defects in design, The DTI is tasked with protecting the consumer against deceptive,
manufacture, construction, assembly and erection, formulas and unfair, and unconscionable sales acts or practices.20Thus, the DTI
handling and making up, presentation or packing of products, as can impose restitution or rescission of the contract without
well as for the insufficient or inadequate information on the use damages and payment of administrative fine ranging from P500
and hazards thereof. to P300,000, plus P1,000 for each day of continuing violation.
Rescission creates the obligation to return the things which were
RA 7394 provides the penalties for deceptive, unfair, and the object of the contract, together with their fruits, and the price
unconscionable sales acts or practices, as with its interest; consequently, it can be carried out only when he
follows:chanRoblesvirtualLawlibrary who demands rescission can return whatever he may be obliged
to restore.21 Rescission abrogates the contract from its inception
Article 60. Penalties. - a) Any person who shall violate the and requires a mutual restitution of the benefits
provisions of Title III, Chapter I, shall upon conviction, be subject received.22ChanRoblesVirtualawlibrary
to a fine of not less than Five Hundred Pesos (P500.00) but not
more than Ten Thousand Pesos (P10,000.00) or imprisonment of Records show that Autozentrum already possessed the car since
not less than five (5) months but not more than one (1) year or 8 August 2011. Thus, the DTI Hearing Officer and the CA correctly
both, upon the discretion of the court. applied RA 7394 and DTI Department Administrative Order No.
007-06 when they ordered Autozentrum to return to Spouses
b) In addition to the penalty provided for in paragraph (1), the court Bernardo the value of the car amounting to P2,990,000 and to pay
may grant an injunction restraining the conduct constituting the an administrative fine of P160,000 and an additional
contravention of the provisions of Articles 50 and 51 and/or actual administrative fine of not more than P1,000 for each day of
damages and such other orders as it thinks fit to redress continuing violation.
injury to the person caused by such conduct.
Section 1 of Resolution No. 796 of the Monetary Board of the
x x x x Bangko Sentral ng Pilipinas dated 16 May 2013 provides: "The
rate of interest for the loan or forbearance of any money, goods or
Article 164. Sanctions. - After investigation, any of the following credits and the rate allowed in judgments, in the absence of an
administrative penalties may be imposed even if not prayed express contract as to such rate of interest, shall be six percent
for in the complaint: (6%) per annum." Thus, Autozentrum is ordered to pay the value
of the car amounting to P2,990,000, with a legal interest rate of
a) the issuance of a cease and desist order, Provided, however, 6% per annum from the finality of this Decision until the amount is
That such order shall specify the acts that respondent shall cease fully paid.
and desist from and shall require him to submit a report of
compliance therewith within a reasonable time; WHEREFORE, we DENY the petition
and AFFIRM with MODIFICATION the Decision dated 30 June
b) the acceptance of a voluntary assurance of compliance or 2014 and Resolution dated 4 September 2014 of the Court of
discontinuance from the respondent which may include any or all Appeals in CA-G.R. SP No. 127748. We ORDER petitioner
of the following terms and conditions: Autozentrum Alabang, Inc. to RETURN to respondents Spouses
Miamar A. Bernardo and Genaro F. Bernardo, Jr. the value of the
1) an assurance to comply with the provisions of this Act and its car amounting to P2,990,000, with 6% interest per annum from
implementing rules and regulations; the finality of this Decision until the amount is fully paid.

2) an assurance to refrain from engaging in unlawful acts and


practices or unfair or unethical trade practices subject of the
formal investigation;

3) an assurance to comply with the terms and conditions specified


in the consumer transaction subject of the complaint;

4) an assurance to recall, replace, repair, or refund the money


value of defective products distributed in commerce;

5) an assurance to reimburse the [complainant] out of any money


or property in connection with the complaint, including expenses
in making or pursuing the complaint, if any, and to file a bond to
guarantee compliance therewith.

c) restitution or rescission of the contract without damages;

d) condemnation and seizure of the consumer product found to be


hazardous to health and safety unless the respondent files a bond
to answer for any damage or injury that may arise from the
continued use of the product;

e) the imposition of administrative fines in such amount as


deemed reasonable by the Secretary, which shall in no case
be less than Five Hundred Pesos (P500.00) nor more than
Three Hundred Thousand Pesos (P300,000.00) depending on
the gravity of the offense, and an additional fine of not more
than One Thousand Pesos (P1,000.00) for each day of
continuing violation.18(Emphasis supplied)cralawred
DTI Department Administrative Order No. 007-0619 reiterates the
power of the DTI Adjudication Officer to impose the following
penalties upon the respondent, if warranted, and even if these
have not been prayed for by the complainant: "(3) The restitution
or rescission of the contract without damages; x x x (5) The
AOWA vs DTI HELD:

Petitioner: Aowa Electronic Philippines, Inc NO.


Respondents: DTI-NCR
Citation: GR No. 189655 Contrary to Aowa’s postulations, the DTI has the authority and the
Date of Promulgation: April 13, 2011 mandate to act upon the complaints filed against Aowa. Article 2
Ponente: Nachura of the Consumer Act clearly sets forth the policy of the State on
consumer protection, viz.:
FACTS:

 DTI-NCR’s records show that numerous administrative ART 2. Declaration of Basic Policy. — It is the policy of the State
complaints have been filed against Aowa Electronic to protect the interests of the consumer, promote his general
Philippines, Inc. by different consumers, or a total of at least welfare and to establish standards of conduct for business and
two hundred and seventy-three (273) from the year 2001 until industry. Towards this end, the State shall implement measures
2007. The facts narrated in the said complaints consistently to achieve the following objectives:
contain a common thread, as follows:
1. A target customer is approached by Aowa’s a) protection against hazards to health and safety;
representatives, usually in a mall and informs the b) protection against deceptive, unfair and
former that he/she has won a gift or is to receive unconscionable sales acts and practices;
some giveaways. In certain cases, when the target c) provision of information and education to facilitate
customer expresses interest in the said "gift" or sound choice and the proper exercise of rights by the
giveaway, Aowa’s representatives then verbally consumer;
reveal that the same can only be claimed or received d) provision of adequate rights and means of redress;
upon purchase of an additional product or products, and
which are represented to be of high quality. e) involvement of consumer representatives in the
However, consumer complainants allege that such formulation of social and economic policies.
products are substantially priced.

2. An initial gift is offered to the target customer, and This policy is reiterated in Article 48 of the Consumer Act, which
upon acceptance, the customer is invited to provides that "the State shall promote and encourage fair, honest
[Aowa’s] store/outlet. It is at that point that the and equitable relations among parties in consumer transactions
customer is informed that he/she has qualified for a and protect the consumer against deceptive, unfair and
raffle draw or contest, entitling them to claim an unconscionable sales acts or practices." Verily, as espoused by
additional "gift." In the same manner, such additional the OSG, the DTI validly invoked Article 159 of the Consumer Act
gift can be received only upon the purchase of in order to effectuate this policy of the State by filing a formal
additional products, also represented to be of high charge against Aowa. It is indubitable that the DTI is tasked to
quality, and sometimes similarly alleged to be protect the consumer against deceptive, unfair, and
substantially charged. unconscionable sales, acts, or practices, as defined in Articles 50
and 52 of the Consumer Act.19
3. [In] the course of enticing the target customer to
purchase the additional product, they are physically
surrounded by Aowa’s representatives, otherwise The law is clear. Articles 50 and 52 of the Consumer Act provide:
known to many as "ganging up" o[n] customers.
ART. 50. Prohibition Against Deceptive Sales Acts or Practices.
4. Although the customer is required to purchase an — A deceptive act or practice by a seller or supplier in connection
additional product to claim the offered "gift/s," this is with a consumer transaction violates this Act whether it occurs
not disclosed during the initial stages of the sales before, during or after the transaction. An act or practice shall be
pitch. The revelation is only done when the target deemed deceptive whenever the producer, manufacturer, supplier
customer is being surrounded by Aowa’s or seller, through concealment, false representation [or] fraudulent
representatives within its showroom/store/outlet. manipulation, induces a consumer to enter into a sales or lease
transaction of any consumer product or service.
5. In some cases, when customers state that they are
short of cash, [Aowa’s] representatives urge said Without limiting the scope of the above paragraph, the act or
customers to use their credit card or to withdraw practice of a seller or supplier is deceptive when it represents that:
from an Automated Teller Machine (ATM). There are
even instances where [Aowa’s] representatives
accompany a customer to his/her residence, where a) a consumer product or service has the sponsorship,
the latter can produce their (sic) means of payment. approval, performance, characteristics, ingredients,
 Aowa: denied having violated the provisions of Consumer accessories, uses, or benefits it does not have;
Act b) a consumer product or service is of a particular
 DTI: issued a Preventive Measure Order in order to prohibit standard, quality, grade, style, or model when in fact it is
AOWA from the continuing with act the act complained of until not;
such time that a sale promotion permit is secured c) a consumer product is new, original or unused, when
 ADJUDICATION OFFICER: found that the complaints in fact, it is in a deteriorated, altered, reconditioned,
against Aowa continued to increase despite its claims of reclaimed or second-hand state;
amicable settlement. He also found that Aowa submitted no d) a consumer product or service is available to the
proof of such amicable settlement. Based on the numerous consumer for a reason that is different from the fact;
complaints against Aowa, the Adjudication Officer held that e) a consumer product or service has been supplied in
the DTI had sufficiently established prima facie evidence accordance with the previous representation when in fact
against Aowa for violation of the applicable provisions of it is not;
Republic Act (R.A.) No. 7394, or the Consumer Act of the f) a consumer product or service can be supplied in a
Philippines (the Consumer Act), and its Implementing Rules quantity greater than the supplier intends;
and Regulations (IRR). Furthermore, the Adjudication Officer g) a service, or repair of a consumer product is needed
highlighted that Aowa failed to secure any Sales Promotion when in fact it is not;
Permit from the DTI for Aowa’s alleged promotional sales. h) a specific price advantage of a consumer product
exists when in fact it does not;
 DTI APPEALS COMMITTEE: dismissed Aowa’s appeal and
i) the sales act or practice involves or does not involve a
sustained the Adjudication Officer’s decision.
warranty, a disclaimer of warranties, particular warranty
 CA: affirmed
terms or other rights, remedies or obligations if the
indication is false; and
ISSUES:
j) the seller or supplier has a sponsorship, approval, or
1. W/N he CA committed any reversible error in
affiliation he does not have.
affirming the findings and ruling of the Adjudication
Officer and the DTI Appeals Committee.
xxxx products, again misrepresented by [Aowa to] be of high quality.
This is how [Aowa] operates its business, and not simply as a
ART. 52. Unfair or Unconscionable Sales Act or Practice. — An means of promotional sale. The act sought to be avoided and
unfair or unconscionable sales act or practice by a seller or punished under the Consumer Act has clearly been committed by
supplier in connection with a consumer transaction violates this Aowa.21
Chapter whether it occurs before, during or after the consumer
transaction. An act or practice shall be deemed unfair or By reason of the special knowledge and expertise of the DTI over
unconscionable whenever the producer, manufacturer, distributor, matters falling under its jurisdiction, it is in a better position to pass
supplier or seller, by taking advantage of the consumer's physical judgment on the issues, and its findings of fact in that regard,
or mental infirmity, ignorance, illiteracy, lack of time or the general especially when affirmed by the CA, are generally accorded
conditions of the environment or surroundings, induces the respect, if not finality, by this Court.22 Furthermore, Aowa failed to
consumer to enter into a sales or lease transaction grossly inimical refute DTI’s finding that it did not secure any permit for its alleged
to the interests of the consumer or grossly one-sided in favor of promotional sales. In sum, Aowa failed to show any reversible
the producer, manufacturer, distributor, supplier or seller. error on the part of the CA in affirming the ruling of the DTI as to
warrant the modification much less the reversal of its assailed
In determining whether an act or practice is unfair and decision.
unconscionable, the following circumstances shall be considered:
A final note.
a) that the producer, manufacturer, distributor, supplier
or seller took advantage of the inability of the consumer In these trying times when fly-by-night establishments and
to reasonably protect his interest because of his inability syndicates proliferate all over the country, lurking and waiting to
to understand the language of an agreement, or similar prey on innocent consumers, and ganging up on them like a pack
factors; of wolves with their sugar-coated sales talk and false
representations disguised as "overzealous marketing strategies,"
b) that when the consumer transaction was entered into, it is the mandated duty of the Government, through its various
the price grossly exceeded the price at which similar agencies like the DTI, to be wary and ready to protect each and
products or services were readily obtainable in similar every consumer. To allow or even tolerate the marketing schemes
transaction by like consumers; such as these, under the pretext of promotional sales in
contravention of the law and its existing rules and regulations,
would result in consumers being robbed in broad daylight of their
c) that when the consumer transaction was entered into, hard earned money. This Court shall not countenance these
the consumer was unable to receive a substantial benefit pernicious acts at the expense of consumers.
from the subject of the transaction;
WHEREFORE, the Petition is DENIED and the Court of Appeals
d) that when the consumer transaction was entered into, Decision dated June 23, 2009 is AFFIRMED. Costs against
the seller or supplier was aware that there was no petitioner.
reasonable probability or payment of the obligation in full
by the consumer; and
ANG vs CA and BRUNO SOLEDAD
e) that the transaction that the seller or supplier induced
the consumer to enter into was excessively one-sided in Petitioner: Jaime Ang
favor of the seller or supplier. Respondents: CA, Bruno Soledad
Citation: GR No. 214122
Date of Promulgation: June 08, 2016
It cannot be gainsaid that the DTI acted on the basis of about 273 Ponente: Carpio-Morales
consumer complaints against Aowa, averring a common and viral
scheme in carrying out its business to the prejudice of consumers. FACTS:
Complaints — filed by consumers residing not only within the NCR  Bruno Soledad: sold his Mitsubishi GSR Sedan 1982 model,
but also in the provinces20 ¾ continued to be filed even after the under a car swapping scheme, to Jaime Ang, by Deed of
formal charge and the issuance of the PMO. In this regard, we Absolute Sale dated July 28, 1992.
quote with affirmation and accord respect to the factual findings of - For his part, Ang conveyed to Soledad his Mitsubishi
the CA, to wit: Lancer model 1988, also by Deed of Absolute Sale2 of
even date. As Ang’s car was of a later model, Soledad
[Aowa], in employing the sales scheme described by customers paid him an additional P55,000.00.
in their complaints in order to entice customers to purchase [its]  Ang: a buyer and seller of used vehicles, later offered the
products clearly violated Article 52 of the Consumer Act of the Mitsubishi GSR for sale through Far Eastern Motors, a
Philippines. As found by public respondent DTI whose findings We second-hand auto display center.
heretofore adopt: - The vehicle was eventually sold to a certain Paul Bugash
(Bugash) for P225,000.00, by Deed of Absolute Sale3
"It is undisputed that the techniques/scheme employed by [Aowa] dated August 14, 1992.
were fraudulently (sic) considering that the same were being used - Before the deed could be registered in Bugash’s name,
as a bait to lure customers into buying it products. [Aowa’s] however, the vehicle was seized by virtue of a writ of
customary act of giving gifts and the so called prizes to its replevin dated January 26, 1993 issued by the Cebu City
prospective customers in order to entice them to enter the store Regional Trial Court (RTC), Branch 21 in Civil Case No.
outlet and later convincing (sic) them to purchase the products [it CEB-13503, "BA Finance Corporation vs. Ronaldo and
is] selling are (sic) but common trends (sic) that occurred in every Patricia Panes," on account of the alleged failure of
complaint lodged against [Aowa] before the DTI-NCR and regional Ronaldo Panes, the owner of the vehicle prior to
offices. In such manner, it is evident that the said scheme is Soledad, to pay the mortgage debt constituted thereon.
actually the means by which [Aowa] operates its business. Simply,  To secure the release of the vehicle: Ang paid BA Finance
it is intrinsically connected to the business itself of and had [Aowa] the amount of P62,038.476 on March 23, 1993.
not employed those techniques, customers would not have - Soledad refused to reimburse the said amount, despite
transacted with it." repeated demands, drawing Ang to charge him for Estafa
with abuse of confidence before the Office of the City
Prosecutor, Cebu City.
In doing so, [Aowa], as seller, through its representatives - By Resolution7 of July 15, 1993, the City Prosecutor’s
stationed usually in malls, entice consumers into purchasing their Office dismissed the complaint for insufficiency of
products by taking advantage of the latter’s physical or mental evidence, drawing Ang to file on November 9, 1993 the
infirmity, ignorance, illiteracy, lack of time or the general conditions first of three successive complaints for damages against
of the environment or surroundings. This is done by Soledad before the RTC of Cebu City where it was
misrepresenting to the consumer that he/she has won a gift or is docketed as Civil Case No. Ceb-14883.
to receive some giveaways when in truth, these gifts can only be  RTC Cebu: dismissed for failure to submit the controversy to
claimed or received upon purchase of an additional product or barangay conciliation
 Ang: thereafter secured a certification to file action and again In declaring that he owned and had clean title to the vehicle at the
filed a complaint for damages, raffled at RTC Cebu, Br. 14 time the Deed of Absolute Sale was forged, Soledad gave an
which was dismissed, again on the ground that the amount implied warranty of title. In pledging that he "will defend the same
involved is not within its jurisdiction from all claims or any claim whatsoever [and] will save the vendee
 Ang: filed at MTCC = dismissed on the ground of prescription from any suit by the government of the Republic of the
 RTC: , judgment is rendered directing defendant to pay Philippines," Soledad gave a warranty against eviction.
plaintiff P62,038.47, the amount the latter paid BA Finance
Corporation to release the mortgage on the vehicle, with Given Ang’s business of buying and selling used vehicles, he
interest at the legal rate computed from March 23, 1993. could not have merely relied on Soledad’s affirmation that the car
Except for this, the judgment in the decision of the trial court, was free from liens and encumbrances. He was expected to have
dated October 8, 2001 dismissing the claims of plaintiff is thoroughly verified the car’s registration and related documents.
affirmed.
 CA: reversed
Since what Soledad, as seller, gave was an implied warranty, the
prescriptive period to file a breach thereof is six months after the
ISSUE:
delivery of the vehicle, following Art. 1571. But even if the date of
1. W/N Ang’s cause of action had not yet prescribed
filing of the action is reckoned from the date petitioner instituted
when he filed the Complaint and he should not be
his first complaint for damages on November 9, 1993, and not on
blamed for paying the mortgage debt.
July 15, 1996 when he filed the complaint subject of the present
petition, the action just the same had prescribed, it having been
HELD:
filed 16 months after July 28, 1992, the date of delivery of the
vehicle.
NO.

On the merits of his complaint for damages, even if Ang invokes


The resolution of the sole issue of whether the complaint had
breach of warranty against eviction as inferred from the second
prescribed hinges on a determination of what kind of warranty is
part of the earlier-quoted provision of the Deed of Absolute Sale,
provided in the Deed of Absolute Sale subject of the present case.
the following essential requisites for such breach, vìz:

A warranty is a statement or representation made by the seller of


"A breach of this warranty requires the concurrence of the
goods, contemporaneously and as part of the contract of sale,
following circumstances:
having reference to the character, quality or title of the goods, and
(1) The purchaser has been deprived of the whole or
by which he promises or undertakes to insure that certain facts
part of the thing sold;
are or shall be as he then represents them.22
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the
Warranties by the seller may be express or implied. Art. 1546 of sale made by the vendor; and
the Civil Code defines express warranty as follows: (4) The vendor has been summoned and made co-
defendant in the suit for eviction at the instance of
"Art. 1546. Any affirmation of fact or any promise by the seller the vendee.
relating to the thing is an express warranty if the natural
tendency of such affirmation or promise is to induce the In the absence of these requisites, a breach of the warranty
buyer to purchase the same, and if the buyer purchases the against eviction under Article 1547 cannot be
thing relying thereon. No affirmation of the value of the thing, nor declared." 24 (Emphasis supplied),
any statement purporting to be a statement of the seller’s opinion
only, shall be construed as a warranty, unless the seller made
have not been met. For one, there is no judgment which deprived
such affirmation or statement as an expert and it was relied upon
Ang of the vehicle. For another, there was no suit for eviction in
by the buyer."(Emphasis and underscoring supplied)
which Soledad as seller was impleaded as co-defendant at the
instance of the vendee.
On the other hand, an implied warranty is that which the law
derives by application or inference from the nature of the
Finally, even under the principle of solutio indebiti which the RTC
transaction or the relative situation or circumstances of the parties,
applied, Ang cannot recover from Soledad the amount he paid BA
irrespective of any intention of the seller to create it.23 Among the
Finance. For, as the appellate court observed, Ang settled the
implied warranty provisions of the Civil Code are: as to the seller’s
mortgage debt on his own volition under the supposition that he
title (Art. 1548), against hidden defects and encumbrances (Art.
would resell the car. It turned out that he did pay BA Finance in
1561), as to fitness or merchantability (Art. 1562), and against
order to avoid returning the payment made by the ultimate buyer
eviction (Art. 1548).
Bugash. It need not be stressed that Soledad did not benefit from
Ang’s paying BA Finance, he not being the one who mortgaged
The earlier cited ruling in Engineering & Machinery Corp. states the vehicle, hence, did not benefit from the proceeds thereof.
that "the prescriptive period for instituting actions based on a
breach of express warranty is that specified in the contract, and in
WHEREFORE, the petition is, in light of the foregoing disquisition,
the absence of such period, the general rule on rescission of
DENIED.
contract, which is four years (Article 1389, Civil Code)."

SO ORDERED.
As for actions based on breach of implied warranty, the
prescriptive period is, under Art. 1571 (warranty against hidden
defects of or encumbrances upon the thing sold) and Art. 1548
(warranty against eviction), six months from the date of delivery of
the thing sold.

The following provision of the Deed of Absolute Sale reflecting the


kind of warranty made by Soledad reads:

xxxx

I hereby covenant my absolute ownership to (sic) the above-


described property and the same is free from all liens and
encumbrances and I will defend the same from all claims or
any claim whatsoever; will save the vendee from any suit by the
government of the Republic of the Philippines.

x x x x (Emphasis supplied)