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Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

JAIME D. ANG, Petitioner, G.R. No. 177874

- versus - Present:

COURT OF APPEALS AND BRUNO SOLEDAD, QUISUMBING, J., Chairperson,

Respondents.
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.

Promulgated:
September 29, 2008

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DECISION

CARPIO MORALES, J.:

Under a "car-swapping" scheme, respondent Bruno Soledad (Soledad) sold his Mitsubishi GSR sedan 1982 model to
petitioner Jaime Ang (Ang) by Deed of Absolute Sale1 dated July 28, 1992. For his part, Ang conveyed to Soledad his
Mitsubishi Lancer model 1988, also by Deed of Absolute Sale2 of even date. As Ang’s car was of a later model, Soledad paid
him an additional P55,000.00.

Ang, a buyer and seller of used vehicles, later offered the Mitsubishi GSR for sale through Far Eastern Motors, a second-
hand auto display center. The vehicle was eventually sold to a certain Paul Bugash (Bugash) for P225,000.00, by Deed of
Absolute Sale3 dated August 14, 1992. Before the deed could be registered in Bugash’s name, however, the vehicle was
seized by virtue of a writ of replevin4 dated January 26, 1993 issued by the Cebu City Regional Trial Court (RTC), Branch 21
in Civil Case No. CEB-13503, "BA Finance Corporation vs. Ronaldo and Patricia Panes," on account of the alleged failure of
Ronaldo Panes, the owner of the vehicle prior to Soledad, to pay the mortgage debt5 constituted thereon.

To secure the release of the vehicle, Ang paid BA Finance the amount of P62,038.476 on March 23, 1993. Soledad refused
to reimburse the said amount, despite repeated demands, drawing Ang to charge him for Estafa with abuse of confidence
before the Office of the City Prosecutor, Cebu City. By Resolution7 of July 15, 1993, the City Prosecutor’s Office dismissed
the complaint for insufficiency of evidence, drawing Ang to file on November 9, 1993 the first8 of three successive complaints
for damages against Soledad before the RTC of Cebu City where it was docketed as Civil Case No. Ceb-14883.

Branch 19 of the Cebu City RTC, by Order9 dated May 4, 1995, dismissed Civil Case No. Ceb-14883 for failure to submit the
controversy to barangay conciliation.

Ang thereafter secured a certification to file action and again filed a complaint for damages,10 docketed as Ceb-17871, with
the RTC of Cebu City, Branch 14 which dismissed it, by Order11 dated March 27, 1996, on the ground that the amount
involved is not within its jurisdiction.

Ang thereupon filed on July 15, 1996 with the Municipal Trial Court in Cities (MTCC) a complaint,12 docketed as R-36630,
the subject of the instant petition.

After trial, the MTCC dismissed the complaint on the ground of prescription, vìz:

It appearing that the Deed of Sale to plaintiff o[f] subject vehicle was dated and executed on 28 July 1992, the complaint
before the Barangay terminated 21 September 1995 per Certification to File Action attached to the Complaint, and this case
eventually was filed with this Court on 15 July 1996, this action has already been barred since more than six (6) months
elapsed from the delivery of the subject vehicle to the plaintiff buyer to the filing of this action, pursuant to the aforequoted
Article 1571."13 (Emphasis and underscoring supplied)

His motion for reconsideration having been denied, Ang appealed to the RTC, Branch 7 of which affirmed the dismissal of the
complaint, albeit it rendered judgment in favor of Ang "for the sake of justice and equity, and in consonance with the salutary
principle of non-enrichment at another’s expense." The RTC ratiocinated:

xxxx
[I]t was error for the Court to rely on Art. 1571 of the Civil Code to declare the action as having prescribed, since the action is
not one for the enforcement of the warranty against hidden defects. Moreover, Villostas vs. Court of Appeals declared that
the six-month prescriptive period for a redhibitory action applies only to implied warranties. There is here an express
warranty. If at all, what applies is Art. 1144 of the Civil Code, the general law on prescription, which states, inter alia,
that actions ‘upon a written contract’ prescribes in ten (10) years [Engineering & Machinery Corporation vs. Court of
Appeals, G.R. No. 52267, January 24, 1996].

More appropriate to the discussion would be defendant’s warranty against eviction, which he explicitly made in the Deed of
Absolute Sale: 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…"

Still the Court finds that plaintiff cannot recover under this warranty. There is no showing of compliance with the
requisites.

xxxx

Nonetheless, for the sake of justice and equity, and in consonance with the salutary principle of non-enrichment at
another’s expense, defendant should reimburse plaintiff the P62,038.47 which on March 23, 1993 he paid BA Finance
Corporation to release the mortgage on the car. (Emphasis and underscoring supplied)14

The RTC thus disposed as follows:

Wherefore, judgment is rendered directing defendant to pay plaintiff P62,038.47, the amount the latter paid BA Finance
Corporation to release the mortgage on the vehicle, with interest at the legal rate computed from March 23, 1993. Except for
this, the judgment in the decision of the trial court, dated October 8, 2001 dismissing the claims of plaintiff is affirmed."
(Underscoring supplied)15

Soledad’s Motion for Reconsideration was denied by Order16 of December 12, 2002, hence, he elevated the case to the
Court of Appeals, Cebu City.

The appellate court, by the challenged Decision17 of August 30, 2006, noting the sole issue to be resolved whether the RTC
erred in directing Soledad to pay Ang the amount the latter paid to BA Finance plus legal interest, held that, following
Goodyear Phil., Inc. v. Anthony Sy,18 Ang "cannot anymore seek refuge under the Civil Code provisions granting award of
damages for breach of warranty against eviction for the simple fact that three years and ten months have lapsed from the
execution of the deed of sale in his favor prior to the filing of the instant complaint." It further held:

It bears to stress that the deed of absolute sale was executed on July 28, 1992, and the instant complaint dated May 15,
1996 was received by the MTCC on July 15, 1996.

While it is true that someone unjustly enriched himself at the expense of herein respondent, we agree with petitioner
(Soledad) that it is not he.

The appellate court accordingly reversed the RTC decision and denied the petition.

By Resolution19 of April 25, 2007, the appellate court denied Ang’s motion for reconsideration, it further noting that when Ang
settled the mortgage debt to BA Finance, he did so voluntarily in order to resell the vehicle, hence, Soledad did not benefit
from it as he was unaware of the mortgage constituted on the vehicle by the previous owner.

The appellate court went on to hold that Soledad "has nothing to do with the transaction anymore; his obligation ended when
he delivered the subject vehicle to the respondent upon the perfection of the contract of sale." And it reiterated its ruling that
the action, being one arising from breach of warranty, had prescribed, it having been filed beyond the 6-month prescriptive
period.

The appellate court brushed aside Ang’s contention that Soledad was the proximate cause of the loss due to the latter’s
failure to thoroughly examine and verify the registration and ownership of the previous owner of the vehicle, given that Ang is
engaged in the business of buying and selling second-hand vehicles and is therefore expected to be cautious in protecting
his rights under the circumstances.

Hence, the present recourse – petition for review on certiorari, Ang maintaining that his cause of action had not yet
prescribed when he filed the complaint and he should not be blamed for paying the mortgage debt.

To Ang, the ruling in Goodyear v. Sy is not applicable to this case, there being an express warranty in the herein subject
Deed of Absolute Sale and, therefore, the action based thereon prescribes in ten (10) years following Engineering &
Machinery Corp. v. CA20 which held that where there is an express warranty in the contract, the prescriptive period is the one
specified in the contract or, in the absence thereof, the general rule on rescission of contract.

Ang likewise maintains that he should not be blamed for paying BA Finance and should thus be entitled to reimbursement
and damages for, following Carrascoso, Jr. v. Court of Appeals,21 in case of breach of an express warranty, the seller is liable
for damages provided that certain requisites are met which he insists are present in the case at bar.

The resolution of the sole issue of whether the complaint had prescribed hinges on a determination of what kind of warranty
is provided in the Deed of Absolute Sale subject of the present case.

A warranty is a statement or representation made by the seller of goods, contemporaneously and as part of the contract of
sale, having reference to the character, quality or title of the goods, and by which he promises or undertakes to insure that
certain facts are or shall be as he then represents them.22

Warranties by the seller may be express or implied. Art. 1546 of the Civil Code defines express warranty as follows:
"Art. 1546. Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the
natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer
purchases the thing relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a
statement of the seller’s opinion only, shall be construed as a warranty, unless the seller made such affirmation or statement
as an expert and it was relied upon by the buyer."(Emphasis and underscoring supplied)

On the other hand, an implied warranty is that which the law derives by application or inference from the nature of the
transaction or the relative situation or circumstances of the parties, irrespective of any intention of the seller to create it.23
Among the implied warranty provisions of the Civil Code are: as to the seller’s title (Art. 1548), against hidden defects and
encumbrances (Art. 1561), as to fitness or merchantability (Art. 1562), and against eviction (Art. 1548).

The earlier cited ruling in Engineering & Machinery Corp. states that "the prescriptive period for instituting actions based on a
breach of express warranty is that specified in the contract, and in the absence of such period, the general rule on rescission
of contract, which is four years (Article 1389, Civil Code)."

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)

In declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute Sale was forged, Soledad gave
an implied warranty of title. In pledging that he "will defend the same from all claims or any claim whatsoever [and] will save
the vendee from any suit by the government of the Republic of the Philippines," Soledad gave a warranty against eviction.

Given Ang’s business of buying and selling used vehicles, he could not have merely relied on Soledad’s affirmation that the
car was free from liens and encumbrances. He was expected to have thoroughly verified the car’s registration and related
documents.

Since what Soledad, as seller, gave was an implied warranty, the prescriptive period to file a breach thereof is six months
after the delivery of the vehicle, following Art. 1571. But even if the date of filing of the action is reckoned from the date
petitioner instituted his first complaint for damages on November 9, 1993, and not on July 15, 1996 when he filed the
complaint subject of the present petition, the action just the same had prescribed, it having been filed 16 months after July
28, 1992, the date of delivery of the vehicle.

On the merits of his complaint for damages, even if Ang invokes breach of warranty against eviction as inferred from the
second part of the earlier-quoted provision of the Deed of Absolute Sale, the following essential requisites for such breach,
vìz:

"A breach of this warranty requires the concurrence of the following circumstances:

(1) The purchaser has been deprived of the whole or part of the thing sold;

(2) This eviction is by a final judgment;

(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and

(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared." 24
(Emphasis supplied),

have not been met. For one, there is no judgment which deprived Ang of the vehicle. For another, there was no suit for
eviction in which Soledad as seller was impleaded as co-defendant at the instance of the vendee.

Finally, even under the principle of solutio indebiti which the RTC applied, Ang cannot recover from Soledad the amount he
paid BA Finance. For, as the appellate court observed, Ang settled the mortgage debt on his own volition under the
supposition that he would resell the car. It turned out

that he did pay BA Finance in order to avoid returning the payment made by the ultimate buyer 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 vehicle,
hence, did not benefit from the proceeds thereof.

WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:
 LEONARDO A. QUISUMBING DANTE O. TINGA
Associate Justice Associate Justice
Chairperson

PRESBITERO J. VELASCO, JR. ARTURO D. BRION

Associate Justice Associate Justice
ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion
of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Foonotes

1 Exhibit "C," records, p. 86.

2 Exhibit "2," id. at 136.

3 Exhibit "D," id. at 87.

4 Exhibit "J," id. at 94.

5 See Chattel Mortgage, Exhibit "E," id. at 88.

6 Exhibit "G," id. at 91.

7 Exhibit "4," id. at 138-141.

8 Annex "A," CA rollo, pp. 38-41.

9 Annex "C", id. at 49; penned by Judge Ramon G. Codilla, Jr.

10 Annex "D," id. at 50-53.

11 Annex "G," id. at 66-67; penned by Judge Renato C. Dacudao.

12 Annex "H," id. at 68-72.

13 Annex "J," id. at 87; penned by Judge Edgemelo C. Rosales

14 Annex "K," id. at 90-91; penned by Judge Simeon Dumdum, Jr.

15 ` Id. at 91-92.

16 Annex "M," id. at 99-100.

17 Id. at 169-177; penned by Associate Justice Marlene Gonzales-Sison, with the concurrence of Associate Justices
Arsenio J. Magpale and Agustin S. Dizon.

18 G.R. No. 154554, November 9, 2005, 474 SCRA 427.

19Annex "C," CA rollo, pp. 206-209. Penned by Associate Justice Stephen C. Cruz and concurred in by Executive
Justice Arsenio J. Magpale and Associate Justice Agustin S. Dizon.

20 G.R. No. 52267, January 24, 1996, 252 SCRA 156.

21 G.R. Nos. 123672 & 164489, December 14, 2005, 477 SCRA 666.

22 De Leon, Comments and Cases on Sales 299 (2000).

 23 Id. at 304.

24 Power Commercial and Industrial Corp. v. CA, et al., G.R. No. 119745, June 20, 1997, 274 SCRA 597, 600.

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