AUTOZENTRUM vs SPS. BERNARDO
YES
Petitioner: Autozentrum Alabang, Inc
Respondents: SPS. Miamar Bernardo and Genao Bernardo,
DTI, Asian Carmakers Corporation, Bayerishe Motoren
Citation: GR No. 214122
Date of Promulgation: June 08, 2016
Ponente:
FACTS:
 SPS. Bernardo: on November 12, 2008, bought a 2008
BMW 320i sports car in the amount of P2, 990, 000 from
Autozentrum
- Autozentrum:
o Authorized dealer of BMW
o Authorized to deliver the brand new car to SPS.
Bernardo
 October 12, 2009: SPS. Bernardo brought the car to BMW
Authohaus service of Asian Carmakers because its ABS
Brake systeme and steering column malfunctioned
 October 26, 2009: 6 days after the car’s release, SPS.
Bernardo returned the car to BMW Autohaus due to
malfunctioning of the electric warning system and door lock
system.
 March 2010: the car was brought again to BMW Autohaus
because its airconditioning unit bogged down
- BMW Autohaus: repaired the car under us warranty
 September 2010: SPS. Bernardo brought the car to BMW
Autohaus, under an insurance claim, for the replacement of
its two front wheels due to the damage of its wishbone
component.
- BMW Autohaus performed the repairs and discovered
that one of the rear tires did not have Running Flat
Technology (RFT), when all of its tires should have RFT.
Upon being informed, Autozentrum replaced the ordinary
tire with an RFT tire.
 January 13, 2011: pouses Bernardo brought the car to ACC
because the car's fuel tank was leaking. ACC replaced the
fuel tank without cost to the Spouses Bernardo. On 17
January and 26 January 2011, Spouses Bernardo sent letters
to Autozentrum, demanding for the replacement of the car or
the refund of their payment.
 In his letter dated 29 January 2011: Autozentrum's
Aftersales Manager Ron T. Campilan (Campilan) replied that
the car purchased by Spouses Bernardo was certified pre-
owned or used, and that Autozentrum's legal department was
still examining their demand.
 February 24, 2011: Spouses Bernardo filed a complaint for
refund or replacement of the car and damages with the DTI
against respondents Autozentrum, ACC, and Bayerishe
Motoren Werke (BMW) A.G. for violation of Article 50(b) and
(c), in relation to Article 97, of the Consumer Act of the
Philippines or Republic Act No. (RA) 7394.
 DTI RULING: DTI Hearing Officer Maria Fatima B.
Pacampara (Hearing Officer) ruled that:
1. Autozentrum violated the Consumer Act of the
Philippines particularly the provisions on defective
products and deceptive sales. In concluding that the car
was defective, the Hearing Officer considered that the
major malfunctions in the car do not usually happen in
such a short period of usage, and Autozentrum did not
present proof that the malfunctions were caused by
ordinary wear and tear.
2. The Hearing Officer further held Autozentrum liable for
deceptive sales because the car was not brand new at
the time of sale, contrary to what Autozentrum
represented to Spouses Bernardo.
3. However, the Hearing Officer exculpated ACC and
BMW, since there was no proof that the defects were due
to design and manufacturing, and they were not privy to
the sale of the car.
 DTI APPEALS: affirmed
 CA: in favor SPS. Bernardo; car was defective and not brand
new
ISSUES:
1. W/N the car sold was defective and not brand new?
2. W/N Autozentrum shall be held liable under Article 97 of
RA 7394?
HELD:
1.
Article 97. Liability for the Defective Products. - Any Filipino or
foreign manufacturer, producer, and any importer, shall be liable
for redress, independently of fault, for damages caused to
consumers by defects resulting from design, manufacture,
construction, assembly and erection, formulas and handling and
making up, presentation or packing of their products, as well as
for the insufficient or inadequate information on the use and
hazards thereof.
A product is defective when it does not offer the safety
rightfully expected of it, taking relevant circumstances into
consideration, including but not limited to:
a) presentation of product;
b) use and hazards reasonably expected of it;
c) the time it was put into circulation.
A product is not considered defective because another better
quality product has been placed in the market.
The manufacturer, builder, producer or importer shall not be held
liable when it evidences:
a) that it did not place the product on the market;
b) that although it did place the product on the market such
product has no defect;
c) that the consumer or a third party is solely at fault.11 (Emphasis
supplied)crala
RA 7394 specifically provides that an act of a seller
is deceptive when it represents to a consumer that a product is
new, original or unused, when in fact, it is deteriorated, altered,
reconditioned, reclaimed or second-hand. A representation is not
confined to words or positive assertions; it may consist as well of
deeds, acts or artifacts of a nature calculated to mislead another
and thus allow the fraud-feasor to obtain an undue
advantage.12 Failure to reveal a fact which the seller is, in good
faith, bound to disclose may generally be classified as a deceptive
act due to its inherent capacity to deceive.13Suppression of a
material fact which a party is bound in good faith to disclose is
equivalent to a false representation.14ChanRoblesVirtualawlibrary
A case where the defendant repainted an automobile, worked it
over to resemble a new one and represented that the automobile
being sold was new, was found to be "a false representation of an
existing fact; and, if it was material and induced the plaintiff to
accept something entirely different from that which he had
contracted for, it clearly was a fraud which, upon its discovery and
a tender of the property back to the seller, entitled the plaintiff to
rescind the trade and recover the purchase
money."15ChanRoblesVirtualawlibrary
In the present case, both the DTI and the CA found that
Autozentrum sold a defective car and represented a second-hand
car as brand new to Spouses Bernardo. In finding that the
evidence weighs heavily in favor of Spouses Bernardo, the DTI
and the CA gave considerable weight to the following facts: (1) the
condition of the car in just 11 months from the date of purchase;
(2) Autozentrum's Aftersales Manager Campilan's letter declaring
that the vehicle was certified pre-owned or used; (3) one of the
tires was not RFT; and (4) the Land Transportation Office (LTO)
registration papers stating that Autozentrum was the previous
owner of the car. As public documents, the LTO registration
papers are prima facie evidence of the facts stated
therein.16ChanRoblesVirtualawlibrary
By reason of the special knowledge and expertise of the DTI over
matters falling under its jurisdiction, it is in a better position to pass
judgment on the issues; and its findings of fact in that regard,
especially when affirmed by the CA, are generally accorded
respect, if not finality, by this Court.17ChanRoblesVirtualawlibrary
Moreover, by claiming that its initial intention was for the car to be
used by one of its executive officers, Autozentrum effectively
admitted ownership of the car prior to its purchase by Spouses
Bernardo. Autozentrum failed to present evidence that its intention
did not occur. On the other hand, Autozentrum's registration of the
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
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
Petitioner: Aowa Electronic Philippines, Inc
Respondents: DTI-NCR
Citation: GR No. 189655
Date of Promulgation: April 13, 2011
Ponente: Nachura
FACTS:
 DTI-NCR’s records show that numerous administrative
complaints have been filed against Aowa Electronic
Philippines, Inc. by different consumers, or a total of at least
two hundred and seventy-three (273) from the year 2001 until
2007. The facts narrated in the said complaints consistently
contain a common thread, as follows:
1. A target customer is approached by Aowa’s
representatives, usually in a mall and informs the
former that he/she has won a gift or is to receive
some giveaways. In certain cases, when the target
customer expresses interest in the said "gift" or
giveaway, Aowa’s representatives then verbally
reveal that the same can only be claimed or received
upon purchase of an additional product or products,
which are represented to be of high quality.
However, consumer complainants allege that such
products are substantially priced.
2. An initial gift is offered to the target customer, and
upon acceptance, the customer is invited to
[Aowa’s] store/outlet. It is at that point that the
customer is informed that he/she has qualified for a
raffle draw or contest, entitling them to claim an
additional "gift." In the same manner, such additional
gift can be received only upon the purchase of
additional products, also represented to be of high
quality, and sometimes similarly alleged to be
substantially charged.
3. [In] the course of enticing the target customer to
purchase the additional product, they are physically
surrounded by Aowa’s representatives, otherwise
known to many as "ganging up" o[n] customers.
4. Although the customer is required to purchase an
additional product to claim the offered "gift/s," this is
not disclosed during the initial stages of the sales
pitch. The revelation is only done when the target
customer is being surrounded by Aowa’s
representatives within its showroom/store/outlet.
5. In some cases, when customers state that they are
short of cash, [Aowa’s] representatives urge said
customers to use their credit card or to withdraw
from an Automated Teller Machine (ATM). There are
even instances where [Aowa’s] representatives
accompany a customer to his/her residence, where
the latter can produce their (sic) means of payment.
 Aowa: denied having violated the provisions of Consumer
Act
 DTI: issued a Preventive Measure Order in order to prohibit
AOWA from the continuing with act the act complained of until
such time that a sale promotion permit is secured
 ADJUDICATION OFFICER: found that the complaints
against Aowa continued to increase despite its claims of
amicable settlement. He also found that Aowa submitted no
proof of such amicable settlement. Based on the numerous
complaints against Aowa, the Adjudication Officer held that
the DTI had sufficiently established prima facie evidence
against Aowa for violation of the applicable provisions of
Republic Act (R.A.) No. 7394, or the Consumer Act of the
Philippines (the Consumer Act), and its Implementing Rules
and Regulations (IRR). Furthermore, the Adjudication Officer
highlighted that Aowa failed to secure any Sales Promotion
Permit from the DTI for Aowa’s alleged promotional sales.
 DTI APPEALS COMMITTEE: dismissed Aowa’s appeal and
sustained the Adjudication Officer’s decision.
 CA: affirmed
ISSUES:
1. W/N he CA committed any reversible error in
affirming the findings and ruling of the Adjudication
Officer and the DTI Appeals Committee.
HELD:
NO.
Contrary to Aowa’s postulations, the DTI has the authority and the
mandate to act upon the complaints filed against Aowa. Article 2
of the Consumer Act clearly sets forth the policy of the State on
consumer protection, viz.:
ART 2. Declaration of Basic Policy. — It is the policy of the State
to protect the interests of the consumer, promote his general
welfare and to establish standards of conduct for business and
industry. Towards this end, the State shall implement measures
to achieve the following objectives:
a) protection against hazards to health and safety;
b) protection against deceptive, unfair and
unconscionable sales acts and practices;
c) provision of information and education to facilitate
sound choice and the proper exercise of rights by the
consumer;
d) provision of adequate rights and means of redress;
and
e) involvement of consumer representatives in the
formulation of social and economic policies.
This policy is reiterated in Article 48 of the Consumer Act, which
provides that "the State shall promote and encourage fair, honest
and equitable relations among parties in consumer transactions
and protect the consumer against deceptive, unfair and
unconscionable sales acts or practices." Verily, as espoused by
the OSG, the DTI validly invoked Article 159 of the Consumer Act
in order to effectuate this policy of the State by filing a formal
charge against Aowa. It is indubitable that the DTI is tasked to
protect the consumer against deceptive, unfair, and
unconscionable sales, acts, or practices, as defined in Articles 50
and 52 of the Consumer Act.19
The law is clear. Articles 50 and 52 of the Consumer Act provide:
ART. 50. Prohibition Against Deceptive Sales Acts or Practices.
— A deceptive act or practice by a seller or supplier in connection
with a consumer transaction violates this Act whether it occurs
before, during or after the transaction. An act or practice shall be
deemed deceptive whenever the producer, manufacturer, supplier
or seller, through concealment, false representation [or] fraudulent
manipulation, induces a consumer to enter into a sales or lease
transaction of any consumer product or service.
Without limiting the scope of the above paragraph, the act or
practice of a seller or supplier is deceptive when it represents that:
a) a consumer product or service has the sponsorship,
approval, performance, characteristics, ingredients,
accessories, uses, or benefits it does not have;
b) a consumer product or service is of a particular
standard, quality, grade, style, or model when in fact it is
not;
c) a consumer product is new, original or unused, when
in fact, it is in a deteriorated, altered, reconditioned,
reclaimed or second-hand state;
d) a consumer product or service is available to the
consumer for a reason that is different from the fact;
e) a consumer product or service has been supplied in
accordance with the previous representation when in fact
it is not;
f) a consumer product or service can be supplied in a
quantity greater than the supplier intends;
g) a service, or repair of a consumer product is needed
when in fact it is not;
h) a specific price advantage of a consumer product
exists when in fact it does not;
i) the sales act or practice involves or does not involve a
warranty, a disclaimer of warranties, particular warranty
terms or other rights, remedies or obligations if the
indication is false; and
j) the seller or supplier has a sponsorship, approval, or
affiliation he does not have.
 xxxx
ART. 52. Unfair or Unconscionable Sales Act or Practice. — An
unfair or unconscionable sales act or practice by a seller or
supplier in connection with a consumer transaction violates this
Chapter whether it occurs before, during or after the consumer
transaction. An act or practice shall be deemed unfair or
unconscionable whenever the producer, manufacturer, distributor,
supplier or seller, by taking advantage of the consumer's physical
or mental infirmity, ignorance, illiteracy, lack of time or the general
conditions of the environment or surroundings, induces the
consumer to enter into a sales or lease transaction grossly inimical
to the interests of the consumer or grossly one-sided in favor of
the producer, manufacturer, distributor, supplier or seller.
In determining whether an act or practice is unfair and
unconscionable, the following circumstances shall be considered:
a) that the producer, manufacturer, distributor, supplier
or seller took advantage of the inability of the consumer
to reasonably protect his interest because of his inability
to understand the language of an agreement, or similar
factors;
b) that when the consumer transaction was entered into,
the price grossly exceeded the price at which similar
products or services were readily obtainable in similar
transaction by like consumers;
c) that when the consumer transaction was entered into,
the consumer was unable to receive a substantial benefit
from the subject of the transaction;
d) that when the consumer transaction was entered into,
the seller or supplier was aware that there was no
reasonable probability or payment of the obligation in full
by the consumer; and
e) that the transaction that the seller or supplier induced
the consumer to enter into was excessively one-sided in
favor of the seller or supplier.
It cannot be gainsaid that the DTI acted on the basis of about 273
consumer complaints against Aowa, averring a common and viral
scheme in carrying out its business to the prejudice of consumers.
Complaints — filed by consumers residing not only within the NCR
but also in the provinces20 ¾ continued to be filed even after the
formal charge and the issuance of the PMO. In this regard, we
quote with affirmation and accord respect to the factual findings of
the CA, to wit:
[Aowa], in employing the sales scheme described by customers
in their complaints in order to entice customers to purchase [its]
products clearly violated Article 52 of the Consumer Act of the
Philippines. As found by public respondent DTI whose findings We
heretofore adopt:
"It is undisputed that the techniques/scheme employed by [Aowa]
were fraudulently (sic) considering that the same were being used
as a bait to lure customers into buying it products. [Aowa’s]
customary act of giving gifts and the so called prizes to its
prospective customers in order to entice them to enter the store
outlet and later convincing (sic) them to purchase the products [it
is] selling are (sic) but common trends (sic) that occurred in every
complaint lodged against [Aowa] before the DTI-NCR and regional
offices. In such manner, it is evident that the said scheme is
actually the means by which [Aowa] operates its business. Simply,
it is intrinsically connected to the business itself of and had [Aowa]
not employed those techniques, customers would not have
transacted with it."
In doing so, [Aowa], as seller, through its representatives
stationed usually in malls, entice consumers into purchasing their
products by taking advantage of the latter’s physical or mental
infirmity, ignorance, illiteracy, lack of time or the general conditions
of the environment or surroundings. This is done by
misrepresenting to the consumer that he/she has won a gift or is
to receive some giveaways when in truth, these gifts can only be
claimed or received upon purchase of an additional product or
products, again misrepresented by [Aowa to] be of high quality.
This is how [Aowa] operates its business, and not simply as a
means of promotional sale. The act sought to be avoided and
punished under the Consumer Act has clearly been committed by
Aowa.21
By reason of the special knowledge and expertise of the DTI over
matters falling under its jurisdiction, it is in a better position to pass
judgment on the issues, and its findings of fact in that regard,
especially when affirmed by the CA, are generally accorded
respect, if not finality, by this Court.22 Furthermore, Aowa failed to
refute DTI’s finding that it did not secure any permit for its alleged
promotional sales. In sum, Aowa failed to show any reversible
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
decision.
A final note.
In these trying times when fly-by-night establishments and
syndicates proliferate all over the country, lurking and waiting to
prey on innocent consumers, and ganging up on them like a pack
of wolves with their sugar-coated sales talk and false
representations disguised as "overzealous marketing strategies,"
it is the mandated duty of the Government, through its various
agencies like the DTI, to be wary and ready to protect each and
every consumer. To allow or even tolerate the marketing schemes
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
hard earned money. This Court shall not countenance these
pernicious acts at the expense of consumers.
WHEREFORE, the Petition is DENIED and the Court of Appeals
Decision dated June 23, 2009 is AFFIRMED. Costs against
petitioner.
ANG vs CA and BRUNO SOLEDAD
Petitioner: Jaime Ang
Respondents: CA, Bruno Soledad
Citation: GR No. 214122
Date of Promulgation: June 08, 2016
Ponente: Carpio-Morales
FACTS:
 Bruno Soledad: sold his Mitsubishi GSR Sedan 1982 model,
under a car swapping scheme, to Jaime Ang, by Deed of
Absolute Sale 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
replevin 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 debt 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
first of three successive complaints for damages against
Soledad before the RTC of Cebu City where it was
docketed as Civil Case No. Ceb-14883.
 RTC Cebu: dismissed for failure to submit the controversy to
barangay conciliation
 Ang: thereafter secured a certification to file action and again
filed a complaint for damages, raffled at RTC Cebu, Br. 14
which was dismissed, again on the ground that the amount
involved is not within its jurisdiction
 Ang: filed at MTCC = dismissed on the ground of prescription
 RTC: , 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.
 CA: reversed
ISSUE:
1. W/N Ang’s cause of action had not yet prescribed
when he filed the Complaint and he should not be
blamed for paying the mortgage debt.
HELD:
NO.
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

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)