Case Digest: JAIME D. ANG v. COURT OF APPEALS AND BRUNO SOLEDAD

JAIME D. ANG v. COURT OF APPEALS AND BRUNO SOLEDAD

567 SCRA 53 (2008)

Even under the principle of solutio indebiti, Ang cannot recover from Soledad the amount he paid BA Finance since Ang settled the mortgage debt on his own volition and that Soledad did not benefit therein, the latter not being the one who mortgaged the vehicle.

Under a “car-swapping” scheme, Bruno Soledad sold his Mitsubishi GSR sedan 1982 model to Jaime Ang. For his part, Ang conveyed to Soledad his Mitsubishi Lancer model 1988. 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 Paul Bugash. Before the deed could be registered in Bugash‘s name, however, the vehicle was seized by virtue of a writ of replevin 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. Soledad refused to reimburse, despite repeated demands, drawing Ang to charge him for Estafa with abuse of confidence. By Resolution, the City Prosecutor‘s Office dismissed the complaint for insufficiency of evidence, drawing Ang to file for consecutive complaints for damages against Soledad before the Regional Trial Court (RTC) of Cebu City. Subsequently, the RTC 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 then ordered Soledad to pay Ang the amount the latter paid to BA Finance.

Soledad then appealed to the Appellate Court, which reverses the decision of the RTC. The Court of Appeals dismissed Ang‘s petition on the ground that the filing of said complaint seeking the awarding of damages for breach of warranty has already prescribed.

Hence, this petition to the High Court.

ISSUE:

1) Whether or not Ang‘s cause of action had not yet prescribed when he filed the complaint
2) Whether or not Ang can recover from Soledad the amount he paid BA Finance on account of the mortgage debt

HELD:

First Issue

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. Warranties by the seller may be express or implied. Art. 1546 of the Civil Code defines express warranty – 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. 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.

The ruling in Engineering & Machinery Corporation vs. Court of Appeals 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.

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.

Second Issue
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: (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, 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.