CASE NO.1
1548), against hidden defects and
JAIME D. ANG, Petitioner,
VS
COURT OF APPEALS AND BRUNO SOLEDAD, Respondents.
G.R. No. 177874
September 29, 2008
FACTS:
Respondent Soledad sold his car to petitioner Ang by Deed of
Absolute Sale dated July 28, 1992. Ang later offered the car he bought from
Soldedad, for sale which was eventually sold to Paul Bugash. 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 but
Soledad refused to reimburse the said amount, despite repeated demands. Ang
filed on July 15, 1996 with the MTCC a complaint which was however dismissed
on the ground of prescription since more than 6 months elapsed from the
delivery of the subject vehicle to the plaintiff buyer to the filing of this action,
pursuant to Article 1571.
Ang appealed to the RTC which affirmed the dismissal of the
complaint but required defendant to reimburse the amount plaintiff paid BA
Finance Corporation. Soledad’s Motion for Reconsideration was denied hence,
he elevated the case to the Court of Appeals and accordingly reversed the RTC
decision and denied the petition.
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.
ISSUE:
1. Whether or not the defendant Soledad in executing the Deed of
Absolute Sale declaring that, “I hereby covenant my absolute
ownership to (sic) the above-described property and the same is free
from all liens and encumbrances… xxx “ ,made an EXPRESS warranty,
the prescriptive period for which is that specified in the contract,
and in the absence of such period, the general rule on rescission of
contract, which is four years; or an IMPLIED warranty which
prescribes six months from the date of delivery of the thing sold.
2. Whether or not petitioner Ang is entitled to damages for warranty
against eviction by virtue of the writ of replevin issued on account of
the alleged failure of Ronaldo Panes, the owner of the vehicle prior
to Soledad, to pay the mortgage debt constituted on the subject
vehicle and pursuant to the declaration of defendant Soledad in the
Absolute Sale that, “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.”
HELD:
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.
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 as 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. Among the implied warranty provisions of the Civil
Code are: as to the seller’s title (Art.
encumbrances (Art. 1561), as to fitness or merchantability (Art. 1562), and
against eviction (Art. 1548).
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. Ang’s action therefore has already prescribed.
On the merits of his complaint for damages, Ang cannot recover
damages for breach of warranty against eviction due to the absence of 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.
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.
CASE NO.2
JERRY T. MOLES VS. INTERMEDIATE APPELLATE COURT AND MARIANO M.
DIOLOSA
G.R. No. 73913, January 31, 1989
FACTS:
Jerry Moles(petitioner) bought from Mariano Diolosa owner of Diolosa
Publishing House a linotype printing machine(secondhand machine). Moles
promised Diolosa that will pay the full amount after the loan from DBP worth
P50,000.00 will be released. Private respondent on return issued a certification
wherein he warrated that the machine was in A-1 condition, together with
other express warranties. After the release of the of the money from DBP,
Petitioner required the Respondent to accomplish some of the requirements.
On which the dependant complied the requirements on the same day.
On November 29, 1977, petitioner wrote private respondent that the machine
was not functioning properly. The petitioner found out that the said machine
was not in good condition as experts advised and it was worth lesser than the
purchase price. After several telephone calls regarding the defects in the
machine, private respondent sent two technicians to make necessary repairs
but they failed to put the machine in running condition and since then the
petitioner wan unable to use the machine anymore.
ISSUE/S:
1. Whether there is an implied warranty of its quality or fitness.
2. Whether the hidden defects in the machine is sufficient to warrant a
rescission of the contract between the parties.
FACTS:
1. It is generally held that in the sale of a designated and specific article sold
as secondhand, there is no implied warranty as to its quality or fitness for the
purpose intended, at least where it is subject to inspection at the time of the
sale. On the other hand, there is also authority to the effect that in a sale of
secondhand articles there may be, under some circumstances, an implied
warranty of fitness for the ordinary purpose of the article sold or for the
particular purpose of the buyer.
Said general rule, however, is not without exceptions. Article 1562 of our Civil
Code, which was taken from the Uniform Sales Act, provides:
"Art. 1562. In a sale of goods, there is an implied warranty or condition as to
the quality or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication, makes known to the seller
the particular purpose for which the goods are acquired, and it appears that
the buyer relies on the seller's skill or judgment (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be
reasonably fit for such purpose;"
2. We have to consider the rule on redhibitory defects contemplated in
Article 1561 of the Civil Code. A redhibitory defect must be an imperfection or
defect of such nature as to engender a certain degree of importance. An
imperfection or defect of little consequence does not come within the category
of being redhibitory.
As already narrated, an expert witness for the petitioner categorically
established that the machine required major repairs before it could be used.
This, plus the fact that petitioner never made appropriate use of the machine
from the time of purchase until an action was filed, attest to the major defects
in said machine, by reason of which the rescission of the contract of sale is
sought. The factual finding, therefore, of the trial court that the machine is not
reasonably fit for the particular purpose for which it was intended must be
upheld, there being ample evidence to sustain the same.
At a belated stage of this appeal, private respondent came up for the first time
with the contention that the action for rescission is barred by prescription.
While it is true that Article 1571 of the Civil Code provides for a prescriptive
period of six months for a redhibitory action, a cursory reading of the ten
preceding articles to which it refers will reveal that said rule may be applied
only in case of implied warranties. The present case involves one with an
express warranty. Consequently, the general rule on rescission of contract,
which is four years shall apply. Considering that the original case for rescission
was filed only one year after the delivery of the subject machine, the same is
well within the prescriptive period. This is aside from the doctrinal rule that
the defense of prescription is waived and cannot be considered on appeal if not
raised in the trial court, and this case does not have the features for an
exception to said rule.
MOLES v. IAC
FACTS:
Jerry Moles(petitioner) bought from Mariano Diolosa owner of Diolosa
Publishing House a linotype printing machine(secondhand machine). Moles
promised Diolosa that will pay the full amount after the loan from DBP worth
P50,000.00 will be released. Private respondent on return issued a certification
wherein he warrated that the machine was in A-1 condition, together with other
express warranties. After the release of the of the money from DBP, Petitioner
required the Respondent to accomplish some of the requirements. On which the
dependant complied the requirements on the same day.
On November 29, 1977, petitioner wrote private respondent that the machine
was not functioning properly. The petitioner found out that the said machine was
not in good condition as experts advised and it was worth lesser than the
purchase price. After several telephone calls regarding the defects in the
machine, private respondent sent two technicians to make necessary repairs but
they failed to put the machine in running condition and since then the petitioner
wan unable to use the machine anymore.
ISSUE/S:
1. Whether there is an implied warranty of its quality or fitness.
2. Whether the hidden defects in the machine is sufficient to warrant a rescission of
the contract between the parties.
HELD:
1. It is generally held that in the sale of a designated and specific article sold as
secondhand, there is no implied warranty as to its quality or fitness for the
purpose intended, at least where it is subject to inspection at the time of the
sale. On the other hand, there is also authority to the effect that in a sale of
secondhand articles there may be, under some circumstances, an implied
warranty of fitness for the ordinary purpose of the article sold or for the
particular purpose of the buyer.
Said general rule, however, is not without exceptions. Article 1562 of our Civil
Code, which was taken from the Uniform Sales Act, provides:
"Art. 1562. In a sale of goods, there is an implied warranty or condition as to
the quality or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication, makes known to the seller
the particular purpose for which the goods are acquired, and it appears that the
buyer relies on the seller's skill or judgment (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be
reasonably fit for such purpose;"
2. We have to consider the rule on redhibitory defects contemplated in Article 1561
of the Civil Code. A redhibitory defect must be an imperfection or defect of
such nature as to engender a certain degree of importance. An imperfection
or defect of little consequence does not come within the category of
being redhibitory.
As already narrated, an expert witness for the petitioner categorically established
that the machine required major repairs before it could be used. This, plus the
fact that petitioner never made appropriate use of the machine from the time of
purchase until an action was filed, attest to the major defects in said machine, by
reason of which the rescission of the contract of sale is sought. The factual
finding, therefore, of the trial court that the machine is not reasonably fit for the
particular purpose for which it was intended must be upheld, there being ample
evidence to sustain the same.
At a belated stage of this appeal, private respondent came up for the first time
with the contention that the action for rescission is barred by
prescription. While it is true that Article 1571 of the Civil Code provides for a
prescriptive period of six months for a redhibitory action, a cursory reading of
the ten preceding articles to which it refers will reveal that said rule may be
applied only in case of implied warranties. The present case involves one with
an express warranty. Consequently, the general rule on rescission of contract,
which is four years shall apply. Considering that the original case for rescission
was filed only one year after the delivery of the subject machine, the same is
well within the prescriptive period. This is aside from the doctrinal rule that the
defense of prescription is waived and cannot be considered on appeal if not
raised in the trial court, and this case does not have the features for an exception
to said rule.
CASE NO.3
G.R. No. 216098
BISHOP BRODERICK S. PABILLO, DD, PABLO R. MANALAST AS, JR., PhD,
MARIA CORAZON AKOL, CONCEPCION B. REGALADO, HECTOR A. BARRIOS,
LEO Y. QUERUBIN, AUGUSTO C. LAGMAN, FELIX P. MUGA, II, PhD, ATTY.
GREGORIO T. FABROS, EVITA L. JIMENEZ, and JAIME DL CARO, PhD,
Petitioners,
- versus - COMMISSION ON ELECTIONS, EN BANC, represented by Acting
Chairperson CHRISTIAN ROBERT S. LIM, and SMARTMATIC-TIM
CORPORATION, represented by Smartmatic Asia-Pacific President CESAR
FLORES, Respondents.
x----------------------------------------x
G.R. No. 216562
INTEGRATED BAR OF THE PHILIPPINES, Petitioner,
- versus –
COMMISSION ON ELECTIONS, represented by its acting Chairperson ROBERT
S. LIM, and SMARTMATIC-TIM CORPORATION, Respondents.
FACTS
Congress enacted Republic Act No. (RA) 8436, which authorized the COMELEC
"to use AES. The COMELEC published a Request for Proposal (RFP) for the
public bidding of the lease with option to purchase of an AES. COMELEC and
Smartmatic-TIM executed the Contract for the Provision of an Automated
Election System.
The COMELEC En Banc, in Resolution No. 8608, 18 resolved to approve the
report/recommendation of the COMELEC Special Bids and Awards Committee
(SBAC) dated June 3, 2009, confirming Smartmatic-TIM - a joint venture
company formed by Smartmatic International Corporation (Smartmatic) and
Total Information Management Corporation (TIM) - as "the bidder with the
'Lowest Calculated Responsive Bid' [LCRB] and to award the contract for the
automation of the elections on May 10, 2010 to the said joint venture.
The COMELEC was able to implement for the first time the AES on a nationwide
scale during the May 10, 2010 Synchronized National and Local Elections.
The COMELEC partially exercised the OTP when it purchased 920 units of PCOS
machines with the corresponding canvassing/consolidation system (CCS) for
the special elections in certain areas in Basilan, Lanao del Sur, and Bulacan. the
COMELEC received from SmartmaticTIM a proposal letter to "extend the
warranty" of the PCOS machines for three (3) years.The COMELEC's Law
Department issued a memorandum, with subject heading "Review of the Draft
Contract for the 2014 Extension to the Warranty (Program 1)
Prior to the scheduled May 13, 2013 Synchronized National and Local Elections,
petitioners in the consolidated cases of Capalla v. COMELEC34 (Capalla)
challenged the validity and constitutionality of Resolution No. 9376. They
further prayed for the issuance of a temporary restraining order (TRO)
enjoining the implementation of the 2012 Deed of Sale, which the Court
granted in a Resolution dated April 24, 2012. Nevertheless, the Court, in a
Decision dated June 13, 2012, ruled in favor of the COMELEC, finding that the
latter properly exercised its OTP, despite the extended period therefor, and,
accordingly, declared the 2012 Deed of Sale legal and valid.
The COMELEC received from SmartmaticTIM a proposal letter to "extend the
warranty" of the PCOS machines for three (3) years.
In its Resolution No. 2014-00240 dated August 13, 2014, the COMELEC
Advisory Council (CAC) recommended, among others, the reuse of the existing
technology for the upcoming 2016 Elections. The CAC also recommended that
the COMELEC seriously consider the use of multiple or mixed technologies to
promote interoperability and encourage innovative solutions, as well as
engaging one or more secondary technologies, which shall be likewise selected
through open public bidding.
After negotiations by the parties, the contract amount was reduced to
P240,000,000.00, exclusive of VAT, and the scope of work expanded to include
all major repairs and replacement of irreparable units, up to four percent (4%)
of all inventoried PCOS machines.
The COMELEC and Smartmatic-TIM entered into the Extended Warranty
Contract (Program 1),whereby Smartmatic-TIM undertook the following during
a five (5)-month period: (a) accomplish a physical inventory count of all the
81,896 PCOS machines with the authorized COMELEC representatives ensuring,
among others, that the serial numbers are properly recorded and annotated in
the Inventory List of the COMELEC; ( b) complete a full diagnostic of every PCOS
machine in accordance with the Diagnostic Program; ( c) examine each PCOS
machine to determine the required refurbishment to bring them back to
working condition; (d) perform a full Preventive Maintenance Program of every
PCOS machine; ( e) perform all repairs and replacements of the defective
components; and (j) provide replacement units for those PCOS machines that
are irreparable, up to a maximum of four percent (4%) of the total number of
PCOS machines after the inventory count by both parties. The following were,
however, excluded from the scope of work: (a) those PCOS machines that are
unavailable during the five ( 5) month period of the Program or those units
beyond the four percent (4%) cap; (b) those cosmetic changes or refinishing of
the machines or furnishing of the machines or furnishing supplies for such
purposes, or making specification changes; and ( c) those PCOS machines,
where persons or entities other than Smartmatic TIM authorized
representative, performed maintenance or repair services, as a result of which,
further repair or maintenance is required to be done by a Smartmatic-TIM
authorized representative to restore the machines to good working condition.
ISSUE
Whether or not the COMELEC gravely abused its discretion in issuing
Resolution No. 9922 and in subsequently entering into the Extended Warranty
Contract (Program 1) with Smartmatic-TIM.
RULING
The court GRANTED the Petition. Accordingly, COMELEC Resolution No. 9922
and the Extended Warranty Contract (Program I) are hereby declared NULL and
VOID.
The Manual of Procedures for the Procurement of Goods and Services of the
Government Procurement Policy Board (GPPB Manual) explains that the GPRA
allows the use of alternative methods of procurement in some exceptional
instances, provided: (a) there is prior approval of the Head of the Procuring
Entity on the use of alternative methods of procurement, as recommended by
the BAC; and (b) the conditions required by law for the use of alternative
methods are present. As additional requisites, (c) the Procuring Entity must
ensure that the method chosen promotes economy and efficiency, and (d) that
the most advantageous price for the government is obtained.
The Extended Warranty Contract (Program 1) cannot be validated by the mere
expedient of characterizing the same as a part of the 2009 AES Contract. The
services of repair and refurbishment cannot be procured from Smartmatic-TIM
through an "extended warranty" mode, unless this Court assents to a blatant
circumvention of the procurement law.
“There are no qualms about the task of having the PCOS machines repaired and
refurbished. However, there are serious and unignorable legal flaws about how
the COMELEC intends to pursue this undertaking. Bluntly, the COMELEC has
failed to justify its reasons for directly contracting with Smartmatic-TIM: it had
not shown that any of the conditions under Section 50, Article XVI of the GPRA
exists; its claims of impracticality were not supported by independently
verified and competent data; and lastly, its perceived “warranty extension” is,
in reality, just a circumvention of the procurement law. For all these counts, the
conclusion thus reached is that the COMELEC had committed grave abuse of
discretion amounting to lack or excess of jurisdiction.210 As a result, its
Resolution No. 9922 and the Extended Warranty Contract (Program 1) should
be stricken down, and necessarily, all amounts paid to Smartmatic-TIM
pursuant to the said contract, if any, being public funds sourced from
taxpayers’ money, should be returned to the government in accordance with
the procedures contained in existing rules and regulations. Note that the
disposition of these cases does not prohibit the COMELEC from resorting to
direct contracting anew or other alternative method of procurement with any
service contractor, subject to compliance with the conditions provided in the
GPRA and all the pertinent rules and procedures.
While this Court recognizes that the COMELEC should be given sufficient
leeway in exercising its constitutional mandate to enforce and administer all
election laws, it demands equal recognition that it is the Court’s constitutional
duty to see to it that all governmental actions are legally permissible. In so
doing, the Court decides not only with pragmatism in mind, but pragmatism
within the fair bounds of law. Such is the case in examining the COMELEC’s
apprehensions under the lens of the procurement law, with heightened
considerations of public accountability and transparency put to the fore. With
due deference to the COMELEC, it should be made to understand that this
Court does not stand to thwart the conduct of automated elections; but only
steps in to preserve its sanctity. After all, in a democracy, nothing is more vital
than an unimpaired vote.”
DOCTRINE
"Procurement of electoral services and goods constitutes a major part of the
organization of elections in terms of planning, costs and implementation
(purchasing and distribution). Integrity and transparency is thus essential; lack
of integrity in the purchasing system may put the legitimacy of the whole
electoral exercise at risk ."
The COMELEC's Law Department issued a memorandum, with subject heading
"Review of the Draft Contract for the 2014 Extension to the Warranty (Program
1)
CASE NO.4
Goodyear Philippines, Inc. vs Anthony Sy
June 29, 2010
474 SCRA 427 – Civil Law – Law on Sales – Breach of Warranties –
Contract of Sale
Goodyear Philippines was the owner of an Isuzu car which was hijacked
in 1986. Goodyear reported it to the police. PNP issued an alert alarm on
the stolen vehicle. Later that year the car was recovered. Goodyear told
PNP to lift the alarm from the recovered car.
In 1996, Goodyear sold the car to Sy. In 1997, Sy sold the car to Jose
Lee. Lee tried to register the car in his name but he was not able to do so
because apparently PNP did not lift the alert alarm over the said car. The
car was impounded and PNP sued Lee. Lee told Sy about it.
Sy then sue Goodyear for breach of warranty. Sy argued that Goodyear
has the duty to convey the vehicle to Sy free from all liens,
encumbrances and legal impediments. The RTC ruled in favor of
Goodyear. CA reversed the RTC decision.
ISSUE: Whether or not there was a breach of warranty.
HELD: No. In a contract of sale, there are implied warranties: first, the
vendor has a right to sell the thing at the time that its ownership is to
pass to the vendee, as a result of which the latter shall from then on
have and enjoy the legal and peaceful possession of the thing; and,
second, the thing shall be free from any charge or encumbrance not
declared or known to the vendee.
Goodyear did not break any of those. Certainly, the impoundment of the
car was not Goodyear’s fault and it was not a legal impediment that
deprived Sy from ownership of said car. When Sy sold the car to Lee, Sy
was already the absolute owner. This is because when Goodyear sold
the car to Sy, Goodyear transferred full ownership to Sy.
It was just unfortunate that the PNP did not lift the alert alarm from the
said car placed on it in 1986. Certainly, Goodyear has no control over the
PNP and PNP’s inaction is a purely administrative and government in
nature. Hence, Goodyear did not breach its obligation as a vendor to Sy;
neither did it violate Sy’s right for which he could maintain an action for
the recovery of damages. Without this crucial allegation of a breach or
violation, no cause of action exists.
Read full text
Notes:
Warranty defined:
A warranty is an affirmation of fact or any promise made by a vendor in
relation to the thing sold. As such, a warranty has a natural tendency to
induce the vendee — relying on that affirmation or promise — to
purchase the thing. The vendor impliedly warrants that that which is
being sold is free from any charge or encumbrance not declared or
known to the vendee. The decisive test is whether the vendor assumes
to assert a fact of which the vendee is ignorant.
Lien defined:
A lien is “a legal right or interest that a creditor has in another’s property,
lasting usually until a debt or duty that it secures is satisfied.
Encumbrance defined:
An encumbrance is “a claim or liability that is attached to property or
some other right and that may lessen its value, such as a lien or
mortgage.”
** A legal impediment is a legal “hindrance or obstruction.”
CASE NO.5
COCA-COLA BOTTLERS PHILIPPINES, INC. v. CA (1993)
FACTS:
The private respondent in this case was the owner of a school canteen
that sold soft drinks (including Coke and Sprite) and other goods to both
students and the public. One day she received some complaints from parents that
the Coke and Sprite soft drinks she sold contained fiber-like matter and other
foreign substances or particles. Testing done by the Department of Health
confirmed the presence of these substances. As a consequence of that discovery,
her sales severely plummeted, eventually costing her her job and shop.
She demanded payment of damages from the petitioner which the
latter refused.
The petitioner anchored its arguments on failure of the private
respondent to exhaust administrative remedies and prescription. The private
respondent contended that her complaint was one for damages which did not
involve administrative action and that her cause of action was based on an injury
to plaintiff’s right which can be brought within four years pursuant to Article
1146 of the Civil Code.
The trial court granted the petitioner’s motion to dismiss, reasoning
that the complaint was based on a contract and not a quasi-delict.
The Court of Appeals annulled the trial court’s orders, ruling that
petitioner’s complaint was based on a quasi-delict and not for a breach of
warranty. The action had not prescribed yet.
ISSUE:
Whether or not the action for damages should be treated as one for
breach of implied warranty against hidden defects or merchantability or one for
quasi-delict
RULING:

The action is one for quasi-delict.

The allegations in the complaint, that there was reckless and

negligent manufacture of “adulterated food items intended to be sold for public
consumption” on the part of petitioner, supported the public respondent’s
conclusion that the cause of action was based on a quasi-delict.

The vendee’s remedies against a vendor with respect to the

warranties against hidden defects of or encumbrances upon the thing sold are not
limited to those prescribed in Article 1567 of the Civil Code. The vendor could
likewise be liable for quasi-delict under Article 2176 of the Civil Code, and an
action based thereon may be brought by the vendee.

As a general rule, a pre-existing contract between the parties bars the

applicability of the law on quasi-delict. An exception to the rule is that the
liability itself may be deemed to arise from quasi-delict, such as the acts which
break the contract.

The Court has repeatedly held in past cases that the existence of a
contract between the parties does not bar the commission of a tort by the one
against the other and the consequent recovery of damages therefor.