477 SCRA 666 Fernando Carrascoso, Jr. vs Court of Appeals477 SCRA 666 – Civil Law – Law on Sale – Contract to Sell vs Contract of SaleFACTS: In March 1972, El Dorado Plantation, Inc. (El Dorado), through its board member Lauro Leviste, executed a Deed of Sale with Fernando Carrascoso, Jr. The subject of the sale was a 1,825 hectare of land. It was agreed that Carrascoso was to pay P1.8M.; that P290K would be paid by Carrascoso to PNB to settle the mortgage upon the said land. P210k would be paid directly to Leviste. The balance of P1.3M plus 10% interest would be paid over the next 3 years at P519k every 25th of March. Leviste also assured that there were no tenants hence the land does not fall under the Land Reform Code. Leviste allowed Carrascoso to mortgage the land which the latter did.Carrascoso obtained a total of P1.07M as mortgage and he used the same to pay the down payment agreed upon in the contract. Carrascoso defaulted from his obligation which was supposed to be settled on March 25, 1975. Leviste then sent him letters to make good his end of the contract otherwise he will be litigated.In 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the sale was the same land sold to Carrascoso by Leviste but it was only the 1000 sq. m. portion thereof. The land is to be sold at P3M. Part of the terms and conditions agreed upon was that Carrascoso is to remove all tenants from the land within one year. He was also being given a 6-month extension in case he’ll need one. Thereafter, PLDT will notify Carrascoso if whether or not PLDt will finalize the sale. Eventually, PLDT gained possession of the land.Meanwhile, El Dorado filed a civil case against Carrascoso. PLDT intervened averring that it was a buyer in good faith. The Regional Trial Court (RTC) ruled in favor of Carrascoso. The Court of Appeals (CA) reversed the RTC ruling.ISSUE: What is the nature of each contract?HELD: The contract executed between El Dorado and Carrascoso was a contract of sale. It was perfected by their meeting of the minds and was consummated by the delivery of the property to Carrascoso. However, El Dorado has the right to rescind the contract by reason of Carrascoso’s failure to perform his obligation.A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain in money or its equivalent. The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time existed, and discharges the obligations created thereunder. Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to rescind the contract.On the other hand, the contract between Carrascoso and PLDT is a contract to sell. This is evidenced by the terms and conditions that they have agreed upon that after fulfillment of Carrascoso’s obligation PLDT has “to notify Carrascoso of its decision whether or not to finalize the sale.”Side Issue: Carrascoso also averred that there was a breach on El Dorado’s part when it comes to warranty. Carrascoso claimed that there were tenants on the land and he spent

about P2.9M relocating them. The SC ruled that Carrascoso merely had a bare claim without additional proof to support it.Requisites of Express warranty in a Contract of Sale(1) the express warranty must be an affirmation of fact or any promise by the seller relating to the subject matter of the sale;(2) the natural tendency of such affirmation or promise is to induce the buyer to purchase the thing; and(3) the buyer purchases the thing relying on such affirmation or promise thereon. Ang vs Court of Appeals, G.R. No. G.R. No. 177874 Petitioner: Jaime D. AngRespondent: Court of Appeals and Bruno Soledad

FACTS: Under a “car-swapping” scheme, respondent Soledad sold his Mitsubishi GSR sedan 1982 model to petitioner Ang by Deed of Absolute Sale dated July 28, 1992. Ang 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. 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 the amount of P62,038.47. Soledad refused to reimburse the said amount, despite repeated demands, drawing Ang to charge him for Estafa with abuse of confidence. It was dismissed later for insufficiency of evidence. Ang filed the first complaint for damages against Soledad. It was 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 which was dismissed on the ground that the amount involved is not within its jurisdiction. Ang thereupon filed with the Municipal Trial Court in Cities (MTCC) a complaint the subject of the instant petition. After trial, the MTCC dismissed the complaint on the ground of prescription pursuant to Article 1571.Ang appealed to the RTC 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.” Soledad’s Motion for Reconsideration was denied. He elevated the case to the Court of Appeals. The appellate court accordingly reversed the RTC decision and denied Ang’s motion for reconsideration.

ISSUE: Whether Ang’s cause of action has prescribed

RULING: 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. Art. 1546 of the Civil Code defines express warranty. 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).” 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.

CARLOS B. DE GUZMAN, vs. TOYOTA CUBAO, INC.,G.R. NO. 141480, November 29, 2006

FACTS: On November 27, 1997, BUYER purchased from SELLER a brand new vehicle. The vehicle was delivered to BUYER two days later. On October 18, 1998, BUYER demanded the replacement of the engine of the vehicle because it developed a crack after traversing Marcos Highway during a heavy rain. As BUYER knows no reason why the vehicle's engine would crack just like that, the same could only be due to the fact that said engine and/or the vehicle itself was defective even from the time it was bought. BUYER asserted that respondent should replace the engine with a new one based on an implied warranty. SELLER refused to answer for this defect saying it is not covered by the vehicle's warranty. It refused to replace the vehicle as BUYER demanded (or at least its engine, or even repair the damage). He further alleged that the BUYER's cause of action had prescribed as the case was filed more than six months from the date the vehicle was sold and/or delivered.ISSUES:1) Whether the SELLER is liable for the redhibitory defects of the vehicle.

2) Whether the BUYER's cause of action had prescribed.RULING:The pertinent provisions of the Code set forth the available remedies of a buyer against the seller on the basis of a warranty against hidden defects:Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of this trade or profession, should have known them. (Emphasis supplied)Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereof.This provision shall not apply if the contrary has been stipulated and the vendor was not aware of the hidden faults or defects in the thing sold.Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months from the delivery of the thing sold.

Wherefore, the SELLER is not liable for the defects and a redhibitory action for violation of an implied warranty against hidden defects has been time-barred.