Olongapo SubicBay BatangGapo Newscenter

Thursday, June 07, 2007

Used car sellers liable for hidden defects, says CA

The Court of Appeals has ruled that vendors of second-hand motor vehicles are responsible for the seller’s warranty against hidden defects of their sold vehicles.

In a 16-page resolution penned by Presiding Justice Ruben Reyes, chairman of the appellate court’s First Division, the CA affirmed the June 1, 2004 decision of the Tarlac City Branch 1 Municipal Trial Court in Cities (MTCC) and the April 22, 2005 decision of the Tarlac City Branch 65 Regional Trial Court.

The lower court decisions ruled in favor of respondent Jesus Concepcion in the action for breach of warranty and damages he had filed against petitioners Wilson Dy, Marianne Dy and Andrew Dy, who are engaged in the importation of used right-hand drive motor vehicles under the business name Micro-Kinetics Inc. which is based at the Subic Bay Freeport in Olongapo City.

Accoding to court records, Concepcion went to Micro-Kinetics on Dec. 2, 2002 to buy a secondhand vehicle. Concepcion was shown by Andrew Dy a secondhand Silver White Mitsubishi Pajero which he had agreed to buy for P650,000.

After inspecting the vehicle, Concepcion paid P100,000 as downpayment and paid the balance of P550,000 on Jan. 18, 2003. Upon payment of the balance, Concepcion also signed an acknowledgment receipt which read that "above unit is in used condition and has no guarantee but it is in good running condition with accessories listed on the checklist." The receipt also stated that "unit listed above is not yet insured, any accident arising from the use or misuse of the said vehicle will be the sole responsibility of the user. Micro Kinetics Inc. will not be liable for any damage caused by the accident."

On June 23, 2003, a deed of sale was executed by Marianne Dy in which she assured that the Pajero is free from any liens and encumbrances and that she will "defend the title and rights of the vendee from any claims of whatever kind or nature from third persons."

On May 17, 2003 or after four months from its delivery to Concepcion, the Pajero broke down due to a faulty automatic transmission while traversing the North Luzon Expressway.

Concepcion then invoked the seller’s implied warranty against hidden defects and asked the Dys to replace the broken transmission. The demand meanwhile went unheeded and Concepcion was forced to have the transmission replaced at his own expense for P67,000.

Reiterating the seller’s warranty against hidden defects, Concepcion asked the Dys to reimburse his repair expenses but the petitioners refused. Feeling aggrieved, Concepcion then filed a complaint against the Dys for breach of warranty and damages before the MTCC.

Concepcion argued that the Pajero that he had bought is covered by the seller’s warranty against hidden defects. He also argued that the Dys are also liable to pay him the expenses that he had incurred for the replacement of the vehicle’s faulty automatic transmission.

The Dys as argued that since the vehicle is secondhand, it is not covered by the said warranty. They referred to the acknowledgment receipt signed by Concepcion where it was declared that the vehicle has no guarantee. They also countered that because of the filing of the unfounded action, it should be Concepcion who should be the one to pay them damages.

On June 1, 2004, the MTCC decided in favor of Concepcion explaining that there is implied warranty in the sale of secondhand articles where the buyer makes known to the seller the particular purpose for which the articles are acquired and it appears that the buyer relies on the seller’s skill. The MTCC also ruled that "there is nothing in the corresponding acknowledgment receipt that would show that the warranty against hidden defects was expressly waived by respondent." The MTCC also ordered the Dys to pay Concepcion P67,000 and P20,000 in litigation expenses.
By MIKE FRIALDE - The Philippine Star

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