Guinhawa vs. People

Facts:

Jaime Guinhawa was engaged in the business of selling brand new motor vehicles, including Mitsubishi vans, under the business name of Guinrox Motor Sales. His office and display room for cars were located along Panganiban Avenue, Naga City. He employed Gil Azotea as his sales manager.On March 17, 1995, Guinhawa purchased a brand new Mitsubishi L-300 Versa Van with Motor No. 4D56A-C8929 and Serial No. L069WQZJL-07970 from the Union Motors Corporation (UMC) in Paco, Manila. The van bore Plate No. DLK 406. Guinhawa’s driver, LeopoldoOlayan, drove the van from Manila to Naga City. However, while the van was traveling along the highway in Labo, Daet, Camarines Norte, Olayan suffered a heart attack. The van went out of control, traversed the highway onto the opposite lane, and was ditched into the canal parallel to the highway.The van was damaged, and the left front tire had to be replaced.The incident was reported to the local police authorities and was recorded in the police blotter.The van was repaired and later offered for sale in Guinhawa’s showroom. The couple decided to purchase the van for ₱591,000.00.On October 11, 1995, the couple arrived in Guinhawa’s office to take delivery of the van. Guinhawa executed the deed of sale, and the couple paid the ₱161,470.00 downpayment, for which they were issued Receipt No. 0309. On October 12, 1995, Josephine Silo, accompanied by Glenda Pingol, went to Manila on board the L-300 Versa Van, with Glenda’s husband, BayaniPingol III, as the driver. Their trip to Manila was uneventful.When Pingol complained to Guinhawa, the latter told him that the defects were mere factory defects. The trial court rendered judgment convicting Guinhawaguilty of the crime of Other Deceits defined and penalized under Art. 318(1) of the Revised Penal Code. The CA ruled that the private complainant had the right to assume that the van was brand new because Guinhawa held himself out as a dealer of brand new vans. According to the appellate court, the act of displaying the van in the showroom without notice to any would-be buyer that it was not a brand new unit was tantamount to deceit. Thus, in concealing the van’s true condition from the buyer, Guinhawa committed deceit.

Issue:

Whether or not there is a breach of warranty on the part of the seller Jaime Guinhawa.

Ruling:

Article 1389 of the New Civil Code provides that failure to disclose facts when there is a duty to reveal them constitutes fraud. In a contract of sale, a buyer and seller do not deal from equal bargaining positions when the latter has knowledge, a material fact which, if communicated to the buyer, would render the grounds unacceptable or, at least, substantially less desirable.If, in a contract of sale, the vendor knowingly allowed the vendee to be deceived as to the thing sold in a material matter by failing to disclose an intrinsic circumstance that is vital to the contract, knowing that the vendee is acting upon the presumption that no such fact exists, deceit is accomplished by the suppression of the truth.

On the petitioner’s insistence that the private complainant was proscribed from charging him with estafa based on the principle of caveat emptor, case law has it that this rule only requires the purchaser to exercise such care and attention as is usually exercised by ordinarily prudent men in like business affairs, and only applies to defects which are open and patent to the service of one exercising such care.

It bears stressing that Azotea and the petitioner had every opportunity to reveal to the private complainant that the van was defective. They resolved to maintain their silence, to the prejudice of the private complainant, who was a garment merchant and who had no special knowledge of parts of motor vehicles. Based on the surrounding circumstances, she relied on her belief that the van was brand new. In fine, she was the innocent victim of the petitioner’s fraudulent nondisclosure or concealment.

Digest Credit: Mac Burdeos Camposuelo

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