SPOUSES MARIO AND JULIA GASPAR, PETITIONERS, VS. HERMINIO ANGEL E.
DISINI, JR., JOSEPH YU, DOING BUSINESS UNDER THE NAME AND STYLE
LEGACY LENDING INVESTOR AND DIANA SALITA, RESPONDENTS
G.R. No. 239644, February 03, 2021
Caguioa, J. – First Division
NATURE OF THE ACTION:
Petition for Review on Certiorari assailing the Decision and Resolution of the Court of
Appeals, which affirmed with modification Decision of the Regional Trial Court of Manila,
Branch 18.
FACTS:
The property subject of the litigation is a year 2000 model, white Mitsubishi Pajero
originally owned by one Artemio Marquez. The subject property was mortgaged by Marquez as
security for a loan obtained from Legacy Lending Investor, which is owned by Joseph Yu.
Marquez failed to pay his loan, leading Legacy to seize the Pajero. Spouses Mario and Julia
Gaspar who are engaged in the business of buying and selling second-hand vehicles, purchased
the subject Pajero from Legacy. The Spouses Gaspar, in turn, sold the same to Herminio Disini,
Jr. About a year later, the police apprehended the subject Pajero while it was illegally parked in
Makati.
The Spouses Gaspar reimbursed Disini the amount of P400,000.00 and leaving an unpaid
balance of P760,000.00. Apart from the P150,000.00 initially returned by Yu to the Spouses
Gaspar, Yu failed to reimburse the balance of the purchase price paid by the Spouses Gaspar for
the subject Pajero in the amount of P850,000.00.
When written demand failed, Disini filed a complaint for sum of money against Rocky
and the Spouses Gaspar to collect the unpaid reimbursement of what he paid for the subject
Pajero. In turn, the Spouses Gaspar filed a third-party complaint against Yu for the unpaid
reimbursement of P850.000.00.
The RTC rendered a Decision directing: (i) Spouses Gaspar to refund the amount of
P760,000.00 in favor of Disini, (ii) Yu to reimburse Spouses Gaspar the amount of P850,000.00.
On appeal, the CA said that the sale of the subject Pajero from Yu to Spouses Gaspar gave rise to
an implied warranty of title and a concomitant implied warranty against eviction. These implied
warranties, in turn, prescribe six (6) months from date of delivery of the thing sold pursuant to
Article 1571 of the Civil Code. Here, Spouses Gaspar filed the third-party complaint against Yu
on October 9, 2006, or nearly four (4) years after delivery of the subject Pajero on July 12, 2002.
Thus, said third-party complaint was filed out of time.
ISSUE:
Whether or not the third-party complaint was filed out of time.
RULING:
The Petition is GRANTED IN PART.
The third-party complaint against Yu is based on the nullity of the COS between him and
Spouses Gaspar. The third-party complaint was thus timely filed.
By the contract of sale, one of the contracting parties obligates himself or herself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price
certain in money or its equivalent.40 In turn, the elements of a valid contract of sale are: (i)
consent or meeting of the minds; (ii) determinate subject matter; and (iii) price certain in money
or its equivalent.41 With respect to the second element, it is further required that the thing which
is the subject matter of the contract must be licit, and that the vendor must have a right to transfer
the ownership thereof at the time it is delivered.
Here, the object of the COS turned out to be a vehicle stolen from the Office of the
President which was immediately confiscated when Disini was cited for illegal parking. As a
general rule, the possession of movable property acquired in good faith is equivalent to a title.
This general rule, however, does not apply in cases where the owner of said movable property
has been unlawfully deprived of the same, as in this case where the vehicle subject of the COS
had been stolen.
Evidently, Yu had no right to transfer the ownership of the subject Pajero at the time it
was delivered to Spouses Gaspar, as the object of the COS is clearly illicit. The second element
of a valid contract of sale is consequently absent. The COS executed between Yu and Spouses
Gaspar is therefore void ab initio, pursuant to Article 1409 of the Civil Code, thus:
ART. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy;
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These contracts cannot be ratified. Neither can the right to set up the defense of illegality
be waived.
By filing a third-party complaint against Yu for the purpose of seeking reimbursement of the
purchase price they had paid for the subject Pajero, Spouses Gaspar effectively sought to declare
the COS null and void ab initio and recover what they had given on account of said void COS.
The third-party complaint thus assumes the nature of an action to declare the inexistence of a
contract which does not prescribe.
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Since none of the foregoing warranties apply, the six-month prescriptive period under Article
1571 of the Civil Code is inapplicable. As the third-party complaint filed by Spouses Gaspar
assumes the nature of an action to declare the inexistence of a contract due to its illicit object,
said complaint is imprescriptible under Article 1409. The CA thus erred when it dismissed the
third-party complaint on the ground of prescription.
