Ang vs Court of Appeals

G.R. No. 177874          September 29, 2008

Petitioner: Jaime D. Ang

Respondent: 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. 

Full text: http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/177874.htm#_ftn22