G.R. No. 117363 - Pangili vs. Court of Appeals

On July 28, 1992, under a “car-swapping” scheme, respondent Bruno Soledad sold his 1982 Mitsubishi GSR sedan to petitioner Jaime Ang by Deed of Absolute Sale.
Simultaneously, Ang conveyed his 1988 Mitsubishi Lancer to Soledad by a similarly executed Deed of Absolute Sale.
Because Ang’s vehicle was of a later model, Soledad paid an additional P55,000.00 to complete the exchange.

Ang, a buyer and seller of used vehicles, later offered the Mitsubishi GSR for sale through Far Eastern Motors.
The vehicle was sold to Paul Bugash for P225,000.00 by Deed of Absolute Sale dated August 14, 1992.
Before Bugash could register the deed in his name, the vehicle was seized pursuant to a writ of replevin issued by the Cebu City RTC, Branch 21, in connection with a mortgage debt allegedly not paid by Ronaldo Panes, the vehicle’s owner prior to Soledad.

To secure the release of the vehicle, Ang paid BA Finance Corporation P62,038.47 on March 23, 1993.
Despite repeated demands, Soledad refused to reimburse Ang for the mortgage release payment.
As a result, Ang charged Soledad with Estafa with abuse of confidence before the Cebu City Prosecutor’s Office.
The prosecutor’s office dismissed the criminal complaint for insufficiency of evidence.

Ang filed his first complaint for damages on November 9, 1993, in the RTC of Cebu City (Civil Case No. Ceb-14883, Branch 19), which was dismissed for failure to submit the controversy to barangay conciliation.
A second complaint was filed (Civil Case No. Ceb-17871, Branch 14) but later dismissed on March 27, 1996, due to the amount involved exceeding the jurisdiction of that court.
On July 15, 1996, Ang filed a complaint for damages with the Municipal Trial Court in Cities (MTCC), docketed as R-36630, the subject of the instant petition.
After trial, the MTCC dismissed Ang’s complaint on the ground of prescription, noting that more than six months had elapsed from the delivery of the vehicle (dated July 28, 1992) to the filing of the action.

Ang’s motion for reconsideration in the MTCC was denied.
Ang subsequently appealed the MTCC decision to the RTC, Branch 7 which, while affirming the dismissal on prescription, rendered judgment in his favor “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 in December 2002, prompting him to elevate the case to the Court of Appeals in Cebu City.
In its decision dated August 30, 2006, the Court of Appeals focused on whether the action for damages had prescribed under the six-month period for implied warranties and reversed the RTC decision, denying Ang’s petition.

The Deed of Absolute Sale contained a provision wherein Soledad covenanted that he had absolute ownership and that the vehicle was free from liens and encumbrances, and that he would defend the vehicle from any claims, including eviction by the government.
This provision gave rise to an implied warranty of title and more specifically an implied warranty against eviction.
Ang, engaged in the business of buying and selling used vehicles, was expected to verify the vehicle’s registration and ownership details and not rely solely on Soledad’s warranty.

Despite Ang’s claim that Soledad should reimburse the amount paid to BA Finance Corporation, the Court of Appeals held that:

The warranty invoked was an implied warranty subject to a six-month prescriptive period from the date of delivery.
Ang had filed his action well beyond the allowable period.
There was no basis for reimbursement since Soledad did not benefit from Ang’s payment to settle the prior mortgage.

Thus, the appellate court affirmed that the action, whether based on breach of warranty against eviction or otherwise, had prescribed.

Whether the action for damages based on the alleged breach of warranty (specifically, implied warranty against eviction) prescribed under the six-month period provided by statute (Art. 1571, among related provisions).
Whether the filing of the complaint beyond the six-month period, despite Ang’s successive attempts, bars recovery.

Whether the warranty rendered by Soledad under the Deed of Absolute Sale should be treated as an express warranty or an implied warranty.
The implications of characterizing the warranty as implied, particularly concerning the applicable prescriptive period.

Whether Ang is entitled to recover the P62,038.47 he paid to BA Finance Corporation to release the mortgage on the vehicle.
Whether the principle of non-enrichment could justify reimbursement even in the absence of a successful breach of warranty claim.

Whether the essential elements for a breach of warranty against eviction (deprivation of the vehicle, a final judgment, a right existing prior to the sale, and the impleading of the vendor in the eviction suit) were met.
Whether the absence of these requisites precludes a successful claim for damages.