G.R. No. 193821 , November 23, 2015
PHIL-AIR CONDITIONING CENTER, Petitioner, vs. RCJ LINES AND ROLANDO ABADILLA, JR., Respondents.

FACTS

Petitioner Phil-Air Conditioning Center (Phil-Air) sold four Carrier Paris 240 air-conditioning units for buses to respondent RCJ Lines on various dates between March 5, 1990, and August 29, 1990, for a total price of ₱1,240,000.00. RCJ Lines paid ₱400,000.00, leaving a balance of ₱840,000.00. The units were delivered, installed, and inspected by RCJ Lines’ president, Rolando Abadilla, Sr. Phil-Air performed maintenance under a one-year warranty and later upgraded the units to the Carrier Paris 280 model. RCJ Lines issued three post-dated checks totaling ₱734,994.00 to cover part of the balance, but all were dishonored—one for insufficient funds and two due to stopped payments. After demands for payment, Phil-Air filed a complaint for sum of money with a prayer for a writ of preliminary attachment on April 1, 1998. RCJ Lines admitted the purchase and partial payment but refused to pay the balance, alleging that Phil-Air breached its warranty because the units were defective and did not sufficiently cool its 45 to 49-seater buses. The Regional Trial Court (RTC) dismissed Phil-Air’s complaint, citing laches and breach of warranty, and ordered Phil-Air to pay attorney’s fees, counter-bond premium refund, and lost profits due to the attachment of two buses. The Court of Appeals affirmed the RTC decision.

ISSUE

1. Whether Phil-Air’s claim was barred by laches.
2. Whether Phil-Air should reimburse RCJ Lines for the counter-bond premium and alleged unrealized profits.
3. Whether RCJ Lines proved its alleged unrealized profits from the enforcement of the writ of attachment.
4. Whether RCJ Lines proved that Phil-Air breached its warranty.

RULING

1. No, Phil-Air’s claim was not barred by laches. The action was based on a written contract of sale, prescribable in ten years under Article 1144 of the Civil Code. Phil-Air filed the complaint on April 1, 1998, less than eight years from the execution of the sales invoice dated November 5, 1990, thus within the prescriptive period. Laches, an equitable doctrine, does not apply when the law provides a specific prescriptive period.
2. No, Phil-Air is not liable to reimburse the counter-bond premium or alleged unrealized profits. The writ of attachment was not improvidently issued, as Phil-Air’s action was based on a valid claim. The attachment bond, not Phil-Air directly, should answer for any damages from the attachment if wrongful.
3. No, RCJ Lines failed to prove its alleged unrealized profits. The evidence presented—daily cash collections from other buses in August and September 2000—was irrelevant and insufficient to establish lost profits for the nine-day attachment period in April 1999. Testimony on lost profits was speculative and not supported by competent evidence.
4. No, RCJ Lines did not prove that Phil-Air breached its warranty. RCJ Lines accepted the units upon delivery and inspection, as shown by signed delivery receipts. The one-year warranty had expired, and RCJ Lines failed to notify Phil-Air of any defects within a reasonable time or to substantiate its claim of breach with credible evidence. The testimony of Carrier Philippines’ country manager that the Carrier Paris 240 model was suited only for buses with up to 35 passengers was not conclusive, as the units were upgraded to the Carrier Paris 280 model, and RCJ Lines continued to use them for years without formal complaint.
The Supreme Court granted the petition, reversed the CA and RTC decisions, and ordered RCJ Lines to pay Phil-Air the balance of ₱840,000.00 plus legal interest at 6% per annum from judicial demand until full payment, and attorney’s fees. All counterclaims by RCJ Lines were dismissed.