G.R. No. 110295 October 18, 1993
Coca-Cola Bottlers Philippines, Inc. vs. The Honorable Court of Appeals (Fifth Division) and Ms. Lydia Geronimo

FACTS

Lydia L. Geronimo, proprietress of the Kindergarten Wonderland Canteen in Dagupan City, filed a complaint for damages against Coca-Cola Bottlers Philippines, Inc. on May 7, 1990. She alleged that on or about August 12, 1989, parents complained that Coke and Sprite soft drinks sold at her canteen contained fiber-like matter and other foreign substances. Upon inspection, she discovered such substances in unopened bottles. Samples submitted to the Department of Health were declared “adulterated.” Consequently, her soft drink sales plummeted from 10 cases to 2-3 cases per day, causing losses of P200-P300 daily, forcing her to close the canteen on December 12, 1989. She demanded damages from Coca-Cola, which was refused. The complaint prayed for actual, compensatory, moral, and exemplary damages, attorney’s fees, and costs.
Coca-Cola moved to dismiss the complaint on grounds of failure to exhaust administrative remedies and prescription. It argued the action was for breach of implied warranty under the law on sales, which prescribes in six months from delivery per Article 1571 of the Civil Code. Geronimo countered that her action was for damages based on quasi-delict, prescribable in four years under Article 1146. The Regional Trial Court (RTC) dismissed the complaint, ruling it was based on contract (breach of warranty) and had prescribed. The Court of Appeals reversed the RTC, annulling its orders and directing further proceedings. It held the complaint was one for quasi-delict, not breach of warranty, and thus the four-year prescriptive period applied. Coca-Cola’s motion for reconsideration was denied.

ISSUE

Whether the complaint filed by Lydia Geronimo against Coca-Cola Bottlers Philippines, Inc. is an action for breach of implied warranty under the law on sales (prescribing in six months) or an action for quasi-delict (prescribing in four years).

RULING

The Supreme Court DENIED the petition, affirming the Court of Appeals’ decision. The complaint is an action for quasi-delict, prescribable in four years.
The Court ruled that a cursory reading of the complaint, particularly its allegation of the “recklessly and negligently manufacturing adulterated food items,” reveals a cause of action based on quasi-delict under Article 2176 of the Civil Code. While the vendee’s remedies for breach of implied warranty against hidden defects are primarily governed by Articles 1561 and 1567 of the Civil Code (allowing the vendee to elect between withdrawing from the contract or demanding a reduction of the price with damages), the law does not limit the action to these contractual remedies. The vendor may also be liable for quasi-delict. The existence of a contractual relation (sale of soft drinks) does not absolutely preclude an action for quasi-delict arising from negligence in the performance of a contract. An act that breaches a contract may also constitute a tort or quasi-delict. Therefore, the applicable prescriptive period is four years pursuant to Article 1146, and the complaint was filed within that period.