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CA (1993)

The private respondent in this case was the owner of a school canteen that sold soft
drinks (including Coke and Sprite) and other goods to both students and the public. One day she
received some complaints from parents that the Coke and Sprite soft drinks she sold contained
fiber-like matter and other foreign substances or particles. Testing done by the Department of
Health confirmed the presence of these substances. As a consequence of that discovery, her sales
severely plummeted, eventually costing her her job and shop.
She demanded payment of damages from the petitioner which the latter refused.
The petitioner anchored its arguments on failure of the private respondent to exhaust
administrative remedies and prescription. The private respondent contended that her complaint
was one for damages which did not involve administrative action and that her cause of action
was based on an injury to plaintiffs right which can be brought within four years pursuant to
Article 1146 of the Civil Code.
The trial court granted the petitioners motion to dismiss, reasoning that the complaint
was based on a contract and not a quasi-delict.
The Court of Appeals annulled the trial courts orders, ruling that petitioners complaint
was based on a quasi-delict and not for a breach of warranty. The action had not prescribed yet.

Whether or not the action for damages should be treated as one for breach of implied
warranty against hidden defects or merchantability or one for quasi-delict

The action is one for quasi-delict.
The allegations in the complaint, that there was reckless and negligent manufacture of
adulterated food items intended to be sold for public consumption on the part of petitioner,
supported the public respondents conclusion that the cause of action was based on a quasi-delict.
The vendees remedies against a vendor with respect to the warranties against hidden
defects of or encumbrances upon the thing sold are not limited to those prescribed in Article
1567 of the Civil Code. The vendor could likewise be liable for quasi-delict under Article 2176
of the Civil Code, and an action based thereon may be brought by the vendee.

As a general rule, a pre-existing contract between the parties bars the applicability of the
law on quasi-delict. An exception to the rule is that the liability itself may be deemed to arise
from quasi-delict, such as the acts which break the contract.
The Court has repeatedly held in past cases that the existence of a contract between the
parties does not bar the commission of a tort by the one against the other and the consequent
recovery of damages therefor.