PSC v. QUIÑONES

Philippine Steel Coating Corp. Vs. Eduard Quiñones

G.R. No. 194533

19 April 2017

Facts:

This case arose from a Complaint for damages filed by respondent Quiñones (owner of Amianan Motors) against petitioner PhilSteel. The Complaint alleged that in early 1994, Richard Lopez, a sales engineer of PhilSteel, offered Quiñones their new product: primer-coated, long-span, rolled galvanized iron (G.I.) sheets. The latter showed interest, but asked Lopez if the primer-coated sheets were compatible with the Guilder acrylic paint process used by Amianan Motors in the finishing of its assembled buses. Uncertain, Lopez referred the query to his immediate superior, Ferdinand Angbengco, PhilSteel’s sales manager.

Angbengco assured Quiñones that the quality of their new product was superior to that of the non-primer coated G.I. sheets being used by the latter in his business. Quiñones expressed reservations, as the new product might not be compatible with the paint process used by Amianan Motors.

Sometime in 1995, Quiñones received several complaints from customers who had bought bus units, claiming that the paint or finish used on the purchased vehicles was breaking and peeling off. Quiñones then sent a letter-complaint to PhilSteel invoking the warranties given by the latter. According to respondent, the damage to the vehicles was attributable to the hidden defects of the primer-coated sheets and/or their incompatibility with the Guilder acrylic paint process used by Amianan Motors, contrary to the prior evaluations and assurances of PhilSteel. Because of the barrage of complaints, Quiñones was forced to repair the damaged buses.

Issues:

1. Whether vague oral statements made by sel1er on the characteristics of a generic good can be considered warranties that may be invoked to warrant payment of damages;

2. Whether general warranties on the suitability of products sold prescribe in six (6) months under Article 1571 of the Civil Code;

3. Assuming that statements were made regarding the characteristics of the product, whether respondent as buyer is equally negligent; and

4. Whether non-payment of price is justified on allegations of breach of warranty.

Ruling:

The RTC rendered a Decision in favor of Quiñones and ordered PhilSteel to pay damages. The trial court concluded that the paint blistering and peeling off were due to the incompatibility of the painting process with the primer-coated G.I. sheets. The RTC also found that the assurance made by Angbengco constituted an express warranty under Article 1546 of the Civil Code. Quiñones incurred damages from the repair of the buses and suffered business reverses. In view thereof, PhilSteel was held liable for damages.

The CA affirmed the ruling of the RTC. The appellate court ruled that PhilSteel in fact made an express warranty that the primer-coated G.I. sheets were compatible with the acrylic paint process used by Quiñones on his bus units. 

The incompatibility was in fact acknowledged through a letter dated 29 June 1996 from Angbengco himself

The CA concurred with the RTC that attorney’s fees were in order since Quiñones was forced to file a case to recover damages.

The Supreme Court denied the petition.

This Court agrees with the CA that this is a case of express warranty under Article 1546 of the Civil Code.

An express warranty can be oral when it is a positive affirmation of a fact that the buyer relied on.

Petitioner argues that the purported warranties by mere “vague oral statements” cannot be invoked to warrant the payment of damages.

A warranty is a statement or representation made by the seller of goods – contemporaneously and as part of the contract of sale that has reference to the character, quality or title of the goods; and is issued to promise or undertake to insure that certain facts are or shall be as the seller represents them. A warranty is not necessarily written. It may be oral as long as it is not given as a mere opinion or judgment. Rather, it is a positive affirmation of a fact that buyers rely upon, and that influences or induces them to purchase the product.

Contrary to the assertions of petitioner, the finding of the CA was that the former, through Angbengco, did not simply make vague oral statements on purported warranties. Petitioner expressly represented to respondent that the primer-coated G.I. sheets were compatible with the acrylic paint process used by the latter on his bus units. This representation was made in the face of respondent’s express concerns regarding incompatibility. Petitioner also claimed that the use of their product by Quiñones would cut costs. Angbengco was so certain of the compatibility that  he suggested to respondent to assemble a bus using the primer-coated sheet and have it painted with the acrylic paint used in Amianan Motors.

The buyer cannot be held negligent in the instant case.

Negligence is the absence of reasonable care and caution that an ordinarily prudent person would have used in a given situation. Under Article 1173 of the Civil Code, where it is not stipulated in the law or the contract, the diligence required to comply with one’s obligations is commonly referred to as paterfamilias; or, more specifically, as bonos paterfamilias or “a good father of a family.” A good father of a family means a person of ordinary or average diligence.