G.R. No. 78223 - Heirs of Guballa, Sr. vs. Court of Appeals

In July 1990, Continental Cement Corporation (CCC) engaged Asea Brown Boveri, Inc. (ABB) and BBC Brown Boveri, Corp. to repair its 160 KW Kiln DC Drive Motor under Purchase Orders Nos. 17136–17137.
The Purchase Orders provided:

Total price of ₱197,450.00
Delivery date of August 29, 1990 (six weeks from down payment)
Penalty of ₱987.25 per day of delay
General Conditions (including Clause 7 limiting liability for consequential damages) appended to ABB’s letter of offer.

First repair tested on October 3–4, 1990: test failed; CCC removed the motor, resumed operation October 9; alleged production loss of 1,040 MT per day from October 5 to 9.
Second repair tested on November 14–19, 1990: test failed; production loss of five days at 1,040 MT/day.
Third repair tested on March 13–15, 1991: test failed; production loss of two days at 1,040 MT/day.
CCC’s summary of claimed damages:

––Total: ₱10,983,017.42

October 23, 1991: CCC filed Complaint for sum of money and damages (Civil Case No. Q-91-10419) against ABB, BBC, and Tord B. Eriksson (ABB’s Service Division VP).
August 30, 1995: RTC Quezon City ruled for CCC, awarding loss of production (₱10.6 M), labor cost and crane rental (₱26,965.78), and attorney’s fees (₱100,000).
August 25, 2005: Court of Appeals (CA) reversed, applying Clause 7 to exculpate respondents and dismissing the complaint.
February 16, 2006: CA denied CCC’s motion for reconsideration.
CCC filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court.

Whether the CA gravely erred in applying the General Conditions (Clause 7) to exculpate respondents from liability.
Whether the CA seriously erred in invoking implied warranty and warranty against hidden defects under the Civil Code to exculpate respondents from their contractual obligation.