Chapter 12 PRODUCT AND SERVICE LIABILITY

Aileen D. Fajardo-Angeles Richelle Joy Figueroa Maria Joyvinella S. Florido Mereyll Kyla Irader

Statutory basis
Product Liability Law
law which governs the liability of manufacturers and sellers for damages resulting from defective products based on fraud, warranty, negligence or strict liability

Statutory Basis:
Civil Code (Articles 33, 2176 and 2187) Consumer Act of the Philippines
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Statutory Basis
Laws passed prior to the enactment of Consumer Act
Act 3073 - to regulate the sale of viruses, serums, toxins Act 3091 to prevent the importation of adulterated or misbranded paris green, lead arsenates, etc and other insecticides and fungicides Act 3595 to regulate the sale of galvanized iron, barbed wire, and nails Act 3596 to prevent adulteration and deception in the sale of paints and paint materials Act 3740 - to penalize fraudulent advertising, mislabeling or misbranding of any product, stocks, bonds, etc. (above laws have penal provisions which give rise to civil liability)

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Consumer Act of the Philippines

Art 2. It is the policy of the State to protect the interests of the consumer, promote his general welfare and to establish standards of conduct for business and industry. Towards this end, the State shall implement measures to achieve the following objectives:
Protection against hazards to health and safety; Protection against deceptive, unfair and unconscionable sales acts and practices; Provisions of information and education to facilitate sound choice and the proper exercise of rights by the consumer; Provision against of adequate rights and means of redress, and; Involvement of consumer representatives in the formulation of social and economic policies.

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Alternative Theories
1. Fraud or Misrepresentations 2. Breach of Warranty 3. Negligence 4. Civil Liability arising from Criminal Liability 5. Strict Liability

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Fraud or Misrepresentations
1. Civil Code 2. Consumer Act

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Fraud or Misrepresentations
Civil Code
Art 33, NCC
In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.

usual exaggeration in trade are not actionable misrepresentations

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Fraud or Misrepresenttaion
Consumer Act, Chapter I, Title III
Art 50. Prohibition Against Deceptive Sales Acts or Practices Art 51. Deceptive Sales Act or Practices By Regulation Art 52. Unfair or Unconscionable Sales Act or Practices
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Fraud or Misrepresentation
Article 50 The act of pratice of a seller or supplier is deceptive when it represents a consumer product or service, that : - has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses or benefits it does not have; - is of a particular standard, quality, grade, CHAPTER 12 : Product and Service Liability in Alternative style, or model when fact itTheories is not;

Fraud or Misrepresentation
- is available to the consumer for a reason that is different from the fact; - has been supplied in accordance with the previous representation when in fact it is not; - can be supplied in a quantity greater than the supplier intends; - a service or repair of a consumer product is needed when in fact it is not; CHAPTER 12 : Product and Service Liability Alternative Theories - a specific price advantage of a consumer

Fraud or Misrepresentation
Article 51

The department, after due notice and hearing, promulgate regulations declaring as deceptive any sales act, practice or technique which is a misrepresentation of facts other than those enumerated in Art. 50.
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Fraud or Misrepresentation
ARTICLE 52 Circumstances to determine whether an act or practice is unfair to consumer: - inability to understand the language of an agreement - price grossly exceeded the price of similar products or services - unable to receive substantial benefit - transaction was excessively one-sided in favor of the seller or supplier Section 60 -and court may grant an injunction CHAPTER 12 : Product Service Liability Alternative Theories restraining the conduct constituting the contravention of the

Alternative Theories
1. Fraud or Misrepresentations

2. Breach of Warranty
3. Negligence 4. Civil Liability arising from Criminal Liability 5. Strict Liability

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Breach of Warranty
Warranty, Civil Code Any affirmation of fact or any promise by the seller relating to the thing, the necessary tendency of which is to induce the buyer to purchase the same, and the buyer purchases the thing relying thereon. (Art 1546) May be express or implied
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Breach of Warranty
Implied warranties :
Art .1561 warranty against hidden defects Art. 1562 warranty as to the quality or fitness of the goods and merchantability Art. 1566 responsibility of vendor to vendee for any hidden faults or defects in the thing sold Art 1567 vendee may elect between withdrawing from the contract (accion redhibitoria), and demanding a proportionate reduction of the price with damages in either cases (accion quanti minoris)
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Breach of Warrranty
Case: Virgilio M. del Rosario Vs. CA and Metal Forming Corp.
Facts : Petitioners were convinced to purchase the roofing materials because the manufacturer advertised through the media and brochures the alleged durability of its tiles and the sturdiness of its roofing materials installed in accordance with its particularly described method. It also claimed that the materials are STRUCTURALLY SAFE AND STRONG and the tile structure acts as a single unit against wind and storm due to strong hook action of its overlaps. Issue: Whether the manufacturer is liable for damages.

Held: The SC imposed liability in the basis of Art 1546 and rejected the argument of the manufacturer that it had no

Breach of Warranty
Warranty, Consumer Act
Article 67 recognizes that the provisions of the CC on conditions and warranties shall govern all contracts of sale with conditions and warranties
Article 68 and other provisions of the Consumer Act added certain rules that govern warranties in sale of consumer products. Any covenant or stipulation contrary to the provisions are considered null and void.
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Breach of Warranty
1. FORMALITIES (Art. 68) Requirements when express warranty is given with regards to: - terms of warranty and identity of warrantor - identification of the party - products or parts covered - warrantors action consumers CHAPTER 12: Product and Service action Liability Alternative Theories

Breach of Warranty
Other formalities a. Designation of warranties Full Warranty - meets the minimum requirements Limited Warranty - does not meet minimum requirements b. Minimum standards for warranties : - remedy reasonable and CHAPTER 12 : Product within and Servicea Liability Alternativetime Theories

Breach of Warranty
2. DURATION (Art. 68 [b], Consumer Act)
operative from the moment of sale. stipulation of the period equal duration (implied warranty + express warranty) not less than 60 days nor more than 1 year

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Breach of Warranty
3. RECORDS and REPORTS
keep a record of all purchases covered by a warranty or guarantee for such period of time to submit a sales report to the manufacturer, producer or imported within 30 days from date of purchase Art 68 [1]) registration is sufficient to impose liability to manufacturer, producer or importer under its warranty Art 68 [2])- the manufacturer shall be obligated to make good the warrranty at the expense of the distributor

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Breach of Warranty
4. LIABILITY OF RETAILERS
Subsidiarily liable Recourse to proceed against the distributor or manufacturer

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Breach of Warranty
5. ENFORCEMENT OF WARRANTIES AND BREACH (Art. 68)
Rules on the enforcement of the warranties:

- by presentment of a claim (present the warranty card of the official receipt along with the product to be serviced or returned) - no other documentary requirement shall be demanded
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Breach of Warranty
- warranty shall be immediately honored if the seller is the manufacturers factory or showroom; the same with the distributor

- retailer shall take responsibility without cost to the buyer of presenting the warranty claim to the distributor in consumers behalf.
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Breach of Warranty
Rules in case of breach of warranties
Breach of express warranty -- to have the goods repaired

or its purchase price refunded by the warrantor at the election of the consumer
Repair within 30 days Refund amount attributable to the use shall be deducted

Breach of Implied warranty may retain in the goods

and recover damages, or reject the goods, cancel and contract and recover from the seller the purchase price paid including damages.

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Breach of Warranty
6. LACK OF PRIVITY (Consumer Act)
Privity is not necessary in successfully pursuing an action for breach of warranty or in enforcing the same under the Consumer Act.
Duration of warranty is longer

Manufacturers warranty
immediate buyer retailer or wholesaler CHAPTER 12 : Product and Service Liability Alternative Theories end-buyer

Alternative Theories
1. Fraud or Misrepresentations 2. Breach of Warranty

3. Negligence
4. Civil Liability arising from Criminal Liability 5. Strict Liability

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Negligence
liability will result if due care of an ordinary prudent man was not exercised in manufacturing, packaging, marketing or distributing the product there is negligence, per se, if the manufactures products do not comply with the safety standards promulgated by appropriate government agencies specified under the Consumer Act.
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Negligence
Safety and quality standards for consumer act
a. requirements to performance, composition, contents, design, construction, finish, packaging of a consumer product b. requirements as to kind, class, grade, dimensions, weight, material c. requirements as to method of sampling, tests and codes used to check the quality of the products d. requirements as to precautions in storage, transporting and packaging e. requirements that a consumer product be marked with or accompanied by clear and adequate safety
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Negligence
COCA-COLA BOTTLERS PHILIPPINES, INC. vs. CA and MS. LYDIA GERONIMO G.R. No. 110295 October 18, 1993 FACTS: Private respondent was the proprietress of Kindergarten Wonderland Canteen in Dagupan City. In August 1989, some parents of the students complained to her that the Coke and Sprite soft drinks sold by her contained fiber-like matter and other foreign substances. She brought the said bottles for examination to DOH and it was found out that the soft drinks are adulterated. As a result, her per day sales of soft drinks severely plummeted that she had to close her shop on 12 December 1989 for losses. She CHAPTER 12 : Product damages and Service Liability Alternative Theories demanded from petitioner before the RTC

Negligence
ISSUE: WON the action for damages by the proprietress against the soft drinks manufacturer should be treated as one for breach of implied warranty under article 1561 of the CC which prescribes after six months from delivery of the thing sold. RULING: Petition Denied. The SC agrees with the CAs conclusion that the cause of action in the case at bar is found on quasi-delict under Article 1146 of the CC which prescribes in four years and not on breach of warranty under article 1562 of the same code. CHAPTER 12 : is Product and Serviceby Liability Alternative Theories This supported theallegations in the

Alternative Theories
1. Fraud or Misrepresentations 2. Breach of Warranty 3. Negligence

4. Civil Liability arising from Criminal Liability

5. Strict Liability
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Delict
Civil liability arising from criminal liability

CHAPTER 12 : Product and Service Liability Alternative Theories

Alternative Theories
1. Fraud or Misrepresentations 2. Breach of Warranty 3. Negligence 4. Civil Liability arising from Criminal Liability

5. Strict Liability

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Strict Liability
Art 2187, NCC
Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers.

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Strict Liability
privity of contract is not required under Art. 2187 because it expressly allows recovery although no contractual relation exists. The duty to warn is primarily imposed on the manufacturer but exceptionally, the wholesaler or retailer may have such obligation if they: are engaged in the packaging or labeling of such products prescribe or specify by means the manner in CHAPTER 12 : Product andproducts Service Liability Alternative Theories which such are packaged or labelled

Strict Liability
minimum labelling requirements
WON it is flammable directions for use warning of toxicity wattage, voltage or amperes process of manufacture use if necessary

failure of the manufacturer to comply with the affirmative duties imposed by law not only CHAPTER 12 : Product and Service Liability Alternative exposes him to civil iability for Theories damages but

Strict Liability
available defenses:
that it did not place the product on the market although it did place the product on the market such products has no defect the consumer or 3rd party is solely at fault there is no defect in the services rendered (supplier)
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Thank you