chapter 12 – product and service liability. pptx

Chapter 12 PRODUCT AND SERVICE

LIABILITYAileen D. Fajardo-Angeles

Richelle Joy FigueroaMaria 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

CHAPTER 12 : Product and Service Liability

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)


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.


Alternative Theories

1. Fraud or Misrepresentations2. Breach of Warranty3. Negligence4. Civil Liability arising from Criminal Liability5. Strict Liability


Fraud or Misrepresentations

1. Civil Code2. Consumer Act

CHAPTER 12 : Product and Service Liability – Alternative Theories

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


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


Fraud or Misrepresentation

• Article 50The 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, style, or model when in fact it is not; - is new, original or unused, when in fact , it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;



- 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;- a specific price advantage of a consumer product exists when in fact it does not;



• 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.


Fraud or MisrepresentationARTICLE 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 - court may grant an injunction restraining the conduct constituting the contravention of the above provisions and/or actual damages and such other orders to redress injury to the affected person.



1. Fraud or Misrepresentations

2. Breach of Warranty3. Negligence4. Civil Liability arising from Criminal Liability5. Strict Liability


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


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)


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 obligation to the petitioners because it was the contractor that directly purchased from them and not the petitioners. Thus, privity between the plaintiff and the defendant is not necessary before liability can be imposed for breach of warranty given to the public.

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.


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- warrantor’s action - consumer’s action- stipulation of the period


Breach of Warranty

• Other formalitiesa. Designation of warranties “Full Warranty” - meets the minimum requirements “Limited Warranty” - does not meet minimum requirements

b. Minimum standards for warranties :- remedy within a reasonable time and without charge- permit the consumer to elect whether to ask for a refund or replacement without charge


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


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


Breach of Warranty

• 4. LIABILITY OF RETAILERS

– Subsidiarily liable– Recourse – to proceed against the distributor or

manufacturer


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


Breach of Warranty

- warranty shall be immediately honored if the seller is the manufacturer’s 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 consumer’s behalf.


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.


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

– Manufacturer’s warranty • immediate buyer • retailer or wholesaler• end-buyerCHAPTER 12 : Product and Service Liability – Alternative Theories


1. Fraud or Misrepresentations2. Breach of Warranty

3. Negligence4. Civil Liability arising from Criminal Liability5. Strict Liability


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.

• ▪CHAPTER 12 : Product and Service Liability – Alternative Theories

Negligence

• Safety and quality standards for consumer acta. 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


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 demanded damages from petitioner before the RTC which dismissed the same on motion by petitioner based on the ground of Prescription. On appeal, the CA annulled the orders of 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 CA’s 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. This is supported by the allegations in the complaint which makes reference to the reckless and negligent manufacture of "adulterated food items intended to be sold for public consumption."



1. Fraud or Misrepresentations2. Breach of Warranty3. Negligence

4. Civil Liability arising from Criminal Liability

5. Strict Liability


Delict

• Civil liability arising from criminal liability



1. Fraud or Misrepresentations2. Breach of Warranty3. Negligence4. Civil Liability arising from Criminal Liability

5. Strict Liability


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.


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 which such

products are packaged or labelled• having knowledge, refuse to disclose the source of the

mislabeled or mispackaged products


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 exposes him to civil iability for damages but also to criminal liability


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)


Thank you…

chapter 12 – product and service liability. pptx

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