Consumer Act

Background & Objectives Alternative Theories Fraud Warranty Negligence Delict Strict Liability Tests Defenses

Background and Statutory Basis

Objectives:
(Art 2, Declaration of Basic Policy, Consumer Act) Protection against the hazards to health & safety; and from deceptive, unfair and unconscionable sales acts and practices To Provide: y information and education to facilitate sound choice and the proper exercise of rights by the consumer y Adequate rights and means of redress y Involvement of consumer reps in the formulation of social and economic policies

y Act No. 3073 An Act to Regulate the Sale of Viruses, Serums, Toxins, and Analogous Products in the Philippines y Act No. 3091 An Act to Prevent the Importation, Manufacture, Sale or Transportation w/in the Philippines of Adulterated or Misbranded Paris Green, Land Arsenates, Lime- Sulphur Compounds, Limeand other Insecticides and Fungicides, and Regulating Traffic therein, and for other Purposes

Consumer Act
Background & Objectives Alternative Theories Fraud Warranty Negligence Delict Strict Liability Tests Defenses

A. Fraud or Misrepresentation (Civil Code) Art 33 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...

yArt 50 Prohibition Against Deceptive Sales Acts or Practices yArt 51 Deceptive Sales Act or Practices By Regulation yArt 52 Unfair or Unconscionable Sales or Practice

B. Warranty
Warranty (Civil Code) any affirmation of fact or promise by the seller relating to the thing May be express or implied [ Art 15471571]
(Against)

Art 1567
Choices of vendee in case of breach: y Accion Redhibitoria withdraw from the contract with damages y Accion Quanti Minoris proportionate reduction of price with damages CASE: Virgilio M. Del Rosario v CA & MFC Privity between the plaintiff and defendant is not necessary before liability can be imposed for breach of warranty given to the public
Privity is the relationship that exists between two or more parties to an agreement. (copyright: 1981-2005 by Gerald N. Hill and Kathleen T. Hill.)

Consumer Act
1. Formalities (Express Warranty) Art 68 Any seller or manufacturer who gives an express warranty is required to stipulate: a. b. c. d. e. f. The terms in an understandable language Parties who can avail of warranty Product and parts covered Action of warrantor in case of failure to conform to the written warranty Action of consumer to avail of warranty Period of action in case of failure to conform to the warranty

2. Duration
- Operative from the moment of sale - Enforceable Period may be stipulated by the seller and consumer - Any other implied warranty for shall endure not less than 60 days nor more than 1 year following the sale of a new product

3. Records and Reports - That distributors and retailers keep a record of all purchases covered by warranty and guaranty - That sales report be submitted to the manufacturer, producer, or importer Effect to failure to conform: - Distributor who failed to comply shall be personally liable under the warranty 4. Liability of Retailers - Subsidiary liability in case both manu/dist failed to honor the warranty - Which he may recourse to proceed against both

5. En Enforcement of Warranties and Breach (Art 68) - Rights can be enforced by presentment of claim through: 1. a warranty card 2. official receipt along with the product to be serviced or returned Options of Consumer (express Warranty)

Repaired Whole or part w/in 30 days (Extendable)

Refunded Purchase price Use of consumer til knowledge/discovery of defect

6. Lack of Privity Warranty of the manufacturer extends not only to the immediate buyer, the retailer/wholesaler, but also to the end buyer

y The liability will result if due care (of a prudent man) is not exercised in manufacturing, packaging, marketing, or distributing the product. y Special laws and Government Agencies also set standards that if not complied is tantamount to negligence

a. Civil Code Art. 2187

Manufacturers and processors of food stuff, drinks, toilet articles and similar good 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.

y Privity not required Art 2187 Art 2187

Negligence [Salas Case]

Strict Liability [Escola [Escola and Greenman Cases]

STRICT LIABILITY
y Negligence not material to incur liability

QUASI DELICT
y Fault or negligence results to liability

EscolaCoca Cola BottlingBottling vs Coca Cola Co Escola vs Co

Manufacturer incurs absolute liability when an article he placed in the market knowing that it is to be used without inspection, proves to have defect that causes injury to human being. Even in the absence of negligence manufacturers are liable because it is they who can anticipate hazards and the public cannot.

Greenman v Yuba Power Productions Greenman v Yuba Power Productions

To establish the manufacturers liability, it was sufficient that the plaintiff proved that he was injured while using the power tool in a way it was intended to be used and as a result of defect in design...the tool was unsafe for its intended use.

Salas v San Miguel Brewery

y CA ruled in favor of plaintiff. That the injury was caused by the negligence of the brewery as it is inconceivable that a bottle of beer would burst spontaneously without any defect. Note: CA did not consider Art 2187 as a strict liability rather an application of negligence theory

b. Consumer Act [Clearer justification of Strict Liability]

Art 97
Art 97

Art 99

Art 99

y Provides for liability for defective products independently at fault

y Provides for liability for defective service independently at fault

3. Four kinds of Defects 3.1 Manufacturing Defect -Defects resulting from manufacture, construction, assembly and erection 3.2 Design Defect -resulting from design and formulation 3.3 Packaging and Presentation -resulting from handling, making up, presentation or packing of products -may result from manufacturers deviation from its selfselfimposed norm in packaging

3.4 Lack of Warning, Duty to warn

Art 74. - Provision for compulsory labelling to enable consumers to obtain accurate information as to the nature, quality, and quantity of the product. Art 77. Label should state the following: a. b. c. d. e. Whether flammable or not Directions for use if necessary Warning of toxicity Wattage, voltage, amperes Process of manufacture

Consumer Act
Background & Objectives Alternative Theories Fraud Warranty Negligence Delict Strict Liability Tests Defenses

Determining a design defect:

y Consumer Expectation Test to establish the right to recover it should be proven that the product did not perform with the reasonable expectation of the user (adopted by Consumer Act) y Risk Utility Test the test is whether the defect could have been reduced or avoided by the adoption of a reasonable alternative design

reasonable alternative design

Method to find out what the consumers expect

y Adopts the consumer expectation test

consumer expectation test

Defective design Service Defective

5. Proof of Defect

a. Facts tending to show that the defect existed before the accident b. Expert testimony

Consumer Act
Background & Objectives Alternative Theories Fraud Warranty Negligence Delict Strict Liability Tests Defenses

How to determine liability of manufacturer: 1. Was the product or design faulty? 2. Did the defendant inject the defective product into the stream of commerce 3. Did the defect cause the injury

Plaintiff
y Should prove that : a. Product was defective b. Product was manufactured by the defendant c. Defective product was the cause of his injury

Defendant
y Prove that he discovered the defects and the goods were turned over to a government agency for destruction y Establish that the defect if any did not provide the condition which resulted in the injury