Liability for Product and Service (Product Liability)

Liability for the defective products

Any Filipino or foreign manufacturer, producer, and any importer, are liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, presentation or packing of their products, as well as for the insufficient or inadequate information on the use and hazards thereof.[1]

What constitutes a defective product

A product is defective when it does not offer the safety rightfully expected of it, taking relevant circumstances into consideration, including but not limited to: (a) presentation of product; (b) use and hazards reasonably expected of it; and (c) the time it was put into circulation.[2] A product is not considered defective because another better quality product has been placed in the market.[3]

Non-liability of manufacturer, builder, produce, or importer

The manufacturer, builder, producer or importer is not liable for a defective product when it is established that: (a) it did not place the product on the market; (b) although it did place the product on the market such product has no defect; or (c) the consumer or a third party is solely at fault.[4]

Liability of tradesman or seller

In relation to a defective product, the tradesman or seller is liable, pursuant to the immediately preceding paragraph when: (a) it is not possible to identify the manufacturer, builder, producer, or importer; (b) the product is supplied, without clear identification of the manufacturer, producer, builder, or importer; (c) he does not adequately preserve perishable goods.[5]

Best Legal Practices

Avoid selling items of questionable origins – As the seller may be held liable for defective products, businesses should avoid selling items which have questionable origins or those where it is not possible to identify or there is no clear identity of the manufacturer, builder, producer, or importer.

Right to recover

The party making payment to the damaged party may exercise the right to recover a part of the whole of the payment made against the other responsible parties, in accordance with their part or responsibility causing the damage.[6]

Liability for defective services

The service supplier is liable for redress, independently of fault, for damages caused to consumers by defects relating to the rendering of the services, as well as for insufficient or inadequate information on the fruition and hazards thereof.[7]

What constitutes defective service

The service is defective when it does not provide the safety the consumer may rightfully expect of it, taking the relevant circumstances into consideration, including but not limited to:  (a) the manner in which it is provided; (b) the result of hazards which may reasonably be expected of it; and (c) the time when it was provided.[8] A service is not considered defective because of the use or introduction of new techniques.[9]

Non-liability of supplier of services

The supplier of the services is not liable when it is proven that: (a) there is no defect in the service rendered; and (b) the consumer or third party is solely at fault.[10]

Liability for product and service imperfection

The suppliers of durable or non-durable consumer products are jointly liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or decrease their value, and for those resulting from inconsistency with the information provided on the container, packaging, labels or public messages or advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts.[11]

Air Philippines Corporation v. Pennswell, Inc.
G.R. No. 172835, 13 December 2007

Plaintiff Pennswell, Inc., initiated a complaint for sum of money against defendant Air Philippines Corporation. In its defense, defendant claimed that it had justification for its refusal to pay as the plaintiff committed fraud in delivering the same set of items (various lubricants) as those previously purchased by defendant in violation of their contract. To establish the similarity, defendant sought to compel plaintiff to disclose the chemical components of the latter’s products. To which, plaintiff refused on the ground that such were confidential trade secrets which are privileged in character. The trial court agreed with plaintiff.

HELD: Plaintiff was correct. “In the case at bar, [defendant] cannot rely on Section 77 of Republic Act 7394, or the Consumer Act of the Philippines, in order to compel respondent to reveal the chemical components of its products.  While it is true that all consumer products domestically sold, whether manufactured locally or imported, shall indicate their general make or active ingredients in their respective labels of packaging, the law does not apply to [plaintiff].  [Plaintiff’s] specialized lubricants — namely, Contact Grease, Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry Lubricant and Anti-Seize Compound — are not consumer products.  ‘Consumer products,’ as it is defined in Article 4(q), refers to goods, services and credits, debts or obligations which are primarily for personal, family, household or agricultural purposes, which shall include, but not be limited to, food, drugs, cosmetics, and devices.  This is not the nature of [plaintiff’s] products.  Its products are not intended for personal, family, household or agricultural purposes.  Rather, they are for industrial use, specifically for the use of aircraft propellers and engines.”

Alternatives after 30-day period

If the imperfection is not corrected within 30 days, the consumer may alternatively demand at his option: (a) the replacement of the product by another of the same kind, in a perfect state of use,[12] (b) the immediate reimbursement of the amount paid, with monetary updating, without prejudice to any losses and damages, or (c) a proportionate price reduction.[13] The parties may agree to reduce or increase the 30-day period, but the same cannot be less than 7 nor more than 180 days.[14]

Non-applicability of 30-day period

The consumer may make immediate use of the alternatives mentioned above when by virtue of the extent of the imperfection, the replacement of the imperfect parts may jeopardize the product quality or characteristics, thus decreasing its value.[15]

Liability for product quantity imperfection

Suppliers are jointly liable for imperfections in the quantity of the product when, in due regard for variations inherent thereto, their net content is less than that indicated on the container, packaging, labeling or advertisement, the consumer having powers to demand, alternatively, at his own option: (a) the proportionate price; (b) the supplementing of weight or measure differential; (c) the replacement of the product by another of the same kind, mark or model, without said imperfections; or (d) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages, if any.[16]

Liability for service quality imperfection

The service supplier is liable for any quality imperfections that render the services improper for consumption or decrease their value, and for those resulting from inconsistency with the information contained in the offer or advertisement, the consumer being entitled to demand alternatively at his option: (a) the performance of the services, without any additional cost and when applicable; (b) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages, if any; (c) a proportionate price reduction.[17]

What constitutes improper service

Improper services are “those which prove to be inadequate for purposes reasonably expected of them and those that fail to meet the provisions of [the Consumer Code] regulating service rendering.”[18]

Repair service obligation

When services are provided for the repair of any product, the supplier is considered implicitly bound to use adequate, new, original replacement parts, or those that maintain the manufacturer’s technical specifications unless, otherwise authorized, as regards to the latter by the consumer.[19]

Ignorance of quality imperfection

The supplier’s ignorance of the quality imperfections due to inadequacy of the products and services does not exempt him from any liability.[20]

Legal guarantee of adequacy

The legal guarantee of product or service adequacy does not require an express instrument or contractual exoneration of the supplier being forbidden.[21]

Prohibition in contractual stipulation

The stipulation in a contract of a clause preventing, exonerating or reducing the obligation to indemnify for damages effected, as provided for in the preceding paragraphs, is prohibited. [22] If there is more than one person responsible for the cause of the damage, they are to be jointly liable for the redress established in the pertinent provisions of the law. [23] However, if the damage is caused by a component or part incorporated in the product or service, its manufacturer, builder or importer and the person who incorporated the component or part are jointly liable.[24]

 

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[1] Ibid. Paragraph 1, Article 97. The DTI enforces the provisions on liability for product and service (Article 96, Ibid.).

[2] Ibid. Paragraph 2, Article 97.

[3] Ibid. Paragraph 3, Article 97.

[4] Ibid. Paragraph 4, Article 97.

[5] Ibid. Article 98.

[6] Ibid.

[7] R.A. 7394, Paragraph 1, Article 99.

[8] Ibid. Paragraph 2, Article 99.

[9] Ibid. Paragraph 3, Article 99.

[10] Ibid. Paragraph 4, Article 99.

[11] Ibid. Paragraph 1, Article 100.

[12] If the consumer opts for this alternative, and replacement of the product is not possible, it may be replaced by another of a different kind, mark or model: Provided, That any difference in price may result thereof shall be supplemented or reimbursed by the party which caused the damage, without prejudice to the rules on 30-day period (Paragraph 4, Article 100).

[13] R.A. 7394, Paragraph 2, Article 100.

[14] Ibid. Paragraph 3, Article 100.

[15] Ibid. Paragraph 4, Article 100.

[16] Ibid. Paragraph 1, Article 101. The immediate supplier shall be liable if the instrument used for weighing or measuring is not gauged in accordance with official standards (Paragraph 3, Article 101, Ibid.)

[17] Ibid. Paragraph 1, Article 102. Re-performance of services may be entrusted to duly qualified third parties, at the supplier’s risk and cost (Paragraph 2, Article 102, Ibid.)

[18] Ibid. Paragraph 3, Article 102.

[19] Ibid. Article 103.

[20] Ibid. Article 104.

[21] Ibid. Article 105.

[22] Ibid. Article 106.

[23] Ibid. Article 106.

[24] Ibid. Article 106.