Consumer Product and Service Warranties

Applicable law on warranties under the Consumer Act

The provisions of the Civil Code on conditions and warranties primarily govern all contracts of sale with conditions and warranties.[1] The Consumer Act provides for additional rules on warranties as provided below.

Rules on Warranties
Consumer Code

In addition to the Civil Code provisions on sale with warranties, the following provisions are to govern the sale of consumer products with warranty:[2]

(1) Terms of express warranty – Any seller or manufacturer who gives an express warranty are required to:[3]

a. Set forth the terms of warranty in clear and readily understandable language and clearly identify himself as the warrantor;[4]

b. Identify the party to whom the warranty is extended;[5]

c. State the products or parts covered;[6]

d. State what the warrantor will do in the event of a defect, malfunction of failure to conform to the written warranty and at whose expense;[7]

e. State what the consumer must do to avail of the rights which accrue to the warranty;[8] and

f. Stipulate the period within which, after notice of defect, malfunction or failure to conform to the warranty, the warrantor will perform any obligation under the warranty.[9]

(2) Express warranty is operative from moment of sale – All written warranties or guarantees issued by a manufacturer, producer, or importer are to be operative from the moment of sale.[10]

a. Sales report – All sales made by distributors of products covered by this rule are to be reported to the manufacturer, producer, or importer of the product sold within 30 days from date of purchase, unless otherwise agreed upon.[11]

b. Failure to make or send report – Failure of the distributor to make the report or send them the form required by the manufacturer, producer, or importer relieves the latter of the liability under the warranty.[12] Further, the distributor who failed to comply with its obligation to send the sales reports are to personally liable under the warranty.[13]

c. Retail – The retailer is subsidiarily liable under the warranty in case of failure of both the manufacturer and distributor to honor the warranty. Thus, the retailer is to shoulder the expenses and costs necessary to honor the warranty.[14]

d. Enforcement of warranty or guarantee – The warranty rights can be enforced by presentment of a claim. The purchaser needs only to present to the immediate seller either the warranty card or the official receipt along with the product to be serviced or returned to the immediate seller. No other documentary requirement is to be demanded from the purchaser. The warranty is to be immediately honored: (a) by the immediate seller if it is the manufacturer’s factory or showroom; or (b) by the distributor if the product was purchased from it. In the case of a retailer other than the distributor, the retailer is to take responsibility without cost to the buyer upon presenting the warranty claim to the distributor in the consumer’s behalf.[15]

e. Record of purchases – Distributors and retailers covered by this rule are to keep a record of all purchases covered by a warranty or guarantee for such period of time corresponding to the lifetime of the product’s respective warranties or guarantees.[16]

f. Contrary stipulations: null and void – All covenants, stipulations, or agreements contrary to the provisions of this rule are void and without legal effect.[17]

(3) Designation of warranties – A written warranty is required to clearly and conspicuously designate such warranty as:[18]

a. Full warranty – if the written warranty meets the minimum requirements set forth in No. 4 below;[19] or

b. Limited warranty – if the written warranty does not meet such minimum requirements.[20]

(4) Minimum standards for warranties – For the warrantor of a consumer product to meet the minimum standards for warranty, he is to:[21]

a. Remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure to conform to such written warranty;[22]

b. Permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to have the defect or to malfunction.[23]

c. The warrantor is not to be required to perform the above duties if he can show that the defect, malfunction, or failure to conform to a written warranty was caused by damage due to unreasonable use thereof.[24]

(5) Duration of warrantyThe seller and the consumer may stipulate the period within which the express warranty are enforceable. If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration.[25] Any other implied warranty is to endure not less than 60 days nor more than one year following the sale of new consumer products.[26]

(6) Breach of warranties – Breach of warranties are subject to the following:

a. In case of breach of express warranty, the consumer may elect to have the goods repaired or its purchase price refunded by the warrantor. In case the repair of the product in whole or in part is elected, the warranty work must be made to conform to the express warranty within 30 days by either the warrantor or his representative. The 30-day period may be extended by conditions which are beyond the control of the warrantor or his representative. In case the refund of the purchase price is elected, the amount directly attributable to the use of the consumer prior to the discovery of the non-conformity is to be deducted.[27]

b. In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods, cancel the contract and recover from the seller so much of the purchase price as has been paid, including damages.[28]

De Guzman v. Toyota Cubao, Inc.
G.R. No. 141480, 29 November 2006

Plaintiff Carlos B. De Guzman initiated a complaint against defendant Toyota Cubao, Inc., for damages. Prior to the case, plaintiff purchased from defendant a white Toyota Hi-Lux 2.8 SS double cab motor vehicle for Php508,000.00. After 19 months from date of delivery, plaintiff demanded the replacement of the car’s engine as it developed a crack. Defendant responded that such damage was not covered by the warranty. Hence, plaintiff initiated this case which was subsequently dismissed by the trial court on the ground that his cause of action had prescribed following the 6 month rule in implied warranty under the Civil Code. On appeal, plaintiff claimed that the 1 year rule in the Consumer Code should have been applied.

HELD: Defendant was not liable. In the Civil Code, an implied warranty has a prescription of 6 months. “By filing this case, [plaintiff] wants to hold [defendant] responsible for breach of implied warranty for having sold a vehicle with defective engine.” Unfortunately, plaintiff’s cause of action had been time-barred as he did not exercise his right within six months from delivery of the thing sold as required under the Civil Code. He filed the case after 19 months from delivery. Even if the implied warranty under the Consumer Code is applied, the case will still be dismissed as the 1 year prescriptive period has also lapsed.

Warranties in supply of services

In every contract for the supply of services to a consumer made by a seller in the course of a business, there is an implied warranty that the services are to be rendered with due care and skill and that any material supplied in connection with such services will be reasonably fit for the purpose for which it is supplied.[29]

Reasonably fit for the purpose bought

If a seller supplies consumer services in the course of a business and the consumer, expressly or by implication, makes known to the seller the particular purpose for which the services are required, there is an implied warranty that the services supplied under the contract and any material supplied in connection therewith will be reasonably fit for that purpose or are of such a nature or quality that they might reasonably be expected to achieve that result, unless the circumstances show that the consumer does not rely or that it is unreasonable for him to rely, on the seller’s skill or judgment.[30]

Best Legal Practices

Specify in detail as to what would make a service “reasonably fit for the purpose bought” – To avoid doubts, the parties should expressly stipulate agree what would make a service “reasonably fit for the purpose bought.”

Professional services

The provision of the rules on warranty do not apply to professional services rendered by certified public accountants, architects, engineers, lawyers, veterinarians, optometrists, pharmacists, nurses, nutritionists, dietitians, physical therapists, salesmen, medical and dental practitioners, and other professionals engaged in their respective professional endeavors.[31]

Guaranty of service firms

Service firms are to guarantee workmanship and replacement of spare parts for a period not less than 90 days which period is to be indicated in the pertinent invoices.[32]

Prohibited acts

The following acts are prohibited:

  1. Refusal without any valid legal cause by the local manufacturer or any person obligated under the warranty or guarantee to honor a warranty or guarantee issued;[33]
  2. Unreasonable delay by the local manufacturer or any person obligated under the warranty or guarantee in honoring the warranty;[34]
  3. Removal by any person of a product’s warranty card for the purpose of evading said warranty obligation;[35] and
  4. Any false representation in an advertisement as to the existence of a warranty or guarantee.[36]

 

– – –

[1] Ibid. Article 67. The DTI is to strictly enforce the provisions consumer product and service warranties (Article 66, Ibid.)

[2] Ibid. Article 68.

[3] Ibid. Article 68 (a).

[4] Ibid. Article 68 (a) (1).

[5] Ibid. Article 68 (a) (2).

[6] Ibid. Article 68 (a) (3).

[7] Ibid. Article 68 (a) (4).

[8] Ibid. Article 68 (a) (5).

[9] Ibid.7394, Article 68 (a) (6).

[10] Ibid. 7394, Article 68 (b).

[11] Ibid. Article 68 (b) (1). The report must contain, among others, the date of purchase, model of the product bought, its serial number, name and address of the buyer. The report made in accordance with this provision is equivalent to a warranty registration with the manufacturer, producer, or importer. Such registration is sufficient to hold the manufacturer, producer, or importer liable, in appropriate cases, under its warranty (Ibid.).

[12] Ibid. Article 68 (b) (2). For this purpose, the manufacturer shall be obligated to make good the warranty at the expense of the distributor (Ibid.).

[13] Ibid. Article 68 (b) (2). For this purpose, the manufacturer shall be obligated to make good the warranty at the expense of the distributor (Ibid.).

[14] Ibid. Article 68 (b) (3). Nothing therein prevents the retailer from proceeding against the distributor or manufacturer (Ibid).

[15] Ibid. Article 68 (b) (4).

[16] Ibid. Article 68 (b) (5).

[17] Ibid. Article 68 (b) (6).

[18] Ibid. Article 68 (c).

[19] Ibid. Article 68 (c) (1).

[20] Ibid. Article 68 (c) (2).

[21] Ibid. Article 68 (d).

[22] Ibid. Paragraph 1, Article 68 (d) (1).

[23] Ibid. Paragraph 1, Article 68 (2).

[24] Ibid. Paragraph 2, Article 68.

[25] Ibid. Paragraph 1, Article 68 (e).

[26] Ibid. Paragraph 2, Article 68 (e).

[27] Ibid. Article 68 (f) (1).

[28] Ibid. Article 68 (f) (2).

[29] Ibid. Article 69 (a).

[30] Ibid. Article 69 (b).

[31] Ibid. Article 70.

[32] Ibid. Article 71.

[33] Ibid. Article 72 (a).

[34] Ibid. Article 72 (b).

[35] Ibid. Article 72 (c).

[36] Ibid. Article 72 (d).

Conditions and warranties in sale on seller

Sales contract with suspensive condition

If the sales contract is under a suspensive condition which is not met, the innocent party may refuse to proceed with the contract or he may waive performance of the condition.[1]

Breach of warranty

In addition to the above rule, the innocent party may also consider the non-performance of the condition as a breach of warranty if the other party has promised that the condition should happen or be performed.[2]

Continue reading here.