Consumer Rights (Torts and Damages)

8/6/2019 Consumer Rights (Torts and Damages)

1/32


2/32

Consumer Act

Background & Objectives

Alternative TheoriesFraud

Warranty

Negligence

Delict

Strict Liability

Tests

Defenses


3/32

Background and StatutoryBasis


4/32

(Art 2, Declaration of Basic Policy, Consumer Act)(Art 2, Declaration of Basic Policy, Consumer Act)

Protection against theProtection against the hazards to health & safety; andhazards to health & safety; andfrom deceptive, unfair and unconscionable salesfrom deceptive, unfair and unconscionable salesacts and practicesacts and practices

To Provide:To Provide:

yy iinformation and education to facilitate sound choicenformation and education to facilitate sound choiceand the proper exercise of rights by the consumerand the proper exercise of rights by the consumer

yyAdequate rights and means of redressAdequate rights and means of redress

yy Involvement of consumer reps in the formulation ofInvolvement of consumer reps in the formulation ofsocial and economic policiessocial and economic policies

Objectives:


5/32

yyAct No. 3073Act No. 3073 An Act to Regulate the Sale ofAn Act to Regulate the Sale ofViruses, Serums, Toxins, and AnalogousViruses, Serums, Toxins, and AnalogousProducts in the PhilippinesProducts in the Philippines

yyAct No. 3091Act No. 3091 An Act to Prevent theAn Act to Prevent theImportation, Manufacture, Sale orImportation, Manufacture, Sale or

Transportation w/in the Philippines ofTransportation w/in the Philippines ofAdulterated or Misbranded Paris Green,Adulterated or Misbranded Paris Green,Land Arsenates, LimeLand Arsenates, Lime-- Sulphur Compounds,Sulphur Compounds,and other Insecticides and Fungicides, andand other Insecticides and Fungicides, andRegulating Traffic therein, and for otherRegulating Traffic therein, and for other

PurposesPurposes


6/32

Consumer Act



Warranty

Negligence

Delict

Strict Liability

Tests

Defenses


7/32

A. Fraud or Misrepresentation

(Civil Code) Art 33

In cases of defamation, fraud, andphysical injuries, a civil action for

damages, entirely separate and distinct

from the criminal action, may be broughtby the injured party...


8/32

yyArt 50 Prohibition Against Deceptive SalesArt 50 Prohibition Against Deceptive Sales

Acts or PracticesActs or Practices

yyArt 51 Deceptive Sales Act or Practices ByArt 51 Deceptive Sales Act or Practices ByRegulationRegulation

yyArt 52 Unfair or Unconscionable Sales orArt 52 Unfair or Unconscionable Sales or

PracticePractice


9/32

Warranty (Civil Code)

- any affirmation of fact or promise by the

seller relating to the thing

- May be express or implied [ Art 1547-1571]

B. Warranty

(Against)


10/32

Choices of vendee in case of breach:Choices of vendee in case of breach:

yyAccion RedhibitoriaAccion Redhibitoria withdraw from the contract withwithdraw from the contract withdamagesdamages

yyAccion Quanti MinorisAccion Quanti Minorisproportionate reduction ofproportionate reduction ofprice with damagesprice with damages

CASE: Virgilio M. Del Rosario v CA & MFCCASE: Virgilio M. Del Rosario v CA & MFC

PrivityPrivity between the plaintiff and defendant is notbetween the plaintiff and defendant is notnecessary before liability can be imposed for breachnecessary before liability can be imposed for breach

of warranty given to the publicof warranty given to the public

Art 1567

Privity is therelationship that exists between two or more parties to an

agreement. (copyright: 1981-2005 by Gerald N. Hill and Kathleen T. Hill.)


11/32

1.1. Formalities (Express Warranty)Formalities (Express Warranty)

Art 68 Any seller or manufacturer who gives an expressArt 68 Any seller or manufacturer who gives an expresswarranty is required to stipulate:warranty is required to stipulate:

a.a. The terms in an understandable languageThe terms in an understandable language

b.b. Parties who can avail of warrantyParties who can avail of warranty

c.c. Product and parts coveredProduct and parts covered

d.d. Action of warrantor in case of failure to conform to theAction of warrantor in case of failure to conform to thewritten warrantywritten warranty

e.e. Action of consumer to avail of warrantyAction of consumer to avail of warranty

f.f. Period of action in case of failure to conform to the warrantyPeriod of action in case of failure to conform to the warranty

Consumer Act


12/32

-- Operative from the moment of saleOperative from the moment of sale

-- Enforceable Period may be stipulated by the sellerEnforceable Period may be stipulated by the sellerand consumerand consumer

-- Any other implied warranty for shall endure not lessAny other implied warranty for shall endure not less

than 60 days nor more than 1 year following the salethan 60 days nor more than 1 year following the sale

of a new productof a new product

2. Duration


13/32

-- That distributors and retailers keep a record of allThat distributors and retailers keep a record of allpurchases covered by warranty and guarantypurchases covered by warranty and guaranty

-- That sales report be submitted to the manufacturer,That sales report be submitted to the manufacturer,producer, or importerproducer, or importer

Effect to failure to conform:Effect to failure to conform:

-- Distributor who failed to comply shall be personally liableDistributor who failed to comply shall be personally liableunder the warrantyunder the warranty

-- Subsidiary liability in case both manu/dist failed to honorSubsidiary liability in case both manu/dist failed to honorthe warrantythe warranty

-- Which he may recourse to proceed against bothWhich he may recourse to proceed against both

3. Records and Reports

4. Liability of Retailers


14/32


15/32

6. Lack of Privity

Warranty of the manufacturerextends not only to the

immediate buyer, the

retailer/wholesaler, but also tothe end buyer


16/32

yy The liability will result if due care (of a prudentThe liability will result if due care (of a prudent

man) is not exercised in manufacturing,man) is not exercised in manufacturing,

packaging, marketing, or distributing thepackaging, marketing, or distributing the

product.product.

yy Special laws and Government Agencies alsoSpecial laws and Government Agencies also

set standards that if not complied isset standards that if not complied is

tantamount to negligencetantamount to negligence


17/32


18/32

a.a. Civil CodeCivil Code

Art. 2187Art. 2187

Manufacturers and processors of food stuff, drinks, toilet Manufacturers and processors of food stuff, drinks, toiletarticles and similar good shall be liable for death or injuriesarticles and similar good shall be liable for death or injuriescaused by any noxious or harmful substances used, althoughcaused by any noxious or harmful substances used, although

no contractual relation exists between them and theno contractual relation exists between them and theconsumers.consumers.

yy PrivityPrivity not requirednot required

Art 2187Art 2187

Negligence Strict LiabilityNegligence Strict Liability

[Salas Case] [[Salas Case] [EscolaEscola andand GreenmanGreenman Cases]Cases]

Art 2187


19/32

STRICT LIABILITYSTRICT LIABILITYyy Negligence not materialNegligence not material

to incur liabilityto incur liability

QUASI D

ELICT

QUASI D

ELICT

yy Fault orFault or negligencenegligence

results to liabilityresults to liability


20/32

EscolaEscola vsvs Coca Cola Bottling CoCoca Cola Bottling Co

Manufacturer incurs absolute liability when an article Manufacturer incurs absolute liability when an articlehe placed in the market knowing that it is to be usedhe placed in the market knowing that it is to be used

without inspection, proves to have defect that causeswithout inspection, proves to have defect that causes

injury to human being.injury to human being.

Even in the absence of negligence manufacturers areEven in the absence of negligence manufacturers are

liable because it is they who can anticipate hazardsliable because it is they who can anticipate hazards

and the public cannot.and the public cannot.

Escola vs Coca Cola Bottling

Co


21/32

GreenmanGreenman v Yuba Power Productionsv Yuba Power Productions

To establish the manufacturers liability, it wasTo establish the manufacturers liability, it was

sufficient that the plaintiff proved that hesufficient that the plaintiff proved that hewas injured while using the power tool in awas injured while using the power tool in a

way it was intended to be used and as away it was intended to be used and as a

result of defect in design...the tool wasresult of defect in design...the tool was

unsafe for its intended use.unsafe for its intended use.

Greenman v Yuba Power Productions


22/32

yy CA ruled inCA ruled in favorfavor of plaintiff. That the injuryof plaintiff. That the injury

was caused by the negligence of the brewerywas caused by the negligence of the brewery

as it is inconceivable that a bottle of beeras it is inconceivable that a bottle of beer

would burst spontaneously without anywould burst spontaneously without anydefect.defect.

Note: CA did not consider Art 2187 as a strictNote: CA did not consider Art 2187 as a strict

liability rather an application of negligenceliability rather an application of negligence

theorytheory

Salas v San Miguel Brewery


23/32

Art 97Art 97

yy Provides for liability forProvides for liability for

defective productsdefective products

independently at faultindependently at fault

Art 99Art 99

yy Provides for liability forProvides for liability for

defective servicedefective service

independently at faultindependently at fault

b. Consumer Act

[Clearer justification of Strict Liability]

Art 97 Art 99


24/32

3. Four kinds of Defects3. Four kinds of Defects

3.1 Manufacturing Defect3.1 Manufacturing Defect

--Defects resulting from manufacture, construction,Defects resulting from manufacture, construction,assembly and erectionassembly and erection

3.2 Design Defect3.2 Design Defect

--resulting from design and formulationresulting from design and formulation

3.3 Packaging and Presentation3.3 Packaging and Presentation

--resulting from handling, making up, presentation orresulting from handling, making up, presentation orpacking of productspacking of products

--may result from manufacturers deviation from its selfmay result from manufacturers deviation from its self--imposed norm in packagingimposed norm in packaging


25/32

Art 74.Art 74. -- Provision for compulsory labelling to enable consumers to obtainProvision for compulsory labelling to enable consumers to obtain

accurate information as to the nature, quality, and quantity of the product.accurate information as to the nature, quality, and quantity of the product.

Art 77. Label should state the following:Art 77. Label should state the following:

a.a. Whether flammable or notWhether flammable or not

b.b. Directions for use if necessaryDirections for use if necessary

c.c. Warning of toxicityWarning of toxicity

d.d. Wattage, voltage, amperesWattage, voltage, amperes

e.e. Process of manufactureProcess of manufacture

3.4 Lack of Warning, Duty to warn


26/32

Consumer Act



Warranty

Negligence

DelictStrict Liability

Tests

Defenses


27/32

yy Consumer Expectation TestConsumer Expectation Test to establish theto establish theright to recover it should be proven that theright to recover it should be proven that theproduct did not perform with the reasonableproduct did not perform with the reasonableexpectation of the user(adopted by Consumerexpectation of the user(adopted by Consumer

Act)Act)

yy Risk Utility TestRisk Utility Test the test is whether the defectthe test is whether the defectcould have been reduced or avoided by thecould have been reduced or avoided by theadoption of aadoption of a reasonable alternative designreasonable alternative design

Method to find out what the consumers expectMethod to find out what the consumers expect

Determining a design defect:

reasonable alternativedesign


28/32

yyAdopts theAdopts the consumer expectation testconsumer expectation test

Defective design DefectiveDefective design Defective

ServiceService

consumer expectation test


29/32

5. Proof of Defect5. Proof of Defect

a. Facts tending to show that the defect existed beforea. Facts tending to show that the defect existed beforethe accidentthe accident

b. Expert testimonyb. Expert testimony


30/32

Consumer Act



Warranty

Negligence

DelictStrict Liability

Tests

Defenses


31/32

How to determine liability of manufacturer:How to determine liability of manufacturer:

1.1. Was the product or design faulty?Was the product or design faulty?

2.2. Did the defendant inject the defectiveDid the defendant inject the defective

product into the stream of commerceproduct into the stream of commerce

3.3. Did the defect cause the injuryDid the defect cause the injury


32/32

yy Should prove that :Should prove that :

a.a. Product wasProduct was

defectivedefective

b.b. Product wasProduct wasmanufactured by themanufactured by thedefendantdefendant

c.c. Defective productDefective productwas the cause of hiswas the cause of hisinjuryinjury

yy Prove that heProve that hediscovered the defectsdiscovered the defectsand the goods wereand the goods were

turned over to aturned over to agovernment agency forgovernment agency fordestructiondestruction

yy Establish that theEstablish that thedefect if any did notdefect if any did notprovide the conditionprovide the conditionwhich resulted in thewhich resulted in theinjuryinjury

Plaintiff Defendant

Documents

Consumer Rights (Torts and Damages)