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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
“Any person who shall violate the provisions of the Civil Code on warranties shall be subject to fine of not less than Five Hundred Pesos (P500.00) but not more than Five Thousand Pesos (P5,000.00) or an imprisonment of not less than three (3) months but not more than two (2) years or both upon the discretion of the court.
A second conviction under the same paragraph shall also carry with it the penalty or revocation of his business permit and license.” (Article 73, Republic Act No. 7394 or the Consumer Act of the Philippines)
Warranty under the Civil Code
A warranty is a statement or representation made by the seller of goods – contemporaneously and as part of the contract of sale – that has reference to the character, quality or title of the goods; and is issued to promise or undertake to ensure that certain facts are or shall be as the seller represents them. (Philippine Steel Coating Corp. v. Eduard Quiñones, G.R. No. 194533, April 19, 2017)
The law says:
“The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale.” (Article 1495, Civil Code)
A warranty is a collateral undertaking in a sale of either real or personal property, express or implied, that if the property sold does not possess the certain incidents or qualities, the purchaser may either consider the sale void or claim damages for breach of warranty. Thus, a warranty may either be express or implied. (Pilipinas Makro, Inc. v. Coco Charcoal Philippines, Inc., G.R. No. 196419, October 4, 2017)
Jurisprudence says:
“An express warranty pertains to any affirmation of fact or any promise by the seller relating to the thing, the natural tendency of which is to induce the buyer to purchase the same. It includes all warranties derived from the language of the contract, so long as the language is express-it may take the form of an affirmation, a promise or a representation.
On the other hand, an implied warranty is one which the law derives by application or inference from the nature of transaction or the relative situation or circumstances of the parties, irrespective of any intention of the seller to create it. In other words, an express warranty is different from an implied warranty in that the former is found within the very language of the contract while the latter is by operation of law.” (Pilipinas Makro, Inc. v. Coco Charcoal Philippines, Inc., G.R. No. 196419, October 4, 2017)
Warranty under the Consumer Act of the Philippines
In addition to the Civil Code provisions on sale with warranties, certain provisions of Republic Act No. 7394 or the Consumer Act of the Philippines shall govern the sale of consumer products with warranty.
The law says:
“a) Terms of express warranty. – Any seller or manufacturer who gives an express warranty shall:
1) set forth the terms of warranty in clear and readily understandable language and clearly identify himself as the warrantor;
2) identify the party to whom the warranty is extended;
3) state the products or parts covered;
4) 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;
5) state what the consumer must do to avail of the rights which accrue to the warranty; and
6) 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.
b) Express warranty – operative from moment of sale. – All written warranties or guarantees issued by a manufacturer, producer, or importer shall be operative from the moment of sale.
1) Sales Report. – All sales made by distributors of products covered by this Article shall be reported to the manufacturer, producer, or importer of the product sold within thirty (30) days from date of purchase, unless otherwise agreed upon. The report shall 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 shall be 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.
2) 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 shall relieve the latter of its liability under the warranty: Provided, however, That the distributor who failed to comply with its obligation to send the sales reports shall be personally liable under the warranty. For this purpose, the manufacturer shall be obligated to make good the warranty at the expense of the distributor.
3) Retail. – The retailer shall be subsidiarily liable under the warranty in case of failure of both the manufacturer and distributor to honor the warranty. In such case, the retailer shall shoulder the expenses and costs necessary to honor the warranty. Nothing therein shall prevent the retailer from proceeding against the distributor or manufacturer.
4) Enforcement of warranty or guarantee. – The warranty rights can be enforced by presentment of a claim. To this end, the purchaser needs only to present to the immediate seller either the warranty card of the official receipt along with the product to be serviced or returned to the immediate seller. No other documentary requirement shall be demanded from the purchaser. If the immediate seller is the manufacturer’s factory or showroom, the warranty shall immediately be honored. If the product was purchased from a distributor, the distributor shall likewise immediately honor the warranty. In the case of a retailer other than the distributor, the former shall take responsibility without cost to the buyer of presenting the warranty claim to the distributor in the consumer’s behalf.
5) Record of purchases. – Distributors and retailers covered by this Article shall 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.
6) Contrary stipulations – null and void. – All covenants, stipulations or agreements contrary to the provisions of this Article shall be without legal effect.
c) Designation of warranties. – A written warranty shall clearly and conspicuously designate such warranty as:
1) “Full warranty” if the written warranty meets the minimum requirements set forth in paragraph (d); or
2) “Limited warranty” if the written warranty does not meet such minimum requirements.
d) Minimum standards for warranties. – For the warrantor of a consumer product to meet the minimum standards for warranty, he shall:
1) 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;
2) 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.
The warrantor will not 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.
e) Duration of warranty. – The seller and the consumer may stipulate the period within which the express warranty shall be enforceable. If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration.
Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale of new consumer products.
f) Breach of warranties. –
1) 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 thirty (30) days by either the warrantor or his representative. The thirty-day period, however, 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 shall be deducted.
2) In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods, cancel and contract and recover from the seller so much of the purchase price as has been paid, including damages.” (Article 68, Republic Act No. 7394 or the Consumer Act of the Philippines)
Violation of the rules on warranties under the Civil Code and under the Consumer Act of the Philippines is punishable by a fine or imprisonment. In case of a second violation of such rules, the penalty is revocation of the business permit.
The law says:
“Article 73. Penalties. –
a) Any person who shall violate the provisions of Article 67 shall be subject to fine of not less than Five Hundred Pesos (P500.00) but not more than Five Thousand Pesos (P5,000.00) or an imprisonment of not less than three (3) months but not more than two (2) years or both upon the discretion of the court. A second conviction under this paragraph shall also carry with it the penalty or revocation of his business permit and license.
b) Any person, natural or juridical, committing any of the illegal acts provided for in Chapter III, except with respect to Article 67, shall be liable for a fine of not less than One Thousand Pesos (P1,000.00) but not more than Fifty Thousand Pesos (P50,000.00) or imprisonment for a period of at least one (1) year but not more than five (5) years, or both, at the discretion of the court.
The imposition of any of the penalties herein provided is without prejudice to any liability incurred under the warranty or guarantee.” (Article 73, Republic Act No. 7394 or the Consumer Act of the Philippines)
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