WARRANTY

What is a warranty? And what are consumers entitled to in terms of

product warranty? (An article from abs-cbnNEWS.com)
A warranty, according to the Merriam-Webster Dictionary, is a usually
written guarantee of the integrity of a product and of the maker's
responsibility for the repair or replacement of defective parts.
Simply put, by issuing a warranty, a seller says the product will
function as claimed, and if not, the seller will repair or replace defective
parts.
On the morning TV show "Mornings@ANC", Department of Trade and
Industry (DTI) Director for Bureau of Trade and Regulation and Consumer
Protection Atty. Victorio Dimagiba explained that consumers should not be
confused with the types of warranty available. He said there are only two
types of warranties that are honored in the Philippines--the express and the
implied.
According to him, the express warranty indicates the exact terms,
date, and time of warranty (example: January 2011). The implied warranty
has a generic time frame of warranty (example: 6 months warranty).
Dimagiba added that the basic warranty as stated by Philippine law is
set to a minimum time frame of six months and a maximum time frame of
one year.
In order to avail of the warranty, a consumer must present an original
receipt, a sticker label with a serial number of the product, or a warranty
card, especially when it comes to gadgets like computers and cellphones.
3 basic consumer rights
Dimagiba also reiterated that consumers must be aware of their 3
basic consumer rights that he calls 3Rs: Right to Repair, Right to seek
Replacement and Right to Refund. He said that international warranties are
honored in the Philippines. As long as the product is brand new and original,
consumers with defective products can go to the nearest authorized selling
center for repair or replacement.
On the other hand, products from tiangge or similar establishments
which do not issue official receipts do not come with warranty service.
However, Dimagiba said that inevitable disputes with such businesses can be
easily settled through proper mediation.

He also revealed there's such a thing as in-house warranties (example:

7-day warranty) offered by companies. He said this type of warranty is an
independent service given by a company out of generosity.
As explained, in-house warranties give consumers 7 days to return a
product for whatever reason. However, this guarantee causes confusion as it
misleads the public from the law-imposed warranties.
Dimagiba said that DTI already released an order to the companies to
remove the in-house policies.
Protecting consumers' rights
The director said that DTI is for promoting consumers rights and
welfare while at the same time protecting the interests of the business
sector. He said that the public will always find an ally in DTI by reaching its
24-hour service call centers. They will also open soon an online complaint
hotline. The agency is ready not just to negotiate but also to mediate to
help protect consumers' rights, said Dimagiba.
He also shared the 7 things consumers should look for with regard to express
warranties:
1. What the warrantor will do in the event of a defect, malfunction or failure
to conform to the written warranty and at whose expense
2. What the consumer must do to avail of the rights which accrue to the
warranty
3. Designation of warranties, whether full warranty or limited warranty
4. Duration of warranty.
5. Business name and address of the warrantor.
6. Name and address of the person to whom the warranty is extended, if the
warranty is not transferable.
7. Consumer products or parts thereof, or consumer service covered by the
warranty.

What are implied warranties?

Warranties deemed included in all contracts of sale by operation of law. (Art.
1547)
1. Warranty that seller has right to sell refers to consummation stage. Not
applicable to sheriff, auctioneer, mortgagee, pledge
2. Warranty against eviction Requisites:

a. Buyer is Evicted in whole or in part from the subject matter of sale

b. Final Judgment
c. Basis of eviction is a right Prior to sale or act imputable to seller
d. Seller has been summoned in the suit for eviction at the instance of
buyer; or made 3rd party defendant through 3rd party complaint brought by
buyer
e. No waiver on the part of the buyer Note: For eviction disturbance in law
is required and not just trespass in fact.
3. Warranty against encumbrances (non-apparent) Requisites:
A. immovable sold is encumbered with non- apparent burden or servitude
not mentioned in the agreement
B. nature of non-apparent servitude or burden is such that it must be
presumed that the buyer would not have acquired it had he been aware
thereof
Exception: warranty not applicable when non-apparent burden or servitude is
recorded in the Registry of Property unless there is expressed warranty that
the thing is free from all burdens & encumbrances
4. Warranty against Hidden Defects Requisites:
a. Defect is important or serious
i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the
buyer would not have acquired it had he been aware thereof
b. Defect is hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time
e. Action for rescission or reduction of the price is brought within the
proper period
i. 6 months from delivery of the thing sold
ii. Within 40 days from the delivery in case of animals
f. There must be No waiver of warranty on the part of the buyer.

When is implied warranty not applicable?

1. As is and where is sale

2. Sale of second hand articles

3. Sale by virtue of authority in fact or law
4. Sale at public auction for tax delinquency

What are the effects of waiver of an implied warranty?

1. Seller in bad faith & there is waiver against eviction void
2. When buyer w/o knowledge of a particular risk, made general renunciation
of warranty is not a waiver but merely limits liability of seller in case of
eviction
3. When buyer with knowledge of risk of eviction assumed its consequences
& made a waiver seller not liable (applicable only to waiver of warranty
against eviction)

Warranty for Purchase of Motor Vehicles

SECTION 1. Short Title. This Act shall be known as the Philippine Lemon
Law.
SEC. 2. Declaration of Policy. It is hereby declared the policy of the State to
promote full protection to the rights of consumers in the sale of motor
vehicles against business and trade practices which are deceptive, unfair or
otherwise inimical to consumers and the public interest.
The State recognizes that a motor vehicle is a major consumer purchase or
investment. Hence, the rights of consumers should be clearly defined,
including the means for redress for violations thereof.
SEC. 3. Definition of Terms. As used in this Act:
(a) Brand new motor vehicle refers to a vehicle constructed entirely from
new parts and covered by a manufacturers express warranty at the time of
purchase that it has never been sold or registered with the Department of
Transportation and Communications (DOTC) or an appropriate agency or
authority, and has never been operated on any highway of the Philippines, or
in any foreign state or country;

(b) Collateral charges refer to the fees paid to the Land Transportation Office
(LTO) for the registration of a brand new motor vehicle and other incidental
expenses such as, but not limited to, the cost of insurance pertaining to the
vehicle, chattel mortgage fees and interest expenses if applicable;
(c) Comparable motor vehicle refers to a motor vehicle that is identical or
reasonably equivalent to the motor vehicle to be replaced, in terms of
specifications and values, subject to availability, as the motor vehicle existed
at the time of purchase: Provided, That there shall be an offsetting from this
value for reasonable allowance for its use;
(d) Consumer refers to any person, natural or juridical, who purchases a
brand new motor vehicle either by cash or credit from an authorized
distributor, dealer or retailer in the Philippines;
(e) Dealer or retailer refers to any person, natural or juridical, authorized by
the manufacturer or distributor to sell brand new motor vehicles directly to
the retail buyers and the public;
(f) Distributor refers to any person, natural or juridical, authorized by the
manufacturer to sell brand new motor vehicles to duly authorized dealers or
retailers;
(g) Implementing agency refers to the Department of Trade and Industry
(DTI), reorganized under Title X, Book IV of Executive Order No. 292, series of
1987, otherwise known as the Administrative Code of 1987;
(h) Lemon Law rights period refers to the period ending twelve (12) months
after the date of the original delivery of a brand new motor vehicle to a
consumer or the first twenty thousand (20,000) kilometers of operation after
such delivery, whichever comes first. This shall be the period during which
the consumer can report any nonconformity, as defined in paragraph (k)
herein, to the standards and specifications of the manufacturer, authorized
distributor, authorized dealer or retailer, and pursue any right as provided for
under this Act;
(i) Manufacturer refers to any person, natural or juridical, engaged in the
business of manufacturing or assembling motor vehicles;
(j) Motor vehicle refers to any self-propelled, four (4) wheeled road vehicle
designed to carry passengers including, but not limited to, sedans, coupes,

station wagons, convertibles, pick-ups, vans, sports utility vehicles (SUVs)

and Asian Utility Vehicles (AUVs) but excluding motorcycles, delivery trucks,
dump trucks, buses, road rollers, trolley cars, street sweepers, sprinklers,
lawn mowers and heavy equipment such as, but not limited to, bulldozers,
payloaders, graders, forklifts, amphibian trucks, cranes, and vehicles which
run only on rails or tracks, and tractors, trailers and traction engines of all
kinds used exclusively for agricultural purposes. Trailers having any number
of wheels, when propelled or intended by attachment to a motor vehicle,
shall be classified as separate motor vehicle with no power rating;
(k) Nonconformity refers to any defect or condition that substantially impairs
the use, value or safety of a brand new motor vehicle which prevents it from
conforming to the manufacturers or distributors standards or specifications,
which cannot be repaired, but excluding conditions resulting from
noncompliance by the consumer of his or her obligations under the warranty,
modifications not authorized by the manufacturer or distributor, abuse or
neglect, and damage due to accident or force majeure;
(l) Purchase price refers to the invoice price or the amount of money which
the dealer or retailer actually received for the brand new motor vehicle, in
consideration of the sale of such brand new motor vehicle;
(m) Warranty refers to the written assurance, so labeled, of the manufacturer
of a brand new motor vehicle including any term or condition precedent to
the enforcement of obligations under the warranty; and
(n) Warranty rights period refers to the period provided for under the
contract of sale when the manufacturer would guarantee the materials used,
the workmanship and the roadworthiness of a brand new motor vehicle for
ordinary use or reasonable intended purposes.
SEC. 4. Coverage. This Act shall cover brand new motor vehicles purchased
in the Philippines reported by a consumer to be in nonconformity with the
vehicles manufacturer or distributors standards or specifications within
twelve (12) months from the date of .original delivery to the consumer, or up
to twenty thousand (20,000) kilometers of operation after such delivery,
whichever comes first. The following causes of nonconformity shall be
excluded:
(a) Noncompliance by the consumer of the obligations under the warranty;

(b) Modifications not authorized by the manufacturer, distributor, authorized

dealer or retailer;
(c) Abuse or neglect of the brand new motor vehicle; and
(d) Damage to the vehicle due to accident or force majeure.
SEC. 5. Repair Attempts. At any time within the Lemon Law rights period,
and after at least four (4) separate repair attempts by the same
manufacturer, distributor, authorized dealer or retailer for the same
complaint, and the nonconformity issue remains unresolved, the consumer
may invoke his or her rights under this Act.
The repair may include replacement of parts components, or assemblies.
SEC. 6. Notice of Availment of Lemon Law Rights. Before availing of any
remedy under this Act and subject to compliance with the provisions of
Section 5 hereof, the consumer shall, in writing, notify the manufacturer,
distributor, authorized dealer or retailer of the unresolved complaint, and the
consumers intention to invoke his or her rights under this Act within the
Lemon Law rights period.
The warranty booklet issued by the manufacturer, distributor, authorized
dealer or retailer shall clearly state the manner and form of such notice to
constitute a valid and legal notice to the manufacturer, distributor,
authorized dealer or retailer. It shall also clearly state the responsibility of the
consumer under this section.
SEC. 7. Availment of Lemon Law Rights. Subsequent to filing the notice of
availment referred to in the preceding section, the consumer shall bring the
vehicle to the manufacturer, distributor, authorized dealer or retailer from
where the vehicle was purchased for a final attempt to address the complaint
of the consumer to his or her satisfaction.
It shall be the duty of the manufacturer, distributor, authorized dealer or
retailer, upon receipt of the motor vehicle and the notice of nonconformity
required under Section 6 hereof, to attend to the complaints of the consumer
including, as may be necessary, making the repairs and undertaking such
actions to make the vehicle conform to the standards or specifications of the
manufacturer, distributor, authorized dealer or retailer for such vehicle.

In case the nonconformity issue remains unresolved despite the

manufacturer, distributor, authorized dealer or retailers efforts to repair the
vehicle, pursuant to the consumers availment of his or her Lemon Law
rights, the consumer may file a complaint before the DTI as provided for
under this Act: Provided, however, That if the vehicle is not returned for
repair, based on the same complaint, within thirty (30) calendar days from
the date of notice of release of the motor vehicle to the consumer following
this repair attempt within the Lemon Law rights period, the repair is
deemedsuccessful: Provided,
finally, That,
in
the
event
that
the
nonconformity issue still exists or persists after the thirty (30)-day period but
still within the Lemon Law rights period, the consumer may be allowed to
avail of the same remedies under Sections 5 and 6 hereof.
To compensate for the non-usage of the vehicle while under repair and
during the period of availment of the Lemon Law rights, the consumer shall
be provided a reasonable daily transportation allowance, an amount which
covers the transportation of the consumer from his or her residence to his or
her regular workplace or destination and vice versa, equivalent to airconditioned taxi fare, as evidenced by official receipt, or in such amount to
be agreed upon by the parties, or a service vehicle at the option of the
manufacturer, distributor, authorized dealer or retailer. Any disagreement on
this matter shall be resolved by the DTI.
Nothing herein shall be construed to limit or impair the rights and remedies
of a consumer under any other law.
SEC. 8. Remedies for Dispute Resolution. The DTI shall exercise exclusive
and original jurisdiction over disputes arising from the provisions of this Act.
All disputes arising from the provisions of this Act shall be settled by the DTI
in accordance with the following dispute resolution mechanisms:
(a) Mediation
(1) The principles of negotiation, conciliation and mediation towards
amicable settlement between the manufacturer, distributor, authorized
dealer or retailer and the consumer shall be strictly observed;
(2) In the course of its dispute resolution efforts, the DTI shall endeavor to
independently establish the validity of the consumers outstanding
complaint. The DTI shall likewise retain the services of other government
agencies or qualified independent private entities in the ascertainment of the

validity of the consumers complaint. Any cost incurred in establishing the

validity of the consumers complaint shall be bornejointly by the consumer
and the manufacturer, distributor, authorized dealer or retailer;
(3) The complaint shall be deemed valid if it is independently established
that the motor vehicle does not conform to the standards or specifications
set by the manufacturer, distributor, authorized dealer or retailer;
(4) Upon failure of the negotiation or mediation between the manufacturer,
distributor, authorized, dealer or retailer and the consumer, the parties shall
execute a certificate attesting to such failure; and
(5) At any time during the dispute resolution period, the manufacturer,
distributor, authorized dealer or retailer and the consumer shall be
encouraged to settle amicably. All disputes that have been submitted for
mediation shall be settled not later than ten (10) working days from the date
of filing of the complaint with the DTI.
(b) Arbitration
In the event there is a failure to settle the complaint during the mediation
proceedings, both parties may voluntarily decide to undertake arbitration
proceedings.
(c) Adjudication
(1) In the event that both parties do not undertake arbitration proceedings,
at least one of the parties may commence adjudication proceedings,
administered by the DTI. The DTI shall rely on the qualified independent
findings as to conformity to standards and specifications established herein.
In no case shall adjudication proceedings exceed twenty (20) working days;
(2) In case a finding of nonconformity is arrived at, the DTI shall rule in favor
of the consumer and direct the manufacturer, distributor, authorized dealer
or retailer to grant either of the following remedies to the consumer:
(i) Replace the motor vehicle with a similar or comparable motor vehicle in
terms of specifications and values, subject to availability; or
(ii) Accept the return of the motor vehicle and pay the consumer the
purchase price plus the collateral charges.

In case the consumer decides to purchase another vehicle with a higher

value and specifications from the same manufacturer, distributor, authorized
dealer or retailer, the consumer shall pay the difference in cost.
In both cases of replacement and repurchase, the reasonable allowance for
use, as defined in this Act, shall be deducted in determining the value of the
nonconforming motor vehicle; and
(3) In case a nonconformity of the motor vehicle is not found by the DTI, it
shall rule in favor of the manufacturer, distributor, .authorized dealer or
retailer, and direct the consumer to reimburse the manufacturer, distributor,
authorized dealer or retailer the costs incurred by the latter in validating the
consumers complaints.
An appeal may be taken from a final judgment or order of the Adjudication
Officer which completely disposes of the case within fifteen (15) days from
receipt thereof. The appeal shall be taken by filing a Memorandum of Appeal
with the Secretary of the DTI, with Notice of Appeal to the Adjudication
Officer, and with a copy duly furnished the adverse party or parties on any of
the following grounds:
(i) Grave abuse of discretion;
(ii) The decision/order is in excess of jurisdiction or authority of the
Adjudication Officer; and
(iii) The decision/order is not supported by the evidence or there is serious
error in the findings of facts.
The Secretary of the DTI shall decide on the appeal within thirty (30) days
from receipt thereof. A party seeking further appeal from the decision of the
Secretary of the DTI may file a case for certiorari to the Court of Appeals
under Section 4, Rule 65 of the Revised Rules of Court.
SEC. 9. Determination of Reasonable Allowance for Use. For purposes of
this Act, reasonable allowance for use shall mean twenty percent
(20%) per annum deduction from the purchase price, or the product of the
distance traveled in kilometers and the purchase price divided by one
hundred thousand (100,000) kilometers, whichever is lower.

SEC. 10. Disclosure on Resale. Should the returned motor vehicle be made
available for resale, the manufacturer, distributor, authorized dealer or
retailer shall, prior to sale or transfer, disclose in writing to the next
purchaser of the same vehicle the following information:
(a) The motor vehicle was returned to the manufacturer, distributor,
authorized dealer or retailer;
(b) The nature of the nonconformity which caused the return; and
(c) The condition of the motor vehicle at the time of the transfer to the
manufacturer, distributor, authorized dealer or retailer.
The responsibility of the manufacturer, distributor, authorized dealer or
retailer under this section shall cease upon the sale of the affected motor
vehicle to the first purchaser.
SEC. 11. Penalty. The manufacturer, distributor, authorized dealer or
retailer adjudged to have violated the provisions requiring disclosure as
mentioned in the preceding section shall be liable to pay a minimum amount
of One hundred thousand pesos (P100,000.00) as damages to the aggrieved
party without prejudice to any civil or criminal liability they and/or the
responsible officer may incur under existing laws.
SEC. 12. Assistance by Other Agencies. The DOTC and other agencies,
political subdivisions, local government units, including government-owned
and/or controlled corporations, shall render such assistance as required by
the DTI in order to effectively implement the provisions of this Act.
SEC. 13. Implementing Rules and Regulations. The DTI shall promulgate the
necessary implementing rules and regulations within, ninety (90) days from
the effectivity of this Act.
SEC. 14. Separability Clause. If, for any reason, any part or provision of this
Act is declared invalid, such declaration shall not affect the other provisions
of this Act.
SEC. 15. Repealing Clause. All laws, decrees, executive orders, issuances,
rules and regulations or parts thereof which are inconsistent with the
provisions of this Act are hereby deemed repealed, amended or modified
accordingly.

SEC. 16. Effectivity. This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in any newspaper of .general circulation.

A warranty deed is a type of deed where the grantor (seller)

guarantees that he or she holds clear title to a piece of real estate and has a
right to sell it to the grantee (buyer). This is in contrast to a quitclaim deed,
where the seller does not guarantee that he or she holds title to a piece of
real estate. A general warranty deed protects the grantee against title
defects arising at any point in time, extending back to the property's origins.
A special warranty deed protects the grantee only against title defects
arising from the actions or omissions of the grantor. Most buyers perform
a title search to determine if there are defects in title that must be resolved
before they purchase real property. A title search provides constructive
notice of any encumbrances, easements, or restrictions on the property
being conveyed, and is generally considered part of a buyer's due
diligence in the process of purchasing real estate. Buyers can also purchase
title insurance to protect against title defects. A warranty deed is not a
substitute for title insurance because, if the grantor later dies or
goes bankrupt, the grantee may not be able to exercise the warranty.
A special warranty deed is a deed in which the seller warrants or
guarantees the title only against defects arising during the period of his or
her tenure or ownership of the property. The grantor makes no warranty
against defects existing before the time of his or her ownership.
Defects in Materials and Workmanship
The most common kind of warranty on goods is a warranty that the
product is free from defects in materials and workmanship. This simply
promises that the manufacturer properly constructed the product, out of
proper materials. This implies that the product will perform as well as such
products customarily do.
It is common for these to be limited warranties, limiting the time the
buyer has to make a claim. For example, a typical 90 day warranty on a
television gives the buyer 90 days from the date of purchase to claim that
the television was improperly constructed. Should the television fail after 91
days of normal usage, which because televisions customarily last longer than
91 days means there was a defect in the materials or workmanship of the
television, the buyer nonetheless may not collect on the warranty because it
is too late to file a claim.

Time limited warranties are often confused with performance

warranties. A 90 day performance warranty would promise that the television
would work for 90 days, which is fundamentally different from promising that
it was delivered free of defects and limiting the time the buyer has to prove
otherwise. But because the usual evidence that a product was delivered
defective is that it later breaks, the effect is very similar.
One situation in which the effect of a time limited warranty is different
from the effect of a performance warranty is where the time limit exceeds to
normal lifetime of the product. If a coat is designed to last two years, but has
a 10 year limited warranty against defects in materials and workmanship, a
buyer who wears the coat for 3 years and then finds it worn out would not be
able to collect on the warranty. But it is different from a 2 year warranty
because if the buyer starts wearing the coat 5 years after buying it, and finds
it wears out a year later, the buyer would have a warranty claim in Year 6. On
the other hand, a 10 year performance warranty would promise that the coat
would last 10 years.

Lifetime warranty
A lifetime warranty is usually a warranty against defects in materials
and workmanship that has no time limit to make a claim, rather than a
warranty that the product will perform for the lifetime of the buyer. The
actual time that product can be expected to perform is normally determined
by the custom for products of its kind used the way the buyer uses it.
If a product has been discontinued and is no longer available, the warranty
may last a limited period longer. For example:

The Cisco Limited Lifetime Warranty currently lasts for five years after
the product has been discontinued, but only if you know where you
bought it from as the seller is responsible for administering it.

HP Networking product lifetime warranties last for as long as one owns

the product.
EXTENDED WARRANTY
In addition to standard warranties on new items, third parties or
manufacturers may sell extended warranties (also called service contracts).

These extend the warranty for a further length of time. However, these
warranties have terms and conditions which may not match the original
terms and conditions. For example, these may not cover anything other than
mechanical failure from normal usage. Exclusions may include commercial
use, "acts of God", owner abuse, and malicious destruction. They may also
exclude parts that normally wear out such as tires and lubrication on a
vehicle.
These types of warranties are provided for various products,
but automobiles and electronics are common examples. Warranties which
are sold through retailers such as Best Buy may include significant
commission for the retailer as a result of reverse competition. [10] For instance,
an auto warranty from a car dealership may be subcontracted and vehicle
repairs may be at a lower rate which could compromise the quality of
service. At the time of repair, out-of-pocket expenses may be charged for
unexpected services provided outside of the warranty terms or uncovered
parts.
Representations vs. Warranties
Statements of fact in a contract or in obtaining the contract are considered
to be either warranties or representations. Traditionally, warranties are
factual promises which are enforced through a contract legal action,
regardless of materiality, intent, or reliance. Representations are traditionally
pre-contractual statements which allow for a tort-based action if the
misrepresentation is negligent or fraudulent.
Home Warranty
A home warranty protects against the costs of home and appliance
repair by offering home warranty coverage for houses, town homes,
condominiums, mobile homes, and new construction homes. When a
problem occurs with a covered appliance or mechanical system such as an
air conditioning unit or furnace, a service technician repairs or replaces it.
The homeowner pays for a service call fee and the home warranty company
pays the balance for the repair or replacement of the covered item.
Warranty data

Warranty data consists of claims data and supplementary data. Claims data
are the data collected during the servicing of claims under warranty and
supplementary data are additional data such as production and marketing
data. This data can help determine product reliability and plan for future
modifications