Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
‘Second Regular Session

HOUSE BILL no 8365

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
ESTABLISHING LEGAL STANDARDS AND PROCEDURES FOR PRODUCT
LIABILITY LITIGATION AND FOR OTHER PURPOSES

Our people are excessively litigious. The civil justice system is overcrowded, sluggish,
and excessively costly and the costs of lawsuits, both direct and indirect, are inflicting
serious and unnecessary injury on individuals.

There is a need to restore rationality, certainty, and fairness to the civil justice system in
order to protect the public against excessive, arbitrary, and uncertain damage awards
and to reduce the volume, costs, and delay of litigation.

While the State might be able to fully and effectively respond to this problem, due to its
magnitude, efforts can be made to at least mitigate this predicament.

This bill seeks to establish certain legal principles of product liability in order to help
reduce costs of litigation by providing a mechanism for the speedy disposition of
product-liability cases and a fair balance among the interests of product users,
manufacturers, and product sellers.

lpfrhr

LUIS RAYMUND; AY” F. VILLAFUERTE, JR.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Queson City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. 8365

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
ESTABLISHING LEGAL STANDARDS AND PROCEDURES FOR PRODUCT
LIABILITY LITIGATION AND FOR OTHER PURPOSES

Be enacted by the Senate and House of Representative of the Philippines in Congress
assembled,

SECTION 1, Short Title. — This Act shall be known as the “Product Liability Act.”

SECTION 2. Definitions of Terms. — For purposes of this Act, the term:

(A) “Actual malice” means specific intent to cause serious physical injury, illness,

disease, death, or damage to property;

“Claimant” means any person who brings an action covered by this title and any

person whose behalf such an action is brought;

If such an action is bought through or on behalf of an estate, the term includes the

claimant's decedent. If such an action is brought or on behalf of a minor or

incompetent, the term includes the claimant's legal guardian.

(C) “Claimant's benefits” means the amount paid to an employee as worker's

compensation benefits;

“Clear and convincing evidence” is that measure or degree of proof that will produce

in the mind of the trier of fact a firm belief or conviction as to the truth of the

allegation sought to be establish; it is the level of proof required to satisfy such

standard is more than that required under preponderance of the evidence, but less

than that required for proof beyond a reasonable doubt;

(E) “Commercial loss” means any loss or damage solely to a product itself, loss relating
to dispute over its value, or consequential economic loss;

(F) “Compensatory damages” means damages awarded for economic and
non-economic loss;

(G) “Economic loss” means any pecuniary loss resulting from harm, including the loss of
earnings or other benefits related to employment, medical expense loss,
replacement services loss, loss due to death, burial costs, and loss of business or

(c)

(0)


employment opportunities, to the extent recovery for such loss is allowed under
applicable laws;

(H) “Harm” means any physical injury, illness, disease, or death or damage to property
caused by a product. The term does not include commercial loss;

()) “Manufacturer” means
(1) Any person who is engaged in a business to produce, create, make, or

construct any product or component part of a product and who

(a) Designs or formulates the product or component part of the product; or

(b) Has engaged another person to design or formulate the product or
component part of the product.

A product seller, but only with respect to those aspects of a product or

component part of the product which are created or affected when, before

placing the product in the stream of commerce, the product seller produces,
creates, makes or construct and designs, or formulates, or has engaged
another person to design or formulate an aspect of the product or component
part of the product made by another person; or
(3) Any product seller not described in the preceding subparagraphs but who holds
himself, herself or itself out as a manufacturer to the user of the product.

(J) “Non-economic loss” means subjective, non-monetary loss resulting from harm,
including pain, suffering, inconvenience, mental suffering, emotional distress, loss of
society and companionship, loss of consortium, injury to reputation, and humiliation;

(K) “Person” means any individual, corporation, company, association, firm, partnership,
society, joint stock company, or any other entity, including any governmental entity;

2

(L) ‘Product liability action” means a civil action brought on any theory for harm caused
by a product.

(M) “Product seller’ means a person who in the course of a business conducted for that
purpose

(1) Sells, distributes, rents, leases, prepares, blends, packages, labels, or
otherwise is involved in placing a product in the stream of commerce; or
Installs, repairs, refurbishes, reconditions, or maintains the harm-causing
aspect of the product.

The term does not include a seller or lessor of real property; a provider
of professional services in any case in which the sale or use of a product is
incidental to the transaction and the essence of the transaction is the
furnishing of judgment, skill, or services; any person who acts in only a
financial capacity with respect to the sale of a product; or leases a product
under a lease arrangement in which the lessor does not initially select the
leased product and does not during the lease term ordinarily control the daily
operations and maintenance of the product.

2

SECTION 3. Liability Rules Applicable to product Sellers and Manufacturers. —
(A) In General. - In any product liability action, a product seller other than a manufacturer
shall be liable to a claimant only if the claimant establishes that —
(1) The product that allegedly caused the harm that is the subject of the complaint
was sold, rented, or leased by the product seller;
(2) The product seller failed to exercise reasonable care with respect to the


product;

(3) The failure to exercise reasonable care was a direct and proximate cause of
harm to the claimant;

(4) The product seller made an express warranty applicable to the product that
allegedly caused the harm that is the subject of the complaint, independent of
any express warranty made by a manufacturer as to the same product;

(5) The product failed to conform to the warranty;

(6) The failure of the product to conform to the warranty caused harm to the
claimant;

(7) The product seller engaged in intention wrongdoing, as determined under
applicable law; and such intentional wrongdoing was a direct and proximate
cause of the harm that is the subject of the complaint.

(B) Reasonable Opportunity for Inspection. — A product seller shall not be considered to
have failed to exercise reasonable care with respect to a product based upon an alleged
failure to inspect the product if failure occurred because there was no reasonable
opportunity to inspect the product; or if the inspection, in the exercise of reasonable care,
would not have revealed the aspect of the product which allegedly caused the claimant's
harm.

(C) Liability of Manufacturers. - The manufacturer of the product that caused harm to the
claimant shall be liable subsidiarily. In the event that the product seller has no fault or that
the manufacturer's negligence is the direct and proximate cause of the harm done, the
manufacturer alone shall be held liable. q

SECTION 4. Defense Based on Claimants’ Use of intoxicating Alcohol or Drugs. — In any

product liability action, it shall be a complete defense to such action if

(A) The claimant was intoxicated or was under the influence of intoxicating alcohol or
any drug when the accident or other event which resulted in such claimant's harm
occurred; and

(8) The claimant, as a result of the influence of the alcohol or drug, was more than 50
percent responsible for such accident or other event.

SECTION 5. Uniform Time Limitations on Liability
(A) In General. — The product liability action may be filed not later than 2 years after the
date on which the claimant discovered or, in the exercise of reasonable care, should
have discovered —

(1) The harm that is the subject of the action; and

(2) The cause of the harm.
(B) Exception. - A person with a legal disability, as determined under applicable law, may
file a product liability action not later than 2 years after the date on which the person
ceases to have the legal disability.

SECTION 6. Alternative Dispute Resolution Procedure. —
(A) Service of Offer. - A claimant or a defendant in a product liability action may not later
than 60 days after the service of the initial complaint; or the applicable deadline for a
responsive pleading; whichever is later, shall serve upon an adverse party an offer to
proceed pursuant to any voluntary, non-binding alternative dispute resolution procedure



establish under the rules of the court in which such action is maintained.
(B) Written Notice of Acceptance or Rejection, — Except as provided in paragraph (C),
not later than 10 days after the service of an offer to proceed under paragraph (A), an
offeree shall file a written notice of acceptance or rejection of the offer.

(C) Extension. — The court may, upon motion by an offeree made prior to the expiration
of the 10-day period specified in paragraph (B), extend the period for filling a written
notice under such subsection for a period of not more than 60 days after the date of
expiration of the period specified in paragraph (B). Discovery may be permitted during
such period.

SECTION 7. Uniform Standards for Award of Damages. —

(A) General Rule. — Damages may, to the extent permitted by applicable law, be awarded
against a defendant if the claimant establishes by clear and convincing evidence that
conduct carried out by the defendant with a conscious, flagrant indifference to the rights
or safety of others was the proximate cause of the harm that is the subject of the action in
any product liability action.

(B) Limitation on Amount. — The amount of damages that may be awarded in an action
described in paragraph (A) may not exceed the greater of two (2) times the sum of the
amount awarded to the claimant for economic loss and non-economic loss.

(C) Exception for Insufficient Award in Cases of Egregious Conduct. -

(1) Determination by Court. — If the court makes a determination, after considering
each of the factors in subparagraph (2) below, that the award of damages is
insufficient to punish the egregious conduct of the defendant against whom the
punitive damages are to be awarded or to deter such conduct in the future, the
court shall determine the additional amount of damages against the defendant
in a separate proceeding in accordance with this paragraph.

Factors for Consideration. — In any proceeding instituted pursuant to this Act,

the court shall consider —

(a) The extent to which the defendant acted with actual malice;

(b) The likelihood that serious harm would arise from the conduct of the
defendant;

(c) The degree of the awareness of the defendant of that likelihood;

(a) The profitability of the misconduct to the defendant;

(e) Tthe duration of the misconduct and any concurrent or subsequent
concealment of the conduct by the defendant;

(f) The attitude and conduct of the defendant upon the discovery of the
misconduct and whether the misconduct has terminated;

(g)_ The financial condition of the defendant; and

Requirements for Awarding Additional Amount. — If the court awards an

additional amount pursuant to this subsection, the court shall state its reasons

for setting the amount of the additional amount in findings of fact and

conclusions of law.

(2

(3

SECTION 8. Harm Resulting from Action of Employer or Co-employee. — If, with respect
to a product liability action that is subject to this Act, the manufacturer or product seller
attempts to persuade the trier of fact that the harm to the claimant, which incidentally


took place in the workplace, was caused by the fault of the employer of the claimant or

any co-employee of the claimant, the issue of that fault shallbe submitted to the trier of

fact, but only after the manufacturer or product seller has provided timely written notice to
the insurer.

If the trier of fact finds by clear and convincing evidence that the harm to the
claimant that is the subject of the product liability action was caused by the fault of the
employer or a co-employer of the claimant —

(A) The court shall reduce by the amount of the claimant's benefits the damages
awarded against the manufacturer or product seller; and any corresponding
insurer's subrogation lien; and

(B) The manufacturer or product seller shall have no further right by way of contribution
or otherwise against the employer.

SECTION 9. Separability Clause. — If any provision or part hereof, is held invalid or
unconstitutional, the remainder of the law or the provision not otherwise affected shall
remain valid and subsisting.

SECTION 10. Repealing Clause. — Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule or regulation contrary to or
inconsistent with the provision of this. Act is hereby repealed, modified or amended
accordingly.

SECTION 11. Effectivity Clause — this Act shall take effect fifteen (15) days after its
publication in at least two (2) newspaper of general circulation.

Approved,