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THIRTEENTH CONGRESS OF THE! REPUBLIC) 
OF THE PHILIPPn\TES 
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First Reguler Session 
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S E N A T E  
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12 
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lntroduced by Senator Miriam Defensor Santiago 
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EXPLANATORY NOTE 
Our people are excessively litigious. The civil justice system i s  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 Mly 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 
of product users, 
manufacturers, and product sellers. 
fair balance among the interests 
MlRlAM DEFENSOR SANTIAGO 
d 


. ., A 
THIRTEENTH CONGRESS OF THE REPUBLIC) 
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-1 
i i  ‘i : 1 ! 
OF THE PHILlPPlNES 
) 
First Regular Session 
1 
Introduced by Senator Miriam Defensor Santiago 
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AN ACT 
ESTABLISHING LEGAL STANDARDS AND PROCEDURES FOR PRODUCT 
LLQBILITY LITIGATION AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House ofRepresentaiives ojthe Philippines in Congress 
assem6 Zed, 
SECTION 1. Shori Title. 
This Act shall be known as the “Product Liability 
Act” 
SECTION 2. Definitions. For purposes of this title-- 
(1) ACTUAL MALICE- means specific intent to cause serious physical injury, 
illness, disease, death, or damage to property. 
(2) CLAIMANT- means any person who brings an action covered by this title and 
any person on whose behalf such an action is brought. If such an action is brought through 
or on behalf of an estate, the term includes the claimant’s decedent. If such an action is 
brought through or on behalf of a minor or incompetent, the term includes the claimant’s 
legal guardian 
(3) CLAIMANT’S BENEFITS- means the amount paid to an employee as 
workers’ compensation benefits. 
(4) CLEAR AND CONVNCING 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 allegations sought to be established. 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. 
(5) COMMERCIAL LOSS- means any loss or damage solely to a product itself, 
loss relating to a dispute over its value, or consequential economic loss 


(6) COMPENSATORY DAMAGES- means damages awarded for economic and 
non-economic loss. 
(7) 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 
employment opportunities) to the extent recovery for such loss is 
allowed under 
applicable laws. 
(8) HARM- means any physical injury, illness, disease, or death or damage to 
property caused by a product. The term does not include commercial loss. 
(9) MANUFACTURER- means-- 
(A) any person who is engaged in a business to produce, create, make, or 
construct any product (or component part of a product) and who (i) designs or formulates 
the product (or component part of the product), or (ii) has engaged another person to 
design or formulate the product (or component part of the product); 
(B) a product seller, but only with respect to those aspects of a product (or 
component part of a product) which are created or affected when, before placing the 
product in the stream of commerce, the product seller produces, creates, makes or 
constructs 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 
(C) any product seller not described in subparagraph (B) which holds itself 
out as a manufacturer to the user of the product. 
(10) 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. 


(1 1) PERSON- means any individual, corporation, company, association, firm, 
partnership, society, joint stock company, or any other entity (including any governmental 
entity). 
(12) PRODUCT LIABILITY ACTION- The term 'product liability action' means 
a civil action brought on any theory for harm caused by a product. 
(13) PRODUCT SELLER- 
(A) IN GENERAL,- The term 'product seller' means a person who in the 
course of a business conducted for that purpose-- 
(i) sells, distributes, rents, leases, prepares, blends, packages, labels, or 
otherwise is involved in placing a product in the stream of commerce, or 
(ii) installs, repairs, refurbishes, reconditions, or maintains the harm-causing 
aspect of the product. 
(B) EXCLUSION- The term 'product seller' does not include-- 
(i) a seller or lessor of real property; 
(ii) 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 judgement, skill, or services; 
or 
(iii) any person who-- 
(I) .acts in only a financial capacity with respect to the sale of a product; or 
(11) 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. 
SECTION 3, Liability Rules Applicable to Prochrcr Sellers and Manztfactzirers 
(1) 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-- 


(A) that-- 
(i) the product that allegedly caused the harm that is the subject of the 
complaint was sold, rented, or leased by the product seller; 
(ii) the product seller failed to exercise reasonable care with respect to the 
product, and 
(iii) the failure to exercise reasonable care was a direct and proximate cause 
of harm to the claimant, 
(B) that-- 
(i) 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; 
(ii) the product failed to conform to the warranty; and 
(iii) the failure of the product to conform to the wananty caused harm to the 
claimant; or 
(C) that-- 
(i) 
the product seller engaged in intentional wrongdoing, as determined under 
applicable law; 
and 
(ii) such intentional wrongdoing was a direct and proximate cause of the 
harm that is the subject of the complaint. 
(2) 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-- 
(A) if the failure occurred because there was no reasonable opportunity to 
inspect the product; or 


(B) 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. 
(3) 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. 
SECTION4. Defense Based on Claimants' Use of Intoxicating Alcohol or 
Drugs 
(1) GENERAL RULE- 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 
(B) 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. Unijorm Time Limitations on Liability 
STATUTE OF LIMITATIONS- 
(A) IN GENERAL- 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-- 
(a) the harm that is the subject of the action; and 
(b) the cause of the harm. 
(l3) 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. Alfernafive Dispute Resolution Procedure 
(1) SERVICE OF OFFER- A claimant or a defendant in a product liability action 
may, not later than 60 days after the service of-- (1) the initial complaint; or (2) 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 established under the rules of the court in which such action 
is maintained. 
(2) WRITTEN NOTICE OF ACCEPTANCE OR REJECTION- Except as 
provided in subsection (3), not later than 10 days after the service of an offer to proceed 
under subsection (l), an offeree shall file a written notice of acceptance or rejection of the 
offer. 
(3) EXTENSION- The court may, upon motion by an offeree made prior to the 
expiration of the 10-day period 
specified in subsection (2), 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 subsection (2). Discovery may be permitted during 
such period. 
SECTION 7. Unijorm Sfarzhds for Award of Damages 
(1) 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. 
(2) LIMITATION ON AMOUNT- 
(A) IN GENERAL- The amount of damages that may be awarded in an action 
described in subsection (1) 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 
(3) EXCEPTION FOR JNSUFFICIENT AWARD IN CASES OF EGREGIOUS 
CONDUCT- 


(A) DETERMINATION BY COURT- If the court makes a determination, after 
considering each of the factors in subparagraph (B), 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 hture, the court shall 
determine the additional amount of damages (referred to in this paragraph as the 
“additional amount”) against the defendant in a separate proceeding in accordance with 
this paragraph. 
(B) FACTORS FOR CONSIDERATION- In any proceeding under paragraph 
(A), the court shall consider-- 
(i) the extent to which the defendant acted with actual malice; 
(ii) the likelihood that serious harm would arise from the conduct of the 
defendant; 
(iii) the degree of the awareness of the defendant of that likelihood; 
(iv) the profitability of the misconduct to the defendant; 
(v) the duration of the misconduct and any concurrent or subsequent 
concealment of the conduct by the defendant; 
(vi) the attitude and conduct of the defendant upon the discovery of the 
misconduct and whether the misconduct has terminated; 
(vii) the financial condition of the defendant; and 
(C) 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. 
SECTION 8. Harm Resziltingj?om Acfion of Employer or Co-employee 
(A) IN GEmRAL- 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 shall he submitted to the trier of fact, but only after the manufacturer or product 
seller has provided timely written notice to the insurer. 
(B) REDUCTION OF DAMAGES- 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-employee of the claimant-- 
(i) the court shall reduce by the amount of the claimant's benefits-- 
(I) the damages awarded against the manufacturer or product seller; and 
(II) any corresponding insurer's subrogation lien; and 
(ii) the manufacturer or product seller shall have no further right by way o f  
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 1 1. Effectivity Clazise - This Act shall take effect fifteen (1 5) days after 
its publication in at least two (2) newspapers of general circulation. 
Approved, 
EC 
03 August 1998