Clarification of 10% Warranty on Goods

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Clarification of 10% Warranty on Goods

Post by Jovinal on Thu Mar 08, 2012 8:20 am

Section 62. Warranty
62.1. For the procurement of goods, in order to assure that manufacturing defects shall be
corrected by the supplier, a warranty security shall be required from the contract
awardee for a minimum period of three (3) months, in the case of Expendable
Supplies, or a minimum period of one (1) year, in the case of Non-expendable
Supplies, after acceptance by the procuring entity of the delivered supplies.
My question on the above provisions:
1) The purchase of goods in their original state such as agricultural products, fresh meat and marine product is not subject to 10% warranty?
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Re: Clarification of 10% Warranty on Goods

Post by engrjhez® on Thu Mar 08, 2012 8:35 am

Jovinal wrote:Section 62. Warranty
62.1. For the procurement of goods, in order to assure that manufacturing defects shall be
corrected by the supplier, a warranty security shall be required from the contract
awardee for a minimum period of three (3) months, in the case of Expendable
Supplies, or a minimum period of one (1) year, in the case of Non-expendable
Supplies, after acceptance by the procuring entity of the delivered supplies.
My question on the above provisions:
1) The purchase of goods in their original state such as agricultural products, fresh meat and marine product is not subject to 10% warranty?

The warranty for expendable supplies will apply. Smile
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Re: Clarification of 10% Warranty on Goods

Post by Jovinal on Thu Mar 08, 2012 3:30 pm

You mean Engr. Jhez that even perishable meat and fish that have not gone manufacturing processes is covered ? The phrase manufacturing defects, what it mean ?
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Re: Clarification of 10% Warranty on Goods

Post by sunriser431 on Thu Mar 08, 2012 4:31 pm

Jovinal wrote:You mean Engr. Jhez that even perishable meat and fish that have not gone manufacturing processes is covered ? The phrase manufacturing defects, what it mean ?

may i butt in, please consider first the section 5 of the GPRA
Definition of terms
For purposes of this IRR, the following terms or words and phrases shall mean or be understood as follows:
a). xxxx
j) Domestic Bidder. Refers to any person or entity offering unmanufactured articles, materials or supplies of the growth or production of the Philippines, or manufactured articles, materials, or supplies manufactured or to be manufactured in the Philippines substantially from articles, materials, or supplies of the growth, production, or manufacture, as the case may be, of the Philippines.(n)
bounce

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Re: Clarification of 10% Warranty on Goods

Post by Jovinal on Thu Mar 08, 2012 7:22 pm

What I understand Sir Sunriser is that the purpose of 10% warranty is to answer manufacturing defects, so if the goods that did not undergo manufacturing process are excluded.
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Re: Clarification of 10% Warranty on Goods

Post by engrjhez® on Thu Mar 08, 2012 11:32 pm

Jovinal wrote:You mean Engr. Jhez that even perishable meat and fish that have not gone manufacturing processes is covered ? The phrase manufacturing defects, what it mean ?

This one is old but still will provide a sufficient take on the query:

Whether or not warranty for goods covered by retention money or bank guarantee under Section 62.1 of the IRR-A of R.A. 9184 is required for highly-perishable goods, which are consumed before the expiration of the three-month warranty period.

By virtue of this provision (Sec. 62.1, IRR-A), procuring entities are now mandated to retain a part of the contract price, or require a bank guarantee from its suppliers, manufacturers or distributors in the procurement of goods. This provision is generic in application and provides for no exception such that even procurement of goods in small amounts and quantity including those highly-perishable goods, which are to be consumed immediately, are subject to this requirement.

However, as regards the warranty period which is fixed by law as three (3) months for supplies, we believe that this period may further be shortened for highly-perishable goods depending upon when such goods are consumed. It can be observed from the aforequoted provision that the release of the obligation for warranty, which is covered by a retention money or bank guarantee, though attached to a fixed period, is also dependent upon the condition that the goods supplied are free from patent and latent defects and that all of the conditions imposed under the contract have been fully met. Hence, it can be gainsaid the warranty obligation is not only with a term, but also with a resolutory condition.

Generally, the obligation on the warranty is extinguished upon the concurrence of the expiration of the term, which is three (3) months, and the resolutory condition that goods are without defects. However, in case of highly-perishable and fungible goods, their consumption would obviously bring about the extinguishment of the warranty obligation, since the use of the thing implies the fulfillment of the resolutory condition that the goods are without defects. Furthermore, since the goods, which are the object of the warranty obligation, no longer exists upon consumption, this will bring about the concomitant extinguishment of the obligation, and hence, the term of three (3) months on the warranty becomes irrelevant.

This was from GPPB NPM 108-2004 Smile
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Re: Clarification of 10% Warranty on Goods

Post by Jovinal on Fri Mar 09, 2012 9:03 am

The problem Engr. Jhez is the timing of posting the warranty, because usually the highly perishable goods were consumed on the day of delivery or on next day, and the time to comply the 10% bank guarantee takes more than 1 day or if it is withheld from payment, it is already consumed during the processing of Disbursement Voucher that make warranty irrelevant. What is you view Engr. Jhez ?
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Re: Clarification of 10% Warranty on Goods

Post by engrjhez® on Fri Mar 09, 2012 11:55 am

Jovinal wrote:The problem Engr. Jhez is the timing of posting the warranty, because usually the highly perishable goods were consumed on the day of delivery or on next day, and the time to comply the 10% bank guarantee takes more than 1 day or if it is withheld from payment, it is already consumed during the processing of Disbursement Voucher that make warranty irrelevant. What is you view Engr. Jhez ?

Requoting from above:
Generally, the obligation on the warranty is extinguished upon the concurrence of the expiration of the term, which is three (3) months, and the resolutory condition that goods are without defects. However, in case of highly-perishable and fungible goods, their consumption would obviously bring about the extinguishment of the warranty obligation, since the use of the thing implies the fulfillment of the resolutory condition that the goods are without defects. Furthermore, since the goods, which are the object of the warranty obligation, no longer exists upon consumption, this will bring about the concomitant extinguishment of the obligation, and hence, the term of three (3) months on the warranty becomes irrelevant.

Warranty security is a general requirement, but if the item is consumed before the required posting of warranty security is realized, the requirement becomes obsolete and irrelevant. Nevertheless, in my opinion, it is a primal consideration that warranty security still be processed despite of prospective effects. But if goods were already consumed at the time warranty security is to be applied, it (warranty security) may be dispensed with. Smile
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Re: Clarification of 10% Warranty on Goods

Post by Jovinal on Fri Mar 09, 2012 9:00 pm

I agree with you Engr. JHEZ.
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