Republic of the Philippines

Department of Trade and Industry

Office of the Secretary
Manila
--o0o--

,
Complainant-Appellee, DTI 8 Consumer Case No.

For:
-versus- Violation of R.A. 7394

.,
Respondent-Appellant.
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MEMORANDUM OF APPEAL

RESPONDENT-APPELLANT, represented by its

proprietor, unto this Honorable Office of the Secretary most
respectfully avers:

TIMELINESS OF THE APPEAL

Respondent-appellant received on December 23, 2015

the subject Decision dated December 16, 2015. He filed
through registered mail a motion for reconsideration on
January 7, 2016 but which was denied by the Adjudication
Officer of the DTI Regional Office VIII through the Order
dated March 8, 2016 and received by the appellant on March
28, 2016.

GROUND

With all due respect to the Regional Office/Adjudication

Officer, the Decision dated December 16, 2015, and the
subsequent Order dated March 8, 2016 denying the motion
for reconsideration, were issued with grave abuse of
discretion:

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 I. WHEN IT DECIDED THE CASE CONTRARY
TO THE STIPULATIONS IN THE DEED OF
UNDERTAKING EXECUTED BY THE
PARTIES;

II. WHEN IT HELD THAT RESPONDENT IS

LIABLE TO THE COMPLAINANT FOR
BREACH OF EXPRESS WARRANTY AND
ORDERED FOR THE RETURN OF
PHP80,460.00 IN FAVOR OF THE
COMPLAINANT; and

III.WHEN THE MOTION FOR

RECONSIDERATION WAS DENIED ON MERE
TECHNICAL GROUNDS.

ISSUES

I. WHETHER OR NOT THE DECISION WAS IN

ACCORDANCE WITH THE STIPULATIONS
IN THE DEED OF UNDERTAKING EXECUTED
BY THE PARTIES WHICH PARTAKES OF A
COMPROMISE AGREEMENT;

II. WHETHER OR NOT THERE WAS

SUFFICIENT PROOF THAT INDEED THE
MACHINE IS DEFECTIVE;

III. WHETHER OR NOT THE DEFECT OR

MALFUNCTIONING OF THE MACHINE IS
ATTRIBUTABLE TO THE RESPONDENT; and

IV. WHETHER OR NOT INSPECTION AND

DEMONSTRATION IS NECESSARY TO
DETERMINE THAT INDEED THE MACHINE
IS DEFECTIVE.

TABLE OF EXHIBITS

Exhibit A: Complaint

Exhibit B: Answer/Position Paper for the

Respondent with Annexes

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 Exhibit C: Position Paper for the
Complainant with Annexes

Exhibit D: Decision date December 16

December 2015

Exhibit E: Motion for Reconsideration

Exhibit F: Order dated March 8, 2016

DISCUSSION/ARGUMENTS

I. THE REGIONAL ADJUDICATION OFFICER

ACTED WITH GRAVE ABUSE OF DISCRETION
WHEN SHE FAILED TO CONSIDER THE
STIPUALTIONS IN THE DEED OF
UNDERTAKING WHICH CONSTITUTED THE
COMPROMISE AGREEMENT OF THE PARTIES.

It must be emphasized that the Deed of Undertaking

executed by the parties on July 2, 2015, which constitutes
their compromise agreement, provides:

Each of the Parties have agreed that this

document, constitutes the full and final settlement
of any complaint, each may have, against each
other, in relation to this case. That, to ensure
compliance of these agreement, a monitoring
mechanism will be executed. (emphasis
supplied)

However, this monitoring mechanism which could have

determined if indeed the machine was defective was never
executed. Herein appellant request several times for
demonstration that the paper jamming problem could only
happen because of improper paper feeding, but which was
never granted. This procedure could have at least made up
the “monitoring scheme” necessary to ensure the
compliance with the stipulations in the compromise
agreement.

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 Clearly, the regional adjudicator a quo committed grave
abuse of discretion when the decision was rendered not in
accord with the compromise agreement. It is, thus, settled:

A compromise agreement is final and

executory. Such a final and executory judgment
cannot be modified or amended. If an amendment
is to be made, it may consist only of supplying an
omission, or striking out a superfluity or
interpreting an ambiguous phrase therein in relation
to the body of the decision which gives it life.
(Inaldo v. Balagot, G.R. No. 57256, 18 November
1991, 203 SCRA 650)

A compromise agreement is a contract

whereby the parties make reciprocal concessions in
order to resolve their differences and thus avoid or
put an end to a lawsuit. They adjust their difficulties
in the manner they have agreed upon, disregarding
the possible gain in litigation and keeping in mind
that such gain is balanced by the danger of losing.
Verily, the compromise may be either extrajudicial
(to prevent litigation) or judicial (to end a litigation).
A compromise must not be contrary to law,
morals, good customs and public policy; and must
have been freely and intelligently executed by and
between the parties. To have the force of law
between the parties, it must comply with the
requisites and principles of contracts. Upon the
parties, it has the effect and the authority of res
judicata, once entered into.
When a compromise agreement is given
judicial approval, it becomes more than a contract
binding upon the parties. Having been sanctioned by
the court, it is entered as a determination of a
controversy and has the force and effect of a
judgment. It is immediately executory and not
appealable, except for vices of consent or forgery. [19]
The nonfulfillment of its terms and conditions
justifies the issuance of a writ of execution; in such
an instance, execution becomes a ministerial duty of
the court. (Felipe O. Magbanua, Carlos De La Cruz,
Remy Arnaiz, Billy Arnaiz, Rolly Arnaiz, Domingo
Salarda, Julio Cahilig and Nicanor Labuen vs. Rizalino
Uy, G.R. NO. 161003, May 06, 2005) (emphasis
supplied)

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 The subject decision must have been in accordance
with the Deed of Undertaking executed by the parties. The
adjudication officer has no authority to modify the same. It
is, thus, most respectfully prayed of the Honorable Office of
the Secretary to set aside the subject decision and a
monitoring mechanism be executed. This is the way the
decision should have been rendered. To give effect to the
stipulations in the deed of undertaking, it is respectfully
prayed that an inspection and demonstration on the
machine, to be attended by the parties and representative of
the DTI, to constitute monitoring mechanism, be had. It is
unfair that the machine will be declared to be defective
when in fact there is no basis for such pronouncement.

II. THE MACHINE HAS NO DEFECT.

As discussed in respondent’s Answer/Position Paper,

the malfunctioning, particularly the paper jamming, of the
machine was caused by mishandling and improper use. In
the same position paper, respondent requested that the
machine be brought to the DTI for inspection and
demonstration because that is the best way to determine if
indeed the machine has any defect. Surprisingly, however,
without the inspection being done, the regional adjudication
officer a quo rendered the decision with the following
ratiocination:

It claims that there was improper use of the

subject unit and that an untrained operator made
use of the machine. However, other than his
allegations, this remained unsubstantiated and
no evidence was offered to prove such claim.

With all due respect, respondent submitted documents,

attached to his position paper as Annexes D and E, proving
that the subject unit indicated that it has already made 1389
copies when it was pulled out on July 2, 2015. After about
18 days of observation and actual use, no trouble or
malfunction was observed. The subject unit was then
returned and indicated having a total 2372 copies made. In
other words, while the same was under observation and
proper handling, it made 983 copies. Unfortunately, the
Honorable Office failed to appreciate this fact.

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 When the machine was able to reproduce 983 copies
during the 18 days observation, it only means that the
machine has no defect. It is therefore respectfully prayed of
the Honorable Office of the Secretary to take into
consideration this circumstance in resolving the instant
appeal.

III. THE DEFECT OR MALFUNCTIONING OF

THE MACHINE IS ATTRIBUTABLE TO
THE RESPONDENT

The decision likewise relied so much on the

compromise agreement/deed of undertaking, stating that:

2. That Respondent Agrees and allows that after the

Repair and the same problem-paper jamming still
occur on the Subject item, he is obligated to grant
the initial prayer of the Complainant to Return the
item and get back the purchase amount.

While the compromise agreement provides for the

return of the item and reimbursement of the purchase
amount, logic and fair play dictate that it cannot be done
should the problem recurs because of the mishandling of the
machine. The condition cannot also be interpreted to have
no time limit because it would be contrary to logic and
human experience to expect the machine not to suffer any
malfunction. All machines are bound to deteriorate and
suffer malfunctions at a certain time. In fact, and to
reiterate, the same deed of undertaking states:

Each of the Parties have agreed that this

document, constitutes the full and final settlement
of any complaint, each may have. Against each
other, in relation to this case. That, to ensure
compliance of these agreement, a monitoring
mechanism will be executed. (emphasis
supplied)

What then is that monitoring mechanism? It could have

been a device to monitor if indeed the machine has defects
from the very start, or had it malfunctioned basically
because of improper handling by complainant’s operators.

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 If the machine was from the very start defective, why
did it take the complainant almost three months (January
15, 2015 date of purchase - March 2, 2015 first complaint)
before she had her first complaint? It is just not fair that
while the machine was being operated by the complainant,
the Honorable Office would require respondent to prove that
the machine was improperly handled or that untrained
technician operated the machine.

To be precise, the evidence on record would prove that

the machine was delivered to the complainant on January
15, 2015 and the initial complaint was made on March 2,
2015 after reproduction of 604 copies. The second
complaint was made on May 24, 2015 after reproduction of
1379 copies. The third complaint was made on June 18,
2015 with 1389 copies. The Honorable Office is invited to
notice that between the second and third complaint, the
machine was only able to reproduce 10 copies in the span
of 25 days.

This circumstance only proves that the photocopying

business of the complainant has already died down. If her
business was good, she would definitely have reproduced
more than 10 copies in the span of 25 days. Otherwise, it
would not take her such a long period before complaining.
Again, her failure in her photocopying business is not a
ground for the return of the item. The Honorable
Office/Adjudication Officer a quo would not also be unaware
that paper jamming in printers (in computers) occurs once
in a while. But that does not mean that the machine is
defective. The same is true with photocopy machines. With
improper handling, paper jamming occurs. And the same
cannot be attributed to the respondent.

IV. INSPECTION AND DEMONSTRATION IS

NECESSARY TO DETERMINE THAT
INDEED THE MACHINE IS DEFECTIVE.

In his Answer/Position Paper, respondent already

requested that inspection and demonstration be made
before the Honorable Office/Adjudication Officer make a
conclusion that the machine is indeed defective. This could
have been the most appropriate monitoring mechanism to
determine if indeed the machine is defective.

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 Appellant therefore humbly implores the Honorable
Office of the Secretary to consider the fact that it would be
the height of injustice if the respondent would be made to
suffer loss when the alleged malfunction of the machine is
practically caused by the mishandling of the complainant or
her operator.

PRAYER
WHEREFORE, premises considered, it is most
respectfully prayed of the Honorable Office of the Secretary
that the Decision dated December 16, 2015, and the
subsequent Order dated March 8, 2016, be SET ASIDE and
in lieu thereof, a Decision be rendered DISMISSING the
Complaint and DENYING the request for return of the unit.
On the other hand, it is respectfully prayed that complainant
be ORDERD to pay DAMAGES in favor of herein respondent
for the baseless and malicious filing of the complaint.

Other reliefs and remedies under the premises are

likewise prayed for.

RESPECTFULLY PRAYED.

General Manager
UNISA Trades Enterprises, Inc.

VERIFICATION
I, , Filipino, of legal age, married and a with postal
address at Okey Commercial Complex, P. Paterno St.,
Tacloban City, after being sworn in accordance with law do
hereby depose and state: that I am the General Manager of
UNISA Trades Enterprises, Inc., the respondent in the
instant action; that I have caused the preparation of the
foregoing Memorandum of Appeal; and that I have read and
understood all the statements therein, and that they are
true and correct to the best of my personal knowledge
and/or based on authentic documents.

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 IN WITNESS WHEREOF, I hereunto affix my
signature this

Affiant

SUBSCRIBED AND SWORN to before me this April 8,

2016 in.

Doc. No. ______________

Page No. ______________
Book No. ______________
Series of 2016.

Copy furnished:

THE ADJUDICATION OFFICER

EXPLANATION

Copies of this Memorandum of Appeal was served upon

the complainant via registered mail considering distance and
impracticality of personal service.