II.

CONSUMER PROTECTION

▪ It is the policy of the State to protect the interests of the consumer,

promote his general welfare and to establish standards of conduct for
business and industry.

▪ Objectives
1) Protection against hazards to health and safety;
2) Protection against deceptive, unfair and unconscionable sales acts and
practices;
3) Provision of information and education to facilitate sound choice and
the proper exercise of rights by the consumer;
4) Provision of adequate rights and means of redress; and
5) Involvement of consumer representatives in the formulation of social
and economic policies.

II.a. CONSUMER PRODUCT QUALITY AND SAFETY

▪ Duties of the State:

1) to develop and provide safety and quality standards for consumer
products, including performance or use-oriented standards, codes of
practice and methods of tests;
2) to assist the consumer in evaluating the quality, including safety,
performance and comparative utility of consumer products;
3) to protect the public against unreasonable risks of injury associated
with consumer products;
4) to undertake research on quality improvement of products and
investigation into causes and prevention of product related deaths,
illness and injuries;
5) to assure the public of the consistency of standardized products.

▪ Implementing agencies:
1) Department of Health – foods, drugs, cosmetics, devices and
substances;
2) Department of Agriculture - products related to agriculture;
3) Department of Trade and Industry – other consumer products

▪ The concerned department shall adopt existing government domestic

product quality and safety standards.

In the absence of such standards, the concerned department shall form

specialized technical committees composed of equal number of
representatives from each of the Government, business and consumer
sectors to formulate, develop and purpose consumer product quality and
safety standards.

▪ In case the department, upon petition by an interested party or its own

initiative and after due notice and hearing, determines a consumer
product to be substandard or materially defective, it shall so notify the
manufacturer, distributor or seller thereof of such finding and order such
manufacturer, distributor or seller to:
1) give notice to the public of the defect or failure to comply with the
product safety standards; and
 2) give notice to each distributor or retailer of such product.

▪ The department shall also direct the manufacturer, distributor or seller of

such product to extend any or all of the following remedies to the injured
person:
1) to bring such product into conformity with the requirements of the
applicable consumer product standards or to repair the defect in order
to conform with the same;
2) to replace the product with a like or equivalent product which complies
with the applicable consumer product standards which does not
contain the defect;
3) to refund the purchase price of the product less a reasonable allowance
for use; and
4) to pay the consumer reasonable damages as may be determined by the
department.

▪ The manufacturer shall avail of the Philippine Standard Certification

Mark which the concerned department shall grant after determining the
product’s compliance with the relevant standard in accordance with the
implementing rules and regulations.

▪ Imported Products
1) Refused admission if it:
a) fails to comply with an applicable consumer product quality and
safety standard or rule;
b) is or has been determined to be injurious, unsafe and dangerous;
c) is substandard; or
d) has material defect.
2) Owner or the consignee of the imported products may manifest under
bond that none of the above ground for non-admission exists or that
measures have been taken to cure them before they are sold,
distributed or offered for sale to the general public.
3) Any consumer product, the sale or use of which has been banned or
withdrawn in the country of manufacture, shall not be imported into
the country.
4) Non-admitted imported products may be released from customs
custody under bond for the purpose of permitting the owner or
consignee an opportunity to so modify such product.
5) If the product cannot be so modified, or if the owner or consignee is not
proceeding to satisfactorily modify such product → refused admission,
and direct redelivery into customs custody, or seize the product if
redelivered.
6) Non-admitted imported products must be exported. Otherwise,
products undergo destruction.

▪ Exported products. — safety and quality provisions on imported products

shall not apply to any consumer product if:
1) it can be shown that such product is manufactured, sold or held for
sale for export from the Philippines, or that such product was imported
for export, unless such consumer product is in fact distributed in
commerce for use in the Philippines; and
 2) such consumer product or the packaging thereof bears a stamp or label
stating that such consumer product is intended for export and actually
exported.

II.b. DECEPTIVE, UNFAIR AND UNCONSCIONABLE SALES ACTS AND

PRACTICES

II.b.i. Deceptive sales acts or practices

▪ Act or practice where the producer, manufacturer, supplier or seller

through concealment, false representation or fraudulent manipulation,
induces a consumer to enter into a sales or lease transaction of any
consumer product or service.

▪ Act or practice of a seller or supplier is deceptive when it represents that:

1) Consumer product/service has the sponsorship, approval,

performance, characteristics, ingredients, accessories, uses or benefits
it does not have;
2) Consumer product/service is of a particular standard, quality, grad,
style, or model when in fact it is not;
3) Consumer product is new, original or unused, when in fact, it is in a
deteriorated, altered, reconditioned, reclaimed or second-hand state;
4) Consumer product/service is available to the consumer for a reason
that is different from the fact;
5) Consumer product/service has been supplied in accordance with the
previous representation when in fact it is not;
6) Consumer product/service can be supplied in a quantity greater than
the supplier intends;
7) Service, or repair of a consumer product is needed when in fact it is
not;
8) Specific price advantage of a consumer product exists when in fact it
does not;
9) Sales act or practice involves or does not involve a warranty, a
disclaimer of warranties, particular warranty terms or other rights,
remedies or obligations if the indication is false; and
10) Seller or supplier has a sponsorship, approval, or affiliation he does
not have.

▪ Deceptive act or practice by seller or supplier in connection with a

consumer transaction violates this Act whether it occurs before, during or
after the transaction.

II.b.ii. Unfair or unconscionable sales acts or practices

▪ Act or practice where the producer, manufacturer, distributor, supplier or

seller, by taking advantage of the consumer’s physical or mental infirmity,
ignorance, illiteracy, lack of time or the general conditions of the
environment or surroundings, induces the consumer to enter into a sales
or lease transaction grossly inimical to the interests of the consumer or
grossly one-sided in favor of the producer, manufacturer, distributor,
supplier or seller.
 ▪ Circumstances to be considered:

1) Producer, manufacturer, distributor, supplier or seller took advantage

of the inability of the consumer to reasonably protect his interest
because of his inability to understand the language of an agreement of
similar factors;
2) When consumer transaction was entered into, the price grossly
exceeded the price at which similar products or services were readily
obtainable in similar transaction by like consumers;
3) When consumer transaction was entered into, the consumer was
unable to receive a substantial benefit from the subject of the
transaction;
4) When the consumer was entered into, the seller or supplier was aware
that there was no reasonable probability or payment of the obligation
in full by the consumer; and
5) Transaction that the seller or supplier induced the consumer to enter
into was excessively one-sided in favor of the seller or supplier.

▪ Unfair or unconscionable sales act or practice by a seller or supplier in

connection with a consumer transaction violates this Act whether it occurs
before, during or after the consumer transaction.

II.b.ii.1. Chain distribution plans or pyramid sales schemes

▪ Sales devices whereby a person, upon condition that he makes an

investment, is granted by the manufacturer or his representative a right
to recruit to profit one or more additional persons who will also be granted
such right to recruit upon condition of making similar investments.

The profits of the person employing such a plan are derived primarily from
the recruitment of other plans into the plan rather than from the sale of
consumer products, services or credit.

▪ Not be employed in the sale of consumer products

II.b.ii.2. Home solicitation sales

▪ Allowed if with permit from the DTI

▪ Conducted only between 9AM and 7PM of each working day. XPN: other
times, if agreed upon.

Conducted only by a person who has the proper identification and

authority from his principal to make such solicitations.

▪ HSS shall not represent that: (a) the buyer has been specially selected; (b)
a survey, test or research is being conducted; or (c) the seller is making a
special offer to a few persons only for a limited period of time.

II.b.ii.3. Referrals sales

▪ Takes places when an existing consumer provides the name and contact
information of a prospect to his sales representatives.
 ▪ GR: Not be used in the sale of consumer products.

XPN: Seller executes in favor of the buyer a written undertaking that will
grant a specified compensation or other benefit to said buyer in return for
each and every transaction consummated by said seller with the persons
referred by said buyer or for subsequent sales that said buyers has helped
the seller enter into.

II.b.ii. Penalties

▪ 1) Fine – 5k to 10k
2) Imprisonment – not more than 1yr
3) Both, at the discretion of the court

II.c. PRODUCT AND SERVICE WARRANTY

II.c.i. Consumer products with warranty

▪ Any seller or manufacturer who gives an express warranty shall:

1) Set forth the terms of warranty in clear and readily understandable
language and clearly identify himself as the warrantor;
2) Identify the party to whom the warranty is extended;
3) State the products or parts covered;
4) State what the warrantor will do in the event of a defect, malfunction of
failure to conform to the written warranty and at whose expense
5) State what the consumer must do to avail of the rights which accrue to
the warranty; and
6) Stipulate the period within which, after notice of defect, malfunction or
failure to conform to the warranty, the warrantor will perform any
obligation under the warranty.

▪ All written warranties or guarantees issued by a manufacturer, producer,

or importer shall be operative from the moment of sale.

▪ Sales report – all sales made by distributors of products shall be reported

to the manufacturer, producer or importer of the product sold within 30
days from date of purchase, unless otherwise agreed upon.

o It shall contain the date of purchase, model of the product bought,

its serial number, name and address of the buyer.
o It is equivalent to a warranty registration with the manufacturer,
producer or importer. Such registration is sufficient to hold the
manufacturer, producer or importer liable under its warranty.

▪ 1) Manufacturer, producer or importer

- primarily liable
2) Distributor
– primarily liable, if no sales report made
- cannot ask for reimbursement for costs incurred in honoring the
warranty
3) Retailer
 - subsidiarily liable, if both distributor and MPI failed to honor the
warranty
- can ask reimbursement from distributor or MPI

▪ Warranty rights can be enforced by presentment of a claim.

1) Warranty card or the official receipt or sales invoice
2) Product to be serviced or returned

▪ Designation of warranties
1) Full warranty – if written warranty meets the minimum requirements
2) Limited warranty – if written does not meet such minimum
requirements

▪ To meet the minimum standards for warranty, warrantor shall:

1) Remedy such consumer product within a reasonable time and without
charge in case of a defect, malfunction or failure to conform to such
written warranty;
2) Permit the consumer to elect whether to ask for a refund or replacement
without charge of such product or part, as the case may be, where after
reasonable number of attempts to remedy, the product continues to
have the defect or to malfunction.

Warrantor will not be required to perform the above duties if he can show
that the defect, malfunction or failure to conform to a written warranty
was caused by damage due to unreasonable use thereof.

▪ Enforceability of the warranties:

1) Express – as to stipulation of the parties
2) Express with implied - both will be of equal duration.
3) Implied - not less than 60 days nor more than 1yr

▪ Breach of warranties:
1) Express
a) Repair – within 30 days, may be extended
b) Refund of purchase price
2) Implied
a) Retain the goods + damages
b) Reject the goods + cancel the contract + recover purchase price +
damages.

II.c.ii. Warranties in supply of services

▪ There is an implied warranty that the service will be rendered with due
care and skill and that any material supplied in connection with such
services will be reasonably fit for the purpose for which it is supplied.

▪ When consumer, expressly or by implication, makes known to the seller

the particular purpose for which the services are required, there is an
implied warranty that the services supplied under the contract and any
material supplied in connection therewith will be reasonably fit for that
purpose or are of such a nature or quality that they might reasonably be
expected to achieve that result, unless the circumstances show that the
 consumer does not rely or that it is unreasonable for him to rely, on the
seller’s skill or judgment.

▪ This Act on warranty shall not apply to professional services of CPAs,

architects, engineers, lawyers, veterinarians, optometrists, pharmacists,
nurses and other professional engaged in their respective professional
endeavors.

▪ Service firms shall guarantee workmanship and replacement of spare

parts for a period not less than 90 days which shall be indicated in the
pertinent invoices.

II.c.iii. Prohibited acts

▪ 1) Refusal without any valid legal cause by the local manufacturer or any
person obligated under the warranty or guarantee to honor a warranty or
guarantee issued;
2) Unreasonable delay by the local manufacturer or any person obligated
under the warranty or guarantee in honoring the warranty;
3) Removal by any person of a product’s warranty card for the purpose of
evading said warranty obligation;
4) Any false representation in an advertisement as to the existence of a
warranty or guarantee.

II.c.iv. Penalties

▪ 1) Any person who shall violate the provisions of Art. 67 (Conditions and
Warranties governed by CC)
a) Fine – P500 to P5,000
b) Imprisonment – 1 to 2yrs
c) Both
2) Prohibited acts other than Art. 67
a) Fine – P1,000 to P50,000
b) Imprisonment – 1 to 5yrs
c) Both

▪ Any imposition of any of the penalties is without prejudice to any liability

incurred under the warranty or guarantee.

II.d. LABELLING AND PACKAGING

▪ The State shall enforce compulsory labeling, and fair packaging to enable
the consumer to obtain accurate information as to the nature, quality and
quantity of the contents of consumer products and to facilitate his
comparison of the value of such products.

II.d.i. Prohibited acts

▪ It shall be unlawful for any person, either as principal or agent, engaged

in labeling or packaging of any consumer product, to display or distribute
or to cause to be displayed or distributed in commerce any consumer
product whose package or label does not conform to the provisions hereof.
 ▪ Prohibition shall not apply to persons engaged in the business of wholesale
or retail distributors of consumer products.

XPNs: When they (a) are engaged in the packaging or labeling of such
products; (b) prescribe or specify by any means the manner in which such
products are packaged or labeled; or (c) having knowledge, refuse to
disclose the source of the mislabeled or mispackaged products.

II.d.ii. Labeling requirements for consumer products

▪ Minimum labeling requirements

1) Its correct and registered trade name or brand name;
2) Its duly registered trademark;
3) Its duly registered business name;
4) The address of the manufacturer, importer, repacker of the consumer
product in the Phil;
5) Its general make or active ingredients;
6) The net quality of contents, in terms of weight, measure or numerical
count rounded of to at least the nearest tenths in the metric system;
7) Country of manufacturer; and
8) If a consumer product is manufactured, refilled or repacked under
license from a principal, the label shall so state the fact.

▪ Any word, statement or other information required by or under authority:

1) Whether it is flammable or inflammable;
2) Directions for use, if necessary;
3) Warning of toxicity;
4) Wattage, voltage or amperes; or
5) Process of manufacture used if necessary.
shall appear on the label or labeling with such conspicuousness as
compared with other words, statements, designs or devices therein, and
in such terms as to render it likely to be read and understood by the
ordinary individual under customary conditions of purchase or use.

It shall form an integral part of the label without danger of being erased or
detached under ordinary handling of the product.

▪ Label may contain the Philippine Product Standard Mark if it is certified

to have passed the consumer product standard prescribed by the
concerned department.

▪ A package shall be deemed to be nonfunctionally slack-filled if it is filled

to substantially less than its capacity for reasons other than: (a) protection
of the contents of such package; (b) the requirements of machines used for
enclosing the contents in such package; or (c) inherent characteristics of
package materials or construction being used.

II.d.iii. Packaging of consumer products for the protection of children

▪ Standards for the special packaging of any consumer product may be

established if it finds that:
1) Degree or nature of the hazard to children in the availability of such
product, by reason of its packaging, is such that special packaging is
 required to protect children from serious personal injury or serious
illness resulting from handling and use of such product;
2) Special packaging to be required by such standard is technically
feasible, practicable and appropriate for such product.

The concerned department shall consider the:

a) reasonableness of such standard;
b) available scientific, medical and engineering data concerning
special packaging and concerning accidental, ingestions,
illnesses and injuries caused by consumer product;
c) manufacturing practices of industries affected by this Act; and
d) nature and use of consumer products.

II.d.iv. Additional labeling requirements

1) For food
a) Expiry or expiration date, where applicable;
b) Whether the consumer product is semi-processed, fully
processed, ready-to-cook, ready-to-eat, prepared food or just
plain mixture;
c) Nutritive value, if any;
d) Whether the ingredients use are natural or synthetic, as the
case may be;
e) Such other labeling requirements as the concerned department
may deem necessary and reasonable.

2) For cosmetics
a) Expiry or expiration date;
b) Whether or not it may be an irritant;
c) Precautions or contra-indications; and
d) Such other labeling requirements as the concerned department
may deem necessary and reasonable.

3) For drugs - Generics Act shall apply

4) For cigarettes
a) All cigarettes for sale or distribution within the country shall be
contained in a package which shall bear the following statement
or its equivalent in Filipino: “Warning” Cigarette Smoking is
Dangerous to Your Health”.
b) Such statement shall be located in conspicuous place on every
cigarette package and shall appear in conspicuous and legible
type in contrast by typography, layout or color with other printed
matter on the package.
c) Any advertisement of cigarette shall contain the name warning
as indicated in the label.

II.e. CONSUMER RIGHTS

II.e.i. Price Tag Act

▪ It shall be unlawful to offer any consumer product for retail sale to the
public without an appropriate price tag, label, or marking publicly
 displayed to indicate the price of each article and said products shall not
be sold at a price higher than that stated therein and without
discrimination to all buyers.

II.e.i.1. Manner of placing price tags

▪ Smaller consumer products – a price list placed at the nearest point where
the products are displayed may suffice.
▪ Price tags, labels or markings must be written clearly, indicating the price
of the consumer product per unit in pesos and centavos.

II.e.i.2. Regulations for price tag placements

▪ The concerned department shall prescribe rules and regulations for the
visible placement of price tags for specific consumer products and services.
There shall be no erasures or alterations of any sort of price tags, labels or
markings.

II.e.i.3. Penalties

▪ 1) Fine – P200 to P5,000

2) Imprisonment – 1mo to 6mos
3) Both, upon discretion of the court

▪ Second conviction carries the penalty of revocation of business permit and

license.

II.e.ii. Lemon Law

▪ State must 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 MV is a major consumer purchase or

investment. Hence, the rights of consumers should be clearly defined, incl.
the means for redress for violations thereof.

II.e.ii.1. Requisites to invoke Lemon Law Rights

▪ 1) Brand new MV
2) Purchased in the Philippines
3) Reported by a consumer to be in nonconformity with the vehicle’s
manufacturer or distributor’s standards or specifications
4) Within 12mos from the date of original delivery to the consumer, or up
to 20,000kms of operation after such delivery, whichever comes first

▪ At any time within the Lemon Law rights period, AND after at least 4
separate repair attempts by the same manufacturer, distributor,
authorized dealer or retailer (MDA) for the same complaint, and the
nonconformity issue remains unsolved, the consumer may invoke his
rights under this Act.
 ▪ Notice of availment – Before availing of any remedy, the consumer shall,
in writing, notify the MDA of (1) the unresolved complaint, and (2) the
consumer’s intention to invoke his rights under this Act within the Lemon
Law rights period.

After filing the notice, the consumer shall bring the vehicle to the MDA
from where the vehicle was purchased for a final attempt to address the
complaint of the consumer to his satisfaction.

▪ In case the nonconformity issue remains unresolved despite the MDA’s

efforts to repair the vehicle, pursuant to the consumer’s availment of his
Lemon Law rights, the consumer may file a complaint before the DTI.

▪ If the vehicle is not returned for repair, based on the same complain, within
30CD from the date of notice of release of the MV to the consumer following
this repair attempt within the Lemon Law rights period, the repair is
deemed successful.

If the nonconformity issue still exists or persists after the 30-day period
but still within the Lemon Law rights period, the consumer may be allowed
to invoke his rights under this Act.

▪ 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
residence to his regular workplace or destination and vice versa,
equivalent to:
1) Air-conditioned taxi fare, as evidenced by OR;
2) in such amount to be agreed upon by the parties;
3) a service vehicle at the option of the manufacturer, distributor,
authorized dealer or retailer.

II.e.ii.2. Remedies for dispute resolution

▪ DTI shall exercise exclusive and original jurisdiction over dispute arising
from the provisions of the Lemon Law.

▪ Dispute resolution mechanisms

1) Mediation - principles of negotiation, conciliation and mediation
towards amicable settlement between the MDA and the consumer shall
be strictly observed.
2) Arbitration – if there is failure to settle the complaint during the
mediation proceedings, both parties may voluntarily decide to
undertake arbitration proceedings.
3) Adjudication
a) In case there is finding of non-conformity, the DTI shall rule in favor
of the consumer and direct the MDA to grant either the following
remedies:
i. Replace the MV with a similar or comparable MV in terms
of specifications and values, subject to availability; or
ii. Accept the return of the MV + pay purchase price +
collateral damages.
 b) If the nonconformity of the MV is not found by the DTI, it shall rule
in favor of the MDA, and direct the consumer to reimburse the MDA
the costs incurred by the latter in validating the consumer’s
complaints.

▪ Reasonable allowance for use – whichever is lower bet:

1) 20% per annum deduction from purchase price; or
2) Formula = [(Distance traveled in kms) * (Purchase price) / (100,000
kms)

▪ Disclosure on resale – if the returned MV be made available for resale,

the MDA shall, prior to sale or transfer, disclose in writing to the next
purchaser of the same vehicle the following information:
1) MV was returned to the MDA;
2) Nature of the nonconformity which caused the return and
3) Condition of the MV at the time of the transfer to the MDA.