ASSESSMENT. Please answer briefly citing relevant provision of law, if necessary. (5 pts.

each.)

1. Why is there a need for proper label, marking or tag in consumer products?

2. Why is Philippine Product Standard Mark required and what is its importance to consumers?

3. What if there is a difference between the price tag attached to the product and the amount
reflecting with the cashier upon payment, which shall prevail?

4. Pulu Tan purchased an electric fan from a well know appliance store, the salesman warranted
that it is safe for use as intended by Mr. Tan. However, when he used the same, it is not fit for
the use intended. What are the remedies available to Mr. Tan?

ANSWERS:
1. Proper label, marking or tag is deemed important in consumer products for it will be the base
criteria that people will consider on buying products. Also, as a person in the business field, one
must know that consumers protection comes first for consumers are what gives life to the
business. Offering products that are mislabeled can lead to misleading consumers. For a instance,
wrong expiration dates were placed in the products, if the products results to having a negative
impact to consumers, the business will be put in thin ice. Further, when it comes to markings or
tag, it is unlawful to offer consumer products for sale without an appropriate price tag; fair
pricing should always be implemented. Further, in cases that products are too small for price tags,
prices should be displayed near its display to have transparency.
2. The Philippine Product Standard Mark is required because this can guarantee that the product is
certified and have passed the consumer product standard prescribed by the concerned
departments; examples are Department of Health (DOH), Department of Agriculture (DA), and
Department of Trade and Industry (DTI). It is important to consumers because it has concerns
with their protection. This mark is implemented to promote standardization of activities in the
country and ensure the manufacture, production, and distribution of quality products for the
protection of the consumer.
3. In cases like this, the one that should prevail is the price tag attached to the product. According to
DTI, retailers cannot set price above what is indicated in the price tag and the price tag law is in
place to keep retailers from changing prices of the goods without warning.
4. The practice done by the salesman is deceptive for he, through concealment, false representation
made Mr. Tan enter a sales or lease transaction. It is clear when stated that the electric fan was
not fit for the use intended; the salesman misrepresented the use of the electric fan. The remedies
 Mr. Tan can do is to either negotiate things with the seller or if the seller will not cooperate, Mr.
Tan can file a complaint with DTI regarding the matter. A mediation between the parties may
happen and in worst cases the seller may face penalties like fine of not less than One thousand
pesos (P1,000.00) but not more than Ten thousand pesos (P10,000.00) or imprisonment of not
less than two (2) months but not more than one (1) year, both by discretion of the court.

ASSESSMENT. Please answer briefly citing relevant provision of law, if necessary. (5 pts.
each.)

1. Johnny Water, purchased a brand-new motor vehicle from Isuzu Philippines. Six months after
his purchase, the motor vehicle wiggled for unknown reason and was sent to the dealer for repair.
Upon return of the vehicle, the owner still experiences wiggling. Can he already avail of his right
under the lemon law?

2. In the above problem, what if Mr. Water changed the wheels, driveshaft, and axle of the
vehicle, can he avail of the lemon law?

3. Michael Schumacher is a renowned race car driver and drove a certain Ferrari sports car in
grand prix. After winning, Ferrari decided to sell the car used by Schumacher to Manny
Revillame, which after several days of used exhibited damage to its engine. If after 4 attempts to
fix the car and following the procedure for the availment of the lemon law rights, the Ferrari
refused to replace the same, can Mr. Revillame file a complaint with DTI?

ANSWERS:
1. No. It is said that in order for a consumer to invoke the rights under the Lemon Law, the vehicle
must first undergo at least four (4) separate repair attempts by the same manufacturer,
distributor, authorized dealer or retailer for the same compliant and the nonconformity issue is
still not resolved.
2. If the modifications made by Mr. Water was not authorized by the manufacturer, distributor,
authorized dealer, or retailer then the Lemon Law cannot be availed by Mr. Water.
3. No. Though the car may be sold again by the manufacturer the new owner, which is Mr.
Revillame, cannot file a complaint with DTI regarding the availment of lemon law because the
car Mr. Revillame bought is no longer considered as brand new.

ASSESSMENT. Please answer briefly citing relevant provision of law, if necessary. (5 pts.
each.)

1. Differentiate rehabilitation from insolvency.

2. May rehabilitation be converted to liquidation proceedings?

3. When does the court issue commence order and what are its effects?

4. What are the kinds of rehabilitation? Explain each.

ANSWERS:
1. Rehabilitation and insolvency are different. Rehabilitation is the restoration of the debtor to a
condition of successful operation and solvency. This means that the debtor must show that there
is continuance of operation that is economically feasible, and its creditors can recover by way of
present value of payments projected in the plan. On the other hand, insolvency is a financial
condition wherein the debtor is generally unable to pay his liabilities as they fall due in the
ordinary course of the business or in other cases; has liabilities which are greater than his assets.
2. Yes, rehabilitation may be converted to liquidation proceedings. The court may order the
conversion of rehabilitation proceedings to liquidation proceedings in the following instances:
a. Section 25
i. the debtor is insolvent; and
ii. there is no substantial likelihood for the debtor to be successfully rehabilitated as
determined in accordance with the rules to be promulgated by the Supreme
Court.
b. Section 72
i. If no Rehabilitation Plan is confirmed within the period of one (1) year from the
date of the filing of the petition for rehabilitation.
c. Section 75
i. the debtor may also initiate liquidation proceedings by filing a motion in the
same court where the rehabilitation proceedings are pending to convert the
rehabilitation proceedings into liquidation proceedings. The motion shall state
that the debtor is seeking immediate dissolution and termination of its corporate
existence.

d. Section 90
i. the debtor may also initiate liquidation proceedings by filing a motion in the
same court where the rehabilitation proceedings are pending to convert the
rehabilitation proceedings into liquidation proceedings. The motion shall be
 verified, shall contain, or set forth the same matters required in the preceding
paragraph, and state that the debtor is seeking immediate dissolution and
termination of its corporate existence.
e. Section 91
i. three (3) or more creditors whose claims is at least one million pesos
(Php1,000,000.00) or at least twenty-five percent (25%) of the subscribed capital
or partner's contributions of the debtor, whichever is higher, may also initiate
liquidation proceedings by filing a motion in the same court where the
rehabilitation proceedings are pending to convert the rehabilitation proceedings
into liquidation proceedings.
3. Commencement Order happens when the court issues an order after it finds the rehabilitation
petition to be sufficient in form and substance. Further, the effects of a commencement order
are:
a. If a stay or suspension order arise, it would
i. suspend all actions or proceedings, in court or otherwise, for the enforcement of
claims against the debtor;
ii. suspend all actions to enforce any judgment, attachment or other provisional
remedies against the debtor;
iii. prohibit the debtor from selling, encumbering, transferring or disposing in any
manner any of its properties except in the ordinary course of business; and
iv. prohibit the debtor from making any payment of its liabilities outstanding as of
the commencement date except as may be provided herein.
b. It can west the rehabilitation with all the powers and function provided such as the right
to review and obtain records to which the debtor's management and directors have access,
including bank accounts or whatever nature of the debtor subject to the approval by the
court of the performance bond filed by the rehabilitation receiver.
c. It will serve as a legal basis in rendering null and void the results of any extrajudicial
activity or process to seize property, sell encumbered property, or otherwise attempt to
collection or enforce a claim against the debtor after commencement date unless
otherwise allowed
d. It will serve as a legal basis in rendering null and void any setoff after the commencement
date of any debt owed to the debtor by any of the debtor's creditors;
e. It will serve as a legal basis in rendering null and void the perfection of any lien against
the debtor's property after the commencement date; and
 f. Consolidate the resolution of all legal proceedings by and against the debtor to the court.
4. The first type of rehabilitation is the court supervised; it may be voluntary or involuntary.
Voluntary rehabilitation is the one initiated by the insolvent debtor; either a sole proprietor,
majority of the partners, or representing at least two-thirds (2/3) of the outstanding capital stock,
while the involuntary rehabilitation is the one initiated by the creditor in which has a claim of at
least one million pesos (Php 1,000,000) or at least twenty-five percent (25%) of the subscribed
capital stock. The second type of rehabilitation is pre-negotiated; It is one filed by the debtor
alone or together with creditor seeking the approval of a pre-negotiated rehabilitation plan.
Finally, the third type of rehabilitation is the out of the court or informal; where the debtor must
agree to the out-of-court or informal restructuring/workout agreement or Rehabilitation Plan, it
must be approved by creditors representing at least sixty-seven (67%) of the secured obligations
of the debtor, it must also be approved by creditors representing at least seventy-five percent
(75%) of the unsecured obligations of the debtor, and it must be approved by creditors holding at
least eighty-five percent (85%) of the total liabilities, secured and unsecured, of the debtor.