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CONSUMER PROTECTION ACT OF THE PHILIPPINES

[Republic Act No. 7394
In relation to
THE LEMON LAW
[Republic Act No. 10642]

What is Consumer Protection Act of the Philippines ?

The Philippine government adopted R.A. 7394 (Consumer Act of

the Philippines of 1991) as the legal basis for consumer protection in
the country. The law embodies the state policy on the protection of
consumers and establishes standards of conduct for business and
industry in the country.

Rights of a consumer under the consumer Act of the Philippines :

As consumers, we have eight (8) basic rights and five (5)

responsibilities. These are the rights to basic needs; safety;
information; choice; redress; consumer education, and a healthy
environment.

1. Consumer Rights

a. Right to safety;
b. Right to choose;
c. Right to be informed;
d. Right to consumer education;
e. Right to be heard;
f. Right to seek redress;
g. Right to Consumer Protection Act;

2. Consumer Responsibilities

a. Ask Yourself;
b. Be Critically Aware;
c. Be Involved;
d. Be Organized;
e. Practice Sustainable Consumpton;
f. Be Responsible to the Environment.
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Price TAG ACT

According to Republic Act No. 7394, otherwise known as the

Consumer Act of the Philippines, it is “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 in
the price tag.”

Price tag requirements of the consumer Act of the Philippines:

One Price Tag Requirement. Every retailer is required to display

a price tag to indicate the price of each consumer good and/or services,
as required in Articles 8l to 83 of the Consumer Act of the Philippines
or R.A. 7393.

Provision on Price Tag under R. A. 7394

The provision on Price Tag, under R.A. 7394, requires that all
consumer products sold in retail to the public shall bear an
appropriate price tag, label, or marking indicating the price of the
article. Such consumer products shall not be sold at a price higher
than that stated in the price tag.

Whether “no refund policy is legal in the Philippines”

Note that a “NO RETURN, NO EXCHANGE “ Policy is

prohibited because this is considered deceptive. Under the Consumer
Act, in conjunction with the New Civil Code of the Philippines,
sellers are obliged to honor their warranties and grant corresponding
remedies to consumers.

Reason for the imposition of a price tag

Price tags play a very important role. They inform the customer
about the price of an item in such a way that it does not raise any
doubts for the customer. They inform the customer about the value of
the product, and what is more, they play a key promotional role.
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Whether it is legal to charge more than the list price

It shall be unlawful for any person, at the time of sale of a

commodity, to do any of the following: (i) charge an amount greater
than the price; (ii) to compute an amount greater than a true
extension of a price per unit, that is then advertised, posted, marked,
displayed, or quoted for that commodity.

Validity if an item is priced incorrectly

In general, there is no law that requires companies to honor an

advertised price if that price is wrong. Typographical errors,
miscommunication and other glitches can result in items being
offered at what appear to be deep discounts --- discounts that would
be ruinous for the company if it were forced to honor them.

Consequences if a retailer advertises the wrong price

If a retailer sells a product to a customer at a lower price than

they intended to, the customer is not legally obliged to give it back.
If a customer is charged more for a product than what was advertised,
they are entitled to ask to be refunded the price difference.

Labeling and fair packaging

a)Declaration of Policy – 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

b) Implementing Agency - The Department of Trade and

Industry shall enforce the provisions of this Chapter and its
implementing rules and regulations: Provided, That with respect to
food, drugs, cosmetics, devices and hazardous substances, it shall be
enforce by the concerned department.

c) Prohibited Acts on Labeling and Packaging – It shall be

unlawful for any person, either as principal or agent, engaged in thel
abeling or packaging of any consumer product whose package or label
does not conform to the provisions of this Chapter.
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i) are engaged in the packaging or labeling of such

products;
ii) prescribe or specify any means the manner in which
such products are packaged or labeled; or
iii) having knowledge, refuse to disclose the source of
the mislabeled or mispackaged products.

Special packaging of Consumer Products for the Protection of

Children – The concerned department may establish standards for the
special packaging of any consumer product if it finds that:

i) the 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; and

ii) the special packaging to be required by such

standard is technically feasible, practicable and
appropriate for such product. In establishing a
standard under this Article, the concerned
department shall consider:

a) the reasonableness of such a standard;

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

Consumer Products and Service Warranties

Implementing Agency – The Department of Trade and Industry,

shall strictly enforce the provision of this Chapter and its
implementing rules and regulations.
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Applicable Law on Warranties – The provisions of the Civil Code

on conditions and warranties shall govern all contracts of sale with
conditions and warranties.
Additional Provisions on Warranties – In addition to the Civil
Code provisions on sale with warranties, the following provisions
shall govern the sale of consumer products with warranty;

A) Terms of express 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
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 or 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.

B) Express warranty - operative from the moment of sale - All

written warranties or guarantees issued by a manufacturer,
producer, or importer shall be operative from the moment of
sale.

False, Deceptive and Misleading Advertisement

It shall be unlawful for any false, deceptive or misleading

advertisement by Philippine mail or in commerce by print, radio,
television, outdoor advertisement or other medium for the purpose of
inducing which is likely to induce directly or indirectly the purchase
of consumer products or services.

Advertisement shall be false, deceptive or misleading if it is not

in conformity with the provisions of this Act or if it is misleading in a
material respect. In determining whether any advertisement is false,
deceptive or misleading, there shall be taken into account, among
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other things, not only representations made or any combination

thereof, but also the extent to which the advertisement fails to reveal
material facts in the light of such representation, or materials with
respect to consequences which may result from the use or application
of consumer products or services to which the advertisement relates
under the conditions prescribed in said advertisement, or under such
conditions as are customary as usual.

Consumer Education in Schools – The Department of Education,

Culture, and Sports, with the cooperation and advice of the Council
shall develop and adopt a consumer education program which shall be
integrated into existing curricula of all public and private schools
from primary to tertiary levels. A continuing consumer education
program for out-of-school youth and adults shall likewise be
developed and undertaken

National Consumer Affairs Council - To improve the management,

coordination and effectiveness of consumer programs, a National
Consumer Affairs Council is hereby created, hereinafter referred to as
the “Council”.

Definition of Terms – For purposes of this Act, the term:

a) Advertisement means the prepared and through any form of

mass medium, subsequently applied, disseminated or
circulated advertising matter.

b) Amount financed in a consumer credit sale constitutes the

cash price plus non-finance charges less the amount of any
down payment whether made in cash or in property traded in,
or in a consumer loan the amount paid to, receivable by or
paid or payable to the buyer or to another person in his
behalf.

c) Banned hazardous substance means (i) any toy or other

articles intended for use by children, which are hazardous per
se, or which bear or contain substances harmful to human
beings; or (ii) any hazardous substance intended or packaged
in a form suitable for use in the household, which the
implementing agency by regulation, classifies as “banned
hazardous substance” notwithstanding the existence of
cautionary labels, to safeguard the public health and safety
Provided, That the implementing agency may, by regulation
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exempt from this Act, articles which by reason of their

functional purpose require the inclusion of the hazardous
substance involved and which bear appropriate labels giving
adequate directions and warnings for their safe use.

d) Closing out sale means a consumer sale wherein the seller

uses the announcement to create the impression that he is
willing to give large discounts or merchandise in order to
reduce, dispose or close out his inventory and business.

e) Consumer products and services means goods, services and

credits, debts or obligations which are primarily for personal,
family, household or agricultural purposes, which shall
include but not limited to, food, drugs, cosmetics and devices.

f) Consumer transaction means (i) a sale, lease, assignment,

award by change, or other disposition of consumer products,
including chattels that are intended to be affixed to land, or of
services, or of any right, title or interest therein, except
securities as defined in the Securities Act and contracts of
insurance under the Insurance Code, or (ii) grant of provision
of credit to a consumer for purposes that are primarily
solicitation or promotion by a supplier with respect to a
transaction.

g) Commerce means the sale, lease, exchange, traffic or

distribution of goods, commodities, productions, services or
property, tangible or intangible.

h) Consumer means a natural person who is a purchaser, lessee,

recipient or prospective purchase, lease or recipient of
consumer products, services or credit.

i) Consumer loan means a loan made by the lender to a person

which is payable in installment for which a finance charge is
or may be imposed. This term includes credit transactions
pursuant to an open-end-credit plan other than a seller credit
card.

j) Consumer credit means any credit extended by a creditor to a

consumer for the sale or lease of any consumer product or
service under which part or all of the price or payment
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therefore is payable at some future time, whether in full or in

installments.
THE LEMON LAW
[Republic Act No. 10642]

What is the so-called LEMON LAW?

Republic Act No. 10642 or the Lemon Law, endeavors to protect

consumers should they purchase new, albeit non-conforming, motor
vehicles from manufacturers, distributors, dealers, or retailers (collectively,
“Seller”). This Primer seeks to present the rights of such consumers, and
the concurrent obligations of the Seller under the Lemon Law.

Motor Vehicles covered under the Lemon Law

The Lemon Law covers only brand new motor vehicles meaning
vehicles constructed entirely from new parts, and have never been sold nor
operated in any country. The Lemon Law further limits its coverage to
only common four-wheeled road vehicles such as cars, pick-ups, vans,
sports utility vehicles, and Asian Utility vehicles. It specifically excludes
motorcycles, delivery trucks, dump trucks, buses, lawn mowers, heavy
equipment, and farm equipment.

Defects covered under the Lemon Law

The Lemon Law covers those irreparable non-conformities which

substantially impair the use, value, or safety of these new vehicles and
prevent such motor vehicles from conforming to the manufacturers’ or
distributors’ standards or specifications However, the Lemon Law
specifically excludes the following causes of non-conformity, inclusive of
non-compliance by the consumer of the obligations under the
manufacturer’s or distributor’s warranty such as:

A] Modifications upon the motor vehicle which were not allowed by

the manufacturer or distributor;

B] Abuse or neglect of the motor vehicle; and

C] Damage to the vehicle due to accident or force majeure.

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Period within which a customer can avail of his rights under the Lemon Law

The customer may invoke his rights under the Lemon Law within the
Coverage Period which is 12 months from the date of the delivery of the
motor vehicle, or for as long as the motor vehicle has not run more than
20,000 kilometers after such delivery whichever comes first.

Pre-requisite/pre-condition before a consumer can invoke rights under the

Lemon Law

The consumer must have had the affected motor vehicle brought in
for repair with the Seller at least four (4) separate times for the same
complaint, and for all those times, the non-conformity remains unresolved.
Such repair attempts include the replacement of parts, components or
assemblies of the motor vehicle.

However, this comes with the caveat that should a motor vehicle not
be returned for repair for the same non-conformity within 30 days from
notification that the motor vehicle has been required, and after the
expiration of the Coverage Period, the repair will be deemed to have been
successful.

Whether consumer can avail of his rights under the Lemon Law after four (4)
unsuccessful repair attempts

The consumer must first notify the Seller, in writing that he wishes to
invoke his rights under the Lemon Law, and such notification must
comply with the form and procedure set forth in the Seller’s warranty
booklet before such notice may be binding upon the Seller. After such
notification, the Seller is given a final attempt to fix the non-conformity. In
case there is still a failure to fix the non-conformity, the consumer may then
file a complaint with the Department of Trade and Industry (”DTI”),
invoking his rights under the Lemon Law.

Whether consumer is entitled to compensation for the unavailability of the

motor vehicle during the period it is under repair

Yes. During the period that the motor vehicle is being repaired, or
after the consumer has notified the Seller of his invocation of his rights
under the Lemon Law, the consumer shall be provided (i) a reasonable
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daily transportation allowance, equal to an amount which covers the

transportation of the consumer from his residence to his regular workplace
or destination and vice versa, equivalent to air-conditioned taxi fare, as
evidenced by official receipt; (ii) such amount to be agreed upon by the
parties; or (iii) a service vehicle at the option of the Seller. Any
disagreement on this matter shall be resolved by the DTI.
Processes to be followed after filing of the complaint with the DTI

The DTI is the only body which can exercise jurisdiction over
complaints arising from the Lemon Law. It may retain other government
agencies, or qualified third parties, to verify the alleged non-conformity in
determining the validity of the complaint. The costs for such a
determination shall be borne jointly by the consumer and the Seller. The
DTI shall settle the dispute through the following dispute resolution
mechanisms.

A] Arbitration. The parties would then have the option to enter into
arbitration, and rely on the judgment of their chosen arbiter to settle their
dispute.

B] Adjudication. Should the parties not enter into arbitration, any

one of the parties may ask the DTI to commence adjudication proceedings.
The DTI shall then assign the complaint to an adjudication officer to hear
the matter. The adjudication officer shall rely on qualified independent
findings to resolve the claim of non-conformity. The adjudication
proceedings shall not exceed twenty (20) working days.

Consequences if DTI rules in favor of the consumer

The consumer may –

1. Return the motor vehicle to the Seller, who must in turn return
the full purchase price, plus collateral damages.

2. Have the motor vehicle replaced by the Seller with a similar or

comparable motor vehicle in terms of specification and values,
subject to availability; or

3. Purchase a vehicle with a higher value or specifications from the

same Seller, in which case, the consumer must pay the difference
in cost.
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In case the consumer chooses any of the last two options, a

“reasonable allowance” for the use of the subject motor vehicle shall
be deducted in determining the value of the non-conforming motor
vehicle. Such “reasonable allowance” is equal to 20% per annum
deduction from the purchase price, or the product of the distance
travelled in kilometers and the purchase price divided by one 100,000
kilometers, whichever is lower.

Effect or consequence if consumer opted to return motor vehicle to the Seller

The Seller may resell the non-conforming motor vehicle. However,

the Seller is obligated to inform the next purchaser, in writing (a) that the
motor vehicle was returned to the Seller; (b) the nature of the non-
conformity which caused such return; and (c) the condition of the motor
vehicle at the time of its return to the Seller. This obligation on the part of
the Seller ceases upon the sale of the non-conforming motor vehicle to the
first purchaser after it was returned. Neither is there a corresponding
obligation on the part of the first purchaser, or any subsequent purchaser,
to disclose that the motor vehicle had previously been returned.

Effect if the Seller is found to have violated his obligation to disclose

The Seller shall be penalized by at least Php 100,000 as damages to

the uninformed purchaser, without prejudice to any further civil or
criminal liability which it may have incurred under other laws.

If DTI rules in favor of the Seller

The consumer shall be ordered to reimburse the costs of the Seller in

determining the validity of the complaint.

Whether a party can appeal from the decision of the adjudication officer

Yes. Within fifteen (15) days of receipt of the decision, a party may
do so by filing a Memorandum of Appeal to the Secretary of the DTI, with
a Notice of Appeal to the adjudication officer, and with copies furnished to
the other parties. An appeal may be based on grounds that:

A] that the decision was rendered with grave abuse of discretion;

B] that the decision was rendered in excess of the jurisdiction or the

authority of the adjudication officer; or
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C] that the decision is not supported by the evidence or there is

serious error in the finding of facts.

The Secretary of the DTI shall then decide on the appeal within 30
days of his receipt thereof. Should a party wish to thereafter appeal the
decision of the Secretary of the DTI, that party may file a case for
certiorari with the Court of Appeals under Rule 65 of the Rules of Court.

What is R.A. 10642 all about

Republic Act 10642, or the Lemon Law, endeavors to protect

consumers should they purchase new, albeit non-conforming, motor
vehicles from manufacturers, distributors, dealers, or retailers
(collectively, “Seller”).

The Philippine Lemon Law protects owners of brand-new vehicles

purchased in the Philippines within a period of twelve (12) months after the
date of the original delivery of the brand-new motor vehicle or within the
first twenty thousand (20,000) kilometers of operation after delivery of the
vehicle, whichever comes first.

Applicability of Lemon Law

Lemon Law apply to defects that affect the use, safety, or value of a
vehicle or product. If the product cannot be repaired successfully after a
reasonable number of attempts, the manufacturer must repurchase or
replace it.

Consumer Rights under the Lemon Law

To compensate for the non-usage of the vehicle while under repair

and 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 or her residence
to his or her regular workplace.

***END***
To God Be All the Glory!!!
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