M4 Sales and Consumer Protection

Law on Sales

Sell or buy

Contract of Sale

 One of the contracting parties obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay for a price certain in money or its equivalent.
 Consensual contract

Contract for a Piece of Work – goods are to be manufactured specially for the customer and upon his
special order, and not for the general market

Barter – consideration consists of partly in money and thing; intention not clear, it shall be considered a
barter if the value of the thing given exceeds the amount of the money or its equivalent

Promise to Buy and Sell – reciprocally demandable

Accepted Unilateral Promise to Buy or Sell – binding when supported by a consideration distinct from
the price

Parties in Contract of Sale

ABSOLUTE RELATIVE
CAPACITY Of age Husband and Wife
Sane Guardian
INCAPACITY Insane Agent
Demented Executor/Administrator
Deaf and mute unable to read Public Officers / Employees etc.
and write Justices/ Judges/Prosecuting
Attorney etc.

Things in Contract of Sale

 Determinate
 Licit
 Free disposal (vendor must have a right to transfer the ownership at the time of delivery)
 Future Goods
 Potential existence, mere hope or expectancy and vain hope or expectancy
 Undivided Interest
 Fungible Goods

Price in Contract of Sale

 Certain
 Reference to another thing
 Determination left to a special person, his inability or unwillingness- contract is
inefficacious
 Earnest Money – part of the price and proof of perfection
 No price – contract is inefficacious

Valid Contract of Sale

GROSS INADEQUANCY OF PRICE Voidable Contract of Sale (defective consent)
Void of Contract of Sale (simulated price)
 Rules on Ownership and Delivery

Ownership is transferred (acquired by the vendee) upon actual or constructive delivery except when
parties stipulate that ownership shall not pass until price is fully paid

 Delivery – thing (accessions, accessories, and in the condition which they were at the perfection
of the contract) placed in the possession and control of the vendee
 Place of Delivery – stipulation, usage of trade, seller’s place of business, or some other place
(where the things is)
 Time of Delivery – stipulation, reasonable period of time
 Expenses for the Delivery including the execution and registration of sale – Vendor

Delivery to Carrier

 Delivery to carrier is delivery to the buyer

 Seller as agent of buyer when contracting with carrier
 Contract with carrier in behalf of buyer
 Consider the nature of goods and circumstances of the case
 Notice of buyer of circumstances

RISK OF LOSS OF GOODS

SELLER BUYER
Before delivery After delivery
Ownership is transferred, regardless of delivery
Delivered to buyer but ownership retained by sell
Delay in actual delivery due to his fault

Status of SPEICIFIC THING at the time of PERFECTION

Deterioration Buyer’s option:

(without knowledge of seller) 1. Avoid the sales, or
2. Valid as to existing goods
Loss Contract without effect
(Partial Loss – proportionate)

Sale by Auction

 Perfected when the auctioneer announces its perfection by fall of the hammer
 Seller may not bid unless such right is expressly reserved

Sale by Sample

 When a small quantity is exhibited by the seller as a fair specimen of the bulk, which is not
present and there is no opportunity to inspect or examine the same
 The same is treated as the standard of quality and that the product to be delivered would
correspond to the sample

Sale by Description

 When a seller sells things as being of a particular kind, the buyer not knowing whether the
seller’s representations are true or false, but relying on them as true
 The buyer has not seen the article sold and relies on the description given to him by the seller

Art. 1484 Sale of Personal Property by Installment Lease of Personal Property with Option to Buy
(Recto Law)

Exact Fulfillment Cancel the Sale Foreclose the Chattel Mortgage

Obligations of the Vendor:

1. Deliver,
2. Transfer the ownership of, and
3. Warrant
 The thing which is the object of the sale

Delivery of the Thing Sold

1. ACTUAL
2. CONSTRCUTIVE
A. Immovable and Incorporeal Rights / Intangible Property
1. Execution of public Instrument
B. Movable
1. Traditio Symbolica
2. Traditio Brevi Manu
3. Constitutum Possessorium
4. Traditio Longa Manu
5. Agreement of consent

Sale or Return SALE ON TRIAL

 Ownership passes to the vendee upon  Ownership passes to the vendee when he
delivery signifies acceptance or retains without
 Reversion of ownership to the vendor giving objection
by return  Sale on satisfaction

DELIVERY OF SHIPPED GOODS

BILL OF LADING OWNERSHIP EXPLANATION

Goods deliverable to
Seller or his order
Buyer or his order
(seller retains the bill of
lading)
General rule Exception
Seller Bill of Lading shows Seller’s right deemed
ownership would have only for the purpose of
passed to the buyer on securing performance
shipment
Buyer Seller reserves the right
to possession as against
the buyer

Where the seller of goods draws on the buyer and transmits the bill of exchange and bill of lading
together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to
return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of
lading he acquires no added right thereby.

If he bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is
indorsed in blank, or to the buyer by the consignee named therein => one who purchases in good faith,
for value, the bill of lading, or goods from the buyer will obtain the ownership in the goods, provided
that such purchaser has received delivery of the endorsed bill of lading without notice of the facts
making the transfer wrongful.

Sale of goods by a person other than

--> the owner the buyer acquires no better title, except:

1. Owner is precluded to deny the seller's authority

2. Person who is the apparent owner of goods

3. Sale by order of a court of competent jurisdiction

4. Sale in a merchant's store, or in fairs, or markets

Seller of goods has a voidable title

 Buyer acquires a good title to the goods, provided

1. He buys in good faith,

2. He buys for value, and

3. He buys without notice of the seller's defect of title

SALE OF GOODS BY QUANTITY

SELLER Delivered Less Delivered More Delivered Mixed

BUYER'S OPTIONS Reject Accept as per contract Accept as per contract
and reject the excess and reject the excess
Accept and Pay Accept all, pay for all
(contract price or less)
exception: indivisible - buyer may reject the whole

SALE OF REAL ESTATE

(price/unit of measure, with a statement of its area)
LACKING AREA NONE >10%
but part of immovable is not the
quality specified
VENDEE'S OPTIONS Proportional Reduction
Rescission provided inferior Recission
quality exceeds 1/10 of the
price, except when with full
knowledge.

Note: (1) No increase or decrease in price, although there be greater or lesser area for sale real estate
made for lump sum. (2) Prescription: 6m from delivery

Sale as Reciprocal Obligation

* The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if
no period for the payment has been fixed in the contract.

• The vendor is not bound to deliver the thing sold in case the vendee should lose the right to make use
of the terms / period.

Unpaid Seller

1. Right to retain while in possession (possessory lien)

2. Right of stopping the goods in transitu (with insolvent buyer)

3. Right of resale

4. Right to rescind

Double Sale

ownership belongs to one who

For Movables: first to take possession

For Immovables

1. First to record in Registry of Property in good faith

2. First to take possession

3. Presents oldest title

Conditional Sale

None happening of condition

• Refuse to proceed with contract

• Waive the condition and proceed with the contract

Promise that the condition will happen, and it did not happen - breach of warranty, except when
ownership has not passed

WARRANTY

Express Warranty

Any affirmation of fact or any promise by the seller relating to the thing with the natural tendency to
induce the buyer to purchase and the buyer purchases the thing relying thereon.

Affirmation of the value, or a statement of the seller's opinion made by an expert and it was relied upon
by the buyer.

Seller's Implied Warranty

1. To sell the thing at the time when the ownership is to pass, and that the buyer shall have the legal and
peaceful possession of the thing; and

2. The thing shall be free from any hidden faults or defects, or any charge or encumbrance not declared
or known to the buyer.

Warranty Against Eviction

Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.

Buyer's Remedy:

(1) Damages for Breach of Warranty, or

(2) Rescission

Seller's Liability

Breach of Warranty Against Eviction

1. Return of the value at the time of the eviction

2. For the income or fruits

3. Costs of the suit

4. Expenses of the contract

5. Damages and interests, and ornamental expenses

Warranty Against Servitude

REQUISITES REMEDIES

1. Non-apparent servitude • Rescission or Indemnification: (within one year

from execution of deed), or
2. Not agreed upon
• Action for Damages except when registered
3. Vendee would not have acquired it had he been unless there is an express warranty
aware

Warranty Against Hidden Defects

Hidden Defect - unfit for the use for which it was intended; diminished fitness, would not have acquired
or paid lower price had he/she be aware

Exceptions: Patent defects, visible defects, expert vendee

Vendor liable though he is unaware

Prescriptive Period - 6 months from delivery

THING IS LOST AS A CONSEQUENCE OF HIDDEN DEFECT

Vendor Unaware of Hidden Vendor Aware of Hidden

Defect Defect/Bad Faith

Loss return the price and interest and
reimburse the expenses of the
contract
Loss Due to Fortuitous Event return the price less the value
which the thing had when it was
lost
return the price and refund the
expenses of the contract, with
damages
plus damages

Warranty Against Hidden Defects in Animals

• If two or more animals are sold together, the redhibitory defect of one shall only give rise to its
redhibition, unless the vendee would not have purchased the sound animal without the defective one

• Not applicable to animals sold at fairs or at public auctions, or of live stock sold as condemned

• Prescripive period: 40 days from delivery

Warranty as to Fitness of Goods

Where the buyer, expressly or by implication, makes known to the seller the particular purpose for
which the goods are acquired, and it appears that the buyer relies on the seller's skill or judgment

Warranty as to Merchantible Quality

Where the goods are brought by description from a seller who deals in good of that description

Obligations of the Vendee

Obligations of the Vendee

To accept delivery and to pay the price of the thing sold at the time and place stipulated in the contract,
otherwise, payment must be made at the time an place of delivery

Rules on Acceptance

1. Prior to acceptance, the vendee has the right to examine, except when the goods are delivered to the
carrier, in such case, the vendee can exercise his/her right after payment

A. Express Acceptance-vendee intimates to the seller that he has accepted them

B. Implied Acceptance - vendee does any act which is inconsistent with the ownership of the
seller, or retains the goods (beyond reasonable time) without intimating to the seller that he has
rejected them
2. Acceptance shall not discharge the vendor from liability, except when vendee failed to notify the
vendor of such breach within reasonable period of time after knowledge

3. Refusal or rejection to accept by the vendee does not obligate him to return to the vendor, it is
sufficient that he notifies the vendor of his refusal or rejection, except when the goods are delivered to
the carrier, title thereto passes to him from the moment they are placed at his disposal

Vendee Liable to Pay Interest for Period Between Delivery and Payment

1. Stipulated

2. Thing sold or delivered produce fruits or income

3. In default (from demand to payment of price)

Vendee can Suspend Payment

When he is disturbed in the possession or ownership of the thing, or should he have reasonable grounds
to fear such disturbance, unless the vendor gives security for the return of the price

Note: Disturbance mean any vindicatory action or foreclosure mortgage and not a mere act of trespass

Remedies

Remedies of the Vendor (1)

Action for the Price of Goods - vendee wrongfully neglects or refuses to pay the price when (a)
ownership has passed, (b) ownership has not passed and price is payable on a certain day, or (c)
ownership has not passed but they cannot be resold at reasonable price [when the vendor offering to
deliver but the vendee refuses and the vendor has notified the vendee that he is holding the goods for
vendee as bailee]

Remedies of the Vendor (2)

Action for Damages for Non-Acceptance-vendee wrongfully neglects or refuses to accept and pay for
the goods

Measure of Damages: (a) no available market: loss resulting to vendee's breach: (b) with available
market: the difference between the contract price and the market or current price at the time of
acceptance or refusal to accept (if no time was fixed for acceptance) plus profit which the vendor may
have made provided the vendor incurred labor or material expense prior to receiving vendee's
repudiation or countermand.

Remedies of the Vendor (3)

Rescission - when the goods were not delivered, and the vendee (a) repudiated, (b) manifested his
inability to perform his obligations, or (c) has committed a breach

When may the vendor exercise his right to rescind?

1. If he have reasonable grounds to fear the loss of immovable property sold and its price

2. If the vendee, upon the expiration of the period fixed for the delivery of the thing, should not have
appeared to receive it

3. If the vendee after receiving, did not tender price (unless a longer period has been stipulated for its
payment)

Vendee's Option (Automatic Rescission in Sale of Immovable Property)

Though it may have been stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the
period, as long as no demand for rescission of the contract has been made upon him either judicially or
by a notarial act. After the demand, the court may not grant him a new term.

Remedies of the Vendee [1]

Specific Performance

When the vendor broke his contract to deliver specific or ascertained goods

Remedies of the Vendee [2] (for Breach of Warranty by the Vendor)

- Accept the goods and set up against the seller, the breach of warranty by way of recoupment in
diminution or extinction of the price
- Accept or keep the goods and maintain an action against the seller for damages for the breach
of warranty-
- Refuse to accept the goods, and maintain an action against the seller for damages for the
breach of warranty

Measure of Damages (Breach of Warranty of Quality)

special circumstances showing proximate damage - DAMAGES "A"

Less: value of the goods at the time of delivery. value they would have had, if not for the defect
DAMAGES "B"

the higher between DAMAGES A and DAMAGES B

Remedies of the Vendee [3] (for Breach of Warranty by the Vendor)

• Refuse to receive the goods, rescind the contract of sale and and recover the price paid

• Return the goods received, rescind the contract of sale and and recover the price paid, however, he
cannot rescind if (a) he knew of the breach of warranty when he accepted the goods without protest, (b)
he fails to notify the seller within a reasonable time of the election to rescind, or (c) he fails to return or
to offer to return the goods to the seller in substantially as good condition as they were in at the time
the ownership was transferred to the buyer except when the deterioration is due to the breach or
warranty

Effect of Rescission by the Vendee (for Breach of Warranty)

. As to price - Vendee cease to be liable for the price upon returning or offering to return the goods, if
price paid, the vendor shall repay

• As to goods - Vendee deemed to hold the goods as bailee for the seller, if the seller refuses to accept,
with vendee's lien for price which has been paid

Extinguishment of Sale

Extinguishment of Sale

GENERAL SPECIAL
1. Payment or Performance 1. Redemption
2. Loss of Specific Thing a. Conventional Redemption
3. Compensation b. Legal Redemption
4. Condonation 2. Equittable Mortgage
5. Confusion
6. Novation

Conventional Redemption

Conventional Redemption
The vendor reserves the right to repurchase the thing sold, with the obligation to:

1. Return to the vendee the:

A. Price of the sale,

B. Expenses of the contract, and

C. Necessary and useful expenses made on the thing sold; and

2. Comply with other stipulations which may have been agreed upon.

Should the vendee be reimbursed by the vendor-redemptioner/repurchaser for the fruits existing at
the time of redemption?

- No Reimbursement - if at the time of the execution of the sale there be visible or growing fruits
on the land, and no indemnity was paid by the purchaser
- Pro-rated Reimbursement - if at the time of the execution of the sale there are no fruits on the
land, they shall be prorated between the redemptioner and the vendee

Reformation of Contract Absolute Sale Equittable Mortgage

Conventional Redemption

The contract of sale will be treated as that of equittable mortgage in the following circumstances:

1. When the price of a sale with right to repurchase is unusually inadequate

2. When the vendor remains in possession as lessee or otherwise;

3. When upon or after the expiration of the right to repurchase another instrument extending the period
of redemption or granting a new period is executed:

When the purchaser retains for himself a part of the purchase price:

5. When the vendor binds himself to pay the taxes on the thing sold:

6. In any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation.

CONTRACT TO SELL

CONDITIONAL SALE

ABSOLUTE SALE

PACTO DE RETRO SALE

PACTO COMMISSORIO

PERIOD OF CONVENTIONAL REDEMPTION

with stipulation as to period ten (10) years from the date of contract

without stipulation as to period four (4) years from the dateof contract

civil action thirty (30) days from final judgement

When the vendor failed to redeem:

1. The vendee can apply for Consolidation of Ownership

2. The vendor will be summoned in the court proceedings

3. Judicial Order shall be recorded in the Registry of Property.

Redemption Right - REAL RIGHT

• Vendor can enforce against every possessor whose right is derived from the vendee, without prejudice
to the provisions of the Mortgage Law

• Vendor's creditors cannot make use of the right of redemption against the vendee, until after they
have exhausted the property of the vendor.

Redemption in Undivided Immovable

• The vendor who is either a co-owner or a co-heir may not exercise his redemption right more than his
respective share.

• The action by the vendor for redemption must be brought against all the vendee's heirs, individually
for his share, except when the inheritance has been divided, and the thing sold has been awarded to
one of the heirs.

• The vendee may compel the vendor/co-owners to redeem the whole property and he cannot be
compelled to consent to partial redemption. except when, each of the co-owners sold their share
separately.

Effect of Redemption

The vendor who recovers the thing sold shall receive it free from all charges or mortgages constituted by
the vendee, but he shall respect the leases which the vendee may have executed in good faith.

Legal Redemption

Legal Redemption

The right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place
of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby
ownership is transmitted by onerous title.

Legal Right of Redemption

1. A co-owner of a thing as to the share of a co-owner sold to third person (two or more co-owners
redeeming, pro-rata)

2. An owner of adjoining rural land, an area not exceeding one hectare (two or more adjoining owners,
the one with smaller land or the one who first requested)

3. The right of redemption of co-owners excludes that of adjoining owners.

Pre-emption

1. Adjoining owner of a small piece of urban land (preference given to the one whose intended use
appears to be best justified)

2. Exercised within thirty (30) days from the written notice by the vendor or prospective vendor

3. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit
of the vendor that he has given written notice to all possible redemptioners
 Assignment of Credit and other Incorporeal Rights

Assignment (Credit and Other Incorporeal Rights)

+ Perfected by meeting of the minds but shall produce no effect as against third persons, unless it appears in a
public instrument, or the instrument is recorded in the Registry of Property. It includes all the accessory rights,
such as a guaranty, mortgage, pledge or preference.

Effect of Assignment
To the Debtor of the Credit
The debtor who pays his creditor, before having knowledge of the assignment, shall be released from the
obligation.

Warranties of the Vendor/Assignor/Creditor

ASSIGNMENT OF CREDIT
• Existence and legality of the credit at the time of the sale, but not for the solvency of the debtor, unless the
insolvency is of common knowledge or unless expressly stipulated.

Period of Warranty on Solvency Period of Payment

one (1) year from assignment Expired

one (1) year from maturity Not yet expired

Warranties of the Vendor/Assignor/Creditor

• For sale of inheritance the character as an heir.

• For a lump sum sale or assignment of certain rights, rents, or products - the legitimacy of the whole.

Unless otherwise stipulated, the assignment of inheritance shall have the following effects:

• The vendor/assignor shall pay the vendee any profits derived from the fruits received from the inheritance sold

• The vendee/assignee shall reimburse the vendor for all the vendor may have paid for the debts of and charges on
the estate

Not applicable to: assignment to a co-heir or co-owner of the right assigned

The effect of assignment of a credit or other incorporeal right in litigation:

• The debtor can extinguish it by reimbursing the assignee for the price paid, the judicial costs incurred, and the
interest on the price from the day on which the same was paid.

• The debtor may exercise his right within thirty days from the date the assignee demands payment from him.

Not applicable to: assignment to a creditor in payment of his credit; and assignment to the possessor of a
tenement or piece of land which is subject to the right in litigation assigned.

Consumer Act of the Philippines Republic Act 7394 (1992)

Consumer Rights

•Right to basic needs Consumer Responsibilities

•Right to safety • Critical awareness

•Right to information • Action

•Right to choose • Environmental awareness

• Right to representation •Social concern

•Right to redress •Solidarity

•Right to consumer education

•Right to healthy environment

Bureau of Philippine standards

Consumer Product Quality and Safety

▪Product Certification (PS Mark and ICC)

▪ Philippine National Standards Catalogue

Bureau of Philippine standards

PS Mark

• Philippine Standard (PS) Quality and/or Safety Certification Mark Licensing Scheme

• Granted to either local or foreign manufacturer whose factory and product have successfully complied with the
requirements of the PNS ISO 9001 and the relevant product standard/s

ICC Certificate

• Import Commodity Clearance (ICC) Certification Scheme

• Issued to an importer whose imported products have shown conformance to relevant PNS through inspection
and product testing by the BPS Testing Laboratory or BPS-recognized testing laboratory

Philippine National Standards (PNS) Catalogue

• PNS number

• ICS code (International Classification for Standards)

Prohibited sales acts or practice

An act or practice, whether it occurs before, during or after the consumer transaction, shall be deemed:

1. Deceptive

2. Unfair or Unconscionable

3. Prohibited Representation

(1) Deceptive Sales Acts/Practices

Whenever the producer, manufacturer, supplier or seller, through concealment, false representation of fraudulent
manipulation, induces a consumer to enter into a sales or lease transaction of any consumer product or service.

(2) Unfair or unconscionable

Sales Acts/Practices

Whenever 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.

(3) Prohibited Representations (Home Solicitations)

A home solicitation sale 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

Express Warranty

• Terms of warranty • Operative from the moment of sale

• Full or limited warranty. • Duration similar to implied warranty (6 months to
1 year)

Warranties in Supply of Services

• 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.

• 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 (when the consumer makers known to the supplier the purpose for which the
services are required)

Labeling requirements

• Trade name, trademark, brand name • Net weight

• Directions for use • Country of manufacture

• Process of manufacture • For foods: expiration date, nutritive value and

natural or not ingredients
• Business name
• Wattage, voltage or amperes
• Address
•Flammable or not, toxicity if a
• Ingredients

Other Packaging Requirements

• Price Tag • Cosmetics

• Special for the Protection of Children. • Hazardous Substances

• Drugs

ARTICLE 81

Price Tag Requirement

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: Provided. That lumber sold, displayed or
offered for sale to the public shall be tagged or labeled by indicating thereon the price and the corresponding
official name of the wood: Provided, further. That if consumer products for sale are too small or the nature of
which makes it impractical to place a price tag thereon price list placed at the nearest point where the products
are displayed indicating the retail price of the same may suffice.

Section 2

Administrative Order No. 10, S. 2006

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 81 to 83 of the Consumer Act ofthe Philippines or R.A. 7394.

The price tag must be written clearly, indicating the price of the consumer product including Value Added Tax
(VAT) whenever the consumer product is VA TABLE. Service charge, if any, shall not be included in the price tag.

Unlawful Labeling and Unfair Packaging

• A person, either principal or agent, engaged in the labeling or packaging of any consumer product

• Display or distribute or to cause to be displayed or distributed in commerce any consumer product whose
package or label does not conform with the requirements of the law

Advertisement Rules

• Prohibition against the dissemination of false, deceptive and misleading advertisement for the purpose of
inducing the purchase of consumer products or services
• Prohibition against credit advertising (No advertisement to aid. promote, or assist, directly or indirectly, any
extension of consumer credit)

• Special advertising requirement for food, drug, costing, device or hazardous substance

Consumer Credit Transaction

• Charges: finance, delinquency, and deferral charge (periodic statement)

• Payment: pre-pay and rebates

• Disclosures: Credit cost and Credit sale

Philippine Lemon Law republic act no. 10642

Objective

OBJECTIVE-To strengthen consumer protection in the purchase of brand new motor vehicles

COVERAGE-brand new motor vehicles purchased in the Philippines reported by a consumer to be in nonconformity
with the vehicle's manufacturer or distributor's standards or specifications within twelve (12) months from the
date of original delivery to the consumer, or up to twenty thousand (20,000) kilometers of operation after such
delivery, whichever comes first

CONDITION - Repair attempts at any time within the period, and after at least four (4) separate repair attempts by
the same manufacturer, distributor, authorized dealer or retailer for the same complaint, and the nonconformity
issue remains unresolved

Requirements

1. The consumer notifies in writing the manufacturer, distributor, authorized dealer or retailer of the unresolved
complaint, and his/her intention to invoke his or her rights under the law within the period

2. The consumer shall bring the vehicle to the manufacturer, distributor, authorized dealer or retailer from where
the vehicle was purchased for a final attempt to address the complaint of the consumer to his or her satisfaction.

3. The consumer files a complaint before the DTI (the vehicle is not returned for repair, based on the same
complaint, within thirty (30) calendar days from the date of notice of release of the motor vehicle to the consumer
following this repair attempt within the period, the repair is deemed successful unless the the nonconformity issue
still exists or persists after the thirty (30) day period but still within the period

4. DTI exercised exclusive and original jurisdiction for dispute resolution through:

• Mediation

• Arbitration

* Adjudication

5. Appeal to the SoTI within 30 days from receipt

Rights of Consumer

• Reasonable daily transportation allowance to compensate for the non-usage of the vehicle while under repair
and during the period of availment of the Lemon Law rights

• Replacement to comparable motor vehicle offset by reasonable allowance for use (20% /annum deduction from
the purchase price or kilometrage multiplied by purchase price divided by 100k) of the first motor vehicle

Manufacturer, Distributor, Dealer, or Retailer

Obligations • To compensate

• To repair • To be liable for damages (100k minimum)

• To replace Rights
• To resell with full disclosure