Consumer Protection Act & Lemon Law

Question 1

Objectives of Consumer Protection Act (RA No. 7394)

Answer 1

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.

Question 2

Who’s interest shall be considered interpretation and implementation of the provisions of this Act, including its implementing rules and regulations?

Answer 2

Best interest of the Consumer

Question 3

Implementing Agency

Answer 3

The Department of Trade and Industry (DTI)

Question 4

It is an act or practice that shall be deemed deceptive whenever the producer, manufacturer, supplier or seller, through concealment, false representation of fraudulent manipulating, indueces a consumer to enter into a sales or lease transaction of any consumer product or service.

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

Answer 4

Deceptive sales acts or practices

Question 5

Examples of deceptive sales acts or practices

(10)

Answer 5

a. a consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have;
b) a consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not;
c) a consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;
d) a consumer product or service is available to the consumer for a reason that is different from the fact;
e) a consumer product or service has been supplied in accordance with the previous representation when in fact it is not;
f) a consumer product or service can be supplied in a quantity greater than the supplier intends;
g) a service, or repair of a consumer product is needed when in fact it is not;
h) a specific price advantage of a consumer product exists when in fact it does not;
i) the 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
j) the seller or supplier has a sponsorship, approval, or affiliation he does not have.

Question 6

It is an act or practice done 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.

It violates the act whether it occurs before, during or after the consumer transaction

Answer 6

Unfair or Unconscionable Sales Act or Practice

Question 7

Circumstances that shall be considered in determining whether an act or practice is unfair or unsconscionable

(5)

Answer 7

a) that the 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, or similar factors;
b) that when the 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;
c) that when the consumer transaction was entered into, the consumer was unable to receive a substantial benefit from the subject of the transaction;
d) that 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
e) that the transaction that the seller or supplier induced the consumer to enter into was excessively one-sided in favor of the seller or supplier.

Question 8

Shall Chain distribution plans or pyramid sales schemes shall be employed in the sale of consumer products?

Answer 8

Chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products.

Question 9

It means sales devices whereby a person, upon condition that he makes an investment, is granted by the manufacturer of his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments.

Profits - derived primarily from the recruitment of other persons
Limitation on the number of participants does not change the nature of the plan.

Answer 9

Chain Distribution Plans or Pyramid Sales Schemes

Question 10

It means consumer sales or leases which are personally solicited by any person or organization by telephone, person-to-person contact or by written or printed communication other than general advertising or consummated at the buyer’s residence or a place of business, at the seller’s transient quarters, or away from a seller’s regular place of business..

Answer 10

Home Solicitation Sales

Question 11

Rule on Home Solicitation Sales

Answer 11

No business entity shall conduct any home solicitation sale of any consumer product or service** without first obtaining a permit from the Department.** Such permit may be denied suspended or revoked upon cause as provided in the rules and regulations promulgated by the Department, after due notice and hearing.

Question 12

When can home solicitation sales may be conducted?

Answer 12

Home solicitation sales may be conducted only between the hours of 9:00AM and 7:00PM of each working day

May be made at a time other than the prescribed hours where the person solicited has previously agreed to the same.

Question 13

Who shall conduct Home Solicitation Sales?

Answer 13

Home solicitation sales shall only be conducted by a person who has the proper identification and authority from his principal to make such solicitations.

Question 14

Prohibited Representations in Home Solicitation Sales

Answer 14

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.

Question 15

Shall referral selling plans be used in the sale of consumer products?

Answer 15

Referral selling plans shall not be used in the sale of consumer products.

Question 16

Exceptions in Referral Selling Plans

Answer 16

when the 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.

Question 17

Prohibited Acts on Labeling and Packaging

Answer 17

It shall be unlawful for any person, either as principal or agent, engaged in the 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.

Question 18

Exceptions on Prohibited acts on labeling and packaging

Answer 18

The prohibition** shall not apply to persons engaged in the business of wholesale or retail distributors** of consumer products except to the extent that such persons:
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.

Question 19

Minimum Labeling Requirements for Consumer Products

Answer 19

All consumer products domestically sold whether manufactured locally or imported shall indicate the following in their respective labels of packaging:
a) its correct and registered trade name or brand name;
b) its duly registered trademark;
c) its duly registered business name;
d) the address of the manufacturer, importer, repacker of the consumer product in the Philippines;
e) its general make or active ingredients;
f) 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;
g) country of manufacture, if imported; and
h) if a consumer product is manufactured, refilled or repacked under license from a principal, the label shall so state the fact.

The following may be required by the concerned department in accordance with the rules and regulations they will promulgate under authority of this Act:
a) whether it is flammable or inflammable;
b) directions for use, if necessary;
c) warning of toxicity;
d) wattage, voltage or amperes; or
e) process of manufacture used if necessary.

Question 20

a package shall be deemed to be nonfunctionally slack-filled if it is filled to substantially less than its capacity for reasons other than:

Answer 20

1. protection of the contents of such package,
2. the requirements of machines used for enclosing the contents in such package, or
3. inherent characteristics of package materials or construction being used.

Question 21

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:

Answer 21

a) 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
b) 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:
1. the reasonableness of such standard;
2. available scientific, medical and engineering data concerning special packaging and concerning accidental, ingestions, illnesses and injuries caused by consumer product;
3. the manufacturing practices of industries affected by this Article; and
4. the nature and use of consumer products.

Answer 22

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.

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.

For DRUGS
The Generics Act shall apply

For CIGARETTES
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”. 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. Any advertisement of cigarette shall contain the name warning as indicated in the label.

Question 23

Terms of express warranty - Any seller of manufacturer who gives an express warranty shall:

Additional porivions on warranties

Answer 23

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.

Question 24

When is express warranty operative?

Answer 24

From the moment of sales

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

Question 25

Sales Report ## Footnote Additional Provisions on Warranties

Answer 25

****All sales made by distributors of products covered by this Article shall be reported to the manufacturer, producer, or importer of the product sold **within thirty (30) days from date of purchase**, unless otherwise agreed upon. The report shall contain, among others, the date of purchase, model of the product bought, its serial number, name and address of the buyer. The report made in accordance with this provision shall be **equivalent to a warranty registration with the manufacturer, producer, or importer.** Such registration is sufficient to hold the manufacturer, producer, or importer liable, in appropriate cases, under its warranty.

Question 26

Failure to make or send report ## Footnote Additional Provisions on Warranties

Answer 26

Failure of the distributor to make the report or send them the form required by the manufacturer, producer, or importer **shall relieve the latter of its liability under the warranty**: Provided, however, That the **distributor who failed** to comply with its obligation to send the sales reports shall be **personally liable under the warranty**. For this purpose, the **manufacturer shall be obligated to make good the warranty at the expense of the distributor.**

Question 27

Enforcement of warranty or guarantee ## Footnote Additional Provisions on Warranties

Answer 27

The warranty rights can be enforced by **presentment of a claim**. To this end, the purchaser needs only to present to the immediate seller either the **warranty card or the official receipt** along with the **product to be serviced or returned** to the immediate seller. No other documentary requirement shall be demanded from the purchaser. If the **immediate seller is the manufacturer's factory or showroom**, the **warranty shall immediately be honored**. If the product was purchased from a distributor, the distributor shall likewise immediately honor the warranty. In the case of a **retailer other than the distributor**, the **former shall take responsibility** without cost to the buyer of presenting the warranty claim to the distributor in the consumer's behalf.

Question 28

Record of purchases ## Footnote Additional Provisions on Warranties

Answer 28

Distributors and retailers covered by this Article shall keep a record of all purchases covered by a warranty or guarantee for such **period of time corresponding to the lifetime of the product's respective warranties or guarantees.**

Question 29

Contrary Stipulations ## Footnote Additional Provisions on Warranties

Answer 29

Null and Void

Question 30

Designation of Warranties

Answer 30

1. "Full warranty" if the written warranty meets the minimum requirements set forth in paragraph (d); or 2. "Limited warranty" if the written warranty does not meet such minimum requirements.

Question 31

Minimum standards for warranties

Answer 31

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 defect or malfunction, the product continues to have the defect or to malfunction**. The 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.**

Question 32

Duration of warranty

Answer 32

The seller and the consumer **may stipulate** the period within which the **express warranty shall be enforceable**. If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration. Any other **implied warranty** shall endure **not less than sixty (60) days nor more than one (1) year** following the sale of new consumer products.

Question 33

Breach of Warranties

Answer 33

1. In case of **breach of express warranty**, the consumer may **elect to have the goods repaired or its purchase price refunded by the warrantor.** In case the repair of the product in whole or in part is elected, the warranty work must be made to conform to the express warranty **within thirty (30) days** by either the warrantor or his representative. The thirty-day period, however, **may be extended** by conditions which are beyond the control of the warrantor or his representative. In case the **refund of the purchase price is elected**, the amount directly attributable to the use of the consumer prior to the discovery of the non-conformity shall be deducted. 2. In case of **breach of implied warranty**, the consumer may **retain in the goods and recover damages**, or **reject** the goods, cancel and contract **and recover from the seller so much of the purchase price as has been paid, including damages.**

Question 34

Does warranty apply to professional services?

Answer 34

The provision of this Act on warranty **shall not apply to professional services** of certified public accountants, architects, engineers, lawyers, veterinarians, optometrists, pharmacists, nurses, nutritionists, dietitians, physical therapists, salesmen, medical and dental practitioners and other professionals engaged in their respective professional endeavors.

Question 35

Guaranty of Service Firms

Answer 35

Service firms shall guarantee workmanship and replacement of spare parts for **a period not less than ninety (90) days** which shall be **indicated in the pertinent invoices**.

Question 36

Prohibited Acts | Consumer Product and Service Warranty

Answer 36

a) **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; b) **unreasonable delay** by the local manufacturer or any person obligated under the warranty or guarantee **in honoring the warranty;** c) **removal** by any person of a product's **warranty card** for the purpose of evading said warranty obligation; d) any **false representation in an advertisement** as to the existence of a warranty or guarantee.

Question 37

Prohibited Act in Price Tag Requirement

Answer 37

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.

Question 38

Label and Price Tag Requirement on Lumber

Answer 38

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.**

Question 39

If consumer products for sale are too small or the nature of which makes it impractical to place a price tag thereon, _____

Answer 39

**a price list placed at the nearest point where the products are displayed** indicating the retail price of the same may suffice.

Question 40

Regulations for Price Tags

Answer 40

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

Question 41

Declaration of Policy of Philippine Lemon Law (RA NO. 10642)

Answer 41

It is hereby declared the policy of the State to 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.

Question 42

Requisites to Invoke Lemon Law Rights

Answer 42

1. **Brand New** Motor Vehicles 2. Purchased in the **Philippines** 3. Reported by a consumer to be in **noncomformity with the vehicles' manufacturer or distributor's standards or specifications** 4. **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.**

Question 43

Non-conformity refers to:

Answer 43

a. Any **defect** or **condition that substantially impairs the use, value or safety** of a brand new motor vehicle b. Which **prevents it from conforming to the manufacturer’s or distributor’s standards or specifications,** c. Which cannot be repaired ## Footnote But excluding: i. Conditions resulting from noncompliance by the consumer of his or her obligations under the warranty, ii. Modifications not authorized by the manufacturer or distributor, iii. Abuse or neglect, and iv. Damage due to accident or force majeure

Question 44

Repair Attempts ## Footnote Lemon Law

Answer 44

At any time w**ithin the Lemon Law rights period**, and **after at least 4 separate repair attempts** by the same manufacturer, distributor, authorized dealer or retailer for the **same complaint**, and the **nonconformity issue remains unresolved**, the consumer may invoke his or her rights under this Act. ## Footnote The repair may include replacement of parts components, or assemblies.

Question 45

Notice of Availment of his or her rights under this Act ## Footnote Lemon Law

Answer 45

Before availing of any remedy under this Act and subject to compliance with the provisions of Repair Attempts above, the consumer shall, **in writing, notify the manufacturer, distributor, authorized dealer or retailer** of (1) the **unresolved complaint**, and (2) the **consumer’s intention to invoke his or her rights** under this Act within the Lemon Law rights period.

Question 46

Availment of Lemon Law Rights

Answer 46

After filing the notice, the consumer shall **bring the vehicle for a final attempt to address the complaint**. It shall be the duty of the manufacturer, upon receipt of the motor vehicle and the notice of nonconformity, to attend to the complaints. **Noncomformity issue remains unsolved** -- the consumer may file a complaint before the DTI.

Question 47

What is deemed a successful repair?

Answer 47

If 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 Lemon Law rights period, **the repair is deemed successful.** ## Footnote In the event that the nonconformity issue still exists or persists after the thirty (30)-day period but still within the Lemon Law rights period, the consumer may be allowed to invoke his rights under this Act.

Question 48

Compensation for non-usage of the vehicle while under repair

Answer 48

Reasonable daily transportation allowance; equivalent to: 1. Air-conditioned taxi fare, as evidence by official receipt, or 2. In such amount to be agreed upon by the parties, or 3. A service vehicle at the option of the manufacturer, distributor, authorized dealer or retailer

Question 49

Remedies for Dispute Resolution

Answer 49

1. Mediation 2. Arbitration 3. Adjudication

Question 50

Remedies if DTI rules in favor of th e consumer

Answer 50

the manufacturer, distributor, authorized dealer or retailer to grant either of the following remedies to the consumer: i. Replace the motor vehicle with a similar or comparable motor vehicle in terms of specifications and values, subject to availability; or ii. Accept the return of the motor vehicle and pay the consumer the purchase price plus the collateral charges.