I.

BACKGROUND OF CONSUMER ACT LAW

CONSUMER- a natural person and an actual or prospective purchase, lessee,

or recipient of consumer goods, services, or credit.

CONSUMER PRODUCTS OR SERVICES- are goods and services

primarily for personal, family, household, and agricultural purposes. Ex. Food, Drugs,
Cosmetics and Devices

CONSUMER SERVICES- does not include services rendered by

professionals such as doctors, lawyers, dentist, and accountant. It includes services
rendered by service firms for the repair and servicing of products. Ex. Mechanics,
Massage, Salon/Parlor

AGRICULTURAL PURPOSES- those related to producing, harvesting,

processing, manufacturing, distributing, storing, transportation, marketing, exhibition
and disposition of agriculture, fishery and marine products.

CONSUMER CREDIT- buying of goods and services now in exchange of a

promise to pay in the future.

CONSUMER ACT PURPOSE

a) To protect consumers against hazards to health and safety.
b) To protect consumers against deceptive, unfair, and unconscionable sales act
and practices
c) To provide information and education in order to facilitate sound choice and
the proper exercise of rights by the consumer
d) To involve the ‘consumer representative’ in the formulation of social and
economic policies.
II. DECEPTIVE SALES ACT OR PRACTICES

WHAT IS DECEPTIVE SALES ACT OR PRACTICES?

When by inducing the consumer to enter into sale of product through
concealment, false representation, and fraudulent manipulation.

NOTE: There is no deceptive act if there is no inducement/influence on the

part of the seller. Ex. If the person bought the product in able to help his friend but
came out that the product sold is not the same with how it was described.

WHEN IS A SALES ACT OR PRACTICES DECEPTIVE?

a sponsorship, approval, or affiliation he does not have;
b) has the performance, characteristics, ingredients, accessories, uses, or benefits it
does not have;
c) has a particular Standard, quality, grade, style, or model when in fact it does not;
d) is new, original, or unused, when in fact, it is in a deteriorated, altered,
reconditioned, reclaimed, or second-hand state;
e) is available to the consumer for a reason that is different from the fact; has been
supplied in accordance with the previous representation when in fact it is not; can be
supplied in a quantity greater than the supplier can do;
h) needs a service or repair, when in fact it does not;
i) has a specific price advantage when in fact it does not; and
j) involves or does not involve a warranty, a disclaimer of warranties, particularly
warranty terms or other remedies, or obligation, if the indication is false.

WHEN DOES A DECEPTIVE ACT OR PRACTICE TAKE PLACE?

A deceptive sales act or practice violates the Consumer Act whether it occurs
before during, on after the transaction.

WHAT OTHER SALES ACTS AND PRACTICES ARE CONSIDERED

DECEPTIVE?
1. Deceptive presentation of consumer products. The appearance of consumer
products should not be unreasonably enhanced as to deceive consumers about their
true characteristics or condition.
2. Deceptive demonstration of the performance of consumer products and services.
Fraudulent tricks or machinations should not be employed in the demonstration of the
performance of a consumer product or service.

III. UNFAIR AND UNCONSCIONABLE SALES ACT AND PRACTICES

WHAT IS AN INFAIR OR UNCONSCIONABLE SALES ACT OR

PRACTICE?
If 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, a producer. manufacturer, distributor, supplier or seller, owner or
operator, induces or entices a consumer to enter into a sale or lease transaction of a
consumer product or to avail of its services that are grossly inimical to the consumer's
interest or grossly ones sided in favor of the seller.

CIRCUMSTANCES TO BE CONSIDERED IN DETERMINING

UNFAIR AND UNCONSCIONABLE SALES ACTS AND PRACTICES
a) where the producer, manufacturer, distributor, supplier, or seller took
advantage of the inability of the consumer to reasonably protect his interest because
of difficulty in understanding the language of an agreement or similar factors;
b) when the consumer transaction was entered into, the price grossly exceeded
the price at which similar products or services were readily obtainable;
c) when the consumer transaction was entered into, the consumer was (unable
to receive substantial benefit from the subject of the transaction; and
d) when the consumer transaction was entered into, the seller or supplier was
aware that there was no reasonable probability of payment of the obligation in full by
the customer.

IV. CHAIN DISTRIBUTION SCHEME

Chain distribution scheme is not illegal per se if if passes the 8 point test.
8 POINT TEST
1. Is there a product?
2. Are commissions paid on sale of products and not on registration/ entry fees?
3. Is the intent to sell a product not a position?
4. Is there no direct correlation between the number of recruits and compensation?
5. If recruitment were to be stopped today, will the participants still make money?
6. Is there a reasonable product return policy?
7. Do products have fair market value?
8. Is there a compelling reason to buy?
If the answer to all the questions is YES, then the company being
evaluated is a LEGITIMATE compan.
If the answer to all questions is NO, then there is high possibility that it is
a PYRAMID SCAM. If not all, there is still a possibility that it is a scam but not
high.

V. WARRANTY

WARRANTY- is a promise made by a seller or a manufacturer concenring

the quality of goods or services offered for sale. This is to remedy the problem if an
item he has sold does not perform as promised.

2 TYPES OF WARRANTY
IMPLIED- unwritten, created by law which means that the law requires products or
services to meet certain minimum standards of quality and performance, even if no
express promise made.
EXPRESS- written, oral or by demonstration

NOTE: Between the two warranty the one that will benefit the consumer will prevail.
Ex. If the implied warranty provides 1 year warranty and the express provides 6
months, implied warranty will prevail. But if the implied warranty says 6 months and
the express warranty provides 2 years, express warranty will prevail.
IS NO RETURN NO EXCHANGE PROHIBITED?
Yes because the law prohibits it for it will hinder consumer to avail for
warranty wherein sellers are opt not to accept the item sold although there is defect.
Note: No return no exchange policy is deceptive. It creates a misconception on the
part of consumers that they do not have a right to:
a) Return defective goods or
b) Demand for remedies in case of defective or imperfect service or warranty.

VI. LABELING AND FAIR PACKAGING

It is a right of the consumer to be correctly informed on the nature, quantity,
quality, price, and credit term of the goods and services they buy and to facilitate his
comparison of the value of such products.

WHAT ARE THE MINIMUM/LABELING REQUIREMENTS FOR

CONSUMER PRODUCTS?
All consumer products domestically sold, whether manufactured locally or imported,
should indicate in their labels of packaging:
a) the correct and registered trade name or brand name of the product;
b) the duly registered trademark;
c) the duly registered business name;
d) the address of the manufacturer, importer, repacker of the consumer product in the
Philippines;
e) the general make or active ingredient of the product;
f) the net quantity of contents, in terms of weight, measure or numerical count
rounded off to at least the nearest tenths in the metric system;
g) the country of manufacture, if imported; and
h) if a consumer product is manufactured, refilled, or repacked under license from a
principal, the label must state the fact.

VII. PRICE TAG

WHAT ARE THE RULES ON THE PRICE TAG REQUIREMENTS?
a) Consumer products must not be offered for retail sale to the public without an
appropriate price tag, label, or marking publicly displayed to indicate the price of each
article.
b) Consumer products must not be sold at a price higher than that stated on the price
tag.
c) Consumer products must be sold without discrimination to all buyers.
d) Lumber offered for sale to the public should be tagged by indicating thereon the
price and the corresponding official name of the wood. price y official name of wood.

NOTE: If consumer products for sale are too small or the nature of which makes it
impractical to place a price tag on them, a price list/placed at the nearest point where
the products are displayed, should indicate their retail price.

VIII. SALES PROMOTION

Sales promotion intended to increase sales, patronage and /or goodwill of a
product, service or credit facilities.

ELEMENTS OF A SALES PROMO

1. Promise of gain
2. Consumer purchase
3. Use of mass media
4. Duration

IV. PHILIPPINE LEMON LAW RA 10642

PURPOSE: 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.

CONSUMER refers to any person, natural or juridical, who purchases a brand new
motor vehicle either by cash or credit from an authorized distributor, dealer or retailer
in the Philippines;
LEMON LAW RIGHTS PERIOD refers to the period ending twelve (12) months
after the date of the original delivery of a brand new motor vehicle to a consumer or
the first twenty thousand (20,000) kilometers of operation after such delivery,
whichever comes first. This shall be the period during which the consumer can report
any nonconformity.
MOTOR VEHICLE refers to any self-propelled, four (4) wheeled road vehicle
designed to carry passengers including, but not limited to, sedans, coupes, station
wagons, convertibles, pick-ups, vans, sports utility vehicles (SUVs) and Asian Utility
Vehicles (AUVs).

EXCLUDING motorcycles, delivery trucks, dump trucks, buses and heavy

equipment such as, but not limited to, bulldozers, payloaders, graders, forklifts,
amphibian trucks, cranes and traction engines of all kinds used exclusively for
agricultural purposes.

NONCONFORMITY refers to any defect or condition that substantially impairs the

use, value or safety of a brand new motor vehicle which prevents it from conforming
to the manufacturer’s or distributor’s standards or specifications, which cannot be
repaired, but excluding conditions resulting from noncompliance by the consumer of
his or her obligations under the warranty, modifications not authorized by the
manufacturer or distributor, abuse or neglect, and damage due to accident or force
majeure

COVERAGE. This Act shall cover 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.

THE FOLLOWING CAUSES OF NONCONFORMITY SHALL BE

EXCLUDED:
(a) Noncompliance by the consumer of the obligations under the warranty;
(b) Modifications not authorized by the manufacturer, distributor, authorized dealer or
retailer;
(c) Abuse or neglect of the brand new motor vehicle; and
(d) Damage to the vehicle due to accident or force majeure.

REPAIR ATTEMPTS at any time within the Lemon Law rights 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, the consumer may invoke his or her rights under this Act. The
repair may include replacement of parts components, or assemblies.