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This article was originally published on January 21, 2021 and has been updated to reflect recent legal developments.

This article is provided for general informational purposes only and does not create, nor shall it be construed as creating, a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. For advice on specific legal concerns, you are encouraged to engage the services of a qualified lawyer. You may also directly consult Alburo Alburo and Associates Law Offices for proper guidance tailored to your situation.

The views and information presented herein are based on the laws, rules, and jurisprudence prevailing at the time of writing. They do not take into account subsequent legal developments and should not be relied upon as a substitute for professional legal advice.

AT A GLANCE:

Article 4(n) of Republic Act No. 7394 or the Consumer Act of the Philippines defines consumer as a natural person who is a purchaser, lessee, recipient or prospective purchaser, lessor or recipient of consumer products, services or credit.

The law recognizes the need to protect consumers, who often find themselves at a disadvantage in transactions involving goods and services. To ensure fairness and transparency, it safeguards their interests and general welfare against deceptive, unfair, and unconscionable sales acts and practices committed by sellers and service providers.

With this protection in mind, it is important to first understand: who is considered a consumer?

Article 4(n) of Republic Act No. 7394 or the Consumer Act of the Philippines defines consumer as a natural person who is a purchaser, lessee, recipient or prospective purchaser, lessor or recipient of consumer products, services or credit. 

The law uses the term “natural person,” which refers to an individual human being. This definition excludes juridical persons such as corporations or partnerships.

In engaging in a transaction with a seller, a consumer may sometimes be in a disadvantageous position, as the seller may unreasonably control the price of the goods or services being offered. Nevertheless, the law provides protection to consumers against deceptive, unfair, and unconscionable sales acts or practices.

When is a sales act or practice considered deceptive?

The law says: 

Article 50 of Republic Act No. 7394 states that  deceptive act or practice by a seller or supplier in connection with a consumer transaction may be committed before, during, or after the transaction. An act or practice shall be deemed deceptive whenever the producer, manufacturer, supplier or seller, through concealment, false representation or fraudulent manipulation, induces a consumer to enter into a sales or lease transaction of any consumer product or service.

Furthermore, without limiting the scope of the above paragraph, the act or practice of a seller or supplier is deceptive when it represents that:

1. a consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have;
2. a consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not;
3. a consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;
4. a consumer product or service is available to the consumer for a reason that is different from the fact;
5. a consumer product or service has been supplied in accordance with the previous representation when in fact it is not;
6. a consumer product or service can be supplied in a quantity greater than the supplier intends;
7. a service, or repair of a consumer product is needed when in fact it is not;
8. a specific price advantage of a consumer product exists when in fact it does not;
9. 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
10. the seller or supplier has a sponsorship, approval, or affiliation he does not have.

When is a sales act or practice considered unfair or unconscionable?

The law says:

Article 52 of Republic Act No. 7394 provides that an unfair or unconscionable sales act or practice by a seller or supplier in connection with a consumer transaction may occur before, during, or after the consumer transaction. An act or practice shall be deemed unfair or unconscionable 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.

In determining whether an act or practice is unfair or unconscionable, the following circumstances shall be considered:

1. 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;
2. 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;
3. that when the consumer transaction was entered into, the consumer was unable to receive a substantial benefit from the subject of the transaction;
4. 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
5. 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.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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