Shipping-Fee Liability for Damaged Goods
Under the Philippine Consumer Act (Republic Act No. 7394) and Related Laws
This explainer is written for lay readers and entrepreneurs. It summarizes the legal rules and practical consequences of shipping-fee liability when an item arrives damaged. It is not a substitute for formal legal advice.
1. Governing Legal Sources
| Source | Key Points on Damaged Goods & Costs |
|---|---|
| Consumer Act of the Philippines (RA 7394) – esp. Title II on Product Quality & Safety and Title III on Sales, Warranties & Repairs | • Imposes implied warranties that goods are fit, safe and free from hidden defects. • Art. 97 (strict liability) makes manufacturers, importers, distributors and sellers jointly liable for damage caused by a defective product. • Consumers may demand repair, replacement, or refund “without additional charge.” |
| Civil Code (Arts. 1504, 1561, 1170-1174, 1732-1753) | • Risk of loss stays with the seller until delivery to the buyer. • Common carriers are presumed negligent when goods are damaged; they and the shipper may be sued solidarily. • Seller’s contractual duty includes bearing necessary expenses to make delivery possible (Art. 1521). |
| DTI Implementing Rules & Administrative Orders • DAO 1-95 (General IRR) • DAO 3-2014 (No Return/No Exchange policy) • DAO 2-2022 (E-Commerce Guidelines) |
• Unambiguously bars charging the consumer “return or freight fees” where the return is due to defect, damage in transit, or wrong item. • Sellers must provide pre-paid waybills or arrange pick-up for replacements/returns. |
| Special carriage statutes (e.g., Carriage of Goods by Sea Act; Warsaw/Montreal air treaties; Public Service Act) | • Allocate liability as between carrier and shipper; but consumer need not sue the carrier—the seller remains primarily liable. |
| Jurisprudence (illustrative): • Eagle Express vs. CA, G.R. No. 88419 (1990) • Feeder Shipping vs. CA, G.R. No. 168146 (2009) • Air France vs. Carrascoso, G.R. No. 21438 (1966) |
• Confirms solidary liability of seller/shipper and carrier for damaged cargo. • Upholds the presumption of carrier negligence and places burden of proof on them. |
2. When Is the Seller (or Platform) Liable for Shipping Fees?
Item Arrives Damaged, Defective, Leaking, or Incomplete Consumer right: Refund, repair, or replacement at no extra cost. Who pays freight? – Seller (or marketplace platform acting as seller of record) must shoulder:
- Return pick-up or drop-off charges
- Re-shipment of the replacement unit
- Any insurance or “handling” surcharges
Item Damaged in-transit Before Receipt
- Risk of loss lies with the seller until the buyer (or authorized agent) signs proof of delivery.
- Even if the courier is a third-party chosen by the buyer, the seller’s obligation to deliver a conforming good means the initial shipping cost cannot be re-billed to the consumer.
Consumer “Change of Mind” Returns
- Not mandated by RA 7394. A seller may voluntarily allow such returns but may lawfully require the consumer to pay shipping, provided the policy is: • clearly disclosed before checkout, and • not applied to damaged/defective items.
Partial Damage Detected After Opening
- Implied warranty still applies within the statutory period (usually 60 days for “express” warranties or up to six months for latent defects; civil law gives up to six months for hidden faults and four years for obvious ones).
- Return shipping remains for seller’s account because the defect pre-existed acceptance.
3. Allocation of Liability Among Seller, Marketplace, and Carrier
| Scenario | Primary Claim by Consumer | Secondary / Indemnity Claim |
|---|---|---|
| Seller uses its own delivery fleet | Against seller directly | Seller may not charge consumer even if its driver was negligent; may discipline employee. |
| Seller books third-party courier | Against seller (solidary) | Seller may seek reimbursement from courier; burden to prove absence of fault. |
| Marketplace is seller of record (e.g., “Fulfilled by X”) | Against platform | Platform claims vs. merchant and/or carrier under its Service Level Agreement (SLA). |
Key principle: The consumer’s remedy is never diminished by internal arrangements among business partners.
4. Practical Compliance Checklist for Businesses
Pre-Sale Disclosures
- Publish an easy-to-read warranty and returns page.
- State that “returns due to damage, defect, or seller error are free of charge.”
Packaging & Labelling
- Use accreditations like Fragile or This Side Up where appropriate.
- Keep photo/video documentation before dispatch to aid subrogation claims.
Return Logistics Workflow
- Provide consumers a pre-paid airway bill or schedule door-to-door pick-up.
- Track parcels; keep evidence of receipt for at least two years (Consumer Act prescriptive period).
Record-Keeping & Dispute Handling
- Maintain a Customer Complaint Logbook as required by DTI.
- Resolve complaints within 10 working days; otherwise engage DTI mediation.
Insurance & Indemnity
- Take transit insurance for high-value items; premiums are a cost of doing business, not billable to consumer for defect-related claims.
5. Enforcement & Remedies
| Forum | Relief Obtainable | Time Limit |
|---|---|---|
| Seller’s internal process | Replacement, refund, free repairs | 7-15 days typical SLA |
| DTI Provincial or Regional Office | Mediation/conciliation; cease-and-desist orders; fines up to ₱300k; product seizure | Must file within 2 years of discovery of defect |
| Regular courts (MTC/RTC) | Damages (actual + moral + exemplary), attorney’s fees | 4-year prescriptive period for quasi-delict; 6 years for oral contracts; 10 years for written contracts |
| Small Claims (≤ ₱400k, Rule SC) | Money judgment for price, freight, insurance | Within ordinary civil prescriptive period |
6. Frequently-Asked Questions
Can a seller insist the buyer pay the courier first and promise reimbursement later? No. The Act requires the remedy be without additional charge or inconvenience. Reimbursement schemes shift cash-flow burden to the consumer and are non-compliant.
What if the buyer signed the delivery receipt “received in good condition” but later found concealed damage? The presumption of acceptance may be rebutted by proof that the defect was latent. The seller still shoulders reverse logistics and must honor repair/replacement.
Is a “restocking fee” allowed when replacing a damaged item? No. Any restocking or handling fee violates the Consumer Act for defect-related returns.
Does payment via COD change liability? No. Title (and risk) pass only upon actual delivery of a conforming good. The mode of payment does not shift shipping-fee liability.
7. Key Take-Away Rules
- Seller bears shipping both ways whenever the consumer is exercising statutory rights because the product was damaged, defective, or not as advertised.
- Risk of loss remains with the seller (and its chosen courier) until the consumer actually receives and inspects the item.
- Administrative orders forbid passing any freight, insurance, or handling costs to the consumer in these situations.
- Consumer remedies are swift and inexpensive: DTI mediation is free; small-claims courts require no lawyers.
- Business partners may litigate reimbursement among themselves, but this never limits the consumer’s direct claim.
8. Practical Tips for Consumers
- Inspect the parcel immediately upon delivery; take photos or video unboxing.
- Keep receipts, order confirmation e-mails, and correspondence.
- Notify the seller in writing within 7 days (best practice) describing the damage.
- If unresolved, file a complaint with your local DTI office—bring the waybill, photos, and chat/e-mail screenshots.
9. Conclusion
The Philippine Consumer Act strikes a clear policy balance: the cost of curing a defective sale—including shipping—is a seller’s business risk, not a consumer’s burden. Businesses that internalize this rule not only comply with the law but also build trust and repeat patronage in the country’s booming e-commerce sector.
Prepared July 8 2025 – Asia/Manila