backgrounder on the consumer act of the philippines (ra 7394)

Enabling Business, Empowering Consumers
BACKGROUNDER ON
THE CONSUMER ACT
OF THE PHILIPPINES
(R.A. 7394)
By:
Series of 2015
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection Group
This document is circulated for the participants of the 8th ECOP MGM and should NOT be used
for commercial presentation purposes partially or in its entirety without EXPRESSED permission
from the Author Usec. Victorio Mario Dimagiba or HRManagement & Business Solutions Inc.
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LEGAL BASIS OF RA 7394
“THE STATE SHALL PROTECT CONSUMERS
FROM TRADE MALPRACTICES AND FROM
SUBSTANDARD OR HAZARDOUS PRODUCTS.”
- Art. XVI, Gen. Provision, Sec. 9 1987 Constitution
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UNDERSTANDING RA 7394
◊
Took effect on July 15, 1992
BASIC POLICIES
◊
Protect the interest of the consumer and promote
his general welfare
◊
Establish standards of conduct for business and
industry
Understanding…continuation…page 2
OBJECTIVES
◊
◊
◊
◊
◊
Protection
against hazards to
health and safety;
Protection against deceptive, unfair
and unconscionable sales acts and
practices;
Provision of information and
education for sound choice by
consumers;
Provision of adequate rights and
means of redress; and
Representation of Consumers in
social and economic policy
formulation.
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IMPLEMENTING AGENCIES
Department of Trade and Industry (DTI)
◊ Consumer Product Quality and Safety
◊ Deceptive, Unfair and Unconscionable
Sales Acts and Practices
◊ Weights and Measures (Metrication)
◊ Consumer Products and Service
Warranties
◊ Labeling and Packaging
◊ Price Tag
◊ Liability for Products and Services
◊ Regulation of Service and Repair Shops
◊ Advertising and Sales Promotion
◊ Consumer Credit Transactions
Implementing…continuation…page 2
Department of Agriculture (DA)
◊
Quality and safety, and labeling
and packaging of agricultural
products
Department of Health (DOH)
◊
Labeling and packaging,
advertising, and sales promotion
of food, drugs, cosmetics and
devices, and hazardous
substances
Department of Education (DepEd)
◊ Consumer education and
information in the curriculum
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Implementing…continuation…page 2
Local Government Units (LGUs)
◊ Weights and Measures
◊ Regulation of preparation and
sale of meat, fresh fruits,
poultry, milk, fish, vegetables
and other food products for
consumption
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WHEN IS THE CONSUMER ACT
APPLICABLE?
◊
◊
◊
If the complainant is a natural
person
If the subject of the violation
is a consumer product or
service
If the nature of the complaint
is regarding any of the
aforementioned concerns
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WHAT ARE CONSUMER
PRODUCTS AND SERVICES?
◊
◊
◊
goods, service and credits, debts
or obligations
primarily for personal, family,
household, or agricultural
purpose
shall include, but not limited to
food, drugs, cosmetics, and
devices
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PERIOD FOR FILING CONSUMER
COMPLAINTS
Within 2 years from the time the consumer transaction was
consummated or the deceptive or unfair and unconscionable act
or practice was committed,, and in case of hidden defects, from
discovery thereof.
WHERE CAN A CONSUMER COMPLAINT
BE FILED
The administrative complaint shall be filed in the duplicate with the
Provincial Office of the Department having jurisdiction over the
subject of the complaint in areas where there are no Provincial
Offices, the complaint shall be filed in the Regional Office.
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Where can a consumer complaint be filed
◊
In cases where the complainant and respondent are
situated in different provinces, the complainant has the
option to choose the place where to file the complaint.
◊
In National Capital Region (NCR) the complaints shall be
filed with the following offices:
◊
◊
◊
◊
◊
◊
For the Department of Trade and Industry
For the Department of Health
For the Department of Agriculture
For the Securities and Exchange Commission
For the Bangko Sentral ng Pilipinas
-
DTI-FTEB
FDA
DA
SEC
BSP
The civil/criminal action shall be filed with the
appropriate regular courts (Municipal/Regional Trial Courts).
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ADVANTAGES OF FILING COMPLAINT BEFORE
THE IMPLEMENTING AGENCIES (ADMINISTRATIVE
PROCEEDINGS)
Mediation/Arbitration is more economical and
time-saving
Complainant need not undergo the rigors and
expense of a court case
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THE REMEDIES AVAILABLE TO
CONSUMERS
For Administrative Proceedings:
◊ replacement or repair of product or services
◊ refund of payment made
◊ restitution or rescission of contract
◊ reimbursement to complainant of amount spent in
pursuing the complaint
Remedies available
to the consumer
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For civil/criminal action
◊
◊
◊
◊
◊
◊
◊
civil action
award of damages
replacement or repair of product or services
refund of payment made
restitution or rescission of contract
reimbursement to complainant of amount spent in pursuing the
complaint
criminal action-defendant, if found guilty by the court, can
be sentenced to imprisonment or payment of fine or
both, at the discretion of the court.
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Regulating Anti-Competitive
Practices in Trade
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THE PRICE ACT (R.A. 7581)
An Act providing protection to consumers by
stabilizing the prices of basic necessities and
prime commodities and by prescribing measures
against undue price increases during emergency
situations and like occasions.
Signed into Law: 27 May 1992
Effectivity Date : 07 June 1992
Price Act…page 2
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THE PRICE ACT (R.A. 7581)
BASIC POLICY:
◊
◊
Adequate supply and reasonable prices all
times without denying legitimate business
a fair return on investment
Protection to consumers
against hoarding, profiteering
and cartel
Price Act…page 3
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THE PRICE ACT (R.A. 7581)
TO IMPLEMENT THE BASIC POLICY:
◊
Promote productivity
◊
Develop an improved and efficient transport &
distribution system
◊
Institute appropriate penalties for price
manipulators
Price Act…page 4
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THE PRICE ACT (R.A. 7581)
PROVIDES PROTECTION TO
CONSUMERS BY:
◊
Stabilizing the price and supply of basic
necessities and prime commodities
◊
Prescribing measures against undue
price increases especially during
emergency situations and like occasions
Price Act…page 5
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THE PRICE ACT (R.A. 7581)
Implementing Rules and Regulations (IRR)
(DTI, DA, DOH, DENR Joint Administrative Order No. 1
Series of 1992)
Signed
:
15 February 1993
Effectivity :
20 March 1993
Implementing Agencies (IAs)
◊
Dept. of Trade and Industry (DTI)
◊
Dept. of Agriculture (DA)
◊
Dept. of Health (DOH)
◊
Dept. of Environmental and Natural Resources (DENR)
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The Price Act
(Amended by RA 10623)
Basic Necessities
Goods vital to the needs of consumers for their
sustenance and existence in times of state of calamity,
disaster, emergency, rebellion, war, martial law, or when
the privilege of the writ of habeas corpus have been
suspended
Prime Commodities
Goods not considered as basic necessities but are
essential to consumers in times of any of the cases
provided under Section 7
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Implementing Agencies (IAs)
IA
Basic Necessities
Prime Commodities
DTI
Bread; canned fish and other marine
products; potable water in bottles and
containers;
process
milk;
locally
manufactured instant noodles; coffee,
salt, laundry soap; detergent; candles
Flour; processed and canned pork;
processed and canned beef and
poultry meat; vinegar, patis, soy
sauce; toilet soap; paper, school
supplies; cement, clinker, GI sheets;
hollow blocks; construction nails;
batteries, electrical supplies, light
bulbs; steel wires
DA
Rice; corn; root crops; fresh, dried fish
and other marine products; fresh eggs;
fresh pork, beef and poultry meat; fresh
milk; fresh vegetables; fresh fruits;
sugar; cooking oil
Dried pork; dried beef and poultry
meat; fresh dairy products not falling
under basic necessities; onions;
garlic;
fertilizer,
pesticides,
herbicides; poultry, livestock and
fishery feeds; veterinary products
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IA
Basic Necessities
Prime Commodities
DTI
Bread; canned fish and other marine
products; potable water in bottles
and containers; process milk; locally
manufactured
instant
noodles;
coffee, salt, laundry soap; detergent;
candles
Flour; processed and canned pork;
processed and canned beef and
poultry meat; vinegar, patis, soy sauce;
toilet soap; paper, school supplies;
cement, clinker, GI sheets; hollow
blocks; construction nails; batteries,
electrical supplies, light bulbs; steel
wires
DA
Rice; corn; root crops; fresh, dried fish
and other marine products; fresh eggs;
fresh pork, beef and poultry meat;
fresh milk; fresh vegetables; fresh
fruits; sugar; cooking oil
Dried pork; dried beef and poultry
meat; fresh dairy products not falling
under basic necessities; onions; garlic;
fertilizer,
pesticides,
herbicides;
poultry, livestock and fishery feeds;
veterinary products
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IA
Basic Necessities
Prime Commodities
DOH
Drugs and medicines that are
included in the current edition of
the Philippine National Drug
Formulary (PNDF) Essential Drug
List (EDL)
All other drugs and medicines that
are not included in the current
edition of the Philippine National
Drug Formulary (PNDF) Essential
Drug List (EDL)
DENR
Firewood; charcoal
Nipa
shingles;
plyboard
DOE
Household liquefied petroleum gas
(LPG); kerosene
sawali;
plywood;
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Functions of the Implementing Agencies
◊
May issue Suggested Retail Price (SRP) whenever necessary
- SRP is set by manufacturers. DTI evaluates the reasonableness
of any change/increase in the SRP based on the changes in the
prices of raw materials and other production costs.
- SRP also works to ensure free and fair competition among
brand owners and of supermarket and grocery owners.
◊
May determine, recommend and enforce price ceiling/ control
whenever necessary
◊
May require producers, manufacturers, distributors and retailers of
basic necessities and prime commodities to submit production and
inventory reports
◊
Inclusion or exclusion of a particular class or type of commodity upon
petition of concerned parties and after conducting public hearing and
with approval of the President
◊
Creation of Monitoring Task Force
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MONITORING SYSTEM
◊
◊
◊
Conduct regular monitoring in order to:
◊ develop database on prices
◊ identify and investigate causes of market and price
irregularities
◊ provide basis for establishing SRPs and ceiling prices
◊ determine price trends
Each IA shall monitor at least monthly. Frequency may be
increased as the need arises
Monitoring reports shall contain price analyses prevailing price
vs. prevailing price 3 months ago; vs. a month ago; vs. a year
ago, etc.
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ISSUANCE OF NOTICE OF VIOLATION
◊
Notice of Violation (NOV) is being issued to owners of
business establishments selling basic necessities and
prime commodities above the SRPs.
◊
These establishments are directed to comply and adjust
their SRPs and submit a written explanation within
forty-eight (48) hours upon receipt of the NOV
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TYPES OF PRICE CONTROL
Whenever the President declares an area under a state of calamity,
disaster, emergency, rebellion, war, martial law, or when the privilege of
the writ of habeas corpus have been suspended
Automatic Price Control
◊
◊
Prices of basic necessities are automatically frozen at
their prevailing prices or placed under price control
Unless sooner lifted by the president, automatic price
control on basic necessities shall remain effective for the
duration of the condition that brought it about, but not
more than 60 days.
Mandated Price Ceiling
◊
Whenever the prevailing prices have risen to
unreasonable levels, MPC may be imposed by the
President upon recommendation of implementing agency
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ILLEGAL ACTS OF PRICE MANIPULATION
◊
Hoarding – undue accumulation of any basic necessity or prime
commodity beyond his/her normal inventory levels or the
unreasonable limitation or refusal to sell stocks or the unjustified
taking out of any basic necessity or prime commodity from the
channels of production, trade, commerce and industry
◊
Profiteering – sale of any basic necessity or prime commodity at
a price grossly in excess of its true worth
◊
Cartel – any combination of agreement between 2 or more
persons engaged in the production, manufacture, processing,
storage, supply; distribution, marketing, sale or disposition of
any basic necessity or prime commodity designed to artificially
and unreasonably increase or manipulate its price.
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PROFITEERING

The Court of Appeals in the decision issued last 12
December 2014 affirmed that Section 5(2) of RA 7581 is
constitutional.

There is profiteering when the price set for a basic
necessity is flagrantly or extremely higher than its correct
value.

Section 10 of the Price Act provides that the Secretary of
the DTI has the authority, from time to time, to issue a
Suggested Retail Price (SRP).
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PENALTY FOR ACTS OF ILLEGAL PRICE
MANIPULATION
◊
Imprisonment for a period not less than five
(5) years nor more than fifteen (15) years and
shall be imposed a fine of not less than
P5,000 nor more than P2 million.
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NO RETURN, NO
EXCHANGE POLICY
Series of 2013
By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection
Group
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NO RETURN, NO EXCHANGE
POLICY
◊
The words " No Return, No
Exchange,” or words to such effect
shall not be written into the
contract of sale or receipt in a
sales transaction, in any document
evidencing such sale or anywhere
in a store establishment. (Sec. 2,
Rule VI, Chapter 4, Title III of the
Implementing
Rules
and
Regulations, RA 7394).
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WHY IS THIS POLICY PROHIBITED?
It is deceptive
◊ It creates a misconception on
the part of consumers that
they do not have the right to:
◊
Return shoddy or defective
goods; or
b) Demand for remedies in
case of
defective or
imperfect service.
a)
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WHEN AM I ENTITLED TO REFUND,
REPLACEMENT OR REPAIR?
◊
Under the law, you are entitled either
refund, replacement or refund if
something you bought:
• Is faulty or defective and you were
not aware of it;
• Does not do the job you were led
to believe it would do;
• Does not match a sample you
were shown; or
• Was not as described on the box
or in an advertisement.
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Q. WHY IS THE PRESENCE OF A “NO
RETURN, NO EXCHANGE” NOTICE
CONSIDERED DECEPTIVE?
A.
Such
statement
is
considered
deceptive because consumers may
return or exchange the goods or avail
of other remedies in case of hidden
faults or defects, or any charge not
known to the buyer. By provision of
law, sellers are obliged to honor their
implied
warranties
and
grant
corresponding remedies to consumers.
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Q.
CAN BUSINESS ESTABLISHMENTS STILL ISSUE OFFICIAL
RECEIPTS WITH THE “NO RETURN, NO EXCHANGE”?
A.
Business establishments with unused Official Receipts should
erase or blot out the words “No Return, No Exchange” before
issuing such receipts and henceforth, such words should no
longer be printed in their receipts or anywhere in their
business establishments.
Q.
IF AN ITEM BOUGHT FROM STORE Y TURNS OUT TO BE
MORE EXPENSIVE THAN A SIMILAR ITEM IN STORE X, CAN
THE CUSTOMER RETURN THE ITEM AND ASK FOR A REFUND?
A.
No, while consumers have the right to choose and make a
canvass of prices, once a sale is consummated and the
product has no defect, one cannot return the goods nor ask
for refund.
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Q. CAN A STORE EXERCISE ONLY A POLICY OF EXCHANGE
BUT NOT REFUND?
A.
Consumers are entitled to either an exchange or
refund, as long as there is defect in the quality of
goods or imperfection in the service.
Q. IF THE DEFECT IS DUE TO MISHANDLING ON THE
PART OF THE BUYER, CAN HE STILL RETURN THE ITEM
AND DEMAND AN EXCHANGE OR REFUND?
A.
No, the prohibition covers only hidden defects, shoddy
goods or imperfect service.
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Q.
IF AFTER BUYING A CERTAIN ITEM , A CUSTOMER
CHANGES HIS MIND AND WANTS TO RETURN SAID ITEM,
CAN HE INVOKE THE PROHIBITION ON “NO RETURN, NO
EXCHANGE’?
A.
No, the prohibition is not an excuse for the consumers to
return the goods because of change of mind.
Q.
IS THERE A TIME LIMIT WITHIN WHICH A BUYER MAY
RETURN DEFECTIVE PRODUCTS?
A.
There is no hard- and- fast rule on the period within which
a customer may return the products he purchased. A rule
of reason should, however, be observed, taking into
consideration the nature of the item purchased and the
expressed/implied warranties mandated by law, i.e., the
Consumer Act and the New Civil Code of the Philippines.
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Q. CAN A BUYER RETURN DEFECTIVE GOODS WITHOUT
OFFICIAL RECEIPT?
A.
The official receipt is the best proof of purchase. However, a
buyer may still demand replacement or refund if he can
prove that a defective item was bought from a certain store.
Q. CAN A STORE PRINT IN THEIR INVOICES THE STATEMENT
“EXCHANGE OF MERCHANDISE WILL NOT BE ACCEPTED
WITHOUT A VALID RECEIPT OR OTHER EVIDENCE OF
PURCHASE?
A.
NO, because there may be goods exclusively manufactured
or sold by a company and there is no need to prove
purchased of the item.
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Q.
A.
Q.
A.
CAN THE STATEMENT “EXCHANGE WILL NOT BE ACCEPTED
ON ITEM IN ANY WAY USED, DAMAGED OR ALTERED” BE
PRINTED ON INVOICES?
NO, because there may be items which can be determined as
defective only when used. Moreover, the right to determine
whether goods are damaged or altered cannot be reserved
exclusively for the company since this is a matter between the
customer and the company.
IS THE CONDITION “SALE ITEMS ARE NON-REFUNDABLE”
ALLOWED?
This has the same effect as the “No Return, No Exchange”
provision. However, in the case of sales promotions like
“water or fire-damaged sale,” the statement may be allowed,
provided the defects are apparent and visible to the consumer
and that proper disclosure in the form of tags or notices are
made at the time of purchase.
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GIFT CHECK POLICY
Series of 2015
By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection Group
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DEFINITION
Gift Check/Certificate/Card means an instrument issued by
a supplier to an individual/partnership or a juridical entity
for monetary consideration evidencing a promise by the
issuer that consumer goods or services will be exchange in
favor of the bearer upon presentation of said GCs to the
value/credit/specific goods/service or event shown in the
instrument.
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DAO 10-04, SERIES OF 2010
“Guidelines on the Issuance, Use and Redemption of Gift
Checks, Gift Certificates or Gift Cards”
◊
◊
◊
Commencing July 1, 2012, issuance of gift
checks/certificates/cards with expiry date will be
prohibited. All gift checks/certificates with no expiry dates
shall be redeemable until used up by the bearer.
Gift checks/certificates/cards bearing an expiry beyond
June 30, 2012 shall be subject to revalidation or
replacement by suppliers.
Effectivity Date: 15 July 2010
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x
No more expiry
For revalidation
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EXEMPTIONS TO DAO 10-04,
SERIES OF 2010
Gift checks / certificates /
cards that are distributed
by suppliers or retailers
under an award, loyalty
or promotional program
are not covered by this
Order.
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WHEN CAN RETAILERS NOT HONOR GIFT
CHECK/CERTIFICATE/CARD?
Retailers or suppliers may refuse to honor gift
checks/certificates/cards
under
the
following
circumstances:
◊
◊
When the gift check/certificate/card
is lost due to no fault of the supplier;
and
When the gift check/certificate/card
is defaced due to no fault of the
supplier and such damage prevents
the latter from identifying the
security and authenticity features.
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Series of 2015
By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection Group
AIR PASSENGER BILL OF RIGHTS
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UPON PURCAHSED OF TICKET AND UPON ARRIVAL AT THE AIRPORT
Joint Department of Transportation and Communications
(DOTC) – Department of Trade and Industry (DTI) Administrative
Order No. 01, Series of 2012
DOTC-DTI JAO No. 01, S. 2012
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WHAT ARE THE MAJOR RIGHTS
OF AIR PASSENGERS?
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RIGHT TO BE PROVIDED WITH
ACCURATE INFORMATION BEFORE
PURCHASE
Right to Full, Fair and Clear Disclosure of the Service Offered
and All the Terms and Conditions of the Contract of
Carriage
Every passenger
shall, before
purchasing any
ticket, be entitled
to the full, fair and
clear disclosure of
all terms and
conditions of the
contract of
carriage.
Disclosure shall
include, among
others, documents
required to be
presented upon
check-in, provisions
on check-in
deadlines, refund
and rebooking
policies, and
procedures and
responsibility for
Disclosures must be
verbally explained
by the air carrier or
its agent in English
and Filipino, or in a
language that is
easily understood
by the purchaser.
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