Victorio Dimagiba Consumer Act (RA 7394)

Enabling Business, Empowering Consumers

BACKGROUNDER ON THE CONSUMER ACT OF THE PHILIPPINES (R.A. 7394) By:

Series of 2015

Victorio Victor io Mar Mario io A. Dimag Dimagiba iba Undersecretary, Consumer Protection Group This document is circulated for the participants of the 8 th ECOP MGM and should NOT be used for commercial presentation purposes partially or in its entirety without EXPRESSED permission from the the Author Author Usec. Usec. Victorio Victorio Mari Mario o Dimagiba Dimagiba or HRManag HRManagemen ementt & Busi Business ness Solut Solutions ions Inc. Inc.


LEGAL BASIS OF RA 7394

“THE STATE SHALL PROTECT CONSUMERS

FROM TRADE MALPRACTICES AND FROM SUBSTANDARD SUBST ANDARD OR HAZA HAZARDO RDOUS US PRODUC PRODUCTS. TS.” ”

- Art. XVI, Gen. Provision, Provision, Sec. 9 1987 Constitution


LEGAL BASIS OF RA 7394

“THE STATE SHALL PROTECT CONSUMERS

FROM TRADE MALPRACTICES AND FROM SUBSTANDARD SUBST ANDARD OR HAZA HAZARDO RDOUS US PRODUC PRODUCTS. TS.” ”

- Art. XVI, Gen. Provision, Provision, Sec. 9 1987 Constitution


UNDERST UNDER STANDI ANDING NG RA 7394 ◊

Took effect on July 15, 1992

BASIC POLICIES ◊

Protect the interest of the consu sum mer and promote hiss ge hi gene nerral we welf lfar are e

◊

Establish standards of conduct for business and industry

Understanding

continuation

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OBJECTIVES ◊ ◊

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◊

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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.



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

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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


Implementing

continuation

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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



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


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


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.


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: ◊ ◊ ◊ ◊ ◊

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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

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DTI-FTEB FDA DA SEC BSP

The civil/criminal action shall be filed with the appropriate regular courts (Municipal/Regional Trial Courts).


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


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


For civil/criminal action

◊

◊

civil action

◊

award of damages

◊

replacement or repair of product or services

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refund of payment made

◊

restitution or rescission of contract

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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.


Regulating Anti-Competitive Practices in Trade


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

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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

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THE PRICE ACT (R.A. 7581) TO IMPLEMENT THE BASIC POLICY: ◊

Promote productivity

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Develop an improved and efficient transport & distribution system

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Institute appropriate penalties for price manipulators

Price Act

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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


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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

:

Effectivity :

15 February 1993 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)


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


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; fres h 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 fis hery feeds; veterinary products


IA DTI

DA

Basic Necessities

Prime Commodities

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

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


IA

Basic Necessities

Prime Commodities

DOH

Drug Drug s and medicin icines that are included in the current edition of the Phil Philip ipp pine ine Nat Nation ional Drug Drug Formulary (PNDF) Essential Drug List (EDL)

A ll other drug dr ug s and medici medic i nes that are not not incl includ ude ed in the curre current nt edition dition of the Philippin Philippine e Nat Nationa ional Drug Drug Formu Formulary (PNDF) E ss entia ntiall Drug Drug Lis t (EDL)

DENR

Firewood; charcoal

DOE

Hous ehold liquefied liquefi ed petr petr oleum oleum g as (LPG); kerosene

Nipa shingles; plyboard

sawali;

pl plywood;


Functions of the Implementing Agencies ◊

May issue Suggested Suggested Retail Price (SRP) whenever whenever necessary -

-

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S R P is s et by ma manufa nufacturers cturers . DTI evalu evalua ate tess the rea reass ona onabl blene eness s of any any cha c hang ng e/ e/inc increa reass e in the S R P bas bas ed on on the the chang chang es in the prii c es of raw ma pr materi terial alss and other produc pr oductio tion n cos ts . S R P als o wo works rks to ensure fre free e and fair fair com comp petit ition ion amon ongg brand bra nd owners owners and of supe s uperma rmark rk et and g rocery owne owners rs .

M May ay det eter ermi mine ne,, re reco comm mme end an and d en enfo forc rce e pri rice ce ce ceil ilin ing g/ whenever necessary

con co ntr trol ol

◊

May req requir uire e pro produc ducers ers,, man manufa ufactu cturer rers, s, dis distri tribu butor tors s and ret retail ailers ers of basic bas ic nec necess essitie ities s and pri prime me com commod moditie ities s to sub submit mit pro produc ductio tion n and inventory reports

◊

Inclusion or exclusion of a particular Inclusion particular class or type of commodity upon petition of concerned parties and after conducting public hearing and with approval of the President

◊

Creation Creatio n of Monitoring Task Force


MONITORING SYSTEM ◊

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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 prevailing price vs. prevailing price 3 months ago; vs. a month ago; vs. a year ago, etc.


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


TYPES OF PRICE CONTROL Whenever the Pr esident declares an area under a s tate of calamity, dis as ter, emerg ency, rebellion, war, martial law, or when the privilege of the writ of habeas corpus have been s us pended

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


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. –


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).


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.


NO RETURN, NO EXCHANGE POLICY Series of 2013 By:

Victorio Mario A. Dimagiba Undersecretary, Consumer Protection Group


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).


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)


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.


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.


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.


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.


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.


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.


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.


GIFT CHECK POLICY Series of 2015

By:



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.


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


x

No more expiry

For revalidation


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.


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.


Series of 2015 By:


AIR PASSENGER BILL OF RIGHTS Enabling Business, Empowering Consumers

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


WHAT ARE THE MAJOR RIGHTS OF AIR PASSENGERS?


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

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.















Victorio Dimagiba Consumer Act (RA 7394)

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