EDUARDO, Ray Bradley B.

CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF I: CONSUMER RIGHTS AND RESPONSIBILITIES

Consumers have the right to basic needs, safety, information, choose products at competitive
prices and quality, redress or warranty, representation, consumer education, and a healthy
environment. They should also ascertain the functions or uses of the products they are purchasing
or opting to purchase. As part of society, consumers must consider how their consumption affects
the citizens of the Philippines. As stakeholders of the environment, consumers must be wary of
the effects of their consumption on nature.

According to Art. XVI, Sec. 9 of the Philippine Constitution, the State shall protect
consumers from trade malpractices and substandard or hazardous practices. To enforce the
protection of such rights, the Legislature passed a law that provides them and defines the
responsibilities of merchants. (1992 Republic Act 7394 or the Consumer Act of the Philippines)
In addition, DTI Policy Advisory No. 22-01 provides in length and substance the eight (8)
consumer rights. With these laws in sight, the Philippine government and its agencies are with
legal bases to ensure their protection. Moreover, these laws limit the government and its agencies
against any act or omission that infringes fundamental consumer rights.

As mentioned, consumers have the right to access necessities and basic needs. These are
essential for longevity, adequacy, sufficiency, shelter, sanitation, and the like. Since they are
inherently significant to our livelihood, the local government shall, by all means, devise a system
in accordance with the law to make them readily available to consumers at an affordable and just
price. The local government shall not favor one industry over the others to prevent unfair
competition and monopoly.

Consumers have the right to safety. The purchase of a product at an affordable price should
come with decent quality as prescribed by law. Such a purchase should not instigate cognitive
dissonance in them or an unwarranted burden on their health and welfare. They should check for
indications that a product carries stickers issued by the government that signifies quality and is
non-hazardous. In connection, consumers shall be protected from environmental hazards or
polluters. However, it must be noted that they have reciprocal obligations to protect the
environment by practicing the 3rs of environmental protection as Reduce, Reuse, and Recycle.

Furthermore, consumers have the right to redress grievances. In case of damage, they are
entitled to demand either repair or a refund. As presented by the DTI, “if the store is unresponsive,
file your complaint to the appropriate agency.” In that way, consumers may be compensated for
misrepresentation, misclassification, or unsatisfactory services.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF II: DECEPTIVE SALES ACT AND PRACTICES UNDER THE

CONSUMER ACT OF THE PHILIPPINES

One of the 8 consumer rights is the right to information. Consumers must be protected from
misinformation, misclassification, dishonesty, unfair competition, and false advertising or
labeling. Under RA 7394, the Philippine government shall not countenance unfair and
unconscionable sales and shall regulate practices relative to weights and measures.

Under the Art. 48 of the said law, the State must promote and encourage fair, honest, and
equitable relations among parties in consumer transactions and protect the consumer against
deceptive, unfair, and unconscionable sales acts or practices. An act shall be deceptive when a
consumer is convinced to purchase a product or hire a service under pretense, misrepresentation,
misclassification, misdeclaration, or concealment. A sales act shall be unfair or unconscionable
when the consumer is induced to purchase a product, enter into a lease agreement, or hire a service
in due disregard of his or her illiteracy, ignorance, mental infirmity, or deficiency.

One of the examples is taking advantage of one’s illiteracy. Manufacturers or producers

intentionally use technical terms and legal or medical jargon to confuse the general public.
Consumers had no opportunity to understand the terms and conditions of their purchase, and they
were not informed of their rights and responsibilities as regards the purchase. This constitutes
unconscionable practice because not only that manufacturers or producers earn profit at the
expense of illiterate consumers, they did so without informing them of their Constitutional rights
and protection against damage or hidden defects.

The acts mentioned are pernicious to consumer interest. They provide no substantial
benefit, are grossly immoral, and injurious to consumer financial stability. That is why the right to
information deals heavily with deception to protect such an interest. These acts are also inimical
to public interest. They create distrust of the market, foster dishonesty among manufacturers,
retailers, producers, and the like, and monopolize the favor of sellers and suppliers.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF III: WARRANTY AND NO RETURN, NO EXCHANGE

Consumer rights are the paramount consideration of products and services. Consumers
must be wary of any damage to any product or service. However, hidden defects may appear,
which can be caused by a lack of safety measures or regulations. This is what our laws want to
avoid, and fortunately for the Philippines, the Civil Code affords such protection to consumers.
Our laws have paved the way for consumers to redress grievances and to give them options should
such damage arise.

As mentioned, the Civil Code provides that “any affirmation of fact or any promise by the
seller relating to the thing is an express warranty if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying
thereon (Art. 1546)”. This is what we call warranty. It may either be expressed or implied. Express
warranty is an assurance by the seller orally or in writing that encourages or induces the buyer to
purchase a good or hire a service. On the other hand, an implied warranty is an inherent assurance
that goes with the sale of goods or services.

There are instances where the law affords protection insofar as implied warranty is
concerned. Under the Civil Code, these are warranty against eviction and warranty against hidden
defects (Art. 1547 and Art. 1561). Warranty against eviction commonly applies to the sale of land
wherein the seller reserves his right to sell a property when the ownership is to pass. Warranty
against hidden defects is a statutory assurance for the buyer that the seller intends to sell a product
free from any hidden faults or defects, and had the vendee been aware of such defects, he would
not have purchased it.

The New Civil Code does not include changing of mind within the definition of a warranty.
The option to return arises when there is proof of damage or hidden fault. If none, the buyer cannot
return what he had purchased regardless of his or her cognitive dissonance. Philippine laws still
consider the rights of the seller against such an act because it is inimical to their financial stability,
especially their commercial interests. However, RA 7394 or the Consumer Act of the Philippines
provides that manufacturers are prohibited from including in their packaging “No return, No
exchange.” It is deceptive because consumers may have the impression of having no right to
redress in case of hidden faults or defects.

As mentioned, the consumers have the right to demand return, repair, or refund only in
cases that they [defects] arise. Changing of mind is not within the definition of a warranty, but it
is still subject to the discretion of the seller whether to allow a return or not.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF IV: LABELLING AND FAIR PACKAGING

In the previous discussions, settled is the rule that no manufacturers or producers shall
incorporate into their labels a “no return, no exchange” policy. The Constitution discourages such
an act because it conveys illegal information that a product cannot, at any circumstances, be
returned. While it is the duty of the State to protect the interests of the consumer, promote his
general welfare and to establish standards of conduct for business and industry, manufacturers or
producers must practice fair and just labeling and packaging so that consumers are informed of the
contents of a product.

Art. 74 of RA 7934 provides that “the State shall enforce compulsory labeling, and fair
packaging to enable the consumer to obtain accurate information as to the nature, quality and
quantity of the contents of consumer products and to facilitate his comparison of the value of such
products.” Labelling is illegal when a manufacturer or producer displayed on his product a label
that does not conform to the standards of RA 7394 particularly the “no exchange, no return” policy
and other hazard warnings or danger precautions. A label is lawful when a product display PS
Marks, ICC Marks, and the mentioned warnings are in a conspicuous area that cannot be detached
or erased easily.

A label must not only refer to the contents of a product but also to what is inside a package.
Under Rule VII, Chapter IV, DAO 2 s. 1993, packaging should be fair, fit to the prescribed
dimensions, functional, able to protect the contents of the package, and clear and concise. When a
price tag is incorporated, it should be conspicuous and display an amount in foreign currency (in
our case Philippine Peso), just and fair.

Failure to comply with the labeling, packaging and pricing rules in RA 7394 shall be dealt
with accordingly. The DTI may impose administrative penalties or a fine of not less than Php 500
but not greater than Php 300,000.00, depending on the severity of the offense. It is the
responsibility of the DOH, DTI, and DOA to oversee these acts which lead to consumption or
purchase so that consumers are protected by their right to information, right to health and safety,
and right to a balanced and healthful ecology.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF V: SALES PROMOTION AND ADVERTISING GUIDELINES

Sales and marketing play vital roles in the financial stability of a company. They form a
significant part of the expenses of a product. In addition, they induce marketability and seek to
engage with consumers as regards a product giving “solutions” for consumers to everyday stress
and problem. Verily, it is through sales and marketing that the manufacturers and/or producers
convey the purpose of their products and the latter’s viability in the market.

Marketers may utilize Mass Media, Radiobroadcasts, Television, Newspapers, and other
forms or mediums for promoting their products or services. They should, however, employ words
that comply with the provisions of the law and conform with public morals and public policy. The
manner in which marketers should conduct themselves shall be conducive to the attention and
interests of the general public. Notwithstanding their conduciveness, marketers shall convey
correct information about their products or services. Marketing, in essence, shall not be deceptive
of facts, especially concerning government regulations and health warrants.

It is noteworthy that marketing and advertising are not statutory rights but privileges granted
by the State. Under the Consumer Act of the Philippines (RA 7934) and the DAO No. 2 1993,
manufacturers or producers must secure a permit before engaging themselves in sales promotion
campaigns. They shall include in their ads the phrase (as an example) “Per DTI-NCR (or Provincial
FTEB Office) Permit No. 1467, Series of 2023.” As many of us are aware, such a phrase is
delivered from our radios expeditiously, and many of us hear this phrase more often than not.

It must also be noted that securing a permit for sales promotion does not apply to any
activity or any business establishment. Sec. 4 of DAO No. 10-02 provides that the rules on
promotional campaigns shall not apply to government agencies or instrumentalities, private
entities having contracts with the government, religious organizations, educational institutions,
social and civic organizations, and other related organizations that are not engaged for profit.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF VI: CHAIN DISTRIBUTION PLANS OR PYRAMID SALES SCHEME

According to Sec. 2 of DAO No. 08-2002, pyramiding is a scheme or device that grants a
person to recruit for-profit one or more additional persons who will be also granted such right, and
these persons are required to invest the grant of such right. Simply put, these people are encouraged
to recruit others so that they will pool their funds with the promise of return or profit since they
are required to invest it. These investors are not mere players of stocks. They are trained and can
only operate upon the issuance of a license by the government. In other words, these investors are
licensed to invest and to know the risks of making an investment.

How can a person check if an investment scheme is a scam? The Howey Test provides that
if an offer involves an investment contract, a promise of profit that the funds are pooled in a
common enterprise, and such a profit is earned by the efforts of others, then it is an investment
contract. Secondly, persons must know if such an investment contract and the agent himself are
registered. Otherwise, it is a scam that all of us should restrain.

We must also know the distinction between pyramiding scams and multi-level marketing.
Obviously, the former is illegal and the latter is legal. What should we look for to ascertain the
legitimacy of an investment scheme? We must take into consideration the following: 1. Are
commissions paid on product sales? 2. Is the sale of a product not a consideration for promotion
or a higher position? 3. Are there no direct relations between the commission paid and the number
of people recruited? 4. Should recruitment halt, will the investors make money? 5. Is the price of
the product required to be sold based on the fair market value? If the answer is yes to these
questions, then the investment scheme or contract is legal. A negative answer to any of which
would mean that the investment scheme is a scam.

Sincerely, our laws do not condone pyramiding scams and other related investment
deceptions. Under the DTI-DAO No. 08-2002, a victim of a pyramiding scam may seek redress
before the Regional or Provincial Offices of the DTI pursuant to DAO No. 4-1997. Under
Memorandum Circular No. 06, also known as Guidelines for Investigation and Enforcement of
Pyramiding Scams, DTI has the power and authority to hear and decide whether an investment is
a scam based on the elements of pyramiding scams. Once verified as a scam, they will issue a
formal charge that initiates an administrative action against the scammer.

Investing money in a pooled fund or entrusting the same to a stranger may seem off-putting.
It takes risks and trust. It may not be in our favor for now, but, sooner or later, we will reap what
we sow. Principally, we can minimize the risk by securing ourselves through our positive and
active acts. We must be wary of scams and ascertain that investment contracts are valid and that
the license of an investment agent is legal.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF VII: RULES ON MEDIATION AND ADJUDICATION

Mediation is the process by which the parties are heard to amicably settle their dispute or
issue without the strict procedure of regular courts. Mediation is mandatory in all consumer
complaints and is a condition precedent for filing a complaint. Adjudication, on the other hand, is
the process by which the parties are required to present their corresponding evidence for their cause
and to settle their dispute in accordance with the rules on adjudication of the Consumer Act of the
Philippines. The DTI has to hear and try cases in relation to cases under the Consumer Act of the
Philippines. The DTI would still afford assistance to consumers should the case not fall within its
jurisdiction.

As regards mediation, consumers will file a query or complaint before the DTI, and it is at
the discretion of the Mediation Officer whether the case is subject to mediation. Once verified as
a case for mediation, the Mediation Officer will issue a Notice of Mediation within three (3)
working days. The Mediation Officer will issue a Certificate to File Action (CFA) in case the
Notice is not served. In case mediation is proven futile, it will be sent for adjudication or the party
may file a complaint at the regular courts provided that there is CFA. Mediation is terminated
when the agreement is ordered to be executed, issuance of a Certificate to File Action, or
Withdrawal of the Complaint.

As regards adjudication, consumer complaint is submitted for evaluation and enforcement

of right. Upon the receipt of the Certificate to File Action, the party complainant must submit a
formal complaint that contains allegations of violations of the Consumer Act of the Philippines
arising from a consumer transaction. Both the complainant and adverse party are required to submit
their position papers on their respective claims or defenses. Failure to submit position paper will
result to an ex parte proceeding, and either party has waived his or her right to file the same. Should
either parties be aggrieved, post judgment remedies are available for them such as motion for
reconsideration, memorandum of appeal, or notice of appeal. Similar to ordinary civil cases, failure
to file an appeal within the 15-day reglementary period will make the decision final and executory.

Both mediation and adjudication are alternative dispute resolutions. The strict application
of rules of court is not applied since summary proceedings and other alternative dispute resolutions
aim for a speedy disposition of cases and inexpensive trial to attain the ends of justice and equity.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF VIII: PRICE ACT OF THE PHILIPPINES

Basic necessities satisfy our daily needs for sustenance, maintenance, and welfare. They
cannot be stricken off our market or limited where producers place unconscionable prices on these
goods for their own benefit. They cannot be subject of investment because they are commodities
made available by nature and fortified by human biology, chemistry, or other means of lawful and
healthful intervention. Having such in mind, basic necessities and prime commodities must be
readily available to the general public without impediment. Basic necessities and prime
commodities seem similar in nature. But, for clarity, let it be known that the former are goods
considered vital for consumer’s sustenance and existence such as bread, salt, rice, corn, egg, meat,
water, and so one, while the latter are goods that are not necessities but essential to consumers
such as paper, cement, onions, garlics, toiletries, light bulbs, electricity, and the like.

Assuredly, the State regulates and protects basic necessities and prime commodities. Under
RA 7581 or the Price Act of the Philippines, it is the duty of the State to protect consumers by
stabilizing the price and prescribing measures against undue price increases during state of
emergencies or situations where basic necessities and commodities are needed the most. The
Implementing Agencies are as follows: the DTI, DA, DOH, and DENR. They shall issue
Suggested Retail Prices, require manufacturers or producers to furnish an inventory, monitor the
production of basic necessities and prime commodities, and recommend price ceiling when
necessary. How do these agencies control prices? The law provides that “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, prices for basic necessities are
automatically placed under price control” or also known as Price Freeze. In addition, if the price
unconscionably increases, then they may recommend to the President a Mandated Price Ceiling.

The law also mentioned illegal acts of price manipulation such as hoarding, profiteering,
and cartel. Hoarding is committed when manufacturers or producers gather, collect, or accumulate
basic necessities and prime commodities more than their inventory refusing to sell to consumers
and the general public. Profiteering is when manufacturers or producers impose price on basic
necessities and prime commodities grossly excessive. Cartel is when competitors of the market for
basic necessities and prime commodities agree on an excessive price which lessens the competition
among them.

These are the concepts, acts, and agencies that the Price Act of the Philippines elucidates.
Failure to observe the rules and regulations of the law will be meted with the appropriate penalty
such as permanent closure of the business enterprise, confiscation, and revocation of license to
enter into a business.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF IX: SUGGESTED RETAIL PRICE ON BASIC NECESSITIES AND

PRIME COMMODITIES (BNPC)

Necessities must be readily available to the general public at all times. As mentioned, they
are necessary for sustenance and longevity. Fundamental is the rule that the people shall have equal
access to these goods. That is why the Price Act of the Philippines or RA 7581, as amended by
RA 10623, regulates and enforces equal pricing as basis for consumption. Moreover, the law
encourages economic stability and feasibility for consumers while discouraging manufacturers or
producers from imposing unconscionable prices. It ensures that BNPCs can be purchased at
reasonable prices “without denying legitimate business with fair return of investment.”

Suggested Retail Price or SRP (for brevity) is the reasonable price for all basic necessities
and prime commodities or BNPC for brevity, as well. The DTI enforces the SRP but it is set by
the manufacturers. They submit supporting documents before DTI can impose another SRP,
provided that the basis is correct, fair, and aligned with the economy. Once the price is proven, the
DTI will set the SRP by publishing it to the retailers. The retailers, on the other hand, may also
inquire to the DTI how the price or SRP came about. After providing the necessary information or
if no inquiry was submitted, retailers are required to display the SPR in conspicuous places within
the store or establishment.

How does SRP change? What are the factors affecting the same? One of the factors is the
change in the price of major raw materials such as coffee, coal, gas, sugar, water, wheat, coal, milk
powers, and the like. Not only that, mass importation affects the SRP in the Philippines because
the price imposed by another country, including the ordinary and necessary expenses for BNPC’s
importation, holds as the basis for the price. In addition, economic factors such as foreign exchange
rates, taxes, demand and supply, and geopolitical issues affect the SRP. These are the factors that
the manufacturers present to the DTI for further evaluation and change of the SRP. It may be seen
that the Price Act is liberally construed in favor of the consumers, but the law still affords
protection for manufacturers and producers without undue influence.

The stakeholders of consumer products shall take part in securing the stability of prices for
BNPC. It is important that manufacturers and producers submit a lawful ground or cause for
suggesting a retail price; that the retailers must abide with the price enforced by the DTI and make
sure that consumers are aware of the same; and that the consumers must do everything in their
personal capacity to inform other consumers of the price, especially to prevent others from
hoarding BNPCs. Equal opportunity for all and healthy competition for the market.
EDUARDO, Ray Bradley B.
CLEP 2
Atty. Galahad Pe Benito

SUMMARY OF X: RA 10962 GIFT CHECK ACT

What is a gift check? Does it hold monetary value? Can it be exchanged as an alternative
for currency? Under RA 10962 or the Gift Check Act of the Philippines, a gift check is a certificate
or card issued to a person or entity for monetary consideration. Gift checks are issued to a person
for his or her loyalty to an establishment, for winning an award, or when he or she is selected for
promotional programs. As mentioned, a gift check holds monetary value in the amount specified
in the paper or card. It can be exchanged for a product offered by an establishment or another,
depending on the terms and conditions therein. It is also considered as an alternative for currency
because it holds monetary value, but only within the extent of the terms and conditions of the gift
check. Most establishments do not allow cash withdrawal upon presentment of gift checks because
even though they hold monetary value, they cannot be used as a medium for other cash
transactions.

Can establishments deny usage of gift checks? Can they dishonor them? When is a gift
check considered revoked or waived? Generally, business enterprises or establishments shall honor
or recognize gift checks for their full value. With this, gift checks must be honored at all times
without expiration. Gift checks may utilize the partial amount specified therein until the entirety
is satisfied. Most importantly, check holders cannot be compelled to consume the entirety of the
amount. However, as an exception, establishments may dishonor gift checks if the check was
physically lost by the holder, when the check is mutilated or defaced by the holder, and when the
check is not authenticated or legitimate. Principally, a gift check cannot be considered revoked or
waived unless holders lost it or mutilated it. Holders cannot be held in default if they failed to
consume the check within the specified amount of time because the law prohibits establishments
from imposing an expiry date upon gift checks. They cannot charge the holders for changing or
upgrading the gift checks. Moreover, they cannot refuse to validate the check and charge holders
for validation.

Most establishments fail to consider that this law exists to the detriment of the consumers.
But little did they know that the law imposes fines and penalties of not less than Php 500,000.00
or more than Php 1,000,000.00. Failure to comply with the regulations of the Gift Check Act would
possibly result to cancellation of right to issue gift checks and be meted with the corresponding
fine and penalty as the case may be.