RULE 68
Regulatory agency: SEC
- Charged with the supervision of the corporate
sector
- Functions:
a. Regulation and registration of securities
b. Development and regulation of the corporate and
capital market toward good corporate governance
SRC RULE 68
Classifications and Applicability of PFRFrameworks of the
reporting entities:
*must cover two-year comparative periods
1. Large and/or publicly accountable entities
- Total assets = more than 350 million; total liabilities
= more than 250 million
- Required to file Financial Statements (FS) under
Part 1 of SRC Rule 68 using full PFRS/IFRS
- Process of filing their FS for the purpose of issuing
any class of instruments in public market
- Holders of secondary licenses issued by
regulatory agencies
2. Medium-sized entities
- Total assets = more than 100-350 million; total
liabilities = more than 100-250 million
- Not required to file FS under Part 2 of Rule 68
using PFRS/IFRS for SMEs
- Not in the process of filing their FS
- Not holders of secondary licenses issued by
regulatory agencies
3. Small entities
- Total assets and liabilities = between 3-100 million
- Not required to file FS under Part 2 of Rule 68
using PFRS
- Not in the process of filing their FS
- Not holders of secondary licenses issued by
regulatory agencies
4. Micro entities
- Total assets and liabilities = less than 3 million
- Not required to file FS under Part 2 of Rule 68
either PFRS or Income Tax Basis
- Not in the process of filing their FS
- Not holders of secondary licenses issued by
regulatory agencies
INSIDER TRADING (Sec 27.3)
- purchase or sale made by an insider or his relative
within the second degree presumed to be effected
while in possession of material nonpublic
information if transacted after such information
came into existence but prior to the public
dissemination of such information, and lapse of
reasonable time for the market to absorb such
information
27.1. It shall be unlawful for an insider to sell or
buy a security of the issuer, while in possession of
material information with respect to the issuer or
the security that is not generally available to the
public, unless:
(a) The insider proves that the information was not gained
from such relationship;
(b) If the other party selling to or buying from the insider (or
his agent) is identified, the insider proves:
(i) that he disclosed the information to the other
party, or
(ii) that he had reason to believe that the other
party otherwise is
also in possession of the information.
A purchase or sale of a security of the issuer made by
- an insider defined in Section 3.8 of the Code, or
- such insider's spouse or
- relatives by affinity or consanguinity within the
second degree,legitimate or common-law,
- shall be presumed to have been effected while in
possession of material nonpublic information if
transacted after such information came into
existence but prior to dissemination of such
information to the public and the lapse of a
reasonable time for market to absorb such
information; Provided, however, That this
presumption shall be rebutted upon a showing by
the purchaser or seller that he was aware of the
material nonpublic information at the time of the
purchase or sale.
PROHIBITED ACTS in INSIDER TRADING:
1. to communicate material non‐public information
about the issuer or the security to any person who
thereby becomes an insider
2. other than the tender offeror, who is in possession
of material nonpublic information relating to such
tender offer to transact securities covered by the
tender offer
3. the tender offeror, or those acting in his behalf, the
issuer of securities covered by the tender offer,
and any insider, to communicate material
non‐public information relating to the tender offer
which would likely result in violation of prohibition
of the insider from trading
-
INSIDER – A person in possession of corporate information
not generally available to the public
Who may be an insider? I DO-R-G-T TIPPEEE
1. The issuer
2. A director or officers of or a person controlling the
issuer
3. A person whose relationship or former
relationship to the issuer gives him access to
material information about the issuer or the
security that is not generally available to the public
4. A government employee, or director , or officer of
an exchange, clearing agency and/or
self‐regulatory organization who has access to
material information about an issuer or a security
that is not generally available to the public; or
5. Constructive Insider – A person who learns such
information by a communication from any of the
foregoing insiders. (Sec. 3.8)
SRC AMENDMENT TO EXEMPT SECURITIES AND
EXEMPT TRANSACTIONS
Exempt Securities
- Published: 23 April, 2021
- File with UP Law Center: 22 April 2021
(a) Any security issued or guaranteed by the Government of
the Philippines, or by any political subdivision or agency
thereof, or by any person controlled or supervised by, and
acting as an instrumentality of said Government.
(b) maintains diplomatic relations, or by any state,
province or political subdivision thereof on the basis of
reciprocity: Provided, That the Commission may require
compliance with the form and content for disclosures the
Commission may prescribe.
(c) Certificates issued by a receiver or by a trustee in
bankruptcy duly approved by the proper adjudicatory
body.
(d) Any security or its derivatives the sale or transfer of
which, by law, is under the supervision and regulation of
the Office of the Insurance Commission, Housing and Land
Use Rule Regulatory Board, or the Bureau of Internal
Revenue.
(e) Any security issued by a bank except its own shares
of stock.

MODULE 1
Securities Regulation Code (RA 8799)
- enacted to protect the public from
unscrupulous
- promoters
- Blue Sky Law
- August 8, 2000
- For the protection of the investing public
- Development of the capital markets
- Securities Regulation, Act 2581
Blue chip is stock in a corporation with a national reputation
for quality, reliability, and the ability to operate profitably in
good times and bad
- Securities act, BP 178, 1982
Financial Markets:
1. Capital market
a. equity capital market
b. debt capital market
2. Non capital market
SEC, Regulatory Trust of the SRC
- The body administering the SRC is the SEC.
1. Registration of securities
2. Reportorial requirements
3. Regulation of securities professionals
4. Regulation of the exchanges, PSEX, stock
exchange and PDEX, dealing exchange
SECURITIES – are share, participation or interests in a
corporation or
in a commercial enterprise or profit-making venture and
evidenced by
a certificate, contract, instrument, whether written or
electronic in
character . It includes:
a. shares of stocks, bonds, debentures, notes,
evidences of indebtedness, asset-backed
securities;
b. investment contracts, certificates of interest or
participation in a profit sharing agreement,
certificates of deposit for a future subscription;
c. fractional undivided interests in oil, gas or other
mineral rights;
d. derivatives like option and warrants
e. certificates of assignments, certificates of
participation, trust certificates, voting trust
certificates or similar instruments;
f. proprietary or non-proprietary membership
certificates in corporations; and other instruments
as may in the future be determined by the
Commission.
g. other instruments as may in the future be
determined by the Commission.
Includes:
1. Equity instruments – Shares of stock, certificates
of interest or participation in a profit sharing
agreement, certificates of deposit for future
subscription, proprietary or non‐proprietary
membership certificates in corporations
2. Investments instruments – Investment contracts,
fractional undivided interests in oil, gas, or other
mineral rights
Investment contracts
- An investment contract is defined in the Amended
Implementing Rules and Regulations of R.A. No.
8799 as a “contract, transaction or scheme
(collectively ‘contract’) whereby a person invests
his money in a common enterprise and is led to
expect profits primarily from the efforts of
others.”[Howey Test, it requires a transaction,
contract, or scheme whereby a person
(1) makes an investment of money,
(2) in a common enterprise,
(3) with the expectation of profits,
(4) to be derived solely from the efforts of others.[22]
3. Debt instruments – bonds, debentures, notes,
evidence of indebtedness, asset‐backed
securities
4. Derivatives – options( call and put) and warrants
5. Trust instruments – Certificates of assignments,
certificates of participation, trust certificates, voting
trust certificates or similar instruments;
6. Future – Other instruments as may in the future be
7. determined by the SEC.
ISSUER – is the originator, maker, obligor, or creator of the
security.
BROKER – is a person engaged in the business of buying
and
selling securities for the account of others.
DEALER – means any person who buys and sells securities
for his/her own account in the ordinary course of business.
CLEARING AGENCY – is any person who acts as
intermediary
in making deliveries upon payment to affect settlement in
securities transactions.
EXCHANGE – is an organized marketplace or facility that
brings
together buyers and sellers and executes trades of securities
and/or commodities.
PRE-NEED PLANS – are contracts which provide for the
performance of future services or the payment of future
monetary considerations at the time of actual need, for
which plan holders pay in cash or installment at stated
prices,
with or without interest or insurance coverage and includes
life, pension, education, interment, and other plans which
the Commission may from time to time approve.
PROMOTER – is a person who, acting alone or with others,
takes initiative in founding and organizing the business or
enterprise of the issuer and receives consideration therefore.
PROSPECTUS – is the document made by or on behalf of
an
issuer, underwriter or dealer to sell or offer securities for
sale to the public through a registration statement filed
with the Commission.
REGISTRATION STATEMENT – is the application for the
registration of securities required to be filed with the
Commission.
UNCERTIFICATED SECURITY – is a security evidenced by
electronic or similar records.
UNDERWRITER – is a person who guarantees on a firm
commitment and/or declared best effort basis the distribution
and sale of securities of any kind by another company.
INVESTMENT CONTRACT –-a contract, transaction or
scheme (collectively “contract”) whereby a person invests his
money in a common enterprise and is led to expect profits
primarily from the efforts of others.
DERIVATIVES – financial investment, including options and
warrants whose value depends on the interest in or
performance of an underlying security, but which does not
require any investment of principal in the underlying security.
OPTIONS – are contracts that give the buyer the right, but
not the obligation, to buy or sell an underlying security at a
predetermined price, called the exercise or strike price, on or
before a predetermined date, called the expiry date, which
can only be extended in accordance with Exchange rules.
CALL OPTIONS – are rights to buy.
PUT OPTIONS – are rights to sell.
WARRANTS – are rights to subscribe or purchase new
shares or existing shares in a company, on or before a
predetermined date, called the expiry date, which can only
be extended in accordance with Exchange rules. Warrants
generally have a longer exercise period than options.
COMMODITY FUTURE CONTRACT – means a contract
providing for the making or taking delivery at a prescribed
time in the future of a specific quantity and quality of a
commodity or the cash value thereof, which is customarily
offset prior to the delivery date, and includes standardized
contracts having the indicia of commodities futures,
commodity options and commodity leverage, or margin
contracts.
COMMODITY – means any goods, articles, services, rights
and interests, including any group or index of any of the
foregoing, in which commodity interests contracts are
presently or in the future dealt in.
PUT – is a transferable option or offer to deliver a given
number of shares of stock at a stated price at any given time
during a stated period.
CALL – is a transferable option to buy a specified number of
shares at a stated price.
STRADDLE – is a combination of put and call.
INSIDER means
(a) the issuer;
(b) a director or officer (or person performing
similar functions) of, or a person controlling the
issuer;
(c) a person whose relationship or former
relationship to the issuer gives or gave him access t o
material information about the issuer or the security that is
not generally available to the public;
(d) a government employee, or director, or officer
of an exchange, clearing agency and/or self-regulatory
organization who has access to material information about
an issuer or a security that is not generally available to the
public; or
(e) a person who learns such information by a
communication from any of the foregoing insiders.
MATERIAL NON-PUBLIC INFORMATION – An information
is “material non-public” if:
(a) it has not been generally disclosed to the public
and would likely affect the market price of the security after
being disseminated to the public and the lapse of a
reasonable time for the market to absorb the information; or
(b ) would b e considered by a reasonable person
important under the circumstances in determining his course
of action whether to buy, sell or hold a security.
What is registration with regard to securities?
- It is the disclosing to the SEC of all material and
relevant information about the issuer of the
security.
Why is registration of securities mandated?
- Its purpose is to inform the public for them to be
able to make good business judgment. It is the
filing of a registration statement.
What is the rule with regard to registration of securities?
GR: No security can be sold or offered for sale or
distribution within the Philippines unless accompanied by a
registration statement filed with and approved by the SEC.
XPN:
1. Exempt securities
2. Securities sold in exempt transactions.
What are the effects of non‐registration?
- The issuer would be penalized. Issuers of
securities not registered
shall be subject to criminal, civil and administrative charges.
SECURITIES MARKET PROFESSIONALS
Who are the securities market professionals as
classified by the
SRC?
- They are the broker, dealer, associated person of
a broker or dealer, and a salesman.
BROKER – A person engaged in the business of buying and
selling
securities for the account of others.
DEALER – Any person who buys and sells securities for
his/her own
account in the ordinary course of business.
Who are the securities market professionals as
classified by the SRC?
- They are the broker, dealer, associated person of
a broker or dealer, and a salesman.
ASSOCIATED PERSON OF A BROKER OR DEALER – He
is an employee of a broker or dealer who directly exercises
control of supervisory authority but does not include a
salesman, or an agent, or a person, whose functions are
solely clerical or ministerial.
SALESMAN – He is a natural person, employed as such, or
as an agent, by a dealer, issuer or broker to buy and sell
securities; but for the purpose of registration, shall not
include any employee of an issuer whose compensation is
not determined directly or indirectly on sales of securities of
the issuer.
Are security market professionals required to be
registered?
- Yes. No broker shall sell any securities unless he
is registered with the SEC (Sec. 19, Revised
Securities Act) (Nicolas vs. CA, et al., G.R. No.
12285, Mar. 27, 1998)
MANIPULATION OF SECURITY PRICES
1. Transactions intended to create active trading:
a. Wash Sale – engaging in transaction in which there is no
genuine change in the actual ownership of a security
b. Matched Sale – There is a change of ownership in the
securities by entering
an order for the purchase/sale of security with the knowledge
that a simultaneous order of substantially the same size,
time, and price, for the sale or purchase of any such security,
has or will be entered by or for the same or different parties.
c. Similar transactions where there is no change of beneficial
ownership.
2. Engaging in transactions which induce price to
increase or decrease:
a. Marking the close – buying and selling securities at the
close of the market to alter the closing price of the security.
b. Painting the tape – engaging in a series of transactions in
securities that are reported publicly to give the impression of
activity or price movement in a security.
c. Squeezing the float – refers to taking advantage of a
shortage of securities in the market by controlling the
demand side and exploiting market congestion during such
shortages in a way to create artificial prices.
d. Hype and dump – engaging in buying activity at
increasingly higher prices and then selling securities in the
market at the higher prices.
e. Boiler room operations – the use of high pressure sale
tactics to promote purchase and sale of securities
f. Daisy chain – it refers to a series of purchase and sales of
the same issue at successively higher prices by the same
group of people with the purpose of manipulating prices are
drawing unsuspecting investors into the market leaving them
defrauded of their money and securities
What is Short Selling?
- It is the selling of shares which the seller does not
actually own or possess and therefore he cannot,
himself, supply the delivery.
PROTECTION OF INVESTORS
1. Tender Offer Rule
2. Rules on proxy solicitation
3. Disclosure rule
TENDER OFFER RULE
- protect the interest of minority stockholders of
a target company against any scheme that
dilutes the share value of the investments
- Publicly declared intention to buy securities of
public companies given to all stockholders by:
1. Filing with the SEC a declaration to that effect, and
paying the filing fee.
2. Furnishing the issuer a statement containing the
information required of the issuers as SEC may prescribe,
including subsequent or additional materials.
3. Publishing all requests or invitations for tender, or
materials making a tender offer or requesting or inviting
letters of such security
A publicly announced intention by a person acting alone or in
concert with others to acquire equity securities of a public
company
Note: It is also defined as an offer by the acquiring person to
stockholders of a public company for them to tender their
shares on the terms specified in the offer. acquire equity
securities of a public company
WHEN Tender Offer is Mandatory:
- the Implementing rules and regulations of the SRC
provides:
1. Any person or group of persons acting in concert, who
intends to acquire fifteen percent (15 %) of equity
securities in a public company in one or more
transactions within a period of twelve (12) months, shall
file a declaration to that effect with the Commission..
Note: Tender offer applies to both direct and indirect
acquisition.
2. Any person or group of persons acting in concert, who
intends to acquire thirty five percent (35%) of the
outstanding voting shares or such outstanding voting
shares that are sufficient to gain control of the board in
a public company in one or more transactions within a
period of twelve (12) months, shall disclose such intention
and contemporaneously make a tender offer for the
percentage sought to all holders of such securities within the
said period.
Note: Tender offer applies to both direct and indirect
acquisition.
3. The person intends to acquire equity shares of a public
company that would result in ownership of more than
50% of the total outstanding equity securities of a public
company.
Note: Tender offer applies to both direct and indirect
acquisition.
- If any acquisition that would result in ownership
of over fifty percent (50%) of the total
outstanding equity securities of a public
company, the acquirer shall be required to make
a tender offer under this Rule for all the
outstanding equity securities to all remaining
stockholders of the said company at a price
supported by a fairness opinion provided by an
independent financial advisor or equivalent third
party. The acquirer in such
a tender offer shall be required to accept all securities
tendered. (19.2.5. revised IRR)
- The acquirer shall be required to make a tender
offer for all the outstanding equity securities to all
remaining SH of the said company at a price
supported by a fairness opinion provided by an
independent financial advisor or equivalent third
party.
- The acquirer in such a tender offer shall be
required to accept any and all securities thus
tendered.
Unless the acquisition of equity securities is intended to
circumvent
or defeat the objectives of the tender offer rules, the
mandatory
tender offer requirement shall not apply to the following:
1. Any purchase of securities from the unissued
capital stock; Provided, the acquisition will not result to a fifty
percent (50%) or more ownership of securities by the
purchaser or such percentage that is sufficient to gain control
of the board
2. The purchase of newly issued shares from
unissued capital stock
3. In connection with foreclosure proceedings
involving a duly constituted pledge or security arrangement
where the acquisition is made by the debtor or creditor.
Unless the acquisition of equity securities is intended to
circumvent
or defeat the objectives of the tender offer rules, the
mandatory
tender offer requirement shall not apply to the following:
4. Purchases in connection with privatization
undertaken by the government of the Philippines
5. Purchases in connection with corporate
rehabilitation under court supervision.
6. Purchases in the open market at the prevailing
market price; and
7. Merger or consolidation.
What are the unlawful and prohibited acts
relating to tender offers?
It shall be unlawful for any person to:
1. Make any untrue statement of a material fact
or omit to state any material fact necessary in order to
make statements made not misleading,
2. Engage in any fraudulent, deceptive, or
manipulative acts or practices in connection with any
tender offer or request or invitation for tenders, or any
solicitation of security holders in opposition to or in favor of
any such offer, request, or invitation

PUBLIC COMPANY
What may be considered as a public company?
1. Those listed on an exchange; or
2. Those with assets in excess of 50 M pesos
and having 200 shareholders owning at least 100 shares
each.
(3.1.16, Revised IRR, SRC)
Other Rules on MTO
1. Solicitation, recommendation, acceptance and rejection
related to the securities tendered shall be governed by the
SEC and PSE rules.
2. Securities tendered may be withdrawn by the offeror
within 60 days from date of original offer.
3. Securities shall be distributed pro rata in case there are
more persons bound or willing to take up the offered
securities.
4. In case there is an increase in the consideration for
securities tendered before expiration of the offer, the other
holders of the securities who were already paid up shall also
be paid with the additional consideration thereof.
RULES ON PROXY SOLICITATION
1. Proxies must be issued and proxy solicitation must be
made in accordance with rules and regulations to be issued
by the Commission;
2. Proxies must be in writing, signed by the stockholder or
his duly authorized representative and filed before the
scheduled meeting with the corporate secretary.
3. Unless otherwise provided in the proxy, it shall be valid
only for the meeting for which it is intended. No proxy shall
be valid and effective for a period longer than five (5) years
at one time.
4. No broker or dealer shall give any proxy, consent or
authorization, in respect of any security carried for the
account of a customer, to a person other than the customer,
without the express written authorization of such customer.
5. A broker or dealer who holds or acquires the proxy for at
least
ten per centum (10%) or such percentage as the
Commission
may prescribe of the outstanding share of the issuer, shall
submit
a report identifying the beneficial owner within ten (10) days
after such acquisition, for its own account or customer, to the
issuer of the security, to the Exchange where the security is
traded and to the Commission. (Sec. 20)
What are the requisites for valid proxy
solicitation?
1. It must be in writing
2. It must be signed by the stockholder or his duly authorized
representative
3. It must be filed before the scheduled meeting with the
corporate secretary
(Sec. 20)
Note: The proxy shall be valid only for the meeting for which
it is intended. No proxy shall be valid and effective for a
period longer than 5 years at one time.
DISCLOSURE RULE
- Issuer;
- Within 135 days, annual report (fiscal)
- Other periodical reports for interim fiscal
periods
a. His personal circumstances
b. The nature of such beneficial ownership
c. If the purpose was to acquire control of the
business, any plans the recipient may have
affecting a major change in the business
d. The number of shares beneficially owned, and the
number of shares for which there is a right to
acquire granted to such person or his associates
e. Information as to any agreement with a third
person regarding the securities (Sec. 18)
MODULE 2–3
RA 7394 Consumer Act
- April 13, 1992
- Provides protection to consumers against hazards
to
health and safety and deceptive, unfair and
unconscionable sales acts and practices
- Implementing agencies:
a. Department of Trade and Industry (DTI);
b. Department of Agriculture (DA);
c. Department of Health (DOH);
d. Department of Education (DepEd)
Art. 2: Declaration
- Protect against hazards to health & safety
- “ “ deceptive, unfair, and unconscionable sales
acts & practices
- Provision of info and education to facilitate sound
choice and proper exercise of rights by the
consumer
- “ “ adequate rights and means of redress
- Involvement of consumer representatives
Art. 4: Definition of terms
1. “Banned hazardous substance” - (1) any toy or
other articles intended for use by children, which
are hazardous per se, or which bear or contain
substances harmful to human beings; (2) any
hazardous substance intended or packaged in a
form suitable for use in the household, which the
implementing agency by regulation
2. "Chain distribution plans" or "pyramid sales
schemes" - sales devices whereby a person, upon
condition that he makes an investment
3. "Corrosive" - any substance which is in contact
with living tissue will cause destruction of tissue by
chemical action.
4. "Cosmetics" - (1) articles intended to be rubbed,
poured, sprinkled or sprayed on, introduced into or
otherwise applied to the human body or any part
thereof for cleansing, beautifying, promoting
attractiveness, or altering the appearance; (2)
article intended for use as a component of any
such article except that such term shall not include
soap
5. "Counterfeit product" - any consumer product
which, or the container or labeling of which,
without authorization, bears the trademark, trade
name, or other identifying mark, imprint, or device,
or any likeness thereof
6. "Expiry or expiration date" - the date stated on the
label of food, drug, cosmetic, device or hazardous
substance after which they are not expected to
retain their claimed safety, efficacy and quality
Art. 11 Amendment and Revocation
How commenced?
- By petition or by the DTI (motu propio)
DTI: notify manufacturer/distributor/seller
Seller: notice to public of defect; notice to distributor/retailer
- Remedies:
1. Conformity
2. Replace product
3. Refund purchase price
4. Pay consumer for reasonable damages
Food, Drugs, Cosmetics, and Devices
Art. 21 Implementing Agency (DOH)
- Bureau of Food and Drugs is under DOH
Art. 23 Adulterated Food
a. bears or contains any poisonous or deleterious
substance
b. any valuable constituent has been, in whole or in
part, omitted or abstracted
c. bears or contains a color additive which is unsafe
d. confectionary, and it bears or contains any alcohol
or non-nutritive article or substance
e. oleomargarine, margarine or butter and any of the
raw materials used
f. has not been prepared in accordance with current
acceptable manufacturing practice
Art. 24 Regulation of Unprocessed Food
- provincial, municipal and city governments shall
regulate the preparation and sale of meat, fresh
fruits, poultry, milk, fish, vegetables and other
foodstuff for public consumption, pursuant to the
Local Government Code
Art. 29 Adulterated Drugs and Devices
- drug or device shall be deemed to be adulterate:
a. contains in whole or in part of any filthy, putrid, or
decomposed substance
b. purports to be or is represented as a drug
c. not subject to the provisions
d. drug or device and any substance has been mixed
or packed
e. methods used in, or the facilities or controls used
for its manufacture
Art. 32 Dangerous Drugs
- importation, distribution, manufacture, production,
compounding, prescription, dispensing and sale of,
and other lawful acts in connection with,
dangerous drugs
Art. 33 Banned or Restricted Drugs
- banned or severely restricted drugs for health and
safety reasons
COSMETICS
Art. 35 Adulterated Cosmetics
- appropriate price tag, label or marking indicating
DECEPTIVE SALES ACTS AND PRACTICES
(ARTICLES 50 AND 51, RA 7394):
- Inducing a consumer to enter into sales, lease or
avail of services;
- Concealment;
- False Representation;
- Fraudulent Manipulation;
- Generally, when an establishment lies to you or
hides a material fact to entice you to buy, he has
committed a deceptive sales act.
PRODUCT SERVICE AND WARRANTY (CHAPTER III, RA
7394)
- contract whether express or implied between the
buyer and the seller of a consumer product or
owner of a service firm concerning the rights and
obligations of both parties;
- Designation of Warranty
- Repair, replacement or refund
- Duration of Warranty
a. Stipulation of seller and consumer on
the period;
b. 60 days to 1 year after/following the sale
of a new consumer products
- Application of Warranty
LABELLING AND FAIR PACKAGING (CHAPTER IV,
RA 7394)
- Provides for the minimum labelling requirements of
all consumer products domestically sold, whether
manufactured locally or imported;
● MINIMUM LABELLING REQUIREMENTS
(CHAPTER IV, ART. 77):
a. Registered brand, trademark, business
name
b. Address of manufacturer, importer,
repacker
c. General/active ingredients
d. Net quantity of contents
e. Country of manufacture (if imported)
f. Flammable or inflammable;
g. Direction for use;
h. Warning of toxicity;
i. Wattage, voltage or amperes;
j. Process of manufacture (if necessary)
Price Tag (Under Arts. 81 to 83 of RA 7394)
- All consumer products sold in retail shall bear an
the price of the article;
- Consumer products shall not be sold at a price
higher than that stated in the price tag
● PRICE ACT RA 7581
- May 27, 1992
- 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
● REPUBLIC ACT NO. 10623
- AN ACT AMENDING CERTAIN PROVISIONS OF
REPUBLIC ACT NO. 7581, ENTITLED "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" AND FOR OTHER PURPOSES
PRICE TAG REQUIREMENT
- Price tag - “any device, written, printed, affixed or
attached to a consumer product or displayed in a
consumer repair or service.”
Article 82. Manner of Placing Price Tags
- Price tags, labels or markings must be written
clearly, indicating the price of the consumer
product per unit in pesos and centavos.
Lemon Law (RA 10642)
- An Act Strengthening Consumer Protection in
the Purchase of Brand New Motor Vehicles;
- Implementing agency: DTI;
- Covers brand new motor vehicles that are to be
in nonconformity with the standards or
specifications of the vehicle’s manufacturer or
distributor;
- Provides remedies through Mediation,
Arbitration, Adjudication;
- REPAIR, REPLACE, REFUND
● Disclosure (of Resale) Requirement
under Lemon Law (RA 10642)
a. The motor vehicle was returned to the
manufacturer, distributor, authorized dealer or
retailer;
b. The nature of the nonconformity which caused
the return; and
c. The condition of the motor vehicle at the time of
the transfer to the manufacturer, distributor,
authorized dealer or retailer.
Note: The responsibility of the manufacturer, distributor,
authorized dealer or retailer under this section shall cease
upon the sale of the affected motor vehicle to the first
purchaser.
Section 6. Notice of Availment of Lemon Law Rights
- Consumer shall, in writing, notify the
manufacturer, distributor, authorized dealer or
retailer of the unresolved complaint, and the
consumer’s intention to invoke his or her rights
under this Act within the Lemon Law rights period.
- The warranty booklet issued by the
manufacturer, distributor, authorized dealer or
retailer
Section 7. Availment of Lemon Law Rights
- a final attempt to address the complaint of the
consumer to his or her satisfaction.
- duty of the manufacturer, distributor, authorized
dealer or retailer to attend to the complaints of the
consumer.
- in case the nonconformity issue remains
unresolved, the consumer may file a complaint
before the DTI
- however, That if the vehicle is not returned for
repair, within thirty (30) calendar days from the
date of notice of release of the motor vehicle to the
consumer, the repair is deemed successful
- if nonconformity issue still exists or persists
after the thirty (30)-day period but still within the
Lemon Law rights period, the consumer may be
allowed to avail of the same remedies
- compensate for the non-usage of the vehicle
while under repair and during the period of
availment, consumer shall be provided a
reasonable daily transportation allowance, an
amount which covers the transportation of the
consumer from his or her residence to his or her
regular workplace or destination and vice versa;
equivalent to air-conditioned taxi fare, as
evidenced by official receipt, or in such amount to
be agreed upon by the parties, or a service
vehicle at the option of the manufacturer,
distributor, authorized dealer or retailer.
No Shortchanging Act of 2016 (RA 10909)
- “An Act Prohibiting Business Establishments from
Giving Insufficient or No Change to Consumers
and Providing Penalties Therefor”
- Change: the excess in the payment given by a
consumer for goods and services purchased or
received from a business establishment;
- Gross sale: the total invoice value of sales,
before deducting for customer discount,
allowances and returns;
- Insufficient change: a change that is less than
what is due the consumers
- Price-tag: any device written, printed, affixed or
attached to a good, or displayed in a consumer
retail or service establishment for the purpose of
indicating the retail price per unit or services;
- Shortchange: the act of giving insufficient or no
change to a consumer who purchased a product
or service.
● REGULATED ACTS
- Section 4. shall be the duty of the business
establishment to give the exact change to the
consumer without waiting for the consumer to ask
for the same
a. In General – unlawful for any business
establishment to shortchange a
consumer
b. Other Prohibitions – unlawful for any
business establishment which sells
goods or provides services to give the
change in any form other than the
present currency
c. Price-tags – shall likewise be the duty of
business
establishments to use price tags,
including the taxes applicable
Toy and Game Safety Labelling Act of 2013 (RA 10620)
- An Act Providing for Toy and Game Safety
Labelling, Appropriating Funds Therefor;
- Implementing Agencies: DOH and DTI;
- Provides for the labelling requirements of toys
and games;
- Treatment on Misbranded or Banned Hazardous
Substance.
Joint DTI-DA-DOE Administrative Order N0.17-01 Series
of 2017
- AMENDMENTS TO JOINT DTI-DA
ADMINISTRATIVE ORDER (JAO) NO. 02,
SERIES OF 2008;
- Title – "Granting of Discounts to Persons with
Disability on the Purchase of Basic Necessities
and Prime Commodities Pursuant to R.A. No.
9442, otherwise known as the Magna Carta for
Disabled Persons
Joint DTI-DA-DOE Administrative Order N0.17-02 Series
of 2017
- AMENDMENTS TO JOINT DTI-DA
ADMINISTRATIVE
ORDER (JAO) NO. 10- 02, SERIES OF 2010;
- Title – “Grant of Special Discounts to Senior
Citizens on the Purchase of Basic Necessities
and Prime Commodities“; and Joint DTI-DA
ADMINISTRATIVE ORDER (JAO) NO. 12 -02,
SERIES OF 2012 entitled "Granting Special
Discounts to Senior Citizens on Purchase of
Basic Necessities and Prime Commodities“.
8 Basic Rights of Consumers:
1. To basic needs
2. To safety
3. To information
4. To choose
5. To representation
6. To redress
7. To consumer education
8. To a healthy environment
Consumer Complaint:
1. If no settlement – elevation of complaint
2. Docket and assignment of the case
3. Notice of adjudication
4. Submission for position paper
5. Submission for decision – Twenty (20) working
days to Decide from date Case was submitted for
Decision
6. Aggrieved party may file an Appeal (15 days from
receipt of
Decision) – Memorandum & Notice
7. If no Appeal, Decision becomes final and
executory – file Motion & Issuance of Writ for
Execution
DTI Mediation:
1. Receipt of Complaint;
2. Evaluation (within the day of receipt of Complaint);
3. Determine if DTI has Jurisdiction;
a. If No, Endorse
b. If Yes, Recording
4. Scheduling and Sending of Notices;
5. Mediation Proceeding;
a. Non-appearance of Respondent –
elevate
b. Non-appearance of Complainant – close
c. Appearance of Both Complainant and
Respondent – if settled: closed, if not:
elevate
Note: The entire proceeding is within Ten (10) working days

Jurisdictions:
I. Telephone, radios, tv – National
Telecommunications Commission (NTC)
II. Livestock feed, vaccines – Bureau of Animal
Industry (BAI)
III. Fertilizer and Pesticide – Department of
Agriculture (DA)
IV. Rice – National Food Authority (NFA)
V. Processed and Unprocessed meat – National
Meat Inspection Service (NMIS)
VI. Fruits and Vegetables – Bureau of Plant and
Industry (BPI)
VII. Banks, pawn shops – Bangko Sentral ng
Pilipinas (BSP)
VIII. Prices and Quality standard of coconut-based
products – Philippine Coconut Authority (PCA)
IX. Sugar quality and price – Sugar Regulatory
Administration (SRA)
X. Quality/price of the liquefied petroleum gas (LPG)
– Oil Industry Management Bureau (OIMB)
XI. Electricity – Energy Power Industry Management
Bureau (EPIMB) – Energy Regulatory
Commission (ERC)
XII. Forest and Forest-based products – Department
of Environment and Natural Resources (DENR)
XIII. Life and non-life insurance claim – Insurance
Commission (IC)
XIV. Manufactured products – Department of Trade
and Industry (DTI)
XV. Mutual funds (investment) – Securities and
Exchange Commission (SEC)
XVI. Claim for insured deposit – Philippine Deposit
Insurance Corp. (PDIC)
XVII. Fish and fishery products – Bureau of Fisheries
and Aquatic
Resources (BFAR)
XVIII. Hospitals and doctor’s services – Department of
Health (DOH), Center for Health Development
Metro Manila, and Food and Drug
XIX. Food in restaurants, eateries and sidewalk
vendors – City Health Office of the concerned
Local Government Units (LGUs);
DTI Consumer Protection Group
DTI Mission
DTI is the main economic catalyst that enables innovative,
competitive, job generating, inclusive business, and
empowers consumers Consumer Protection Group (CPG)
- heighten vigilance, engage professional orgs,
partner with private business org to promote
ethical practices
WARRANTIES
- shall not apply to professional services
- Service firms shall guarantee workmanship and
replacement of spare parts for a period not less
than ninety (90) days
- Implemented by the DTI
- A statement or representation made by the seller
of goods, contemporaneously and as a part of the
contract of sale, having reference to the character,
quality, or title of the goods, and by which he
promises or undertakes to insure that certain facts
are or shall be as he then represents.
KINDS:
1. Express warranty (Art. 1546) – any affirmation
of fact or any promise by the seller relating to the
thing if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the
same and if the buyer purchased the thing relying
thereon.
“The law allows considerable latitude to seller’s statements,
or dealer’s talk; and experience teaches that it is exceedingly
risky to accept it at its face value.”
- Ramos v. CA, 279 SCRA 118 (1997)
DESIGNATION OF WARRANTIES:
- shall clearly and conspicuously
designate
A. Full Warranty – if the written warranty
meets the minimum requirements set
- Without charge in case of a defect, malfunction or
failure
- permit the consumer to elect whether to ask for a
refund or replacement
- Interest + reimburse the expense of the contract,
B. Limited Warranty – does not meet the
minimum requirements
2. IMPLIED WARRANTIES (ART. 1547, NCC) -That
which the law derives by implication or inference
from the nature of the transaction or the relative
situation or circumstances of the parties,
irrespective of any intention of the seller to create
it.
“Seller must be summoned in the suit for eviction at the
instance of the buyer (Art. 1558), and be made a
co-defendant (Art. 1559); or made a third-party defendant.”
- Escaler v. CA, 138 SCRA 1 (1985); Canizares
Tiana v. Torrejos, 21 Phil. 127 (1911); J.M. Tuazon
v. CA, 94 SCRA 413 (1979)
3. WARRANTY AGAINST NON-APPARENT
SERVITUDES
4. WARRANTY AGAINST HIDDEN DEFECTS
WARRANTY AGAINST EVICTION
- Seller guarantees that he has the right to sell the
thing sold and to transfer ownership, to the
buyer who shall not be disturbed in his legal
and peaceful possession
WARRANTY AGAINST HIDDEN DEFECTS
- vendor is responsible to the vendee
- render it unfit for the use
- diminish its fitness for such use
1. Implied warranty against hidden fault or
defects
a. If Visible or patent – Not liable;
b. If Not visible – Liable
Remedy in case of hidden defects
I. Accion redhibitoria (Withdrawal or rescission) +
damages
II. Accion quanti minoris or estimatoria (Proportionate
reduction in the price) + Damages
III. Action prescribed after 6 months from the delivery
of the thing sold (1571)
LOSS OF THE THING WITH HIDDEN DEFECT
A. Loss due to the hidden fault
1. Vendor was aware – Return the price + refund the
expenses of the contract + DAMAGES, PED
2. Vendor was not aware – Return the price +
PIE
B. Loss due to fortuitous event or fault of the vendee
1. Price paid less value of the thing at loss, ;
2. if acted in bad faith liable for DAMAGES