THE CONSUMER ACT OF THE PHILIPPINES

Case Overview and Summary

Summary of Republic Act No. 7394 (The Consumer Act of the Philippines)

Declaration of Basic Policy (Article 2)
- Protect consumer interests, promote general welfare, establish standards for business/industry
- Implement measures to achieve:
    - Protection against hazards to health and safety
    - Protection against deceptive, unfair and unconscionable sales acts/practices
    - Provision of information and education to facilitate sound choice and exercise of rights
    - Provision of adequate rights and means of redress
    - Involvement of consumer representatives in policy formulation

Consumer Product Quality and Safety (Articles 5-19)
- Establish standards and quality measures for consumer products
- Adopt measures to ensure safe supply of products
- Promulgate and adopt consumer product quality/safety standards
- Publish standards in newspapers for at least 1 month
- Prohibit sale of non-compliant products after effective date
- Recall, prohibit or seize injurious, unsafe or dangerous products
- Notify manufacturer/distributor to remedy defects or provide refund/replacement
- Regulate new consumer products and require publication
- Certification of conformity to standards required for product distribution
- Refuse admission of imported non-compliant products
- Penalties for violations: Fine of ₱1,000-₱10,000 or imprisonment up to 1 year

Food, Drugs, Cosmetics and Devices (Articles 20-39)
- Establish standards and adopt measures for safe supply
- Promulgate rules on definitions and standards
- Provisions on adulterated food, drugs, devices and cosmetics
- Regulation of unprocessed food by local governments
- Tolerances for poisonous ingredients in food
- Regulation of food additives and new drugs
- Licensing and registration requirements for drugs/devices
- Regulation of dangerous drugs by Dangerous Drugs Board
- Ban or restrict drugs banned/restricted in country of origin
- Certification requirements for certain drugs
- Provisions on adulterated and mislabeled cosmetics
- Factory inspection and issuance of provisional permits
- Publicity and publication of information
- Administrative fines of ₱1,000-₱5,000 for violations

Hazardous Substances (Articles 42-47)
- Adopt measures to protect consumers from hazardous substances
- Promulgate rules declaring hazardous substances and exemptions
- Regulate imported hazardous substances and allow relabeling
- Prohibitions on mislabeled and banned hazardous substances
- Seizure and condemnation of mislabeled hazardous substances
- Penalties: Fine of ₱1,000 or imprisonment up to 5 years

Deceptive, Unfair and Unconscionable Sales Acts/Practices (Articles 48-60)
- Prohibit deceptive acts/practices by sellers/suppliers
- Declare deceptive sales acts/practices by regulation
- Prohibit unfair or unconscionable sales acts/practices
- Ban chain distribution plans or pyramid sales schemes
- Regulate home solicitation sales and require permits
- Prohibit certain representations in home solicitation sales
- Regulate referral selling plans
- Penalties: Fine of ₱500-₱10,000 or imprisonment up to 1 year

Weights and Measures (Articles 61-65)
- Enforce provisions on weights and measures by local treasurers
- Require sealing/testing of instruments every 6 months
- Mandate use of metric system for products/transactions
- Prohibit fraudulent practices related to weights and measures
- Penalties: Fines of ₱200-₱1,000 or imprisonment up to 1 year

Consumer Product/Service Warranties (Articles 66-73)
- Provisions on express and implied warranties
- Requirements for warranty terms and disclosures
- Warranties in supply of services
- Guarantee of workmanship by service firms for 90 days
- Prohibitions related to warranties (e.g. refusal to honor)
- Penalties: Fines of ₱500-₱50,000 or imprisonment up to 5 years

Labeling and Fair Packaging (Articles 74-95)
- Enforce compulsory labeling and fair packaging
- Minimum labeling requirements for consumer products
- Authority to provide additional labeling/packaging requirements
- Special packaging for child protection
- Price tag requirements for retail products
- Additional labeling requirements for food
- Provisions on mislabeled food, drugs, cosmetics and hazardous substances
- Labeling requirements for cigarettes
- Penalties: Fines of ₱200-₱20,000 or imprisonment up to 2 years

Liability for Products/Services (Articles 96-107)
- Liability of manufacturers/importers for defective products
- Liability of tradesman/seller in certain cases
- Liability for defective services
- Liability for product/service imperfections
- Repair service obligations
- Prohibition on contractual stipulations limiting liability
- Penalties: Fine up to ₱5,000 or imprisonment up to 1 year

Advertising and Sales Promotion (Articles 108-124)
- Prohibit false, deceptive or misleading advertisements
- Regulate price comparisons in advertising
- Special requirements for food/drug/cosmetic/device advertising
- Regulate credit advertising and open-end credit plan advertising
- Require permits for sales promotion campaigns
- Regulate conduct of sales promotions
- Injunctive relief for violations
- Penalties: Fines of ₱500-₱5,000 or imprisonment up to 6 months

Repair and Service Firms (Articles 125-130)
- Accreditation of repair and service firms/personnel
- Minimum requirements for accreditation
- Issuance of certificate of accreditation
- Suspension, revocation or cancellation of accreditation

Consumer Credit Transactions (Articles 131-147)
- Simplify laws governing credit transactions
- Assure full disclosure of true cost of credit
- Determination of finance charges and simple annual rate
- Provisions on delinquency charges, deferral charges, refinancing
- Right to prepay and rebate on prepayment
- Disclosure requirements for credit sales, open-end plans, loans
- Form and timing of disclosures
- Periodic statement of charges
- Exempted transactions
- Requirements for installment sales instruments
- Penalties for non-disclosure: ₱1,000 or twice finance charge

National Consumer Affairs Council (Articles 148-158)
- Establishment and composition of Council
- Powers and functions of Council
- Consumer education in schools
- Concerned departments to exercise existing powers/duties
- Consumer participation in rule development
- Advisory services for consumers
- Formulation of consumer programs by departments

Consumer Complaints (Articles 159-166)
- Procedures for filing and investigating consumer complaints
- Appointment of consumer arbitration officers
- Qualifications and jurisdiction of arbitration officers
- Investigation procedure and hearings
- Sanctions: Cease and desist, assurance of compliance, restitution, fines
- Appeal process for arbitration officer orders

Transitory and Final Provisions (Articles 167-173)
- Relation to other consumer rights and remedies
- Application to actions accruing prior to the Act
- Prescription period of 2 years for claims
- Repealing/amending inconsistent laws
- Appropriations for initial operating expenses
- Separability clause
- Effectivity 30 days after publication in Official Gazette