Enabling Business, Empowering Consumers

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

Series of 2015
By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection Group
This document is circulated for the participants of the 8th ECOP MGM and should NOT be used
for commercial presentation purposes partially or in its entirety without EXPRESSED permission
from the Author Usec. Victorio Mario Dimagiba or HRManagement & Business Solutions Inc.
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LEGAL BASIS OF RA 7394

THE STATE SHALL PROTECT CONSUMERS

FROM TRADE MALPRACTICES AND FROM
SUBSTANDARD OR HAZARDOUS PRODUCTS.
- Art. XVI, Gen. Provision, Sec. 9 1987 Constitution
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UNDERSTANDING RA 7394

Took effect on July 15, 1992

BASIC POLICIES
Protect the interest of the consumer and promote
his general welfare
Establish standards of conduct for business and
industry
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Understandingcontinuationpage 2

OBJECTIVES
Protection against hazards to
health and safety;
Protection against deceptive, unfair
and unconscionable sales acts and
practices;
Provision of information and
education for sound choice by
consumers;
Provision of adequate rights and
means of redress; and
Representation of Consumers in
social and economic policy
formulation.
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IMPLEMENTING AGENCIES
Department of Trade and Industry (DTI)
Consumer Product Quality and Safety
Deceptive, Unfair and Unconscionable
Sales Acts and Practices
Weights and Measures (Metrication)
Consumer Products and Service
Warranties
Labeling and Packaging
Price Tag
Liability for Products and Services
Regulation of Service and Repair Shops
Advertising and Sales Promotion
Consumer Credit Transactions
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Implementingcontinuationpage 2

Department of Agriculture (DA)

Quality and safety, and labeling
and packaging of agricultural
products
Department of Health (DOH)
Labeling and packaging,
advertising, and sales promotion
of food, drugs, cosmetics and
devices, and hazardous
substances
Department of Education (DepEd)
Consumer education and
information in the curriculum
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Implementingcontinuationpage 2

Local Government Units (LGUs)

Weights and Measures
Regulation of preparation and
sale of meat, fresh fruits,
poultry, milk, fish, vegetables
and other food products for
consumption
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WHEN IS THE CONSUMER ACT

APPLICABLE?
If the complainant is a natural
person
If the subject of the violation
is a consumer product or
service
If the nature of the complaint
is regarding any of the
aforementioned concerns
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WHAT ARE CONSUMER

PRODUCTS AND SERVICES?
goods, service and credits, debts
or obligations
primarily for personal, family,
household, or agricultural
purpose
shall include, but not limited to
food, drugs, cosmetics, and
devices
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PERIOD FOR FILING CONSUMER

COMPLAINTS
Within 2 years from the time the consumer transaction was
consummated or the deceptive or unfair and unconscionable act
or practice was committed,, and in case of hidden defects, from
discovery thereof.

WHERE CAN A CONSUMER COMPLAINT

BE FILED
The administrative complaint shall be filed in the duplicate with the
Provincial Office of the Department having jurisdiction over the
subject of the complaint in areas where there are no Provincial
Offices, the complaint shall be filed in the Regional Office.
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Where can a consumer complaint be filed

In cases where the complainant and respondent are

situated in different provinces, the complainant has the
option to choose the place where to file the complaint.

In National Capital Region (NCR) the complaints shall be

filed with the following offices:
For the Department of Trade and Industry - DTI-FTEB
For the Department of Health - FDA
For the Department of Agriculture - DA
For the Securities and Exchange Commission - SEC
For the Bangko Sentral ng Pilipinas - BSP

The civil/criminal action shall be filed with the

appropriate regular courts (Municipal/Regional Trial Courts).
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ADVANTAGES OF FILING COMPLAINT BEFORE

THE IMPLEMENTING AGENCIES (ADMINISTRATIVE
PROCEEDINGS)

Mediation/Arbitration is more economical and

time-saving

Complainant need not undergo the rigors and

expense of a court case
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THE REMEDIES AVAILABLE TO

CONSUMERS

For Administrative Proceedings:

replacement or repair of product or services
refund of payment made
restitution or rescission of contract
reimbursement to complainant of amount spent in
pursuing the complaint
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Remedies available
to the consumer

For civil/criminal action

civil action
award of damages
replacement or repair of product or services
refund of payment made
restitution or rescission of contract
reimbursement to complainant of amount spent in pursuing the
complaint

criminal action-defendant, if found guilty by the court, can

be sentenced to imprisonment or payment of fine or
both, at the discretion of the court.
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Regulating Anti-Competitive
Practices in Trade
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THE PRICE ACT (R.A. 7581)

An Act providing protection to consumers by
stabilizing the prices of basic necessities and
prime commodities and by prescribing measures
against undue price increases during emergency
situations and like occasions.

Signed into Law: 27 May 1992

Effectivity Date : 07 June 1992
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Price Actpage 2

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
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Price Actpage 3

THE PRICE ACT (R.A. 7581)

TO IMPLEMENT THE BASIC POLICY:

Promote productivity

Develop an improved and efficient transport &

distribution system

Institute appropriate penalties for price

manipulators
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Price Actpage 4

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
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Price Actpage 5

THE PRICE ACT (R.A. 7581)

Implementing Rules and Regulations (IRR)
(DTI, DA, DOH, DENR Joint Administrative Order No. 1
Series of 1992)
Signed : 15 February 1993
Effectivity : 20 March 1993
Implementing Agencies (IAs)
Dept. of Trade and Industry (DTI)
Dept. of Agriculture (DA)
Dept. of Health (DOH)
Dept. of Environmental and Natural Resources (DENR)
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The Price Act

(Amended by RA 10623)
Basic Necessities
Goods vital to the needs of consumers for their
sustenance and existence in times of state of calamity,
disaster, emergency, rebellion, war, martial law, or when
the privilege of the writ of habeas corpus have been
suspended

Prime Commodities
Goods not considered as basic necessities but are
essential to consumers in times of any of the cases
provided under Section 7
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Implementing Agencies (IAs)

IA Basic Necessities Prime Commodities
DTI Bread; canned fish and other marine Flour; processed and canned pork;
products; potable water in bottles and processed and canned beef and
containers; process milk; locally poultry meat; vinegar, patis, soy
manufactured instant noodles; coffee, sauce; toilet soap; paper, school
salt, laundry soap; detergent; candles supplies; cement, clinker, GI sheets;
hollow blocks; construction nails;
batteries, electrical supplies, light
bulbs; steel wires

DA Rice; corn; root crops; fresh, dried fish
and other marine products; fresh eggs;
fresh pork, beef and poultry meat; fresh
milk; fresh vegetables; fresh fruits;
sugar; cooking oil
Dried pork; dried beef and poultry
meat; fresh dairy products not falling
under basic necessities; onions;
garlic; fertilizer, pesticides,
herbicides; poultry, livestock and
fishery feeds; veterinary products

IA Basic Necessities
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
DA Rice; corn; root crops; fresh, dried fish
and other marine products; fresh eggs;
fresh pork, beef and poultry meat;
fresh milk; fresh vegetables; fresh
fruits; sugar; cooking oil
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Prime Commodities
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
Dried pork; dried beef and poultry
meat; fresh dairy products not falling
under basic necessities; onions; garlic;
fertilizer, pesticides, herbicides;
poultry, livestock and fishery feeds;
veterinary products
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IA Basic Necessities Prime Commodities

DOH Drugs and medicines that are
included in the current edition of
the Philippine National Drug
Formulary (PNDF) Essential Drug
List (EDL)
All other drugs and medicines that
are not included in the current
edition of the Philippine National
Drug Formulary (PNDF) Essential
Drug List (EDL)

DENR Firewood; charcoal Nipa shingles; sawali; plywood;

plyboard

DOE Household liquefied petroleum gas

(LPG); kerosene
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Functions of the Implementing Agencies

May issue Suggested Retail Price (SRP) whenever necessary
- SRP is set by manufacturers. DTI evaluates the reasonableness
of any change/increase in the SRP based on the changes in the
prices of raw materials and other production costs.
- SRP also works to ensure free and fair competition among
brand owners and of supermarket and grocery owners.

May determine, recommend and enforce price ceiling/ control

whenever necessary

May require producers, manufacturers, distributors and retailers of

basic necessities and prime commodities to submit production and
inventory reports

Inclusion or exclusion of a particular class or type of commodity upon

petition of concerned parties and after conducting public hearing and
with approval of the President

Creation of Monitoring Task Force

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MONITORING SYSTEM
Conduct regular monitoring in order to:
develop database on prices
identify and investigate causes of market and price
irregularities
provide basis for establishing SRPs and ceiling prices
determine price trends
Each IA shall monitor at least monthly. Frequency may be
increased as the need arises
Monitoring reports shall contain price analyses prevailing price
vs. prevailing price 3 months ago; vs. a month ago; vs. a year
ago, etc.
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ISSUANCE OF NOTICE OF VIOLATION

Notice of Violation (NOV) is being issued to owners of

business establishments selling basic necessities and
prime commodities above the SRPs.

These establishments are directed to comply and adjust

their SRPs and submit a written explanation within
forty-eight (48) hours upon receipt of the NOV
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TYPES OF PRICE CONTROL

Whenever the President declares an area under a state of calamity,
disaster, emergency, rebellion, war, martial law, or when the privilege of
the writ of habeas corpus have been suspended

Automatic Price Control

Prices of basic necessities are automatically frozen at
their prevailing prices or placed under price control
Unless sooner lifted by the president, automatic price
control on basic necessities shall remain effective for the
duration of the condition that brought it about, but not
more than 60 days.

Mandated Price Ceiling

Whenever the prevailing prices have risen to
unreasonable levels, MPC may be imposed by the
President upon recommendation of implementing agency
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ILLEGAL ACTS OF PRICE MANIPULATION

Hoarding undue accumulation of any basic necessity or prime

commodity beyond his/her normal inventory levels or the
unreasonable limitation or refusal to sell stocks or the unjustified
taking out of any basic necessity or prime commodity from the
channels of production, trade, commerce and industry

Profiteering sale of any basic necessity or prime commodity at

a price grossly in excess of its true worth

Cartel any combination of agreement between 2 or more

persons engaged in the production, manufacture, processing,
storage, supply; distribution, marketing, sale or disposition of
any basic necessity or prime commodity designed to artificially
and unreasonably increase or manipulate its price.
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PROFITEERING
The Court of Appeals in the decision issued last 12
December 2014 affirmed that Section 5(2) of RA 7581 is
constitutional.

There is profiteering when the price set for a basic

necessity is flagrantly or extremely higher than its correct
value.

Section 10 of the Price Act provides that the Secretary of

the DTI has the authority, from time to time, to issue a
Suggested Retail Price (SRP).
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PENALTY FOR ACTS OF ILLEGAL PRICE

MANIPULATION

Imprisonment for a period not less than five

(5) years nor more than fifteen (15) years and
shall be imposed a fine of not less than
P5,000 nor more than P2 million.
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NO RETURN, NO
EXCHANGE POLICY

Series of 2013
By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection
Group
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NO RETURN, NO EXCHANGE
POLICY
The words " No Return, No
Exchange, or words to such effect
shall not be written into the
contract of sale or receipt in a
sales transaction, in any document
evidencing such sale or anywhere
in a store establishment. (Sec. 2,
Rule VI, Chapter 4, Title III of the
Implementing Rules and
Regulations, RA 7394).
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WHY IS THIS POLICY PROHIBITED?

It is deceptive
It creates a misconception on
the part of consumers that
they do not have the right to:
a) Return shoddy or defective
goods; or
b) Demand for remedies in
case of defective or
imperfect service.
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WHEN AM I ENTITLED TO REFUND,

REPLACEMENT OR REPAIR?
Under the law, you are entitled either
refund, replacement or refund if
something you bought:
Is faulty or defective and you were
not aware of it;
Does not do the job you were led
to believe it would do;
Does not match a sample you
were shown; or
Was not as described on the box
or in an advertisement.
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Q. WHY IS THE PRESENCE OF A NO

RETURN, NO EXCHANGE NOTICE
CONSIDERED DECEPTIVE?

A. Such statement is considered

deceptive because consumers may
return or exchange the goods or avail
of other remedies in case of hidden
faults or defects, or any charge not
known to the buyer. By provision of
law, sellers are obliged to honor their
implied warranties and grant
corresponding remedies to consumers.
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Q. CAN BUSINESS ESTABLISHMENTS STILL ISSUE OFFICIAL

RECEIPTS WITH THE NO RETURN, NO EXCHANGE?

A. Business establishments with unused Official Receipts should

erase or blot out the words No Return, No Exchange before
issuing such receipts and henceforth, such words should no
longer be printed in their receipts or anywhere in their
business establishments.

Q. IF AN ITEM BOUGHT FROM STORE Y TURNS OUT TO BE

MORE EXPENSIVE THAN A SIMILAR ITEM IN STORE X, CAN
THE CUSTOMER RETURN THE ITEM AND ASK FOR A REFUND?
A. No, while consumers have the right to choose and make a
canvass of prices, once a sale is consummated and the
product has no defect, one cannot return the goods nor ask
for refund.
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Q. CAN A STORE EXERCISE ONLY A POLICY OF EXCHANGE

BUT NOT REFUND?

A. Consumers are entitled to either an exchange or

refund, as long as there is defect in the quality of
goods or imperfection in the service.

Q. IF THE DEFECT IS DUE TO MISHANDLING ON THE

PART OF THE BUYER, CAN HE STILL RETURN THE ITEM
AND DEMAND AN EXCHANGE OR REFUND?

A. No, the prohibition covers only hidden defects, shoddy

goods or imperfect service.
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Q. IF AFTER BUYING A CERTAIN ITEM , A CUSTOMER

CHANGES HIS MIND AND WANTS TO RETURN SAID ITEM,
CAN HE INVOKE THE PROHIBITION ON NO RETURN, NO
EXCHANGE?
A. No, the prohibition is not an excuse for the consumers to
return the goods because of change of mind.

Q. IS THERE A TIME LIMIT WITHIN WHICH A BUYER MAY

RETURN DEFECTIVE PRODUCTS?
A. There is no hard- and- fast rule on the period within which
a customer may return the products he purchased. A rule
of reason should, however, be observed, taking into
consideration the nature of the item purchased and the
expressed/implied warranties mandated by law, i.e., the
Consumer Act and the New Civil Code of the Philippines.
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Q. CAN A BUYER RETURN DEFECTIVE GOODS WITHOUT

OFFICIAL RECEIPT?
A. The official receipt is the best proof of purchase. However, a
buyer may still demand replacement or refund if he can
prove that a defective item was bought from a certain store.

Q. CAN A STORE PRINT IN THEIR INVOICES THE STATEMENT

EXCHANGE OF MERCHANDISE WILL NOT BE ACCEPTED
WITHOUT A VALID RECEIPT OR OTHER EVIDENCE OF
PURCHASE?
A. NO, because there may be goods exclusively manufactured
or sold by a company and there is no need to prove
purchased of the item.
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Q. CAN THE STATEMENT EXCHANGE WILL NOT BE ACCEPTED

ON ITEM IN ANY WAY USED, DAMAGED OR ALTERED BE
PRINTED ON INVOICES?
A. 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.

Q. IS THE CONDITION SALE ITEMS ARE NON-REFUNDABLE

ALLOWED?
A. This has the same effect as the No Return, No Exchange
provision. However, in the case of sales promotions like
water or fire-damaged sale, the statement may be allowed,
provided the defects are apparent and visible to the consumer
and that proper disclosure in the form of tags or notices are
made at the time of purchase.
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GIFT CHECK POLICY

Series of 2015

By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection Group
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DEFINITION

Gift Check/Certificate/Card means an instrument issued by

a supplier to an individual/partnership or a juridical entity
for monetary consideration evidencing a promise by the
issuer that consumer goods or services will be exchange in
favor of the bearer upon presentation of said GCs to the
value/credit/specific goods/service or event shown in the
instrument.
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DAO 10-04, SERIES OF 2010

Guidelines on the Issuance, Use and Redemption of Gift
Checks, Gift Certificates or Gift Cards
Commencing July 1, 2012, issuance of gift
checks/certificates/cards with expiry date will be
prohibited. All gift checks/certificates with no expiry dates
shall be redeemable until used up by the bearer.
Gift checks/certificates/cards bearing an expiry beyond
June 30, 2012 shall be subject to revalidation or
replacement by suppliers.
Effectivity Date: 15 July 2010
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x No more expiry

For revalidation
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EXEMPTIONS TO DAO 10-04,

SERIES OF 2010
Gift checks / certificates /
cards that are distributed
by suppliers or retailers
under an award, loyalty
or promotional program
are not covered by this
Order.
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WHEN CAN RETAILERS NOT HONOR GIFT

CHECK/CERTIFICATE/CARD?
Retailers or suppliers may refuse to honor gift
checks/certificates/cards under the following
circumstances:
When the gift check/certificate/card
is lost due to no fault of the supplier;
and
When the gift check/certificate/card
is defaced due to no fault of the
supplier and such damage prevents
the latter from identifying the
security and authenticity features.
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Series of 2015
By:
Victorio Mario A. Dimagiba
Undersecretary, Consumer Protection Group
 AIR PASSENGER BILL OF RIGHTS
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UPON PURCAHSED OF TICKET AND UPON ARRIVAL AT THE AIRPORT

Joint Department of Transportation and Communications
(DOTC) Department of Trade and Industry (DTI) Administrative
Order No. 01, Series of 2012

DOTC-DTI JAO No. 01, S. 2012

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WHAT ARE THE MAJOR RIGHTS

OF AIR PASSENGERS?
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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 Disclosure shall Disclosures must be
shall, before include, among verbally explained
purchasing any others, documents by the air carrier or
ticket, be entitled required to be its agent in English
to the full, fair and presented upon and Filipino, or in a
clear disclosure of check-in, provisions language that is
all terms and on check-in easily understood
conditions of the deadlines, refund by the purchaser.
contract of and rebooking
carriage. policies, and
procedures and
responsibility for
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