G.R. No. 119176 - Commissioner of Internal Revenue vs. Lincoln Philippine Life Insurance Co., Inc.

From 2001 until 2007, at least 273 administrative complaints were filed against Aowa by various consumers.
The complaints consistently described the same marketing scheme:

Aowa’s representatives approach target customers, usually in malls, informing them that they have won a gift or giveaway.
The initial gift can only be claimed upon purchase of additional product(s), which are represented as high quality but substantially priced.
Customers are often surrounded or “ganged up” by Aowa’s representatives in stores to pressure them into making purchases.
The full terms, including the need to buy products to claim gifts, are not initially disclosed but revealed when the customer is already in the store outlet.
Representatives sometimes urge customers to use credit cards or withdraw money from ATMs to facilitate purchases, even accompanying them to their homes to get payment.

DTI-NCR filed a Formal Charge against Aowa for violations of Articles 50 and 52 of the Consumer Act of the Philippines, praying for a Cease and Desist Order, fines, and other appropriate reliefs.
Aowa denied all charges, contending that:

A Preventive Measure Order (PMO) was issued by the DTI to stop Aowa’s sales promotions until a Sales Promotion Permit was secured.

Found prima facie evidence against Aowa for violation of the Consumer Act based on the numerous complaints.
Aowa failed to prove amicable settlements or counter the charges.
Aowa did not secure a Sales Promotion Permit from the DTI.
Ordered:

Permanent cessation of Aowa’s business operations nationwide.
Cancellation of all Aowa business name registrations for outlets using the questioned sales scheme.
Withholding of registration of any new business name similar to the one under investigation.
Payment/refund to complainants for purchases made as precondition to claim the promised gifts.
A one-time administrative fine of ₱300,000.00.

Directed DTI provincial and area offices to disseminate copies of the decision for enforcement.

The DTI Appeals Committee affirmed the Adjudication Officer’s decision on August 26, 2008, labeling the marketing schemes fraudulent and deceptive.
Aowa elevated the case to the Court of Appeals (CA) via certiorari under Rule 65.
The CA, on June 23, 2009, affirmed the decisions of DTI, recognizing violations of the Consumer Act and Aowa’s failure to secure required permits.
Aowa’s motion for reconsideration was denied by the CA on September 29, 2009.

The formal charge was based solely on complaints already amicably settled and dismissed.
There was no concrete evidence supporting the charge.
The penalty of permanent business closure and maximum fine was harsh and excessive.
The DTI’s order had no nationwide effect as the complaints pertained only to the National Capital Region (NCR).
Good faith was presumed; sales personnel’s aggressive marketing was not deceit.
Customers had the prerogative to refuse purchases, and terms were fully explained.

Complaints and formal charge were valid and based on prima facie violations under Article 159 of the Consumer Act.
Aowa failed to prove otherwise or comply with due regulatory requirements.
The Preventive Measure Order and imposed sanctions were proper and lawful.

Aowa also sought judicial relief against the PMO from the Regional Trial Court and the Court of Appeals but was denied for jurisdictional and procedural reasons.

Whether the Court of Appeals gravely erred in affirming the DTI’s findings that Aowa violated Articles 50 and 52 of the Consumer Act through its marketing scheme.
Whether the administrative sanctions imposed, including permanent closure and maximum fine, were proper or too harsh.
Whether the DTI’s order could be enforced nationwide when the complaints mostly arose in the NCR.
Whether the numerous consumer complaints, some amicably settled or barred by prescription, could be the basis for a formal charge by the DTI.