QuestionsQuestions (Republic Act No. 7394)
RA 7394 is the “Consumer Act of the Philippines.” Article 2 declares the State’s policy to protect the consumer’s interests and general welfare, establish standards of conduct for business and industry, and aims to: (1) protect against hazards to health and safety; (2) protect against deceptive, unfair and unconscionable sales acts and practices; (3) provide information and education for sound consumer choice and proper exercise of rights; (4) provide adequate rights and means of redress; and (5) involve consumer representatives in social and economic policy formulation.
Article 3 provides that the “best interest of the consumer” shall be considered in the interpretation and implementation of the provisions of the Act, including its implementing rules and regulations.
A consumer is a natural person who is a purchaser, lessee, recipient, or prospective purchaser/lessor/recipient of consumer products, services, or credit.
“Consumer products and services” refers to goods, services and credits/debts/obligations primarily for personal, family, household or agricultural purposes. “Consumer transaction” is broader: it includes sales/leases/assignments/awards/dispositions of consumer products and services (except securities and insurance contracts) and grants of credit for personal/family/household/agricultural purposes, plus solicitations/promotions by a supplier regarding such transaction.
“Consumer credit” is credit extended by a creditor to a consumer for the sale or lease of a consumer product/service where part or all of the price is payable in the future, whether in full or installments. “Consumer loan” is a loan payable in installments where a finance charge is imposed or may be imposed; it includes open-end-credit plan transactions other than a seller credit card.
A “Credit Sale” is a sale of products/services/interest in land to a person on credit where the debt is payable in installments or a finance charge is imposed, and it includes certain lease/bailment arrangements where the compensation for use is substantially equivalent to or exceeds the aggregate value and there is an agreement or option for the buyer to become owner upon full compliance (or for no/nominal consideration).
Article 5 mandates the State to develop and provide safety and quality standards (including tests and codes of practice), assist consumers in evaluating quality and safety, protect the public against unreasonable product risks, undertake research on product-related deaths/illness/injuries, and assure consistency of standardized products.
Enforcement is by: (1) Department of Health (food, drugs, cosmetics, devices and substances); (2) Department of Agriculture (agriculture-related products); and (3) Department of Trade and Industry (other consumer products not specified above).
The concerned department shall establish standards that may cover performance/composition/design/packaging/precautions and safety warnings/instructions, and may adopt existing government standards. If none exist, it forms specialized technical committees with equal representation from government, business and consumer sectors to formulate and propose standards, consulting the private sector and considering international standards recognized by the Philippine Government.
It must specify an effectivity date not exceeding 90 days from promulgation unless later effective date is justified and reasons are published. After effectivity, it is no longer legal to sell or distribute consumer products not complying with the standards/rules.
Stockpiling means manufacturing or importing a product between promulgation and effective date at a rate significantly greater than the base period rate prescribed by regulation. It is regulated to prevent manufacturers from circumventing the purpose of preventing distribution of non-complying products.
It must conduct due notice and hearing and then issue an order for recall, prohibition or seizure from public sale/distribution. If the department in its sound discretion declares the product imminently injurious/unsafe/dangerous, it may order immediate recall/ban/seizure, but the seller/distributor/manufacturer/producer must be afforded a hearing within 48 hours from the order.
The department must direct the manufacturer/distributor/seller to: (1) give notice to the public of the defect/noncompliance and (2) notify each distributor/retailer. It must also direct extension of remedies to injured persons: conformity/repair, replacement with compliant product, refund of purchase price less a reasonable allowance for use, and payment of reasonable damages as determined by the department. The seller cannot charge the consumer for any expense/cost for the remedies availed.
Admission may be refused if the product: (1) fails to comply with applicable quality/safety standard; (2) has been determined injurious/unsafe/dangerous; (3) is substandard; or (4) has a material defect.
It is unlawful to: (1) manufacture for sale/offer for sale/distribute/import consumer products not conforming to applicable standards; (2) do the same for products declared banned consumer products; (3) refuse access to/copying of records or fail/refuse to permit entry/inspection by authorized department officers; (4) fail to comply with orders on notification and recall/repair/replacement/refund of unsafe products; and (5) fail to comply with rules prohibiting stockpiling.
Upon conviction, the offender faces a fine of not less than ₱1,000 and not more than ₱10,000 or imprisonment of not less than 2 months and not more than 1 year, or both (discretion of court). If the offender is an alien, he is deported after service of sentence and payment of fine. If a naturalized citizen, in addition, cancellation of naturalization certificate/registration and immediate deportation after sentence and fine are imposed.