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Republic Act No. 7394 The Consumer Act of the Philippines Title I. General Provisions Title II.

Consumer Product Quality and Safety Title III. Protection against Deceptive, Unfair and Unconscionable Sales Acts or Practices Title IV. Consumer Credit Transaction Title V. The National Consumer Affairs Council

RA 7394 otherwise known as the Consumer Act of the Philippines is the legal basis for consumer protection in the country. The law embodies the state policy on the protection of consumers and establishes standards of conduct for business and industry in the country. The Act aims to protect the interest of the consumer, promote his general welfare and establish standards of conduct for business and industry by adopting the following measures: Protection against hazards to health and safety; Protection against deceptive, unfair and unconscionable acts and practices; Provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer; Provision of adequate rights and means of redress; and Involvement of consumer representatives in the formulation of social and economic policies. What government agencies implement the Consumer Act? What are their areas of concern? DEPARTMENT OF TRADE AND INDUSTRY (DTI) Consumer Product Quality & Safety Deceptive, unfair and unconscionable sales act and practices Weights and measures (metrication) Consumer Products and Service Warranties

Price Tag Labeling and Packaging Liability for Products and Services Services and repair shops Advertising and sales promotion Department of Agriculture (DA) Agricultural Products Quality and safety Labeling and packaging Department of Education, Culture and Sports (DECS) Consumer education and information Department of Health (DOH) Food, drugs, cosmetics and devices and hazardous substance Quality and safety Labeling and Packaging Advertising and Sales Promotion Price Tag Bangko Sentral ng Pilipinas (BSP) Consumer Credit Transactions extended by banks and other financial intermediaries Securities & Exchange Commission (SEC) Credit facilities extended to consumer by financing companies

When is the Consumer Act applicable? If the COMPLAINT is a natural person; If the SUBJECT of the violation is a consumer product or service; and

If the NATURE of the complaint is regarding any of the aforementioned concerns

What is a consumer product or service? Consumer product or service means goods, service credits, debts or obligations which are primarily for personal, family, household or agricultural purpose, which shall include, but not limited to food, drugs, cosmetics and devices.

What can the consumer do if he has a complaint? 1. Identify the problem and what you believe would be a fair settlement.

Do you want your money back? (Refund) Would you want the product repaired? (Repair) Will exchange do? (Replace) 2. Gather documentation which will support the complaint and help the company solve your problem. a. b. c. d. e. Sales receipt Repair orders Warranties Cancelled checks Contract

3. Return to the establishment where you made the purchase Contact the person who sold you the item or performed the service. Calmly and accurately explain the problem and the action you would like taken. If that person is not helpful, ask for the supervisor or manager and repeat your complaint. A large percentage of consumer problems are resolved at this level. 4. Write a formal letter - If you are not satisfied with the response, write a formal letter of complaint to the consumer protection agency concerned. State your name and address; the name and the address of the establishment which the complaint is directed, the circumstances regarding the complaint including names, dates, places etc. Enclose supporting documents such as official receipts, deed of sale and the likes. Be

prepared to make an appearance when called, especially during the mediation conference

What is the period for filing consumer complaints? Within two (2) years from the time the consumer transaction was consummated or the deceptive or unfair and unconscionable act or practice was committed. 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 . In case 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 the National Capital Region, the complaint shall be filed in the following offices: For the Department of Trade & Industry, DTI-NCR For the Department of Health, BFAD For the Department of Agriculture, Legal Dept. DA The civil/ criminal action shall be filed with the appropriate regular courts ( Municipal Trial Court / Regional Trial Court)

What remedies are available to the consumers? A. 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 B. For civil / criminal action :

Civil action Award of damages Replacement or repair of product or service Refund of payment made Restitution or rescission of contract Reimbursement to complainant of amount spent in pursuing the complaint Criminal action - defendant, if found quilty by the court be sentenced to imprisonment or payment of the fine or both, at the discretion of the court.

What are the disadvantages of filing the complaint before the Implementing Agencies (Administrative Proceedings) Mediation / arbitration is more economical and timesaving. Complainant need not undergo the rigors and expense of a court case

How are consumer complaints resolved? The implementing Agency where the complaint is filed, after jurisdiction is determined, will call the parties for mediation conference and find ways for amicable settlement. If no amicable settlement is arrived at, the complaint will be scheduled for preliminary conference for the parties to enter into stipulation of facts or arrive at simplification of issues. Formal hearing will be conducted by the Arbitration Officer and decision will be rendered. Decision of the Arbitration Officer is appealable to the Secretary of the concerned Department within 15 days from receipt of the decision Decision of the Department Secretary is appealable within 15 days from receipt of the decision to the Intermediate Appellate Court of the Supreme Court on the following grounds: 1. There is grave abuse of discretion.

2. The decision rendered was in excess of jurisdiction or authority of the Arbitration Officer 3. The decision is not supported by evidence or there is serious error in findings of facts.

What administrative penalties can be imposed upon establishments that are found to have violated any of the laws covered by the consumer act? The issuance of a cease and desist order. Provided however, that such order shall specify the acts that the respondent shall cease and desist from and shall require him to submit a report of compliance therewith within a reasonable time; The acceptance of a voluntary assurance of compliance or discontinuance from the respondent which may include any or all of the following terms and conditions: 1. An assurance to comply with the provisions of this Act and its implementing rules and regulations; 2. An assurance to refrain from engaging in unlawful acts and practices or unethical trade practices subject of the formal investigation; 3. An assurance to comply with the terms and conditions specified in the consumer transaction subject of the complaint; 4. An assurance to recall, replace, repair or refund the money value of defective products distributed in commerce; 5. An assurance to reimburse the compliant out of any money or property in connection with the complaint, if any, and to file a bond to guarantee compliance therewith. 6. Restitution or rescission of the contract without damages;

7. Condemnation and seizure of the consumer product found to be hazardous to health and safety, unless the respondent files a bond and answer any damages or injury that may arise from the continued use of the product; 8. The imposition of administrative fines in such amount as deemed reasonable by the Secretary, which shall in no case be less than Five Hundred Pesos (P500.00) nor more than Three Hundred Thousand Pesos (P300,000.00) depending on the gravity of the offense, and an additional fine or not more than One Thousand Pesos (P1,000.00) for each day of continuing violation.

No Return, No Exchange 1. What is the legal basis of the prohibition on the No Return, No Exchange policy of business establishments? Pursuant to the Implementing Rules and Regulations of R.A. 7394, or the Consumer Act of the Philippines, specifically Title III, Chapter 1, Rule 2, Section 7 of Department Administrative Order (DAO) No. 2, Series of 1993, the words No Return, No Exchange, or words to such effect shall not be written into the contract of sale, receipt of sales transaction, in any documents as evidence of sale, or anywhere in the store or business establishment. 2. What is the rationale for this provision? The prohibition is aimed to correct the misconception of a lot of consumers today that they do not have the right to return shoddy or defective goods or demand for remedies, in case of defective or imperfect service because of the No Return, No Exchange notice in the receipts or anywhere in the business establishments. 3. Why is the presence of a No Return, No Exchange notice considered deceptive? 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 the buyer was not aware of the time of purchase. By provision of law, sellers are obligated to honor their implied warranties and grant corresponding remedies to consumers. 4. Can Business establishments still issue official receipts with the No Return, No Exchange? The Plan has six-month objectives and three-year objectives. 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. 5.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? No. While consumers have the right to choose and make a canvass of prices, once a sale in done and the product has no defect, one cannot return the goods nor ask for a refund

6.Can a store exercise only a policy of exchange but not refund? Consumers are entitled to either an exchange or refund, as long as there is a defect in the quality of goods or imperfection in the service. 7.If the defect is due to mishandling on the part of the buyer, can he/she still return the item and demand and exchange or refund? No. The prohibition covers only hidden defects, shoddy goods or imperfect service. 8.If after buying a certain item, a customer changes his/her mind and wants to return said item. Can he/she invoke the prohibition on No Return, No Exchange? No, the prohibition is not an excuse for the consumer to return the goods because of a change of mind. 9.Is there a time limit within which a buyer may return defective products? 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 express / implied warranties mandated by law, i.e. Consumer Act and the New Civil Code of the Philippines. 10.Can a buyer return defective goods without the official receipt? The Official Receipt is the best proof of purchase. However, he/she may still demand replacement or refund if he/she can prove that a defective item was bought from a certain store. 11.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? No, because there may be goods exclusively manufactured or sold by a company and there is no need to prove purchase of the item. 12.Can a store impose the condition that merchandise can only be exchanged once? No, because merchandise can be exchanged as many times, as long as the consumer chooses the option of replacement. Credit Transactions i.e. Credit Card Loans, Auto Loans, Housing Loans, etc Can a borrower pre-terminate his loan without the bank imposing a penalty fee?

* If the pre-terminated loan is a loan to a consumer (i.e. loan purpose is primarily for personal, family, household, or agricultural purposes), as defined under Republic Act No. 7394 (The Consumer Act of the Philippines), the borrower may prepay in full or in part the unpaid balance of his loan at any time without penalty. This is in accordance with Article 137 of R.A. No. 7394. * If the pre-terminated loan is a non-consumer loan (such as commercial and industrial loans), the bank may impose a penalty fee on the borrower.