Consumer Act of the Philippines (R.A. 7394) PDF

Regulatory Framework for Business Transactions ATTY. JOHNSON A.H. ONG, CPA, MBA RFBT Consumer Act of the Philippines SUMMER 2021...

Regulatory Framework for Business Transactions ATTY. JOHNSON A.H. ONG, CPA, MBA RFBT Consumer Act of the Philippines SUMMER 2021 STUDENT HANDOUTS Consumer Act of the Philippines (R.A. 7394) Effectivity of Rules Each consumer product standard or safety rule shall specify the Consumer Product Quality and Safety date such rule is to take effect, which shall not exceed ninety (90) days from the date promulgated unless the concerned Policy of the State department finds, for good cause shown, that a later effective It shall be the duty of the State: date is in the public interest and publishes its reasons for such a. to develop and provide safety and quality standards for finding. After which, it shall no longer be legal to, or cause to, consumer products, including performance or use-oriented sell or distribute the consumer product not complying with the standards, codes of practice and methods of tests; standards or rules. b. to assist the consumer in evaluating the quality, including The department may, by regulation, prohibit a manufacturer safety, performance and comparative utility of consumer from stockpiling consumer products so as to prevent such products; manufacturer from circumventing the purposes of this c. to protect the public against unreasonable risks of injury paragraph. (Sec 9) associated with consumer products; d. to undertake research on quality improvement of products Injurious, Dangerous and Unsafe Products and investigation into causes and prevention of product Whenever the departments find, by their own initiative or by related deaths, illness and injuries; petition of a consumer, that a consumer product is found to be e. to assure the public of the consistency of standardized injurious, unsafe or dangerous, it shall, after due notice and products. (Sec 5) hearing, make the appropriate order for its recall, prohibition or seizure from public sale or distribution: Provided, That, in the Implementing Agencies (Sec 6) sound discretion of the department it may declare a consumer Department of Health Food, drugs, cosmetics, product to be imminently injurious, unsafe or dangerous, and devices and substances; order is immediate recall, ban or seizure from public sale or Department of Agriculture products related to distribution, in which case, the seller, distributor, manufacturer agriculture or producer thereof shall be afforded a hearing within forty- Department of Trade and Other consumer products eight (48) hours from such order. Industry The ban on the sale and distribution of a consumer product adjudged injurious, unsafe or dangerous, or imminently Promulgation and Adoption of Consumer Product injurious, unsafe or dangerous under the preceding paragraph Standards shall stay in force until such time that its safety can be assured The concerned department shall establish consumer product or measures to ensure its safety have been established. quality and safety standards which shall consist of one or more of the following: Amendment and Revocation of Declaration of the Injurious, a.) requirements as to performance, composition, contents, Unsafe or Dangerous Character of a Consumer Product design, construction, finish, packaging of a consumer Any interested person may petition the appropriate department product; to commence a proceeding for the issuance of an amendment or b.) requirements as to kind, class, grade, dimensions, weights, revocation of a consumer product safety rule or an order material; declaring a consumer product injurious, dangerous and unsafe. c.) requirements as to the methods of sampling, tests and In case the department, upon petition by an interested party or codes used to check the quality of the product; its own initiative and after due notice and hearing, determines d.) requirements as to precautions in storage, transporting and a consumer product to be substandard or materially defective, packaging; it shall so notify the manufacturer, distributor or seller thereof e.) requirements that a consumer product be marked with or of such finding and order such manufacturer, distributor or accompanied by clear and adequate safety warnings or seller to: instructions, or requirements respecting the form of a) give notice to the public of the defect or failure to comply warnings or instructions. (Art. 7) with the product safety standards; and Upon promulgation of the above standards, publish or cause the b) give notice to each distributor or retailer of such product. publication of the same in two (2) newspapers of general The department shall also direct the manufacturer, distributor circulation at least once a week for a period of not less than one or seller of such product to extend any or all of the following (1) month. It may likewise conduct an information campaign remedies to the injured person: through other means deemed effective to ensure the proper a) to bring such product into conformity with the guidance of consumers, businesses, industries and other sectors requirements of the applicable consumer product concerned. (Art. 8) standards or to repair the defect in order to conform with the same; The concerned department shall adopt existing government b) to replace the product with a like or equivalent product domestic product quality and safety standards: Provided, That which complies with the applicable consumer product in the absence of such standards, the concerned department standards which does not contain the defect; shall form specialized technical committees composed of equal c) to refund the purchase price of the product less a number of representatives from each of the Government, reasonable allowance for use; and business and consumer sectors to formulate, develop and d) to pay the consumer reasonable damages as may be purpose consumer product quality and safety standards. The determined by the department. said technical committees shall consult with the private sector, The manufacturer, distributor or seller shall not charge a which may, motu proprio, develop its own quality and safety consumer who avails himself of the remedy as provided above standards that shall be subject to review and approval of the of any expense and cost that may be incurred. concerned government agency or agencies after public hearings have been conducted for that purpose; and shall likewise Effectivity of Amendment and Revocation of Consumer consider existing international standards recognized by the Product Safety Rule Philippine Government. (Art. 7) 0998-539-40-22; [email protected] Page 1 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA Any amendment or revocation of a consumer product safety owner or consignee an opportunity to so modify such rule made by the concerned department shall specify the date product. on which it shall take effect which shall not exceed ninety days d.) All modifications taken by an owner or consignee for the from the date of amendment or revocation is published unless purpose of securing admission of an imported consumer the concerned department finds, for a good cause shown, that a product under paragraph (c) shall be subject to the later effective date is in the public interest and publishes its supervision of the concerned department. If the product reasons for such finding. The department shall promulgate the cannot be so modified, or if the owner or consignee is not necessary rules for the issuance, amendment or revocation of proceeding to satisfactorily modify such product, it shall be any consumer product safety rule. (Art. 12) refused admission and the department may direct redelivery of the product into customs custody, and to seize New Products the product if not so redelivered. The concerned department shall take measures to make a list of e.) Imported consumer products not admitted must be new consumer products and to cause the publication by the exported, except that upon application, the Commissioner respective manufacturers or importers of such products a list of Customs may permit the destruction of the product if, thereof together with the descriptions in a newspaper of within a reasonable time, the owner or consignee thereof general circulation. (Art. 13) fails to export the same. f.) All expenses in connection with the destruction provided Certification of Conformity to Consumer Product Standards for in this Article, and all expenses in connection with the The concerned department shall aim at having consumer storage, cartage or labor with respect to any consumer product standards established for every consumer product so product refused admission under this Article, shall be paid that consumer products shall be distributed in commerce only by the owner or consignee and, in default of such payment, after inspection and certification of its quality and safety shall constitute a lien against any future importation made standards by the department. The manufacturer shall avail of by such owner or consignee. (Art. 15) the Philippine Standard Certification Mark which the department shall grant after determining the product’s Consumer Products for Export compliance with the relevant standard in accordance with the The preceding article on safety not apply to any consumer implementing rules and regulations. (Art. 14) product if: a.) it can be shown that such product is manufactured, sold or Imported Products held for sale for export from the Philippines, or that such a.) Any consumer product offered for importation into the product was imported for export, unless such consumer customs of the Philippine territory shall be refused product is in fact distributed in commerce for use in the admission if such product: Philippines; and 1. fails to comply with an applicable consumer product b.) such consumer product or the packaging thereof bears a quality and safety standard or rule; stamp or label stating that such consumer product is 2. is or has been determined to be injurious, unsafe and intended for export and actually exported. (Art. 16) dangerous; 3. is substandard; or Powers, Functions and Duties of concerned department 4. has material defect. (Department of Health, Department of Agriculture and b.) Samples of consumer products being imported into the Department of Trade and Industry) Philippines in a quantity necessary for purposes of In addition to their powers, functions and duties under existing determining the existence of any of the above causes for laws, the concerned department shall have the following non-admission may be obtained by the concerned powers, functions and duties: department or agency without charge from the owner or a) to administer and supervise the implementation of this consignee thereof. The owner or consignee of the imported Article and its implementing rules and regulations; consumer product under examination shall be afforded an b) to undertake researches, develop and establish quality and opportunity to a hearing with respect to the importation of safety standards for consumer products in coordination such products into the Philippines. If it appears from with other government and private agencies closely examination of such samples or otherwise that an imported associated with these products; consumer product does not conform to the consumer c) to inspect and analyze consumer products for purposes of product safety rule or its injurious, unsafe and dangerous, determining conformity to established quality and safety is substandard or has a material defect, such product shall standards; be refused admission unless the owner or the consignee d) to levy, assess, collect and retain fees as are necessary to thereof manifests under bond that none of the above cover the cost of inspection, certification, analysis and tests ground for non-admission exists or that measures have of samples of consumer products and materials submitted been taken to cure them before they are sold, distributed or in compliance with the provisions of this Article; offered for sale to the general public. e) to investigate the causes of and maintain a record of Any consumer product, the sale or use of which has been product-related deaths, illnesses and injuries for use in banned or withdrawn in the country of manufacture, shall researches or studies on the prevention of such product- not be imported into the country. related deaths, illnesses and injuries. c.) If it appears that any consumer product which may not be f) to accredit independent, competent non-government admitted pursuant to paragraph (a) of this Article can be so bodies, to assist in (1) monitoring the market for the modified that it can already be accepted, the concerned presence of hazardous or non-certified products and other department may defer final determination as to the forms of violations of Article 18; and (2) other appropriate admission of such product for a period not exceeding ten means to expand the monitoring and enforcement outreach (10) days, and in accordance with such regulations as the of the department in relation to its manpower, testing and department and the Commissioner of Customs shall jointly certification resources at a given time. promulgate, such product may be released from customs g) to accredit independent competent testing laboratories. custody under bond for the purpose of permitting the (Art. 17) 0998-539-40-22; [email protected] Page 2 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA Prohibited Acts Penalties fraudulent manipulation, induces a consumer to enter into a Prohibited Acts sales or lease transaction of any consumer product or service. It shall be unlawful for any person to: Without limiting the scope of the above paragraph, the act or a) manufacture for sale, offer for sale, distribute in commerce, practice of a seller or supplier is deceptive when it represents or import into the Philippines any consumer product which that: is not in conformity with an applicable consumer product a) a consumer product or service has the sponsorship, quality or safety standard promulgated in this Act; approval, performance, characteristics, ingredients, b) manufacture for sale, offer for sale, distribute in commerce, accessories, uses, or benefits it does not have; or import into the Philippines any consumer product which b) a consumer product or service is of a particular standard, has been declared as banned consumer product by a rule in quality, grade, style, or model when in fact it is not; this Act; c) a consumer product is new, original or unused, when in fact, c) refuse access to or copying of pertinent records or fail or it is in a deteriorated, altered, reconditioned, reclaimed or refuse to permit entry of or inspection by authorized second-hand state; officers or employees of the department; d) a consumer product or service is available to the consumer d) fail to comply with an order issued under Article 11 relating for a reason that is different from the fact; to notifications of substantial product hazards and to recall, e) a consumer product or service has been supplied in repair, replacement or refund of unsafe products; accordance with the previous representation when in fact it e) fail to comply with the rule prohibiting stockpiling. (Art. 18) is not; f) a consumer product or service can be supplied in a quantity Penalties greater than the supplier intends; a) Any person who shall violate any provision of Article 18 g) a service, or repair of a consumer product is needed when shall upon conviction, be subject to a fine of not less than in fact it is not; One thousand pesos (P1,000.00) but not more than Ten h) a specific price advantage of a consumer product exists thousand pesos (P10,000.00) or imprisonment of not less when in fact it does not; than two (2) months but not more than one (1) year, or i) the sales act or practice involves or does not involve a both upon the discretion of the court. If the offender is an warranty, a disclaimer of warranties, particular warranty alien, he shall be deported after service of sentence and terms or other rights, remedies or obligations if the payment of fine without further deportation proceedings. indication is false; and b) In case the offender is a naturalized citizen, he shall, in j) the seller or supplier has a sponsorship, approval, or addition to the penalty prescribed herein, suffer the affiliation he does not have. (Art. 50) penalty of cancellation of his naturalization certificate and its registration in the civil register and immediate Deceptive Sales Act or Practices By Regulation deportation after service of sentence and payment of fine. The Department shall, after due notice and hearing, promulgate c) Any director, officer or agent of a corporation who shall regulations declaring as deceptive any sales act, practice or authorize, order or perform any of the acts or practices technique which is a misrepresentation of facts other than these constituting in whole or in part a violation of Article 18, and enumerated in Article 50. (Art. 51) who has knowledge or notice of noncompliance received by the corporation from the concerned department, shall Unfair or Unconscionable Sales Act or Practice be subject to penalties to which that corporation may be An unfair or unconscionable sales act or practice by a seller or subject. supplier in connection with a consumer transaction violates this In case the violation is committed by, or in the interest of a Chapter whether it occurs before, during or after the consumer foreign juridical person duly licensed to engage in business in transaction. An act or practice shall be deemed unfair or the Philippines, such license to engage in business in the unconscionable whenever the producer, manufacturer, Philippines shall immediately be revoked. (Art. 19) distributor, supplier or seller, by taking advantage of the consumer’s physical or mental infirmity, ignorance, illiteracy, Protection Against Deceptive, Unfair and Unconscionable lack of time or the general conditions of the environment or Sales Acts or Practices surroundings, induces the consumer to enter into a sales or lease transaction grossly inimical to the interests of the CHAPTER I - Deceptive, Unfair and Unconscionable Sales consumer or grossly one-sided in favor of the producer, Acts or Practices manufacturer, distributor, supplier or seller. In determining whether an act or practice is unfair and Declaration of Policy unconscionable, the following circumstances shall be The State shall promote and encourage fair, honest and considered: equitable relations among parties in consumer transactions and a. that the producer, manufacturer, distributor, supplier or protect the consumer against deceptive, unfair and seller took advantage of the inability of the consumer to unconscionable sales acts or practices. (Art. 48) reasonably protect his interest because of his inability to understand the language of an agreement, or similar Implementing Agency factors; The Department of Trade and Industry, hereby referred to as b. that when the consumer transaction was entered into, the the Department, shall enforce the provisions of this Chapter. price grossly exceeded the price at which similar products (Art. 49) or services were readily obtainable in similar transaction Regulation of Sales Acts and Practices by like consumers; c. that when the consumer transaction was entered into, the Prohibition Against Deceptive Sales Acts or Practices consumer was unable to receive a substantial benefit from A deceptive act or practice by a seller or supplier in connection the subject of the transaction; with a consumer transaction violates this Act whether it occurs d. that when the consumer transaction was entered into, the before, during or after the transaction. An act or practice shall seller or supplier was aware that there was no reasonable be deemed deceptive whenever the producer, manufacturer, probability or payment of the obligation in full by the supplier or seller, through concealment, false representation or consumer; and 0998-539-40-22; [email protected] Page 3 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA e. that the transaction that the seller or supplier induced the otherwise helping the seller enter into other sales, if the receipt consumer to enter into was excessively one-sided in favor of such benefit is contingent on an event occurring after the sale of the seller or supplier. (Art. 52) is made. (sec 4 bh) Chain Distribution Plans or Pyramid Sales Schemes Penalties Chain distribution plans or pyramid sales schemes shall not be Criminal Administrative employed in the sale of consumer products. (Art. 53) a) Any person who shall ARTICLE violate the provisions of 164. Sanctions. — What is a Chain distribution plans” or “pyramid sales Title III, Chapter I, shall After investigation, any of schemes? upon conviction, be subject the following A sales devices whereby a person, upon condition that he makes to a fine of not less than Five administrative penalties an investment, is granted by the manufacturer or his Hundred Pesos (P500.00) may be imposed even if representative a right to recruit for profit one or more but not more than Ten not prayed for in the additional persons who will also be granted such right to recruit Thousand Pesos complaint: upon condition of making similar investments: Provided, That, (P10,000.00) or XXX the profits of the person employing such a plan are derived imprisonment of not less e) the imposition primarily from the recruitment of other persons into the plan than five (5) months but not of administrative fines in rather than from the sale of consumer products, services and more than one (1) year or such amount as deemed credit: Provided, further, That the limitation on the number of both, upon the discretion of reasonable by the participants does not change the nature of the plan. (Art. 4 (k)) the court. Secretary, which shall in b) In addition to the penalty no case be less than Five Home Solicitation Sales provided for in paragraph hundred pesos (P500.00) No business entity shall conduct any home solicitation sale of (1), the court may grant an nor more than Three any consumer product or service without first obtaining a injunction restraining the hundred thousand pesos permit from the Department. Such permit may be denied conduct constituting the (P300,000.00) depending suspended or revoked upon cause as provided in the rules and contravention of the on the gravity of the regulations promulgated by the Department, after due notice provisions of Articles 50 offense, and an additional and hearing. (Art. 54) and 51 and/or actual fine of not more than One damages and such other thousand pesos Home Solicitation Sales; When Conducted orders as it thinks fit to (P1,000.00) or each day When By Whom redress injury to the person of continuing violation. Home solicitation sales may Home solicitation sales shall caused by such conduct. be conducted only between only be conducted by a (Art. 60) the hours of nine o’clock in person who has the proper the morning and seven identification and authority Consumer Product and Service Warranties o’clock in the evening of each from his principal to make working day: Provided, That such solicitations. (Art. 56) Implementing Agency solicitation sales may be The Department of Trade and Industry, shall strictly enforce the made at a time other than the provision of this Chapter and its implementing rules and regulations. prescribed hours where the (Art. 66) person solicited has previously agreed to the Applicable Law on Warranties same. (Art. 55) The provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with conditions and warranties. (Art. 67) Receipts for Home Solicitation Sales Sales generated from home solicitation sales shall be properly Additional Provisions on Warranties receipted as per existing laws, rules and regulations on sale In addition to the Civil Code provisions on sale with warranties, the transactions. (Art. 57) following provisions shall govern the sale of consumer products with warranty: Prohibited Representations a.) Terms of express warranty. — Any seller or manufacturer who A home solicitation sale shall not represent that: gives an express warranty shall: a) the buyer has been specially selected; 1. set forth the terms of warranty in clear and readily b) a survey, test or research is being conducted; or understandable language and clearly identify himself as the c) the seller is making a special offer to a few persons only for warrantor; a limited period of time. (Art. 58) 2. identify the party to whom the warranty is extended; 3. state the products or parts covered; 4. state what the warrantor will do in the event of a defect, Referral Sales malfunction of failure to conform to the written warranty Referral selling plans shall not be used in the sale of consumer and at whose expense; products unless the seller executes in favor of the buyer a 5. state what the consumer must do to avail of the rights written undertaking that will grant a specified compensation or which accrue to the warranty; and other benefit to said buyer in return for each and every 6. stipulate the period within which, after notice of defect, transaction consummated by said seller with the persons malfunction or failure to conform to the warranty, the referred by said buyer or for subsequent sales that said buyers warrantor will perform any obligation under the warranty. has helped the seller enter into. (Art. 59) b.) Express warranty — operative from moment of sale. — All Referral selling” means the sales device employed by the written warranties or guarantees issued by a manufacturer, sellers wherein the buyer is induced to acquire goods or producer, or importer shall be operative from the moment of services by representing that after the acquisition of the goods sale. or services, he will receive a rebate, commission or other benefit in return for the submission of names of potential customers or 0998-539-40-22; [email protected] Page 4 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA 1. Sales Report. — All sales made by distributors of products e.) Duration of warranty. — The seller and the consumer may covered by this Article shall be reported to the stipulate the period within which the express warranty shall be manufacturer, producer, or importer of the product sold enforceable. If the implied warranty on merchantability within thirty (30) days from date of purchase, unless accompanies an express warranty, both will be of equal otherwise agreed upon. The report shall contain, among duration. others, the date of purchase, model of the product bought, Any other implied warranty shall endure not less than sixty (60) its serial number, name and address of the buyer. The days nor more than one (1) year following the sale of new report made in accordance with this provision shall be consumer products. equivalent to a warranty registration with the f.) Breach of warranties. — manufacturer, producer, or importer. Such registration is 1. In case of breach of express warranty, the consumer may sufficient to hold the manufacturer, producer, or importer elect to have the goods repaired or its purchase price liable, in appropriate cases, under its warranty. refunded by the warrantor. In case the repair of the product 2. Failure to make or send report. — Failure of the distributor in whole or in part is elected, the warranty work must be to make the report or send them the form required by the made to conform to the express warranty within thirty (30) manufacturer, producer, or importer shall relieve the latter days by either the warrantor or his representative. The of its liability under the warranty: Provided, however, That thirty-day period, however, may be extended by conditions the distributor who failed to comply with its obligation to which are beyond the control of the warrantor or his send the sales report shall be personally liable under the representative. In case the refund of the purchase price is warranty. For this purpose, the manufacturer shall be elected, the amount directly attributable to the use of the obligated to make good the warranty at the expense of the consumer prior to the discovery of the non-conformity distributor. shall be deducted. 3. Retail. — The retailer shall be subsidiarily liable under the 2. In case of breach of implied warranty, the consumer may warranty in case of failure of both the manufacturer and retain in the goods and recover damages, or reject the distributor to honor the warranty. In such case, the retailer goods, cancel and contract and recover from the seller so shall shoulder the expenses and costs necessary to honor much of the purchase price as has been paid, including the warranty. Nothing therein shall prevent the retailer damages. (Art. 68) from proceeding against the distributor or manufacturer. 4. Enforcement of warranty or guarantee. — The warranty Warranties in Supply of Services rights can be enforced by presentment of a claim. To this General rule: end, the purchaser needs only to present to the immediate a) In every contract for the supply of services to a consumer made seller either the warranty card or the official receipt along by a seller in the course of a business, there is an implied with the product to be serviced or returned to the warranty that the service will be rendered with due care and immediate seller. No other documentary requirement shall skill and that any material supplied in connection with such be demanded from the purchaser. If the immediate seller is services will be reasonably fit for the purpose for which it is the manufacturer’s factory or showroom, the warranty supplied. shall immediately be honored. If the product was b) Where a seller supplies consumer services in the course of a purchased from a distributor, the distributor shall likewise business and the consumer, expressly or by implication, makes immediately honor the warranty. In the case of a retailer known to the seller the particular purpose for which the services other than the distributor, the former shall take are required, there is an implied warranty that the services responsibility without cost to the buyer of presenting the supplied under the contract and any material supplied in warranty claim to the distributor in the consumer’s behalf. connection therewith will be reasonably fit for that purpose or 5. Record of purchases. — Distributors and retailers covered are of such a nature or quality that they might reasonably be by this Article shall keep a record of all purchases covered expected to achieve that result, unless the circumstances show by a warranty or guarantee for such period of time that the consumer does not rely or that it is unreasonable for corresponding to the lifetime of the product’s respective him to rely, on the seller’s skill or judgment. (Art.69) warranties or guarantees. 6. Contrary stipulations — null and void. — All covenants, Exception: stipulations or agreements contrary to the provisions of this Professional services of Article shall be without legal effect. 1. Certified public accountants, c.) Designation of warranties. — A written warranty shall clearly 2. Architects, and conspicuously designate such warranty as: 3. Engineers, 1. “Full warranty” if the written warranty meets the minimum 4. Lawyers requirements set forth in paragraph (d); or 5. Veterinarians 2. “Limited warranty” if the written warranty does not meet 6. Optometrists, such minimum requirements. 7. Pharmacists d.) Minimum standards for warranties. — For the warrantor of a 8. Nurses, consumer product to meet the minimum standards for warranty, 9. Nutritionists, he shall: 10. Dietitians, 1. remedy such consumer product within a reasonable time 11. Physical therapists, and without charge in case of a defect, malfunction or 12. Salesmen, failure to conform to such written warranty; 13. Medical and dental practitioners and 2. permit the consumer to elect whether to ask for a refund or 14. Other professionals engaged in their respective professional replacement without charge of such product or part, as the endeavors. (Sec 70) case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to Guaranty of Service Firms have the defect or to malfunction. Service firms shall guarantee workmanship and replacement of The warrantor will not be required to perform the above duties spare parts for a period not less than ninety (90) days which shall be if he can show that the defect, malfunction or failure to conform indicated in the pertinent invoices. (Art. 71) to a written warranty was caused by damage due to unreasonable use thereof. Prohibited Acts 0998-539-40-22; [email protected] Page 5 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA The following acts are prohibited: It shall be unlawful for any person, either as principal or agent, a.) refusal without any valid legal cause by the total manufacturer engaged in the labeling or packaging of any consumer product, or any person obligated under the warranty or guarantee to to display or distribute or to cause to be displayed or distributed honor a warranty or guarantee issued; in commerce any consumer product whose package or label b.) unreasonable delay by the local manufacturer or any person does not conform to the provisions of this Chapter. obligated under the warranty or guarantee in honoring the The prohibition shall not apply to persons engaged in the warranty; business of wholesale or retail distributors of consumer c.) removal by any person of a product’s warranty card for the products except to the extent that such persons: purpose of evading said warranty obligation; a. are engaged in the packaging or labeling of such products; d.) any false representation in an advertisement as to the existence b. prescribe or specify by any means the manner in which of a warranty or guarantee. (Art. 72) such products are packaged or labeled; or c. having knowledge, refuse to disclose the source of the Penalties mislabeled or mispackaged products. (Art. 76) Criminal Administrative a. Any person who shall violate Article 164. Sanctions. Minimum Labeling Requirements for Consumer Products the provisions of Article 67 – After investigation, All consumer products domestically sold whether shall be subject to fine of not any of the following manufactured locally or imported shall indicate the following in less than Five hundred pesos administrative their respective labels of packaging: (P500.00) but not more than penalties may be a. its correct and registered trade name or brand name; Five thousand pesos imposed even if not b. its duly registered trademark; (P5,000.00) or an prayed for in the c. its duly registered business name; imprisonment of not less than complaint: d. the address of the manufacturer, importer, repacker of the three (3) months but not xxx consumer product in the Philippines; more than two (2) years or e) the imposition of e. its general make or active ingredients; both upon the discretion of administrative fines in f. the net quality of contents, in terms of weight, measure or the court. A second conviction such amount as deemed numerical count rounded of to at least the nearest tenths in under this paragraph shall reasonable by the the metric system; also carry with it the penalty Secretary, which shall in g. country of manufacture, if imported; and or revocation of his business no case be less that Five h. If a consumer product is manufactured, refilled or repacked permit and license. hundred pesos under license from a principal, the label shall so state the b. Any person, natural or (P500.00) nor more fact. juridical, committing any of than Three hundred the illegal acts provided for in thousand pesos The following may be required by the concerned department in Chapter III, except with (P300,000.00) accordance with the rules and regulations they will promulgate respect to Article 67, shall be depending on the under authority of this Act: liable for a fine of not less than gravity of the offense, a. whether it is flammable or inflammable; One thousand pesos and an additional fine of b. directions for use, if necessary; (P1,000.00) but not more not more than One c. warning of toxicity; than Fifty thousand pesos thousand pesos d. wattage, voltage or amperes; or (P50,000.00) or (P1,000.00) or each day e. process of manufacture used if necessary. imprisonment for a period of of continuing violation. Any word, statement or other information required by or under at least one (1) year but not authority of the preceding paragraph shall appear on the label more than five (5) years, or or labeling with such conspicuousness as compared with other both, at the discretion of the words, statements, designs or devices therein, and in such terms court. as to render it likely to be read and understood by the ordinary The imposition of any of the individual under customary conditions of purchase or use. penalties herein provided is The above requirements shall form an integral part of the label without prejudice to any liability without danger of being erased or detached under ordinary incurred under the warranty or handling of the product. (Art. 77) guarantee. (Art. 73) Philippine Product Standard Mark Labeling and Fair Packaging The label may contain the Philippine Product Standard Mark if it is certified to have passed the consumer product standard Declaration of Policy prescribed by the concerned department. (Art. 78) The State shall enforce compulsory labeling, and fair packaging to enable the consumer to obtain accurate information as to the Authority of the Concerned Department to Provide for nature, quality and quantity of the contents of consumer Additional Labeling and Packaging Requirements products and to facilitate his comparison of the value of such Whenever the concerned department determines that products. (Art. 74) regulations containing requirements other than those prescribed in Article 77 hereof are necessary to prevent the Implementing Agency deception of the consumer or to facilitate value comparisons as The Department of Trade and Industry shall enforce the to any consumer product, it may issue such rules and provisions of this Chapter and its implementing rules and regulations to: regulations: Provided, That with respect to food, drugs, a. establish and define standards for characterization of the cosmetics, devices, and hazardous substances, it shall be size of a package enclosing any consumer product which enforced by the concerned department. (Art. 75) may be used to supplement the label statement of net quality, of contents of packages containing such products Prohibited Acts on Labeling and Packaging but this clause shall not be construed as authorizing any limitation on the size, shape, weight, dimensions, or 0998-539-40-22; [email protected] Page 6 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA number of packages which may be used to enclose any the regulations prescribed by the concerned department of product; health; b. regulate the placement upon any package containing any f. if any word, statement or other information required by or product or upon any label affixed to such product of any under authority of this Act to appear on the principal printed matter stating or representing by implication that display panel of the label or labeling is not prominently such product is offered for retail at a price lower than the placed thereon with such conspicuousness as compared ordinary and customary retail price or that a price with other words, statements, designs or devices in the advantage is accorded to purchases thereof by reason of the labeling and in such terms as to render it likely to be read size of the package or the quantity of its contents; and understood by the ordinary individual under c. prevent the nonfunctional slack-fill of packages containing customary conditions of purchase and use; consumer products. g. if it purports to be or is represented as a food for which a For purposes of paragraph (c) of this Article, a package shall be definition or standard of identity has been prescribed deemed to be nonfunctionally slack-filled if it is filled to unless: substantially less than its capacity for reasons other than 1. it conforms to such definition and standard; and (1) protection of the contents of such package, 2. its labels bears the name of the food specified in the (2) the requirements of machines used for enclosing the definition or standards, and insofar as may be required contents in such package, or by such regulations, the common names of optional (3) inherent characteristics of package materials or ingredients other than spices, flavoring and coloring, construction being used. present in such food; h. if it purports to be or is represented as: Special Packaging of Consumer Products for the Protection 1. a food for which a standard of quality has been of Children prescribed by regulations as provided in this Act and its The concerned department may establish standards for the quality fall below such standard, unless its label bears special packaging of any consumer product if it finds that: in such manner and form as such regulations specify, a a. the degree or nature of the hazard to children in the statement that it falls below such standard; or availability of such product, by reason of its packaging, is 2. a food for which a standard or standards or fill of such that special packaging is required to protect children container have been prescribed by regulations as from serious personal injury or serious illness resulting provided by this Act and it falls below the standard of from handling and use of such product; and fill of container applicable thereto, unless its label b. the special packaging to be required by such standard is bears, in such manner and form as such regulations technically feasible, practicable and appropriate for such specify, a statement that it falls below such standard; product. In establishing a standard under this Article, the i. if it is not subject to the provisions of paragraph (g) of this concerned department shall consider: Article unless its label bears: 1. the reasonableness of such a standard; 1. the common or usual name of the food, if there be any; 2. available scientific, medical and engineering data and concerning special packaging and concerning 2. in case it is manufactured or processed from two or accidental, ingestions, illnesses and injuries caused by more ingredients, the common or usual name of such consumer product; ingredient; except the spices, flavorings and colorings 3. the manufacturing practices of industries affected by other than those sold as such, may be designated as this Article; and spices, flavorings and colorings without naming each: 4. the nature and use of consumer products. Provided, That to the extent that compliance with the requirement of clause (2) of this paragraph is Additional Labeling Requirements for Food impracticable or results in deception or unfair The following additional labeling requirements shall be competition, exemptions shall be established by imposed by the concerned department for food: regulations promulgated by the concerned department a. expiry or expiration date, where applicable; of health; b. whether the consumer product is semi-processed, fully j. if it purports to be or is represented for special dietary uses, processed, ready-to-cook, ready-to-eat, prepared food or unless its label bears such information concerning its just plain mixture; vitamin or mineral or other dietary properties as the c. nutritive value, if any; concerned department determines to be, or by regulations d. whether the ingredients use are natural or synthetic, as the prescribed as necessary in order fully to inform purchasers case may be; as its value for such uses; e. such other labeling requirements as the concerned k. if it bears or contains any artificial flavoring, artificial department may deem necessary and reasonable. (Art. 84) coloring, or chemical preservative, unless it bears labeling, stating that fact: Provided, That to the extent that Mislabeled Food compliance with the requirements of this paragraph is A food shall also be deemed mislabeled: impracticable, exemptions shall be established by a. if its labeling or advertising is false or misleading in any regulations promulgated by the concerned department. way; The provisions of this paragraph or paragraphs (g) and (i) b. if it is offered for sale under the name of another food; with respect to the artificial coloring shall not apply in the c. if it is an imitation of another food, unless its label bears in case of butter, cheese or ice cream. (Art. 85) type of uniform size and prominence, the word “imitation” and, immediately thereafter, the name of the food imitated; Labeling of Drugs d. Its containers is so made, formed, or filled as to be The Generics Act shall apply in the labeling of drugs. (Art. 86) misleading; e. if in package form unless it bears a label conforming to the Additional Labeling Requirements for Cosmetics requirements of this Act: Provided, That reasonable The following additional requirements may be required for variation on the requirements of labeling shall be permitted cosmetics: and exemptions as to small packages shall be established by a. expiry or expiration date; 0998-539-40-22; [email protected] Page 7 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA b. whether or not it may be an irritant; f. if it purports to be a drug the name of which is recognized c. precautions or contra-indications; and in an official compendium, unless it is packaged and labeled d. such other labeling requirements as the concerned as prescribed therein: Provided, That the method of department may deem necessary and reasonable. (Art. 87) packing may be modified with the consent of the concerned department; Special Labeling Requirements for Cosmetics g. if it has been found by the concerned department to be a A cosmetic shall be deemed mislabeled: drug liable to deterioration, unless it is packaged in such a. if its labeling or advertising is false or misleading in any form and manner, and its label bears a statement of such way; precautions, as the concerned department, shall by b. if in package form unless it bears a label conforming to the regulations, require as necessary for the protection of the requirements of labeling provided for in this Act or under public health; existing regulations: Provided, That reasonable variations h. 1. if it is a drug and its container is so made, formed or filled shall be permitted, and exemptions as to small packages as to be misleading; or shall be established by regulations prescribed by the 2. if it is an imitation of another drug; or concerned department; 3. if it is offered for sale under the name of another drug; c. if any word, statement or other information required by or i. if it is dangerous to health when used in the dosage, or with under authority of this Act to appear on the label or labeling the frequency of duration prescribed, recommended or is not prominently placed thereon with such suggested in the labeling thereof; conspicuousness, as compared with other words, j. if it is, purports to be or is represented as a drug composed statements, designs or devices in the labeling, and in such wholly or partly of insulin or of any kind of penicillin, terms as to render it likely to be read and understood by the streptomycin, chlortetracycline, chloramphenicol, ordinary individual under customary conditions of bacitracin, or any other antibiotic drug, or any derivative purchase and use; thereof, unless: d. if its container is so made, formed or filled as to be 1. it is from a batch with respect to which a certificate of misleading; or release has been issued pursuant to regulations of the e. if its label does not state the common or usual name of its concerned department; and ingredients. (Art. 88) 2. such certificate of release is in effect with respect to such drug: Provided, That this paragraph shall not Mislabeled Drugs and Devices apply to any drug or class of drugs exempted by A drug or device shall be deemed to be mislabeled: regulations promulgated under Authority of this Act. a. if its labeling is false or misleading in any way; b. if it is in package form unless it bears a label conforming to Regulation-making Exemptions the requirements of this Act or the regulations promulgated The concerned department may promulgate regulations therefor: Provided, that reasonable variations shall be exempting from any labeling requirements of this Act food, permitted and exemptions as to small packages shall be cosmetics, drugs or devices which are, in accordance with the established by regulations prescribed by the concerned practice of trade, to be processed, labeled or repacked in department. substantial quantities at establishments other than those where c. if any word, statement or other information required by or originally processed, labeled or packed on condition that such under authority of this Act to appear on the principal food, cosmetics, drugs or devices are not adulterated or display panel of the label or labeling is not prominently mislabeled under the provisions of this Act and other applicable placed thereon with such conspicuousness as compared laws upon approval from such processing, labeling and with other words, statements, designs or devices in the repacking establishments. (Art. 90) labeling and in such terms as to render it likely to be read and understood by the ordinary individual under Mislabeled Hazardous Substances customary conditions of purchase and use; Hazardous substances shall be deemed mislabeled when: d. if it is for use by man and contains any quantity of the a. having been intended or packaged in a form suitable for use narcotic or hypnotic substance alpha-eucaine, barbituric in households, especially for children, the packaging or acid, beta-eucaine, bromal, cannabis, carbromal, chloral, labeling of which is in violation of the special packaging coca, cocaine, codeine, heroin, marijuana, morphine, opium, regulations issued by the concerned department; paraldehyde, peyote or sulfonmethane, or any chemical b. such substance fails to bear a label: derivative of such substance, which derivative has been 1) which states conspicuously: designated by the concerned department after (i.) the name and the place of business of the investigation, and by regulations, as habit forming; unless manufacturer, packer, distributor or seller; its label bears the name and quantity or proportion of such (ii.) the common or usual name or the chemical name, substance or derivative and in juxtaposition therewith the if there be no common or usual name, of the statement “Warning — May be habit forming”; hazardous substance or of each component which e. its labeling does not bear: contributes substantially to the harmfulness of the 1. adequate directions for use; and substance, unless the concerned department by 2. such adequate warning against use in those regulation permits or requires the use of the pathological conditions or by children where its use recognized generic name; may be dangerous to health, or against unsafe dosage (iii.) the signal word “danger” on substances which or methods or duration of administration or are extremely flammable, corrosive or highly toxic; application, in such manner and form, as are necessary (iv.) the signal word “warning” or “caution” with a for the protection of users: Provided, That where any bright red or orange color with a black symbol on requirement of clause (1) of this paragraph, as applied all other hazardous substances; to any drug or device, is not necessary for the (v.) a clear statement as to the possible injury it may protection of the public health, the concerned cause if used improperly; department may promulgate regulations exempting (vi.) precautionary measures describing the action to such drug or device from such requirement; be followed or avoided; 0998-539-40-22; [email protected] Page 8 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA (vii.) instructions when necessary or appropriate expenses for such supervision shall be paid by the person for first-aid treatment; obtaining release of the hazardous substance under bond. (viii.) the word “poison” for any hazardous c. all expenses in connection with the destruction provided substance which is defined as highly toxic; for in paragraphs (a) and (b) of this Article and all expenses (ix.) instructions for handling and storage of packages in connection with the storage and labor with respect to which require special care in handling and storage; such hazardous substance shall be paid by the owner or and consignee, and default in such payment shall constitute a (x.) the statement “keep out of the reach of children”, lien against any importation by such owner or consignee. or its practical equivalent, if the article is not (Art. 93) intended for use by children and is not a banned hazardous substance, with adequate directions for Labeling Requirements of Cigarettes the protection of children from the hazard All cigarettes for sale or distribution within the country shall be involved. The aforementioned signal words, contained in a package which shall bear the following statement affirmative statements, description of or its equivalent in Filipino: “Warning” Cigarette Smoking is precautionary measures, necessary instructions or Dangerous to Your Health”. Such statement shall be located in other words or statements may be in the English conspicuous place on every cigarette package and shall appear language or its equivalent in Filipino; and in conspicuous and legible type in contrast by typography, 2) on which any statement required under clause 1) of layout or color with other printed matter on the package. Any this paragraph is located prominently in bright red advertisement of cigarette shall contain the name warning as and orange color with a black symbol in contrast indicated in the label. (Art. 94) typography, layout or color with the other printed matters on the label. (Art.92) Penalties Criminal Administrative Exemptions Fine of not less than Five Article 164. Sanctions. – After If the concerned department finds that for good or sufficient hundred pesos (P500.00) but investigation, any of the reasons, full compliance with the labeling requirements not more than Twenty following administrative otherwise applicable under this Act is impracticable or is not thousand pesos penalties may be imposed necessary for the adequate protection of public health and (P20,000.00) or even if not prayed for in the safety, it shall promulgate regulations exempting such imprisonment of not less complaint: substances from these requirements to the extent it deems than three (3) months but xxx consistent with the objective of adequately safeguarding public not more than two (2) years e) the imposition of health and safety, and any hazardous substance which does not or both, at the discretion of administrative fines in such bear a label in accordance with such regulations shall be the court: amount as deemed deemed mislabeled hazardous substance. (Art. 93) If consumer product is one reasonable by the Secretary, which is not a food, which shall in no case be less Grounds for Seizure and Condemnation of Mislabeled cosmetic, drug, device or that Five hundred pesos Hazardous Substances hazardous substance (P500.00) nor more than a. Any mislabeled hazardous substance when introduced into o Fine of not less than Two Three hundred thousand commerce or while held for sale shall be liable to be hundred pesos pesos (P300,000.00) proceeded against and condemned upon order of the (P200.00) but not more depending on the gravity of concerned department in accordance with existing than Five thousand the offense, and an additional procedure for seizure and condemnation of articles in pesos (P5,000.00) or fine of not more than One commerce: Provided, That this Article shall not apply to a imprisonment of not less thousand pesos (P1,000.00) hazardous substance intended for export to any foreign than one (1) month but or each day of continuing country if: not more than one (1) violation. 1. it is in a package labeled in accordance with the year or both, at the specifications of the foreign purchaser; discretion of the court. 2. it is labeled in accordance with the laws of the foreign (Art. 95 (a)) country; 3. it is labeled on the outside of the shipping package to Price Tag Act show that it is intended for export; and 4. it is so exported, Price Tag Requirement b. any hazardous substance condemned under this Article It shall be unlawful to offer any consumer product for retail sale shall after entry of order of condemnation be disposed of by to the public without an appropriate price tag, label or marking destruction or sale as the concerned department may publicly displayed to indicate the price of each article and said direct, and the proceeds thereof, if sold, less the legal cost products shall not be sold at a price higher than that stated and charges, shall be paid into the treasury of the therein and without discrimination to all buyers: Provided, That Philippines; but such hazardous substance shall not be sold lumber sold, displayed or offered for sale to the public shall be under any order which is contrary to the provisions of this tagged or labeled by indicating thereon the price and the Act: Provided, That, after entry of the order and upon the corresponding official name of the wood: Provided, further, payment of the costs of such proceedings and the execution That if consumer products for sale are too small or the nature of of a good and sufficient bond conditioned that such which makes it impractical to place a price tag thereon price list hazardous substance shall not be sold or disposed of placed at the nearest point where the products are displayed contrary to the provisions of this Act, the concerned indicating the retail price of the same may suffice. (Art. 81) department may direct that such hazardous substance be delivered to or retained by the owner thereof for Manner of Placing Price Tags destruction or for alteration to comply with the provisions Price tags, labels or markings must be written clearly, indicating of this Act under the supervision of an officer or employee the price of the consumer product per unit in pesos and duly designated by the concerned department. The centavos. (Art. 82) 0998-539-40-22; [email protected] Page 9 of 10  ATTY. JOHNSON A.H. ONG, CPA, MBA Price tags/labels/markings and price lists must be clear, and shall indicate the price of the consumer product per unit in pesos and centavos. o Price tags/labels/markings and price lists shall indicate prices of goods and services incorporating therein all price components such as the Value-Added Tax." (DAO 4, 1999) Use of codes - Prices of consumer products and services shall not be written in code except in addition to price tags. labels, markings or price lists. (DAO 2, 1993) Consumer products sold in foreign currency. All products sold in the Philippines shall bear price tags and/or price lists in pesos except when a law or regulation allows consumer products to be sold in foreign currency as in the case of duty-free shops. (DAO 2, 1993) Regulations for Price Tag Placement The concerned department shall prescribe rules and regulations for the visible placement of price tags for specific consumer products and services. There shall be no erasures or alterations of any sort of price tags, labels or markings. Penalties Criminal Administrative 1st Offense Fine of not less than Article 164. Sanctions. – After Two hundred pesos investigation, any of the following (P200.00) but not more administrative penalties may be than Five thousand imposed even if not prayed for in pesos (P5,000.00) or by the complaint: imprisonment of not xxx less than one (1) month e) the imposition of but not more than six administrative fines in such (6) months or both, at amount as deemed reasonable by the discretion of the the Secretary, which shall in no court. case be less that Five hundred 2nd Offense pesos (P500.00) nor more than Same as 1st offense and Three hundred thousand pesos penalty of revocation of (P300,000.00) depending on the business permit and gravity of the offense, and an license. (Sec 95 (b)) additional fine of not more than One thousand pesos (P1,000.00) or each day of continuing violation. However, DAO 6:2007 limited the administrative fine from Five hundred pesos (P500.00) to Fifty thousand pesos (P50,000.00) 0998-539-40-22; [email protected] Page 10 of 10