777JILI on RA 7394: What the Consumer Act Bars

RA 7394 is the Consumer Act of the Philippines, and its Article 2 gives the policy in one line: the State acts “to protect the interests of the consumer, promote his general welfare and to establish standards of conduct for business and industry.” The text is long, so this page picks the Articles a buyer meets first: deceptive sales, unfair sales, pyramid plans, advertising, promotion permits and penalties. When a seller breaks one of them, the usual next step is a complaint letter that names the Article, and the pillar page shows how to write it.

What the Consumer Act of the Philippines says it is for

Four Articles frame the rest of the Act:

1. Article 1 gives the short title: “Consumer Act of the Philippines.”
2. Article 2 declares the State’s policy of protecting the interests of the consumer.
3. Article 3 adds a reading rule: “the best interest of the consumer shall be considered in the interpretation and implementation” of the Act and its implementing rules.
4. Article 49 names the enforcer for the chapter on sales practices, Articles 50 to 60: the Department of Trade and Industry, which the Act calls the Department.

RA 7394 articles to read first

Deceptive sales under the Consumer Act

Article 50 lists the ways a seller is deceptive, and four of its items show the pattern:

1. Item (a): the product or service has a sponsorship, approval, performance or benefit that it does not have.
2. Item (e): the product or service is supplied in line with an earlier statement when it is not.
3. Item (h): a specific price advantage exists when it does not.
4. Item (j): the seller claims a sponsorship, approval or affiliation it does not have.

Whether a particular sale fits one of these items is for the DTI to decide when it reads a complaint.

Penalties: Article 60 and Article 164

Article 60(a) sets, on conviction, a fine of not less than ₱500 and not more than ₱10,000, or imprisonment of not less than five months and not more than one year, or both, at the court’s discretion.

Article 164 covers sanctions after an investigation. They include a cease and desist order, a voluntary assurance of compliance, restitution or rescission of the contract, and an administrative fine from ₱500 up to ₱300,000, plus a further fine of not more than ₱1,000 for each day the violation continues.

Pyramid plans and promotions in RA 7394

Article 4(k) defines a pyramid sales scheme as a device where a person, on condition of making an investment, gains a right to recruit others who must invest too, and where profits come “primarily from the recruitment of other persons into the plan rather than from the sale of consumer products.” The DTI’s own order, DAO No. 08 of 2002, implements Article 53 and lists attributes of such a plan in its Section 2.2(b), among them:

1. Income is derived from participants’ entry fees.
2. Participants must sponsor a fixed number of other participants to earn income.
3. A participant’s income depends primarily on the slot or position set by the time, date and order of joining.
4. Participants are not allowed to return marketable, unused products for a refund within a reasonable period.

The difference between a Ponzi and a pyramid plan is set out on its own page.

Online purchases and the money behind them

The Act names channels in some Articles and none in others:

The DTI’s online sales promotion application page, posted 24 February 2021, says the Article 116 permit is issued in compliance with that Article. The rails that carry a payment are described from their own pages under casino payment methods in the Philippines. Money that sits in a bank has its own rule, covered in what PDIC insures at a bank.