Republic of the Philippines REDRESENTATIVES
HOUSE OF REPRESENTATIVES = FRECETVED
Quezon City D 03 AUG 2016

SEVENTEENTH CONGRESS
First Regular Session
House Bill No. aa?

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

EXPLANATORY NOTE

“Prepaid”, is a relatively recent term brought about by technological
advancement and modernization.

Wikipedia, the web-based, free-content encyclopedia, written
collaboratively by Internet users, defines “Prepaid” as referring to services
paid for in advance. Examples include tolls, pay as you go cell phones, and
stored-value cards such as gift cards and preloaded credit cards. Prepaid
accounts are assets, and they are increased by debiting the account(s).

It continues by saying that prepaid services and goods are sometimes
targeted to marginal customers by retailers. Prepaid options can have
substantial cost reductions over postpaid counterparts because they allow
customers to monitor and budget usage in advance.

In the Philippines, the advent of prepayment for goods or services was
several decades ago with the use of “gift certificates”. These certificates
were sort of cash vouchers issued by, purchased from, and accepted as,
payment for goods sold in department stores, supermarkets and other retail
establishments.

Today, the prepaid concept has permeated almost all spectra of
commercial transactions. With the use of the technology of storing of
monetary values in common prepaid cards, goods and services can now be
prepaid, including public utility services, restaurants, cable or satellite
television, internet service provider, highway toll fees, medical and even
other professional services.

However, prepaid service providing is most prominent in the
telecommunications sector. In the late 1990’s when the telecom companies
suffered from what is then referred to as “subscription fraud”, resort was


made to the use of selling of prepaid cards instead of the then usual post paid
or plan based subscription.

Today, more than 95% of the income of the telecom company giants,
arguably the biggest income earners in the country, are from prepaid
subscribers. Out of the estimated 70 million combined mobile phone
subscriber base of the three telecom companies, less than 2 million are
postpaid subscribers.

The adherence to the business model of preference for prepaid
subscribers was confirmed in the Financial Statement for the first quarter of
this year of one of the largest telecom firm in the country. It stated that “The
predominance of prepaid service reflects one of the distinguishing
characteristics of the Philippine cellular market. The growth in our prepaid
service has enabled us to increase and broaden our subscriber base rapidly
while controlling credit risk and reducing billing and administrative costs
on a per subscriber basis.”

Unfortunately, while the telecom companies, retail establishments,
and other commercial companies have earned so much from their prepaid
subscribers, they continue to engage in a rather unethical business practice,
which is the imposition of expiration on prepaid cards or gift certificates,

To reiterate, this is an unethical business practice. There is no basis,
whatsoever, for the imposition of the expiration. It is downright cheating
the consumers of the moneys they paid for.

In fact, such practice can also be deemed illegal. The consumers, as
buyers, have paid or gave consideration (in advance) for service or goods to
be provided or sold by the seller-establishment. This is basically a contract
of sale, except that the goods or services were paid in advance. This
variation is even very favorable to the merchant establishment as it has been
paid already, even if it still has to deliver the goods or render services.

In such a contract, the seller does have any right to unilaterally decide
not to deliver the goods or provide the services by imposing an expiration of
the time the buyer should get the goods or use the services.

It should never be construed that the buyer purchased the prepaid card
or the gift certificate. This is because such items are worthless. Its value is
in the amount of goods or services such card or certificate can purchase from
the merchant.

Sadly however, this business practice continues to pervade.
In one instance, the National Telecommunications Commission, upon

a directive by Congress, increased the shelf life or the expiration of cell
phone cards. And it was as if such act was manna from heaven that the


consumers should be very grateful for. It was like thanking the robber for
sparing the life of the victim.

This proposed measure seeks to prohibit the imposition of expiration
for all prepaid cards or devices. It likewise prohibits the refusal of
establishments to honor prepaid devices on the ground of its expiry. And, it
seeks to provide for criminal penalties for establishments violating such
prohibitions.

This bill is a reform measure aimed at changing the way big business
conduct their enterprise and empowering consumers who long been prey to
such incessant greed.

In view of the foregoing, the immediate passage of this bill,
previously filed in the Sixteenth Congress as House Bill No. 200, is
earnestly sought.

ARTHUR C. YAP
Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

944")
House Bill No. 2447

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

AN ACT
PROHIBITING THE IMPOSITION OF EXPIRATION OF
PREPAID CARDS, CERTIFICATES OR OTHER
DEVICES OF PREPAYMENT OF GOODS AND
SERVICES, PROVIDING PENALTIES, FOR
VIOLATIONS THEREOF, AND FOR OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled.

SECTION 1. Short Title. — This Act shall be known as the “Prepaid
Expiration Prohibition Act of 2016”.
SECTION 2. Declaration of Policy. — It hereby declared the policy
of the State to protect and empower consumers, reform the unprincipled
business practices of big establishments.
SECTION 3. Definition of Terms. For purpose of this Act, the
following terms shall mean:
a. Prepaid — goods and/or services paid for in advance, Provided,

that, those which were granted or availed of without any

consideration shall not fall within this definition.


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b. Prepaid Device — is any device, in the form of a card, certificate,
coupon, document, record, code, plate, electronic serial number,
identification code or number, or any other proof of payment or
means to pay a prepaid good and or service, usually with a face
value or with memory storage of its monetary value.

SECTION 4. Prohibition on Imposition of Expiration for Prepaid

Cards or Other Proof of Prepaid Services. Any provision of law to the

contrary notwithstanding, the imposition of an expiration of the date to use a

prepaid device is hereby prohibited. The refusal of an establishment to honor

a prepaid device due to its expiration shall likewise be prohibited.

SECTION 5. Penalties - Any goods or services provider who shall be

found guilty of violating any of the provisions of this Act shall be punished

with:

. imprisonment ranging from thirty (30) days to six (6) months or fine

ranging from One Thousand Pesos (P1,000.00) to Ten Thousand

Pesos (P 10,000.00), or both, at the discretion of the Court;

. imprisonment ranging from six (6) months and one (1) day to two (2)

years or fine ranging from Twenty Thousand Pesos (P20,000.00) to
Fifty Thousand Pesos (P50,000.00), or both, at the discretion of the

Court;

. imprisonment ranging from two (2) years and one (1) day to six (6)

years, or fine of ranging from One Hundred Thousand Pesos
(P100,000.00) to Five Hundred Thousand Pesos (P500,000.00), or

both, at the discretion of the Court.


If the establishment is a juridical person, the penalty of imprisonment
shall be imposed against the responsible officer.

SECTION 6. Separability Clause. - If any provision of this Act, or
any parts thereof, is declared unconstitutional, the same shall not affect the
validity and effectivity of the other portions.

SECTION 7. Repealing Clause. - All laws, executive orders,
presidential decrees, proclamations, rules, regulations, issuances and
enactments of parts thereof inconsistent with this Act are hereby repealed or
modified accordingly.

SECTION 8. Effectivity. - This Act shall take effect fifteen (15) days
from its complete publication in the Official Gazette of in a newspaper of

general circulation in the Philippines, whichever comes earlier.

APPROVED.