NINETEENTH CONGRESS OF THE )
PEPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

355€

House Bill No.

Introduced by Representative Ralph G, Recto

AN ACT
GRANTING BROADER PROTECTION TO CONSUMERS AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 7394, OTHERWISE KNOWN AS “THE
CONSUMER ACT OF THE PHILIPPINES”

EXPLANATORY NOTE

This bill seeks to amend Republic Act (R.A.) No. 7394 otherwise known as the
“Consumer Act of the Philippines.”

In order to maintain and strengthen the promotion of consumer interest and
welfare in relation to the business and industry practice as well as the production
and distribution of consumer products, this bill mandates government to adopt
measures and formulate policies taking into account the eight (8) Consumer Bill of
Rights namely, the right to: basic needs, choose products, representation, redress,
consumer education, safety, healthy environment, and sanitation. These rights have
been endorsed by the United Nations through the United Nations Guidelines for
Consumer Protection. Corollary to the consumer rights is the provision of five (5)
consumer responsibilities to wit: critical awareness, action, social concern,

environmental awareness, and solidarity.

The bill also provides a new Article mandating the English or Filipino
translation of product labels written in foreign characters or languages. This will
allow better understanding of the contents, features and uses of imported products
for consumer protection against unsafe products. A new provision permanently


banning suppliers who engage in the importation of defective goods is also proposed
to be included.

The coverage of the provisions on advertising and promotion is to be
expanded to include those for consumer products, services and credit facilities which
include sponsorships of programs, concerts, games, shows and similar activities.

‘A new Article also protects consumers from aggressive marketing promotions
that significantly impair the average consumer's freedom of choice with regard to
the purchase of a product or service.

The chapter on Advertising and Sales Promotion is further strengthened with
the addition of advertising general principles and a specific guideline in the
presentation of advertisements. Hence, among others, the bill provides instructions
on how advertisements should treat specific claims on ingredients, results of
researches and surveys, scientific claims, testimonials and endorsements, and

leadership claims.

The bill increases the penalties for violations of any provision of the Consumer
Act of the Philippines. It sets a uniform penalty to be imposed on any violations and
lengthens the period of prescription for claims relative to deceptive or unfair and
unconscionable practice from two (2) to three (3) years.

Further amendments to R.A. No. 7394 include the definition of terms in

accordance with new technologies and trade practices. Notable of these new
definitions is the one for “Mass Media” which now includes the internet, mobile
phones, and similar electronic devices.

The chapter on Consumer Product Quality and Safety will also be amended by
adding the grant of authority for the automatic closing down of any establishments
caught in flagrante delicto selling, distributing, manufacturing, producing, or
importing substandard and hazardous products.

#


The above cited amendments are intended to enhance consumer protection
and to promote high ethical standards in trade practices. Hence, the passage of this
bill is earnestly sought.

mima


NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES. )
First Regular Session )

HOUSE OF REPRESENTATIVES

AINo. 2298

House Bill No.

Introduced by Representative Ralph G. Recto

AN ACT
GRANTING BROADER PROTECTION TO CONSUMERS AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 7394, OTHERWISE KNOWN AS “THE
CONSUMER ACT OF THE PHILIPPINES”

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 Enhanced Consumer
Act”.
Sec. 2. Republic Act (R.A.) No. 7394, otherwise known as the “Consumer Act
of the Philippines” is hereby amended by inserting a new Article 3 under Title I
General Provisions to read as follows:
“ART. 3. THE EIGHT (8) CONSUMER BILL OF RIGHTS. — THE
GOVERNMENT SHALL ADOPT MEASURES AND FORMULATE
POLICIES TAKING INTO ACCOUNT THE EIGHT (8) BASIC
CONSUMER RIGHTS. THE CONSUMERS SHALL BE ENTITLED
TO:
A) RIGHT TO BASIC NEEDS — THE GUARANTEED
SURVIVAL AND, THUS, BE PROVIDED WITH ADEQUATE
FOOD, CLOTHING, SHELTER, HEALTH CARE, EDUCATION
AND SANITATION;
B) RIGHT TO CHOOSE — THE CHOICE OF PRODUCTS
AT COMPETITIVE PRICES WITH ASSURED
SATISFACTORY QUALITY IN ACCORDANCE WITH
GOVERNMENT STANDARDS;

1


c) RIGHT TO REPRESENTATION = THE
CONSIDERATION OF CONSUMER INTERESTS IN THE
FORMULATION AND EXECUTION OF GOVERNMENT
POLICIES;

D) RIGHT TO REDRESS — CLAIM COMMENSURATE
COMPENSATION FOR MISREPRESENTATION,
SUBSTANDARD, DEFECTIVE GOODS OR
UNSATISFACTORY SERVICES;

—) RIGHT To CONSUMER EDUCATION =
ACQUISITION OF KNOWLEDGE AND SKILLS NECESSARY
TO MAKE AN INFORMED CHOICE;

F) RIGHT TO SAFETY — THE PROTECTION AGAINST
THE MARKETING OF GOODS OR PROVISION OF
SERVICES THAT ARE HAZARDOUS TO HEALTH AND LIFE;
G) RIGHT TO A HEALTHY ENVIRONMENT — LIVE AND
WORK IN AN ENVIRONMENT WHICH PERMITS A LIFE OF
DIGNITY AND WELL-BEING AND WHICH IS NEITHER
THREATENING NOR DANGEROUS; AND

H) RIGHT TO INFORMATION —- PROTECTION
AGAINST DISHONEST OR MISLEADING ADVERTISING
OR LABELING AND BE GIVEN THE PRODUCT FACTS AND
INFORMATION NEEDED TO MAKE AN INFORMED
CHOICE.”

Sec. 3. R. A. No. 7394, is hereby amended by inserting a new Article 4 under
Title I General Provisions to read as follows:
“ART. 4. THE FIVE (5) CONSUMER RESPONSIBILITIES. —-THE
CONSUMER SHALL EXERCISE THE FOLLOWING
RESPONSIBILITIES:

A) CRITICAL AWARENESS — BE MORE ALERT AND
QUESTIONING ABOUT THE USES, THE PRICE AND
QUALITY OF GOODS AND SERVICES PURCHASED;


B) CONSUMER ACTION - ASSERT AND ACT TO
ENSURE THAT CONSUMER RIGHTS ARE PROTECTED AND
THE CONSUMER IS NOT EXPLOITED;

C) SOCIAL CONCERN — BE MORE AWARE OF THE
IMPACT OF CONSUMPTION ON OTHER CITIZENS,
ESPECIALLY THE DISADVANTAGED OR POWERLESS
GROUPS, WHETHER IN THE LOCAL, NATIONAL, OR
INTERNATIONAL COMMUNITY;

D) ENVIRONMENTAL AWARENESS — UNDERSTAND
THE ENVIRONMENTAL CONSEQUENCES OF
CONSUMPTION. THE CONSUMER SHOULD RECOGNIZE
INDIVIDUAL AND SOCIAL RESPONSIBILITY TO
CONSERVE NATURAL RESOURCES AND PROTECT THE
EARTH FOR FUTURE GENERATIONS; AND

£) SOLIDARITY —- ORGANIZE CONSUMER GROUPS TO
DEVELOP THEIR STRENGTH AND INFLUENCE TO
PROMOTE AND PROTECT CONSUMER INTERESTS.”

Sec. 4. Article 4, Title 1 - General Provisions of R. A. No. 7394, is hereby
amended and renumbered to read as follows:
“art. £446. Definition of Terms. —For purposes of this Act, the term:

a) xxx

Koes

"n) Consumer — shall refer to a natural person who is a
purchaser, lessee, recipient or prospective purchaser, lessor or
recipient of consumer products, services, __credit,
TECHNOLOGY, ADVERTISING OR PROMOTION, AND
OTHER ITEMS [E4} OF COMMERCE.

“xx

“q) Consumer products and services — shall refer to goods,
services and credits, debts or obligations, SERVICES which are
primarily for personal, family, household or agricultural
purposes, which shall include but not limited to food, drugs,

3


cosmetics, and devices, PRODUCT, MERCHANDISE, GOODS,
CREDIT, TECHNOLOGY AND OTHER TRANSACTIONS OR
MATTERS INTENDED TO BE COVERED BY THIS ACT.
“xXx

“u) Cosmetics - shall refer to [()-articles-intended—to—be
Fubbed—peured,—sprinided or sprayec_on;—introduced-inte—or
etherwise—applied to-the-human_bedy_orany-part-thereof-fer
cleansing,-beautifying; promoting attractiveness,or-altering the
appearance;and-(2)-article-intended-foru: ponent-of

ecards aymeeeliac mas wre sit eetecil
pen e]

y
ANY SUBSTANCE OR PREPARATION INTENDED TO BE
APPLIED ON THE VARIOUS EXTERNAL PARTS OF THE
HUMAN BODY INCLUDING THE TEETH AND THE
MUCOUS MEMBRANES OF THE ORAL CAVITY FOR THE
PURPOSE EXCLUSIVELY OR MAINLY FOR CLEANING,
PERFUMING, CHANGING APPEARANCE, CORRECTING
BODY ODORS, OR MAINTAINING IN HEALTHY
CONDITION.”

"Xx

*w) Credit card — shall refer to any card, plate, coupon book or
other credit SINGLE device existing for the purpose of BEING
USED FROM TIME TO TIME UPON PRESENTATION TO
obtain[ing] money, property, labor or services on credit.

weed

“aj) Guarantee — shall refer to an expressed or implied
assurance of the REAL quality, PRICE, PROMOTION of the
consumer products and services offered for sale or length of
satisfactory use, COSTS OR OTHER SIMILAR CLAIMS to be
expected from SUCH CONSUMER productS or SERVICES
BASED ON APPLICABLE AND ACTUAL DOCUMENTS IN
ACCORDANCE WITH THE LAW, MORALS, GOOD FAITH
AND PUBLIC POLICY.”


aa us

“XxX

“at) Mass media — shall refer to any means or methods used to
convey advertising messages to the public such as television,
radio, THE INTERNET, MOBILE PHONES AND SIMILAR
ELECTRONIC DEVICES, magazines, cinema, billboards,
posters, streamers, hand bills, leaflets, mails and the like.

"KK

“pm) Sales Promotion — shali refer to techniques intended for
broad consumer participation which contain promises of gain
such as prizes, in cash or in kind, OR AN OPPORTUNITY TO
WIN ANY PRIZES OR FREE SERVICES, OR GIFT, OR ANY
SIMILAR SCHEME, as reward for TRANSACTING FOR,
RECEIVING, OR purchasfe}ING [the-purchase-of] a product,
security, service or winning in contest, game, tournament and
other similar competitions OR CHALLENGES which involve
determination of winner/s and which utilize mass media or other
widespread media of information such as INFORMATION AND
COMMUNICATIONS TECHNOLOGY. It also means
techniques purely intended to increase the sales, patronage
and/or goodwill of [a—preduct], TRANSACTION FOR,
PURCHASING, OR RECEIVING OF, CONSUMER
PRODUCTS AND SERVICES.

"KK X

“bn) Seller — shall refer to a person engaged in the business of
selling consumer products AND SERVICES directly to
consumers. It shall include a supplier or distributor if (1) the
seller is a subsidiary or affiliate of the supplier or distributor; (2)
the seller interchanges personnel or maintains common or
overlapping officers or directors with the supplier or distributor;
or (3) the supplier or distributor provides or exercises
supervision, direction or control over the selling practices of the

seller.


1 “KX X

2 “br) Standard — shall refer to a set of conditions to be fulfilled to
3 ensure the quality and safety of a product AND SERVICE;

4 “XX.”

s Sec. 5. Article 6, Chapter I ~ Consumer Product Quality and Safety of R. A.

No. 7394 is hereby amended to read as follows:
“art, [6] 8. Implementing Agencies. ~ The provisions of this Act and its

a) the Department of Health with respect to PROCESSED

6

1

8 implementing rules and regulations shall be enforced by:

9

0 food, drugs, cosmetics, devices and HAZARDOUS substances;

ul b) the Department of Agriculture with respect to products

12 related to agriculture AND FISHERIES; and

13 ©) the Department of Trade and Industry with respect to
14 other consumer products not specified above.”

15 SEC. 6. Article 8, Chapter I - Consumer Product Quality and Safety of R. A.
16 No. 7394 is hereby amended to read as follows:

7 “Art. [8]10. Publication of Consumer Product Standards. — The
18 department concerned shall, upon promulgation of the above
19 standards, publish or cause the publication of the same EITHER in a
20 newspaper of general circulation, OR in the OFFICIAL GAZETTE,
21 AND IN THE DEPARTMENT'S OR AGENCY'S OFFICIAL WEB
2 PORTAL. It may likewise conduct an information campaign through
23 other means deemed effective to ensure the proper guidance of
24 consumers, businesses, industries and other sectors concerned.”

25 Sec. 7. Article 10, Chapter 1 — Consumer Product Quality and Safety of R. A.
26 No, 7394 is hereby amended to read as follows:

27 “art. [40]12. Injurious, Dangerous and Unsafe Products. - Whenever
28 the departments find, by their own initiative or by petition of a
29 consumer, that a consumer product is found to be injurious, unsafe or
30 dangerous, it shall, after due notice and hearing, make the appropriate
31 order for its recall, prohibition or seizure from public sale or

32 distribution: Provided, That, in the sound discretion of the department

6


it may declare a consumer product to be imminently injurious, unsafe
or dangerous, and order its immediate recall, ban or seizure from
public sale or distribution, in which case, the seller, distributor,
manufacturer or producer thereof shall be afforded a hearing within
forty-eight (48) hours from such order: PROVIDED, FURTHER,
THAT ANY ESTABLISHMENT CAUGHT JN FLAGRANTE DELICTO
SELLING, DISTRIBUTING, MANUFACTURING, PRODUCING, OR
IMPORTING PREVIOUSLY DECLARED SUBSTANDARD AND
HAZARDOUS PRODUCTS SHALL BE AUTOMATICALLY CLOSED
AND SHUT DOWN.”

Nyssa

SEC. 8. Article 11, Chapter I ~ Consumer Product Quality and Safety of R. A.
No. 7394 is hereby amended to read as follows:

“Art. [44]13. Amendment and Revocation of Declaration of the
Injurious, Unsafe or Dangerous Character of a Consumer Product. -
Any interested person may petition the appropriate department to
commence a proceeding for the issuance of an amendment or
revocation of a consumer product safety rule or an order declaring a
consumer product injurious, dangerous and unsafe.
In case the department, upon petition by an interested party or its own
initiative and after due notice and hearing, determines a consumer
product to be substandard or materially defective, it shall so notify the
manufacturer, distributor or seller thereof of such finding and order
such manufacturer, distributor or seller to WITHOUT DELAY:

a) give notice to the public of the defect or failure to comply

with the product safety standards;

b) give notice to each distributor or seller of such product;

and

ras ‘WHEN POSSIBLE, GIVE NOTICE TO EVERY PERSON

TO WHOM SUCH CONSUMER PRODUCT WAS DELIVERED

OR SOLD.


16

The department shall also direct the manufacturer, distributor or seller
of such product to extend WITHIN REASONABLE TIME any or all of
the following remedies to the injured person:
“ea
Sec. 9. R. A. No. 7394 is hereby amended by inserting a new Article 14 under
Chapter I - Consumer Product Quality and Safety to read as follows:
“ART. 14, PHYSICAL SAFETY. — MANUFACTURERS OR
DISTRIBUTORS SHOULD ENSURE THAT AS SOON AS THEY
BECOME AWARE OF UNFORESEEN HAZARDS AFTER PRODUCTS
ARE PLACED ON THE MARKET, THEY SHOULD NOTIFY THE
GOVERNMENT AUTHORITIES CONCERNED AND, AS
APPROPRIATE, INFORM THE PUBLIC WITHOUT DELAY. THE
GOVERNMENT SHOULD ALSO ESTABLISH MECHANISMS FOR
ENSURING THAT CONSUMERS ARE PROPERLY INFORMED OF
SUCH HAZARDS.”
Sec. 10. Article 52, Chapter I - Deceptive, Unfair, and Unconscionable Sales
Acts or Practices, Title III of R. A. No. 7394 is hereby amended to read as follows:
“art. [52] 55. Unfair or Unconscionable Sales Act or Practice. “x x x

In determining whether an act or practice is unfair and unconscionable,

the following circumstances shail be considered:

“ayxxx

"2x &

“d) that the transaction that the seller or supplier induced the

consumer to enter into was excessively one-sided in favor of the

seller or supplier SUCH AS BUT NOT LIMITED TO:

I. THAT WHEN THE CONSUMER TRANSACTION

WAS ENTERED INTO, THE SELLER OR
SUPPLIER IMPOSED UPON THE CONSUMER
TERMS AND CONDITIONS GROSSLY
DISADVANTAGEOUS TO THE LATTER WHO IS
REDUCED TO THE ALTERNATIVE OF
ACCEPTING THE CONTRACT OR LEAVING IT,

8


COMPLETELY DEPRIVED OF THE
OPPORTUNITY TO BARGAIN ON EQUAL
FOOTING; AND

IL. THE SELLER OR SUPPLIER EMPLOYS AN
AGGRESSIVE MARKETING PRACTICE THAT
SIGNIFICANTLY CONSTRAINS OR IMPAIRS
OR IS LIKELY TO SIGNIFICANTLY
CONSTRAIN OR IMPAIR THE AVERAGE
CONSUMER’S FREEDOM OF CHOICE OR
CONDUCT WITH REGARD TO THE PURCHASE
OF A PRODUCT OR SERVICE THAT CAUSES
THE CONSUMER OR IS LIKELY TO CAUSE
THE CONSUMER TO ENTER INTO A
TRANSACTION DIFFERENT FROM THE ONE
THE CONSUMER WOULD HAVE INTENDED,
OR THE CONSUMER WOULD NOT HAVE
DONE WITHOUT THE MARKETING
PRACTICE.”

Sec. 11, Article 81, Chapter 1V - Labeling and Fair Packaging, Title III of R. A.
No. 7394 is hereby amended to read as follows:

“art. [82]84. Price Tag Requirement. — It shall be unlawful to offer any
consumer product OR SERVICE for retail sale to the public without an
appropriate price tag, label, or marking, OR WITH MORE THAN
ONE PRICE, OR DIFFERENT PRICE TAGS, LABELS, OR
MARKINGS publicly displayed to indicate of each article and said
products shall not be sold at a price higher than that stated therein
and without discrimination to all buyers: PROVIDED, THAT IT
SHALL BE UNLAWFUL FOR ANY RETAILER TO CHARGE THE
CUSTOMERS MORE THAN THE ACTUAL CASH RETAIL PRICE OF
THE GOODS OR SERVICES PURCHASED WHEN SUCH
PURCHASE IS DONE WITH THE USE OF CREDIT CARD AND/OR
TO LIMIT BARGAIN SALE ITEMS AND SERVICES TO CASH


PURCHASES: Provided, further, That lumber sold, displayed or
offered for sale to the public shall be tagged or labeled by indicating
thereon the price and the corresponding official name of the wood:
PROVIDED, FINALLY, That if consumer products for sale are too
small or the nature of which makes it impractical to place a price tag
thereon price list placed at the nearest point where the products are
displayed indicating the retail price of the same may suffice.”

Sec. 12. R. A. No. 7394 is hereby amended by inserting a new Article 87
under Chapter IV Labeling and Fair Packaging, Title III to read as follows:

“ART. 87. ENGLISH OR FILIPINO TRANSLATIONS OF PRODUCT
LABELS WRITTEN IN FOREIGN CHARACTERS OR LANGUAGES.
— CONSUMER PRODUCTS WITH PRODUCT LABELS WRITTEN
IN FOREIGN CHARACTERS OR LANGUAGE SHALL BE ALLOWED
ENTRY INTO THE COUNTRY AND INTRODUCED INTO
COMMERCE ONLY IF THEY HAVE A CORRESPONDING ENGLISH
OR FILIPINO TRANSLATION TO ENABLE THE AUTHORITIES TO
DETERMINE WHETHER THE PRODUCT HAS COMPLIED WITH
ALL THE OTHER LABELING REQUIREMENTS AS WELL AS
PROVIDE THE CONSUMERS PROPER GUIDANCE ON THE
CONTENTS AND ORIGIN OF THE PRODUCT.”

Sec. 13. R. A. No. 7394 is hereby amended by inserting a new Article 88
under Chapter IV Labeling and Fair Packaging to read as follows:

“ART. 88. OFFICIAL SOURCES OF INFORMATION FOR
IMPORTED CONSUMER PRODUCTS. — IMPORT DATA FROM
THE BUREAU OF CUSTOMS AND BUREAU OF IMPORT
SERVICES SHALL BE RECOGNIZED AS OFFICIAL SOURCES OF
INFORMATION TO VALIDATE THE FOLLOWING INFORMATION
RELATIVE TO A _ PARTICULAR IMPORTED CONSUMER
PRODUCT:

1. COUNTRY OF MANUFACTURE;

2. NAME AND ADDRESS OF MANUFACTURER/

EXPORTER;

lo


3. NAME AND ADDRESS OF IMPORTER/CONSIGNEE;
4. VALUE AND VOLUME OF SHIPMENT;
5. DATE OF ARRIVAL; AND
6. OTHER INFORMATION RELEVANT TO THE
SHIPMENT IN QUESTION.”
Sec. 14. R. A. No. 7394 is hereby amended by inserting a new Article 115
under Chapter VI - Advertising and Sales Promotion, Title III to read as follows:
“ART. 115. COVERAGE OF ADVERTISING AND SALES
PROMOTION. — THE PROVISIONS ON ADVERTISING AND
SALES PROMOTION SHALL APPLY TO ADVERTISING AND
PROMOTION OF CONSUMER PRODUCTS, SERVICES AND
CREDIT FACILITIES, WHICH INCLUDE SPONSORSHIPS OF
PROGRAMS, CONCERTS, GAMES, SHOWS AND SIMILAR
ACTIVITIES: PROVIDED, THAT WITH RESPECT TO FOOD,
DRUGS, DEVICES, COSMETICS AND HAZARDOUS SUBSTANCES
AND AGRICULTURAL PRODUCTS, THE SAME SHALL BE UNDER
THE JURISDICTION OF THE DEPARTMENTS CONCERNED.”
Sec. 15. R. A. No. 7394 is hereby amended by inserting a new Article 116
under Chapter VI - Advertising and Sales Promotion, Title II] to read as follows:
“ART. 116. COVERAGE, — THESE PROVISIONS SHALL APPLY
TO THE PHILIPPINE ADVERTISING COMMUNITY WHICH
INCLUDES ADVERTISERS, ADVERTISING AGENCIES, MEDIA
AND ADVERTISING SUPPORT GROUPS BUT SHALL NOT APPLY
TO THE FOLLOWING:
4. PUBLIC SERVICE AND EMERGENCY ANNOUNCEMENTS OF
UTILITY COMPANIES;
2. RELIGIOUS, POLITICAL AND PUBLIC ISSUE
ADVERTISEMENTS AND ANNOUNCEMENTS, EXCEPT
WHERE THESE INVOLVE OR SEEK TO PROMOTE
COMMERCIAL TRANSACTIONS; AND
3, STANDARD TRANSPORT ANNOUNCEMENTS, CLASSIFIED
ADVERTISEMENTS AND OBITUARIES.”

Nl


Sec, 16. R. A. No. 7394 is hereby amended by inserting a new Article 117
under Chapter VI — Advertising and Sales Promotion, Title III to read as follows:

“ART. 117. ADVERTISING GENERAL PRINCIPLES. —
ADVERTISEMENTS SHALL BE GUIDED BY THE FOLLOWING
PRINCIPLES:
(1) ADVERTISING MUST PROVIDE THE GENERAL PUBLIC
WITH RELEVANT AND TRUTHFUL INFORMATION ON
PRODUCTS AND SERVICES, THEREBY HELPING
CONSUMERS MAKE INFORMED CHOICES; AND
(2) THE ADVERTISING INDUSTRY SHOULD CONTINUE
TO IMPROVE THE LEVELS AND STANDARDS OF
ADVERTISING.”

Sec. 17. R. A. No, 7394 is hereby amended by inserting a new Article 118
under Chapter VI — Advertising and Sales Promotion, Title III to read as follows:

"ART. 118. PRESENTATION OF ADVERTISEMENTS. — (1)
CLAIMS OF PRODUCTS AND SERVICE FEATURES OR THEIR
INTENDED USAGE SHOULD BE CLEARLY PRESENTED AND
SHOULD NOT MISLEAD OR BE LIKELY TO MISLEAD THE
PERSONS TO WHOM THEY ARE ADDRESSED BY INACCURACY,
AMBIGUITY, EXAGGERATION OR OMISSION;

(2) ANY TEST OR DEMONSTRATION MAY BE USED ONLY IF IT
DIRECTLY PROVES THE CLAIMED PRODUCT OR SERVICE
FEATURE OR CHARACTERISTICS AND SHOULD BE PRESENTED
CLEARLY AND ACCURATELY.

(3) CORPORATE ADVERTISING MUST BE FAIR, TRUTHFUL AND
ACCURATE; IT SHOULD NOT CONTAIN ANY EXAGGERATIONS
OR SWEEPING GENERALIZATIONS THAT MAY MISLEAD THE
PUBLIC REGARDING THE ADVERTISER OR THE ATTRIBUTES
OF ITS PRODUCTS OR SERVICES: PROVIDED, THAT WHERE
THE ADVERTISEMENTS CONTAIN SPECIFIC CLAIMS
REGARDING THE COMPANY OR ITS PRODUCTS OR SERVICES,
SUCH CLAIMS MUST BE VERIFIABLE AND SUBJECT TO


! SUBSTANTIATION IN THE SAME MANNER AS REGULAR
2 PRODUCT OR SERVICE ADVERTISEMENTS.”

3 Sec. 18. Article 110, Chapter VI — Advertising and Sales Promotion, Title III
4 of R. A. No, 7394 is hereby amended to read as follows:

5 “art, [140] 119. False, Deceptive or Misleading Advertisement. — It
6 shall be unlawful for any person to disseminate or to cause the
7 dissemination of any false, deceptive or misleading advertisement by
8 Philippine mail or in commerce by print, radio, television, outdoor

9 advertisement, INTERNET, MOBILE PHONE, or other medium for
10 the purpose of inducing or which is likely to induce directly or indirectly
i the purchase of consumer products or services.”

& “xXx”

13 Sec. 19. R. A. No. 7394 is hereby amended by inserting a new Article 120
14 under Chapter VI - Advertising and Sales Promotion, Title III to read as follows:

15 “ART. 120. SPECIFIC CLAIMS. - (1) INGREDIENT
16 ADVERTISING — (A) ADVERTISEMENTS SHOULD NOT
7 CONTAIN ANY REFERENCE WHICH COULD LEAD THE PUBLIC
18 TO ASSUME THAT A PRODUCT CONTAINS A SPECIFIC
19 INGREDIENT UNLESS THE INGREDIENT’S QUANTITIES AND
20 PROPERTIES AS WELL AS THE MATERIAL BENEFIT THAT
21 RESULTS FROM ITS INCLUSION IN THE PRODUCT
n FORMULATION HAVE BEEN TECHNICALLY SUBSTANTIATED;
2B AND (B) ADVERTISEMENTS SHOULD NOT IMPLY THAT A
4 CERTAIN BENEFIT IS DUE TO A SPECIFIC INGREDIENT
25 UNLESS A VERIFIABLE CAUSE AND EFFECT RELATIONSHIP
26 EXISTS.

27 (2) PROFESSIONAL DATE REFERENCES — ADVERTISEMENTS
28 USING THE RESULTS OF A BONA FIDE RESEARCH, SURVEYS,
2» OR TEST RELATING TO A PRODUCT SHOULD NOT BE
30 PRESENTED INACCURATELY OR IN A MISLEADING MANNER,
31 NOR SHOULD IT CLAIM ANY IMPLICATIONS BEYOND WHAT IS

CLEARLY ESTABLISHED BY RESEARCH, SURVEY OR TEST.

13


(3) SCIENTIFIC CLAIMS — (A) VISUAL REPRESENTATIONS OF
LABORATORY SETTINGS MAY ONLY BE EMPLOYED PROVIDED
THE RESEARCH WAS CONDUCTED IN THE LABORATORY; AND
(B) IN CASE OF REFERENCES TO TESTS BY PROFESSIONALS
OR INSTITUTIONS INCLUDING BUT NOT LIMITED TO
DOCTORS, ENGINEERS, AND RESEARCH FOUNDATIONS, THE
DOCUMENTED AND AUTHORITATIVE EVIDENCE SHOULD BE
SUBMITTED TO SUBSTANTIATE SUCH TESTS AND CLAIMS
BASED THEREON.

(4) NUMBER ONE OR LEADERSHIP CLAIM — (A) NO “NUMBER
1” CLAIM WITH RESPECT TO ANY PRODUCT OR SERVICE
SHALL BE ALLOWED UNLESS IT IS CLEARLY DELINEATED AND
QUALIFIED AS TO RENDER THE CLAIM OBJECTIVELY
VERIFIABLE. THE CLAIM SHOULD, IN ANY CASE, BE
SUBSTANTIATED.

(5) TESTIMONIALS — (A) TESTIMONIAL CLAIMS RELATING TO
THE PRODUCT BEING ADVERTISED SHOULD BE GENUINE AND
TRUTHFUL; (B) INDIVIDUALS ENDORSING A PRODUCT OR
SERVICE IN COMMUNICATION MATERIALS AND WHO IS
PRESENTED AS AN EXPERT MUST HAVE DEMONSTRABLE
CREDENTIALS TO SUBSTANTIATE THE CLAIMED EXPERTISE.
THE ENDORSEMENT MUST BE SUPPORTED BY AN ACTUAL
EXERCISE OF EXPERTISE IN EVALUATING THE PRODUCT OR
SERVICE CHARACTERISTICS. SUCH EVALUATION MUST BE
RELEVANT AND AVAILABLE TO AN ORDINARY CONSUMER'S
USE OF THE PRODUCT; AND (C) ENDORSEMENTS BY AN
ORGANIZATION ARE CONSIDERED AS JUDGMENT BY A
GROUP WHOSE COLLECTIVE EXPERIENCE OUTWEIGHS THAT
OF AN INDIVIDUAL MEMBER. ADVERTISER MUST PROVIDE
EVIDENCE THAT THE ORGANIZATION’S ENDORSEMENT WAS.
REACHED BY A PROCESS SUFFICIENT TO ENSURE THAT IT
REFLECTS THE COLLECTIVE JUDGMENT OF THE

14


ORGANIZATION. THE ORGANIZATION MAY BE CONSIDERED
LEGITIMATE IF IT CAN PRESENT PROOF OF EXISTENCE FOR
AT LEAST ONE (1) YEAR.”

Sec. 20. R. A. No. 7394 is hereby amended by inserting a new Article 125
under Chapter VI - Advertising and Sales Promotion, Title III to read as follows:

“ART. 125. COVERAGE AND EXEMPTION OF THE SALES
PROMOTION OF CONSUMER PRODUCTS AND SERVICES. (A)
COVERAGE OF THE SALES PROMOTION OF CONSUMER
PRODUCTS AND SERVICES. — THE PROVISIONS ON SALES
PROMOTION OF THE CONSUMER PRODUCTS AND SERVICES
SHALL APPLY TO ALL PROMOTIONAL CAMPAIGNS AND
ANNOUNCEMENTS FOR CONSUMER PRODUCTS, SERVICES,
CREDIT FACILITIES, AS WELL AS BEAUTY CONTESTS,
NATIONWIDE IN CHARACTER.
THE PROVISIONS OF SALES PROMOTION OF CONSUMER
PRODUCTS AND SERVICES SHALL LIKEWISE APPLY TO
SIMILAR ACTIVITIES SUCH AS BUT NOT LIMITED TO IN-
STORE PROMOTIONS OFFERING REDUCED PRICES, SPECIAL
OFFERS, PRODUCT DEMONSTRATION, PRODUCT SAMPLES,
REBATES, DISCOUNTS, PREMIUM-IN-PACK, AND EXPERT
ADVICE.
(B) EXEMPTION OF THE SALES PROMOTION OF CONSUMER
PRODUCTS AND SERVICES — THE PROVISIONS OF SALES
PROMOTION OF CONSUMER PRODUCTS AND SERVICES SHALL
NOT APPLY TO THE FOLLOWING PROMOTIONAL CAMPAIGNS
OR ACTIVITIES:
(1) GOVERNMENT OR ANY OF ITS AGENCIES OR
INSTRUMENTALITIES, WHEN THE SAME IS CONDUCTED
IN THE EXERCISE OF THEIR GOVERNMENTAL
FUNCTIONS;


(2) PRIVATE ENTITIES IN JOINT PROJECT/S WITH
ANY GOVERNMENT AGENCY UNDER THE PRECEDING
PARAGRAPH; AND.

(3) SOCIAL, CIVIC, POLITICAL, RELIGIOUS,
EDUCATIONAL, PROFESSIONAL AND OTHER SIMILAR
ORGANIZATIONS WHICH EXTEND PROMOTIONAL
ACTIVITY AMONG THEIR MEMBERS: PROVIDED, THAT
THE PROMOTIONAL ACTIVITY IS NOT CONSIDERED
SALES PROMOTIONAL CAMPAIGN AS DEFINED UNDER
THIS ACT.”

Sec. 21. Article 116, Chapter VI — Advertising and Sales Promotion, Title III of
R. A. No. 7394 is hereby amended to read as follows:

“ART. [446] 127. Permit to Conduct Promotion. — No person shall
conduct any sales campaigns, including beauty contest, national in
character, sponsored and promoted by PRODUCERS, RETAILERS,
SELLERS, DISTRIBUTORS, SUPPLIERS, IMPORTERS, OR
manufacturing enterprises without first securing a permit from the
concerned department [atteastthirty {36} calendardays] prior to the
commencement thereof. Unless an objection or denial is received
WITHIN 5 (FIVE) DAYS [fifteen—(45}-days] from filing of the
COMPLETE application, the same shall be deemed approved and the
promotion campaign or activity may be conducted: Provided, that any
sales promotion campaign using medical prescriptions or any part
thereof or attachment thereto for raffles or a promise of reward shall
not be allowed, nor a permit be issued thereof.”

Sec, 22. R, A. No. 7394 is hereby amended by inserting a new Article 128
under Chapter VI — Advertising and Sales Promotion, Title III, to read as follows:

“ART. 128. APPLICATION FOR PERMIT. — (A) THE
APPLICATION FOR PERMIT SHALL BE IN THE FORM
PRESCRIBED BY THE DEPARTMENT CONCERNED.

(B) WHO MAY FILE THE APPLICATION FOR PERMIT — THE
PERSON WHOSE CONSUMER PRODUCTS, SERVICES, CREDIT

16


! FACILITIES, BEAUTY CONTESTS, COMPETITION, GAMES

2 SHOWS AND THE LIKE ARE BEING PROMOTED MAY FILE THE
3 APPLICATION FOR PERMIT.

4 THE ABOVE PERSON SHALL SIGN THE APPLICATION
s INDIVIDUALLY OR JOINTLY WITH THE OTHERS OR SUBMIT
6 THEREWITH A TRUE COPY OF ANY WRITTEN AGREEMENT
7 BETWEEN OR AMONG THEMSELVES, REFLECTING THE DEGREE
8 OR EXTENT OF THEIR PARTICIPATION AND RESPONSIBILITY

9 IN THE CONDUCT OF THE PROMOTIONAL ACTIVITY COVERED
10 BY THIS ACT WHERE NO LIMITATION AS TO THE EXTENT OF
i THE LIABILITY OR RESPONSIBILITY IS INDICATED IN SUCH
AGREEMENT, ALL OF THEM SHALL BE JOINTLY AND

13 SEVERALLY LIABLE AND RESPONSIBLE THEREFOR.

14 (C) APPLICATION THROUGH AND BY AN AGENT — WHERE THE
15 PROMOTIONAL CAMPAIGN/ACTIVITY IS APPLIED FOR AND IN
16 BEHALF OF THE PERSONS MENTIONED IN PARAGRAPH (A)
17 HEREOF, THE AGENT SHALL BE AUTHORIZED BY A SPECIAL
18 POWER OF ATTORNEY OR A BOARD RESOLUTION AS

19 EVIDENCED BY A SECRETARY'S CERTIFICATE AS THE CASE
20 MAY BE.”

2) Sec. 23. R. A. No. 7394 is hereby amended by inserting a new Article 129
22 under Chapter VI — Advertising and Sales Promotion, Title III, to read as follows:
ag “ART. 129. PROHIBITED ACTS IN THE CONDUCT OF SALES
4 PROMOTION. — “THE FOLLOWING ACTS ARE PROHIBITED IN
35 THE CONDUCT OF SALES PROMOTION CAMPAIGN:
26 (A) GAMBLING AND WAGERING SCHEMES;
27 (B) USE OF MEDICAL PRESCRIPTIONS; AND

(C) DIRECTLY OR INDIRECTLY TAMPERING WITH THE
2 ENTRIES, PARAPHERNALIA AND/OR- ELECTRONIC

30 DEVICE IN A PROMOTIONAL CAMPAIGN/ACTIVITY
31 COVERED BY THIS ACT OR UNDULY INFLUENCING THE
32 RESULTS THEREOF OR PERFORMING ANY ACT TO THE


1 PREJUDICE OF LEGITIMATE PARTICIPANTS OR
WINNERS.”
3 Sec. 24. R. A. No. 7394 is hereby amended by inserting a new Article 130

4 under Chapter VI — Advertising and Sales Promotion, Title III, to read as follows:

I “ART. 130. VOLUNTARY CANCELLATION OF APPROVED
6 PROMOTIONAL CAMPAIGN/ACTIVITY.

7 (A) VOLUNTARY CANCELLATION BEFORE PUBLICATION — A
8 PERSON MAY VOLUNTARILY CANCEL OR DISCONTINUE THE

9 APPROVED PROMOTIONAL CAMPAIGN/ACTIVITY PROVIDED
10 NO INFORMATION DISSEMINATION AND ADVERTISING
ul THEREON HAS BEEN MADE AND THAT A WRITTEN NOTICE

2 SHALL BE SUBMITTED TO THE DEPARTMENT PRIOR TO SUCH
13 VOLUNTARY CANCELLATION.

14 (B) VOLUNTARY CANCELLATION AFTER PUBLICATION — IF
15 ANY ANNOUNCEMENT, INFORMATION DISSEMINATION OR

16 ADVERTISING OF THE PROMOTIONAL CAMPAIGN/ACTIVITY
17 HAS ALREADY BEEN MADE, BUT THE PROMOTION PERIOD

18 HAS NOT YET COMMENCED, THE DISCONTINUANCE OR
19 CANCELLATION OF THE PROMOTION MAY BE MADE ONLY
2 UPON PRIOR WRITTEN NOTICE TO THE DEPARTMENT WITHIN
21 A PERIOD OF NOT LESS THAN FIVE (5) DAYS BEFORE THE
ya COMMENCEMENT OF THE ORIGINAL INTENDED DATE OF
23 PROMOTION.

24 THE SPONSOR SHALL HONOR THE PROMOTIONAL
25 COMMITMENTS SHOULD IT FAIL TO COMPLY WITH THE
26 REQUIRED PERIOD.

27 (C) VOLUNTARY CANCELLATION OF ONGOING PROMOTION —
28 VOLUNTARY CANCELLATION OR DISCONTINUANCE OR
29 SUSPENSION OF ANY ONGOING PROMOTIONAL

30 CAMPAIGNS/ACTIVITIES SHALL NOT BE ALLOWED EXCEPT
31 UPON PRIOR WRITTEN APPROVAL BY THE DEPARTMENT


WHICH SHALL BE BASED ON ANY OF THE FOLLOWING
GROUNDS:
(1) A FINAL JUDGMENT OF VOLUNTARY INSOLVENCY OR
BANKRUPTCY AGAINST THE PERSON WHO APPLIED;
(II) OCCURRENCE OF ANY FORTUITOUS EVENT OR
FORCE MAJEURE THAT WILL MAKE IT IMPOSSIBLE TO
CONTINUE THE PROMOTIONAL CAMPAIGN OR
ACTIVITY: PROVIDED, HOWEVER, THAT THOSE WHO
HAD ALREADY WON IN THE PROMOTION BEFORE THE
APPROVAL OF THE CANCELLATION OR
DISCONTINUANCE OR SUSPENSION SHALL BE PAID OR
GIVEN THEIR PRIZES.”
Sec, 25. R. A. No. 7394 is hereby amended by inserting a new Article 131
under Chapter VI — Advertising and Sales Promotion, Title III to read as follows:
“ART. 131. RULES ON MECHANICS. — ALL COVERED
PROMOTIONAL CAMPAIGNS AND ACTIVITIES SHALL ABIDE
BY OR COMPLY WITH THE RULES ON THE MECHANICS OF THE
PROMOTION SET FORTH IN THE IMPLEMENTING RULES AND
REGULATIONS OF THE AGENCY CONCERNED.”
Sec. 26. R. A. No. 7394 is hereby amended by inserting a new Article 136
under Chapter VI — Advertising and Sales Promotion, Title III to read as follows:
“ART. 136. SELECTION OF PARTICIPANTS AND WINNERS. —
THE SELECTION OF PARTICIPANTS AND WINNERS OF A
PROMOTIONAL PROGRAM SHALL BE GUIDED BY THE

FOLLOWING:
(A) MODE OF SELECTION OF PROSPECTIVE
PARTICIPANTS/ENTRIES. - PROSPECTIVE

PARTICIPANTS/ENTRIES ARE SELECTED IN A FAIR,
HONEST AND TRANSPARENT MANNER. THERE MUST BE
PROOF OF NOTICE OF SELECTION AND SUCH OTHER
RELEVANT INFORMATION TO THE SELECTED

19


PARTICPANTS IN A MANNER EXPRESSLY PROVIDED
FOR IN THE MECHANICS.
(B) DETERMINATION OF WINNERS — DRAW DATE OR
DATES FOR THE SELECTION OF PARTICIPANTS OR
WINNERS TO A PROMOTIONAL CAMPAIGN OR ACTIVITY
SHALL NOT BE MORE THAN FOURTEEN (14) DAYS AFTER
THE DEADLINE OF THE SUBMISSION OF ENTRIES.
WINNERS MAY BE DETERMINED THROUGH THE USE OF
ANY TECHNIQUE NOT CONTRARY TO LAW, MORALS AND
PUBLIC POLICY PROVIDED THE SAME SHALL BE
CONDUCTED IN A FAIR, HONEST AND TRANSPARENT
MANNER.”
Sec. 27. R. A. No. 7394 is hereby amended by inserting a new Article 148
under Title IV - Consumer Credit Transaction to read as follows:
“ART. 148. IMPLEMENTING AGENCY. —THE BANGKO SENTRAL
NG PILIPINAS SHALL STRICTLY ENFORCE THE PROVISION OF
THIS CHAPTER AND ITS IMPLEMENTING RULES AND
REGULATIONS EXCEPT THOSE WHICH FALL WITHIN THE
JURISDICTION OF THE SECURITIES AND EXCHANGE
COMMISSION.”
Sec. 28. Article 149, Chapter I — Establishment and Composition, Title V of R.
A. No. 7394 is hereby amended to read as follows:
“Art. [449] 166. Composition. The Council shall be composed of
representatives from the following government agencies and non-
government agencies:
a) Department of Trade and Industry;
b) Department of Education, [Culture-aad-Sperts;]
) Department of Health;
¢) Department of Agriculture;
E) DEPARTMENT OF ENERGY;
F) BANGKO SENTRAL NG PILIPINAS;

20


20

G) [e] four (4) representatives from the consumer
organizations of nationwide base to be chosen by the President
among [the] ITS nominees [submitted-by-the-vatious-groups-in
the Philippines]; AND
H) [f]_ two (2) representatives from the business
industry/sector to be chosen by the President from among the
nominees submitted by the various business organizations.”
Sec, 29. Article 151, Chapter I — Establishment and Composition, Title V of R.
A. No. 7394 is hereby amended to read as follows:
“Art. [454] 168. Per Diems of Members. - The members of the Council
shall be entitled to an allowance of FIVE THOUSAND PESOS
(P5,000.00) [five-hundred—peses—{P509,80)] per meeting actually
attended but not more than TWENTY THOUSAND PESOS
(P20,000.00) [two thousand pesos (P2,000.00)] a month.”
Sec. 30. Article 156, Chapter II — Powers and Functions, Title V, of R. A. No.
7394 is hereby amended to read as follows:
“art, [456] 173 Consumer Participation. — The Departments. shall
establish procedures for RECOGNITION OF THE meaningful
participation by consumers or consumer organizations in the
development and review of department rules, policies, and programs.
Such procedures shall include provisions for a forum, where consumers
can express their concerns and recommendations to decision-makers.
The departments shail exert efforts to inform consumers of pending
proceedings where their participation is important.”
Sec. 31, Article 164, Chapter III - Consumer Complaints, Title V, of R. A. No.
7394 is hereby amended to read as follows:
“art. [464] 181. Sanctions. - After investigation, any of the following
administrative penalties may be imposed even if not prayed for in the
complaint:
Ya) xxx
"XX

™E) AUTOMATIC CANCELLATION OF A BUSINESS NAME;


1 fe] F) the imposition of administrative fines in such amount as

deemed reasonable by the Secretary, which shall in no case be
less than FIFTY THOUSAND PESOS (P50,000.00) [Five

4 hundred—pesos—{P500.08)] nor more than ONE MILLION
5 PESOS (P1,000,000.00) [Three—hundred—thousand—pesos
6 (P309,000.09)] depending on the gravity of the offense, and an
7 additional fine of not [more] LESS than One thousand pesos
8 (P1,000.00) FOR [or] each day of continuing violation.”

9 Sec. 32. R. A. No. 7394 is hereby amended by inserting a new Article 185

10 under Title VI — Transitory and Final Provisions to read as follows:
i “ART. 185. CRIMINAL PENALTIES. - ANY PERSON WHO

2 VIOLATES ANY PROVISION OF THIS ACT SHALL, UPON
13 CONVICTION, BE SUBJECT TO A FINE OF NOT LESS THAN
14 FIFTY THOUSAND PESOS (P50,000.00) BUT NOT MOT MORE
15 THAN ONE MILLION PESOS (P1,000,000.00) OR
16 IMPRISONMENT OF NOT LESS THAN THREE (3) YEARS BUT
7 NOT MORE THAN SEVEN (7) YEARS OR BOTH, UPON THE
18 DISCRETION OF THE COURT.”

19 Sec, 33. Article 169, Title VI - Transitory and Final Provisions of R. A. No.
20 7394 is hereby amended to read as follows:

21 “art. [469] 187. Prescription. — All actions or claims accruing under
22 the provisions of this Act and the rules and regulations issued pursuant
2B thereto shall prescribe within [Sve-(2)] THREE (3) years from the
24 time the consumer transaction was consummated or the deceptive or
25 unfair and unconscionable act or practice was committed and in case
26 of hidden defects, from discovery thereof.”

27 Sec, 34. Renumbering of Articles. Articles of R, A. No. 7394 are hereby
28 renumbered accordingly.

29 Sec 35. Implementing Rules and Regulations. — Within sixty (60) days from

30 the effectivity of this Act, the Council shall formulate the rules and regulations to
31 effectively implement the provisions of this Act.


Sec. 36. Separability Clause. ~ If any portion or provision of this Act is
declared unconstitutional, the remainder of this Act or any provisions not affected
thereby shall remain in force and effect.

Sec. 37. Repealing Clause. — Any laws, presidential decrees or issuances,
executive orders, letters of instruction, rules or regulations inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

Sec. 38. Effectivity. - This Act shall take effect fifteen (15) days following its
complete publication in two (2) newspapers of general circulation or in the Official
Gazette.

Approved,