Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TWENTIETH CONGRESS:
First Regular Session

2754

House Bill No.

Introduced by Representative Julius Cesar “Jay” V. Vergara

EXPLANATORY NOTE

This bill aims to prohibit the inclusion of automatic or pre-selected add-ons to
online transactions, amending for the purpose Republic Act (RA) No. 7394, otherwise
known as the “Consumer Act of the Philippines.”

With the accelerated growth of e-commerce during and shortly after the
COVID-19 pandemic, Joint Administrative Order (JAO) No. 22-01 (Series of 2022),
entitled “Guidelines for Online Businesses Reiterating the Laws Applicable to Online
Businesses and Consumers” was issued on March 24, 2022 by the Department of Trade
and Industry (DTI), together with the Department of Agriculture, Department of
Environment and Natural Resources, Intellectual Property of the Philippines, and the
National Privacy Commission. JAO No. 22-01 reiterated existing laws and regulations
that online businesses must adhere to boost consumer confidence in business-to-
consumer (B2C) and business-to-business (B2B) e-commerce transactions and protect
consumers against deceptive, unfair, and unconscionable sales acts and prices.

While the use of online applications made it easy to facilitate business
transactions, consumer complaints and fraudulent online transactions have increased
in number and intricacy. Thus, on December 5, 2023, RA 11967, otherwise known as
the “Internet Transactions Act of 2023” was passed to ensure an effective regulation
of commercial activities through the internet. Section 7 of RA 11967 created the E-
Commerce Bureau under the DTI to ensure that consumer rights and data privacy are
protected.

It may be observed that while mobile applications and websites have made
transactions more convenient, some businesses use these platforms td subtly increase
sales by automatically including add-ons during payment. For instance, some airlines
automatically include charges for seat selection or travel insurance in the fare,
requiring users to manually deselect these options. Similarly, certain mobile banking
applications pre-select fund transfer insurance for transfers amounting to One
thousand pesos (P1,000.00) and above. These features are often difficult to notice or
remove, creating confusion for users, particularly senior citizens, and those with

1


limited online technology knowledge. Asa result, customers may unintentionally pay
for services they do not need, imposing unnecessary financial burdens.

Thus, this proposed legislation seeks to amend Article 52 of RA 7394 to provide
additional circumstance in determining whether a sales act or practice is unfair and
unconscionable. This measure will in turn help people avoid unintended expenses
which they are not fully knowledgeable about, thereby upholding the Filipino
consumer's right to make informed choices.

In view of the foregoing, passage of this proposed measure is earnestly sought.

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JULIUS CESAR “JAY” V. VERGARA
Third District of Nueva Ecija


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TWENTIETH CONGRESS
First Regular Session

2754

House Bill No.

Introduced by Representative Julius Cesar “Jay” V. Vergara

AN ACT
PROHIBITING THE INCLUSION OF AUTOMATIC OR PRE-SELECTED ADD-
ONS TO ONLINE TRANSACTIONS, AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 7394, OTHERWISE KNOWN AS THE “CONSUMER ACT
OF THE PHILIPPINES”

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

Section 1. Article 52 of Republic Act (RA) No. 7394, otherwise known as the
“Consumer Act of the Philippines” is amended to read as follows:

“ARTICLE 52. Unfair or Unconscionable Sales Act or Practice. - An
unfair or unconscionable sales act or practice by a seller or supplier in
connection with a consumer transaction violates this Chapter whether
it occurs before, during or after the consumer transaction. An act or
practice shall be deemed unfair or unconscionable whenever the
producer, manufacturer, distributor, supplier or seller, by taking
advantage of the consumer's physical or mental infirmity, ignorance,
illiteracy, lack of time or the general conditions of the environment or
surroundings, induces the consumer to enter into a sales or lease
transact grossly inimical to the interests of the consumer or grossly one-
sided in favor of the producer, manufacturer, distributor, supplier or
seller.

“In determining whether an act or practice is unfair and
unconscionable, the following circumstances shall be considered:

a) that the producer, manufacturer, distributor, supplier or seller
took advantage of the inability of the consumer to reasonably protect
his interest because of his inability to understand the language of an
agreement, or similar factors;


“b) that when the consumer transaction was entered into, the price

1
2 grossly exceeded the price at which similar products or services were
3 readily obtainable in similar transaction by like consumers;

4

5 “c) that when the consumer transaction was entered into, the
6 consumer was unable to receive a substantial benefit from the subject
7 of the transaction;

8

9 “d) that when the consumer was entered into, the seller or supplier

10 was aware that there was no reasonable probability or payment of the

ul obligation in full by the consumer; [and]

12

3 “e) that the transaction that the seller or supplier induced the

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

15 or supplier[:}; AND

16

17 “F) THAT THE SELLER OR SUPPLIER EMPLOYS

18 AGGRESSIVE MARKETING PRACTICES INCLUDING

19 AUTOMATIC OR PRE-SELECTED ADD-ONS TO ONLINE

20 TRANSACTIONS THAT SIGNIFICANTLY CONSTRAIN OR

21 IMPAIR THE CONSUMER'S FREEDOM OF CHOICE WITH

2 REGARD TO THE PURCHASE OF A PRODUCT OR SERVICE,

2B AND CAUSE THE CONSUMER TO MAKE UNINTENDED

24 EXPENSES OR ENTER INTO A TRANSACTION DIFFERENT

25 FROM THE ONE THAT THE CONSUMER INTENDED, OR A

26 TRANSACTION THE CONSUMER WOULD NOT HAVE

27 AVAILED OF IF CHOICES WERE CLEARLY PRESENTED.”

28

29 SEC. 2. Article 60 of RA 7394 is amended to read as follows:

30

31 [’Art] ARTICLE 60. Penalties. -

32

33 “a) Any person who shall violate the provisions of Title III,

34 Chapter I, shall upon conviction, be subject to a fine of not less than

35 [Five Hundred] TWENTY THOUSAND Pesos [P500-00)] (P20,000.00)

36 but not more than [Fen] ONE HUNDRED Thousand Pesos

37 [(P40,000-00)] (100,000.00) or imprisonment of not less than five (5)

38 months but not more than one (1) year or both, upon the discretion of

39 the court.

40 B) xxx.”

41

42 Section 3. Within sixty (60) days after the approval of this Act, the Department

43 of Trade and Industry, in coordination with the relevant government agencies and
44 — stakeholders, shall formulate and issue the necessary rules and regulations for the
45 effective implementation of this Act.


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Section 4. All laws, presidential decrees, executive orders, ordinances, and
rules and regulations or parts thereof which are inconsistent with any provisions of
this Act are hereby repealed or modified accordingly.

Section 5. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

Approved,