SALES PROMOTION UNDER THE CONSUMER LAW (Republic Act No. 7394)

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The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

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AT A GLANCE:

Sales promotion is defined as the means and techniques intended for broad consumer participation which contain promises of gain such as prizes, in cash or in kind, as a reward for the purchase of a product, security, service, or winning in contest, game, tournament and other similar competitions which involve determination of winner/s and which utilize mass media or other widespread media of information. It also means techniques purely intended to increase a product’s sales, patronage, and/or goodwill. (Article 4[bm] of Republic Act No. 7394)

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The above-mentioned definition can be found under the Consumer Act of the Philippines which was enacted to protect the consumers’ interests, promote their general welfare and establish standards of conduct for business and industry. More importantly the law aspires to achieve the following objectives such as:

1. Protection against hazards to health and safety;
2. Protection against deceptive, unfair, and unconscionable sales acts and practices;
3. Provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer;
4. Provision of adequate rights and means of redress; and
5. Involvement of consumer representatives in the formulation of social and economic policies. (Article 2, Republic Act No. 7394)

 

Sales Promotion vis-à-vis Consumer Rights – What You Need to Know

The law says:

Article 108. Declaration of Policy. – The State shall protect the consumer from misleading advertisements and fraudulent sales promotion practices.

The Department of Trade and Industry shall enforce the Consumer Act’s provisions and its implementing rules and regulations. However, with respect to food, drugs, cosmetics, devices, and hazardous substances, it shall be enforced by the Department of Health. (Article 109, Republic Act No. 7394)

 

Consumer rights against false, deceptive, and misleading advertisement

 It shall be unlawful for any person to disseminate or to cause the dissemination of any false, deceptive, or misleading advertisement by Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer products or services.

 

An advertisement shall be false, deceptive or misleading if it is not in conformity with the provisions of the Consumer Act or if it is misleading in a material respect. In determining whether any advertisement is false, deceptive or misleading, there shall be taken into account, among other things, not only representations made or any combination thereof, but also the extent to which the advertisement fails to reveal material facts in the light of such representations, or materials with respect to consequences which may result from the use or application of consumer products or services to which the advertisement relates under the conditions prescribed in the said advertisement, or under such conditions as are customary or usual. (Article 110, Republic Act No. 7394)

 

Advertising conditions when using price comparison

Comparative price advertising by sellers of consumer products or services shall conform to the following conditions:

1.  Where the comparison relates to a former price of the seller, the item compared shall either have been sold at that price within the ninety (90) days immediately preceding the date of the advertisement, or it shall have been offered for sale for at least four (4) weeks during such ninety-day period. If the comparison does not relate to an item sold or offered for sale during the ninety-day period, the date, time or seasonal period of such sale or offer shall be disclosed in the advertisement.
2. Where the comparison relates to a seller’s future price, the future price shall take effect on the date disclosed in the advertisement or within ninety (90) days after the price comparison is stated in the advertisement. The stated future price shall be maintained by the seller for a period of at least four (4) weeks after its effective date: Provided, that compliance thereof may be dispensed with in case of circumstances beyond the seller’s control.
3. Where the comparison relates to a competitor’s price, the competitor’s price shall relate to the consumer products or services advertised or sold in the ninety-day period and shall be representative of the prices similar consumer products or services are sold or advertised in the locality where the price comparison was made. (Article 111, Republic Act No. 7394)

 

Special advertising requirements for food, drugs, cosmetics, device, or hazardous substances

In advertising food, drugs, cosmetics, device, or hazardous substances the following conditions and requirements shall be considered:

1. No claim in the advertisement may be made which is not contained in the label or approved by the concerned department.
2. No person shall advertise any food, drug, cosmetics, device, or hazardous substance in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit, or safety.
3. Where a standard has been prescribed for a food, drug, cosmetic, or device, no person shall advertise any article or substance in such a manner that it is likely to be mistaken for such product, unless the article complies with the prescribed standard or regulation.
4. No person shall, in the advertisement of any food, drug, cosmetic, device, or hazardous substance, make use of any reference to any laboratory report of analysis required to be furnished to the concerned department, unless such laboratory report is duly approved by such department.
5. Any businessman who is doubtful as to whether his advertisement relative to food, drug, cosmetic, device, or hazardous substance will violate or does not conform with the Consumer Act or the concerned department’s pertinent rules and regulations may apply to the same for consideration and opinion on such matter before such advertisement is disseminated to the public. In this case, the concerned department shall give its opinion and notify the applicant of its action within thirty (30) days from the date of application; otherwise, the application shall be deemed approved.
6. No person shall advertise any food, drug, cosmetic, device, or hazardous substance unless such product is duly registered and approved by the concerned department for use in any advertisement. (Article 112, Republic Act No. 7394)

 

Consumer rights in credit advertising

No advertisement to aid, promote, or assist, directly or indirectly, any extension of consumer credit may:

1. State that a specific periodic consumer credit amount or installment amount can be arranged unless the creditor usually and customarily arranges credit payment or installments for that period and in that amount; and,
2. State that a specified down payment is required in any extension of consumer credit unless the creditor usually or customarily arranges a down payment in that amount. (Article 113, Republic Act No. 7394)

In the case of an open-end credit plan, the rate of interest and other material features of the plan shall be disclosed in the advertisement. (Article 114, Republic Act No. 7394)

 

Conduct of Sales Promotion

A sales promotion which is intended for broad consumer participation and utilizes mass media shall indicate the duration, commencement and termination of the promotion, the deadline for submission of entries and the governing criteria or procedure to be followed therein. (Article 118, Republic Act No. 7394)

 

Determination of Winners

The winners in any sales promotion shall be determined at a definite time and place and shall be verified by a representative of the concerned department and the sponsor. Immediately after the winners are selected or determined, a list with their addresses and corresponding prizes shall be submitted to the concerned department. All winners shall be announced or published in the same manner that the sales promotion was announced or published: Provided, that publication in a newspaper of general circulation shall be done in a legible manner at least once, if the sales promotion is national in scope: Provided, further, That such announcement and publication shall be done not later than two (2) weeks after the determination of winners. In all cases where the amount of the price is Five hundred pesos (P500.00) or more, the winners shall also be notified in writing by registered mail or any communication wherein proof of notice or service can be verified. (Article 121, Republic Act No. 7394)

 

Affirmative Action and/or Remedies Available

Injunctive Relief

Whenever the concerned department has the reason to believe that:

1. Any person, partnership or corporation is engaged in or is about to engage in the dissemination or the causing of dissemination of any advertisement in violation of Articles 110 to 115, and,
2. The enjoining thereof would be to the interest of the public, the concerned department shall direct the filing of a complaint in the court of competent jurisdiction, to enjoin the dissemination or the causing of the dissemination of such advertisement. Upon proper showing, a temporary injunction or restraining order shall be granted without bond. Any such complaint shall be filed in the locality in which the person, partnership or corporation resides or transacts business.

Any person who may suffer loss, damage or injury due to a false, misleading or deceptive advertisement may file a complaint with injunction in his own name with any court of competent jurisdiction to recover damages, cost of suit, and reasonable attorney’s fees. (Article 122, Republic Act No. 7394)

 

Suspension of publication or dissemination of information

The concerned department may, after due notice and hearing, suspend the publication and dissemination of any information accompanying a sales promotion campaign, if it finds the campaign to be in violation of the provisions of this Chapter or its implementing rules and regulations. (Article 117, Republic Act No. 7394)

 

Penalty in violation of the Consumer Act

The law says:

Article 123. Penalties. –

1. Any person, association, partnership or corporation who shall violate any of the provisions of Articles 110 to 115 shall, upon conviction, be subject to a fine of not less than Five Hundred Pesos (P500.00) but not more than Five thousand pesos (P5,000.00) or an imprisonment of not less than one (1) month but not more than (6) months or both upon the discretion of the court.
2. Any violation of the provisions of Articles 116 to 121 shall, upon conviction, subject the offenders to a fine of not less than Two hundred pesos (P200.00) but not more than Six hundred pesos (P600.00) or imprisonment of not less than one (1) month but not more than six (6) months or both upon the discretion of the court. If the violation was committed by a juridical person, the manager, representative, director, agent or employee of said juridical person responsible for the act shall be deported after service of sentence and payment of the fine without need for further deportation proceedings. (Article 123, Republic Act No. 7394)

 

Exemption from Penalties

The law says:

Article 124. Exemption from Penalties.

No publisher, radio broadcast, television licensee or medium for the dissemination of advertising shall be liable, under this Chapter, by reason of dissemination by him of any false advertisement unless he refuses, on the request of appropriate authorities, to furnish the name and post office address of the manufacturer, packer, distributor seller or advertising agency. This exemption shall not apply however, to the manufacturer, packer, distributor or seller of the consumer product or service and the advertising agency responsible for the false and misleading advertising. (Article 124, Republic Act No. 7394)

 

Read also: Marketing of food products and medicine under the Consumer Act of the Philippines

 

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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