May 6, 2022

AN ACT AFFORDING MORE PROTECTION TO CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

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 "Financial Products and Services Consumer Protection Act".

SEC. 2. Declaration of Policy. - It is the policy of the State to ensure that appropriate mechanisms are in place to protect the interest of the consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices. These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system. Towards this end, the State shall implement measures to protect the following rights of financial consumers:

(a) Right to equitable and fair treatment;

(b) Right to disclosure and transparency of financial products and services;

(c) Right to protection of consumer assets against fraud and misuse;

(d) Right to data privacy and protection; and

(e) Right to timely handling and redress of complaints.

SEC. 3. Definition of Terms. - As used in this Act:

(a) Financial consumer refers to a person or entity, or their duly appointed representative, who is a purchaser, lessee, recipient, or prospective purchaser, lessee or recipient of financial products or services. It shall also refer to any person, natural or juridical, who had or has current or prospective financial transaction with a financial service provider pertaining to financial products or services;

(b) Financial consumer complaint refers to an expression of dissatisfaction submitted by a financial consumer against a financial service provider relative to a financial product or service in which a response or resolution is expected;

(c) Financial product or service refers to financial products or services which are developed or marketed by a financial service provider which may include, but are not limited to, savings, deposits, credit, insurance, pre-need and health maintenance organization (HMO) products, securities, investments, payments, remittances and other similar products and services. This also includes digital financial products or services which pertain to the broad range of financial services accessed and delivered through digital channels;

(d) Financial regulators refer to the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Insurance Commission (IC), and the Cooperative Development Authority (CDA);

(e) Financial service provider refers to a person, natural or juridical, which provides financial products or services that are under the jurisdiction of financial regulators as defined in this Act. This term shall include Investment Advisers as defined under Section 7 of this Act;

(f) Investment fraud refers to any form of deceptive solicitation of investments from the public. This includes Ponzi schemes and such other schemes involving the promise or offer of profits or returns which are sourced from the investments or contributions made by the investors themselves, boiling room operations, and the offering or selling of investment schemes to the public without a license or permit from the SEC, unless such offering or selling involves exempt securities or are considered as exempt transactions as provided for under existing laws;

(g) Market conduct refers to the manner by which a financial service provider designs and delivers its financial products or services and manages its relationships with its clients and the public;

(h) Marketing refers to the act of communicating, offering, promoting, advertising, or delivering of financial products or services by financial service providers; and

(i) Responsible pricing refers to the pricing, terms, and conditions of financial products and/or services that are set in a way that is both affordable to clients and sustainable for financial service providers by taking into account, among others, client needs and the pricing schemes of the competitors

SEC. 4. Scope and Coverage. - This Act applies to all financial products or services offered or marketed by any financial service provider.

SEC. 5. Financial Regulators. - The BSP, SEC, and IC shall enforce the provisions of this Act on all financial service providers under their jurisdiction by virtue of their respective charters, special laws and amendments thereto. The CDA shall be considered an implementing government agency of this Act only with respect to cooperative offering financial products or services, such as but not limited to, savings and credit, except insurance cooperatives which shall be under the jurisdiction of the IC, and cooperative banks and other BSP-supervised cooperative financial institutions, which shall be under the jurisdiction of the BSP.

SEC. 6. Powers of the Financial Regulators. - Financial regulations under this Act shall have the following powers:

(a) Rulemaking. - Financial regulators shall have the authority to formulate their own standard and rules for the application of the provisions of this Act to specific financial products or services within their jurisdiction guided by internationally accepted standards and practices. Financial regulators may also determine reasonableness of interest charges or fees which a financial service provider may demand, collect, or receive for any service or product offered to a financial consumer. Likewise, they may issue their respective rules of procedure concerning administrative actions arising from the implementation of this Act.

(b) Market Conduct Surveillance and Examination. - Financial regulators may conduct surveillance and examination, on-site or off-site, on their respective financial service providers, consistent with their respective risk-based supervision policies, to ascertain that the provisions of this Act are complied with. The examination for financial consumer protection compliance may be conducted separately from examination of prudential regulations compliance. The provisions on the conduct of examination and surveillance provided in the respective charters of financial regulators, and pertinent special laws shall be made applicable in the examination and surveillance activities authorized under this Act.

The department heads and the examiners of the financial regulators shall be authorized to administer oaths to any director, officer, or employee of the supervised financial service providers subject to the examination of their marker conduct and compliance with this Act, and to compel the presentation of all books, documents, papers, or records in any form necessary in their judgment to ascertain compliance of financial service providers to this Act.

The supervised financial service provider shall afford to its respective financial regulator full opportunity to examine its records, and review its systems and procedures, at any time during business hours when requested to do so by the financial regulator.

(c) Market Monitoring. - Financial regulators shall have the authority to require their respective supervised financial service providers and their third party agents/service providers to submit reports or documents, as needed.

For purposes of market monitoring, the financial regulators may obtain relevant data about financial products, services and markets from other government agencies, which shall be duty-bound to furnish the same.

(d) Enforcement. - Financial regulators shall have the authority to impose enforcement actions on their respective supervised financial service providers for noncompliance with this Act and other existing laws pertinent to the jurisdiction and authority of the respective financial regulators. Such enforcement actions may include the following:

(1) Restriction on the ability of the supervised financial service provider to continue to collect excessive or unreasonable interests, fees or charges, including all other interests, fees and charges covered under Republic Act No. 10870, otherwise known as the "Philippine Credit Card Industry Regulation Law";

(2) Disqualification and/or suspension of directors, trustees, officers, or employees of the supervised financial service provider responsible for violations of the provisions of this Act, its implementing rules and regulations (IRR), or orders of the financial regulators;

(3) Imposition of fines, suspension, or penalties for any noncompliance with or breach of this Act, its IRR, or the orders of the financial regulators;

(4) Issuance of a cease and desist order to the financial service provider without the necessity of a prior hearing if in the financial regulator's judgment, the act or practice, unless restrained, amounts to fraud or a violation of the provisions of this Act and its IRR, or may unjustly cause grave or irreparable injury or prejudice to financial consumers. The financial service provider shall be afforded an opportunity to defend its act or practice in a summary hearing before the financial regulator or its designated body, upon request made by the financial service provider within five (5) calendar days from its receipt of the order. If no such hearing is requested within the said period, the order shall be final. If a hearing is requested by the financial service provider, the proceedings shall be conducted summarily without adhering to the technical rules of evidence, and all issues shall be determined primarily on the basis of records, after which the financial regulator may either reconsider or finalize and execute its order;

(5) Suspension of operation of any supervised financial service provider in relation toa particular financial product or service when in the financial regulator's judgment, based on findings, the financial service provider is operating in violation of the provisions of this Act, and its IRR; and

(6) In any proceedings in which the financial regulators may impose a penalty for noncompliance with or breach of this Act and other existing laws under their jurisdiction, the financial regulators, in addition to the imposed fine, may enter an order requiring accounting and disgorgement of profits obtained, or losses avoided, as a result of a violation of this Act and other existing laws, including reasonable interest. The financial regulators are authorized to adopt rules, regulations, and orders concerning the creation and operation of a disgorgement fund, payment to financial consumers, rate of interest, period of accrual, and such other matters as deemed appropriate to implement this provision.

(e) Consumer Redress or Complaints Handling Mechanism. - Financial regulators shall provide efficient and effective consumer redress or complaints handling mechanism such as mediation, conciliation or other modes of alternative dispute resolution to address conflict/dissatisfaction from financial consumers arising from financial products or services. The financial consumer may avail of the mechanism prior to adjudication.

(f) Adjudication. - Financial regulators shall have the authority to adjudicate all actions as provided under existing laws.

The BSP and SEC shall have the authority to adjudicate actions arising from or in connection with financial transactions that are purely civil in nature, and the claim or relief prayed for by the financial consumer id solely for payment or reimbursement of sum of money not exceeding the amount of Ten million pesos (P10,000,000.00). The decision of the financial regulators in the adjudication shall be final and executory, and may not be restrained or set aside by the court except on petition for certiorari on the ground of grave abuse of discretion, or lack or excess of jurisdiction of the financial regulators. The petition for certiorari may only be filed within ten (10) days from receipt by the aggrieved party of the decision: Provided, That in the case of BSP and SEC, the aggrieved party may file the petition with the Court of Appeals. The adjudicatory power shall be exercised by the Head of the concerned financial regulator or a duly authorized officer or body: Provided, That in the case of BSP and SEC, the decision of the authorized officer or body is not appealable to the Monetary Board or to the Commission en banc, respectively.

The BSP and SEC may order the payment or reimbursement of money which is subject to the action filed before them. In the exercise of their adjudicatory powers, they shall have the power to issue subpoena duces tecum and summon witnesses to appear in their proceedings and when appropriate, order the examination, search and seizure of all documents, and books of accounts of any entity or person under investigation as may be necessary for the proper disposition of the cases before them. Further, the BSP and SEC shall have the authority to punish for contempt, both directly and indirectly, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court.

(g) Other Powers. - Financial regulators may exercise such other powers as may be provided by their enabling laws or charters as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted to the financial regulators to achieve the objectives and purposes of these laws.

SEC. 7. Investment Adviser. - Investment advisers shall be subject to the provisions of Chapters VII, VIII, X and XIII of Republic Act No. 8799, and the rules and regulations to be issued by the SEC.

The term "investment adviser" shall mean any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of investment products or as to the advisability of investing in, purchasing, or selling investment products, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning investment products; but does not include the following:

(a) Trust Department/Unit of Banks;

(b) Stand-alone Trust Entities;

(c) Lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession;

(d) Insurance agent whose performance of such services is solely incidental to the practice of his profession;

(e) Any investment banker or broker dealer whose performance of such services is solely incidental to the conduct of his business as such investment banker or broker dealer and who receives no special compensation therefor;

(f) The publisher of any bona fide newspaper, news magazine, or business or financial publication of general and regular circulation; and

(g) Such other persons as the SEC may designate by rules and regulations, or appropriate order.

SEC. 8. Duties and Responsibilities of Financial Service Providers. -

(a) Board and Senior Management Oversight. - The Board of Directors and the members of senior management of financial service providers shall ensure conformity with this Act and shall provide the means by which they shall identify, measure, monitor, control, and manage consumer protection risk inherent in their operations, in accordance with the rules and regulations of their financial regulators.

(b) Appropriate Product Design and Delivery. - Financial service providers shall continuously evaluate their financial products or services to ensure that they are appropriately targeted to the needs, understanding and capacity of both their markets and their clients. This shall include among others, the following:

(1) Affordability and suitability assessments. - Financial service providers should have written procedures for determining whether a particular financial product or service is suitable and affordable for their clients. This shall include the determination of whether or not the amount and terms of the offered financial product or service allow various clients to meet their respective obligations with a low probability of serious hardship, and that there is a reasonable prospect that the financial product o r service will provide value to its client. For the purpose of extending credit, this assessment will include measures to prevent over-indebtedness.

(2) Cooling-off period. - Financial service providers are expected to adopt a clear cooling-off policy, as may be prescribed by law or by rules and regulations issued by the relevant financial regulator upon its determination that a cooling-off period is necessary for a particular financial product or service that is subject to its regulation. Such policy should, among others, provide a cooling-off period that will allow a client to consider the costs and risks of a financial product or service, free from the pressure of the sales team of the financial service provider. The length of the cooling-off period should be individually determined by the financial service providers based on reasonable expectation of the time required for a client to fully evaluate all the terms and risks of the financial product or service and contact concerned parties who may be affected by its terms and conditions, unless a minimum or fixed period is prescribed by the financial regulator for compliance by the financial service provider or when stipulated in the terms of the financial product or service. Financial regulators may opt not to provide for cooling-off period for short-term transaction or contracts.

During the cooling-off period, the financial consumer may cancel or return the contract without penalty; however, nothing herein prevents the financial service providers from recovering the processing costs incurred, as may be approved by the financial regulators. Financial service providers are prohibited from engaging in practices that unreasonably burden the financial consumer in the exercise of the right of cancellation during the cooling-off period. If the financial product or service is a contract of insurance, a pre-need or a health maintenance organization (HMO) product, the right of return cannot be exercised after the financial consumer has made a claim.

(3) Pre-payment of loans and other credit accommodations. - A borrower may, at any time prior to the agreed maturity date, prepay a loan or other credit transactions in whole or in part: Provided, That costs or fees charged to the borrower for such pre-payment, if any, shall be disclosed to ensure transparency, disclosure, and responsible pricing as required under this section.

(c) Transparency, Disclosure, and responsible Pricing. - Financial service providers must ensure that they adopt disclosure principles in their communications and their contracts with financial consumers, including the use of clear and concise language to ensure that all information concerning the financial product or service is understood by the target clients. This shall also include updated and accurate disclosure of information such as pricing or any cost associated with the product or service, and should be made in a consistent manner to facilitate a comparison between similar financial products or services across the industry.

Sufficient product disclosure must be provided before the contracting of the financial product or service to give the client enough basis and time for review. Any change in the terms or conditions of a financial product or service shall be provided to the client.

In their advertising materials, financial service providers shall disclose the contact information of their consumer assistance unit providing consumer assistance and handling financial consumer complaints. Financial service providers shall also disclose that they are regulated and the advertising materials must identify the relevant financial regulator.

Financial service providers are legally responsible for all statements made in the marketing and sales materials that they produce relative to their financial products or services. Disclosure of information on financial products or services shall be made available to the public by the financial service provider through printed materials, mass media, websites or digital platforms.

Financial service providers must have internal policies and procedures for setting prices for their products and services that take into consideration, among others, the principle of responsible pricing.

(d) Fair and Respectful Treatment of Clients. - Financial service providers shall have the right to select their clients: Provided, That they shall not discriminate against clients on the basis of race, age, financial capacity, ethnicity, origin, gender, disability, health condition, sexual orientation, religious affiliation, or political affiliation: Provided, further, That financial service providers may provide distinction, as necessary, when making a risk assessment on a specific financial product or service.

Financial Service providers are prohibited from employing abusive collection or debt recovery practices against their financial consumers.

(e) Privacy and Protection of Client Data. - Each financial service provider must respect the privacy and protect the data of their clients. Consistent with the provisions of Republic Act No. 10173, otherwise known as the "Data Privacy Act of 2012", the financial regulators shall issue regulations in coordination with the National Privacy Commission, governing the disclosure of client data to a third party.

Clients have the right to review their data to ensure that inaccurate or deficient data is corrected or amended, refuse the sharing of their information to a third party and request the removal of their data from the service provider's system if they no longer wish to use the provider's services.

(f) Financial Consumer Protection Assistance Mechanism. - Each financial service provider must establish a single consumer assistance mechanism for free assistance to financial consumers on financial transactions concerns. This shall include handling of complaints, inquiries and requests.

A financial service provider must provide clear information on the actions taken or to be taken on a complaint, inquiry or request from a financial consumer. In the case of alleged disputed amount or unauthorized transactions, a financial service provider, pending the result of its final investigation report, shall suspend the imposition of interest, fees and charges, or provide similar reasonable accommodations to the financial consumer.

Financial consumers who are unsatisfied with the financial service provider's handling of their complaints, inquiries and requests, may elevate their concerns to the financial regulator which has jurisdiction over the financial service provider concerned.

(g) Information Security Standards. - Financial service providers shall adopt and implement information security standards to ensure the safety and protection of the confidentiality, integrity, availability, authenticity, and non-repudiation of the client's information and financial transactions and to ensure the data privacy of their clients. The financial regulators shall prescribe the minimum information security standards for compliance by all financial service providers.

SEC. 9. Bundling of Products. - When a financial consumer is obliged by the financial service provider to purchase any product, including an insurance policy, as pre-condition for availing a financial product or service, the financial consumer shall have the option to choose the provider of such product subject to reasonable standards set by the financial service provider, and this information shall be made available to the financial consumer.

SEC. 10. Training. - Staff of financial service providers who deal directly with financial consumers, including those who are involved in financial consumer protection assistance mechanism or cybersecurity, must receive adequate training suitable to the complexity of the financial products or services they offer. Financial service providers must be qualified as appropriate for the complexity of the financial product or service they offer.

SEC. 11. Investment Fraud. - It shall be unlawful for any person or persons to commit investment fraud as defined in this Act. Any person who commits investment fraud shall be subject to the penalties under Section 73 of Republic Act No. 8799 and the administrative sanctions under Section 16 of this Act.

SEC. 12. No Waiver of Rights. - No provision of a contract for a financial product or service shall be lawful or enforceable if such provision waives or otherwise deprives a client of a legal right to sue the financial service provider, receive information, have their complaints addressed and resolved, or have their non-public client data protected.

SEC. 13. Liability of a Financial Service Provider on the Acts or Omission of its Authorized Representatives. - The financial service provider shall be responsible for the acts or omissions of its directors, trustees, officers, employees, or agents in marketing and transacting with financial consumers for its financial products or services. The financial service provider shall be solidarily liable with accredited third-party service providers for their acts or omissions in marketing and transacting, which may include, but not limited to, debt collection, with financial consumers for its financial products and services.

SEC. 14. Prescription. - All actions or claims accruing under the provision of this Act, and the rules and regulations issued pursuant thereto, shall prescribe after five (5) years from the time the financial consumer transaction was consummated, or after five (5) years from the discovery of deceit or nondisclosure of material facts: Provided, That such actions shall, in any event. prescribe after ten (10) years from the commission of the violation: Provided, further, That for insurance contracts, the prescriptive period for the commencement of action provided under the Insurance Code shall apply.

SEC. 15. Penalties. - Any persons who willfully violates this Act or the rules, regulations, orders, or instructions issued by the financial regulators to implement this Act, shall be punished by imprisonment of not less than one (1) year, but not more than five (5) years, or by a fine of not less than Fifty thousand pesos (P50,000.00) but not more than Two million pesos (P2,000,000.00), or both, at the discretion of the court: Provided, That if the violation is committed by a corporation or a juridical entity, the directors, officers, employees, or other officers who are directly responsible for such violation shall be held liable thereto.

SEC. 16. Administrative Sanctions. - Without prejudice to the enforcement actions prescribed under Section 6(d) of this Act and the criminal sanctions provided under Section 15 of this Act, the administrative sanctions of the respective charters of the financial regulators shall be made applicable to a financial service provider, its directors, trustees, officers, employees or agents for violation of this Act or any related rules, regulations, orders or instructions of financial regulators; or to any persons found administratively liable for investment fraud: Provided, That for persons found responsible for investment fraud, the SEC may impose a fine of no less than Fifty thousand pesos (P50,000.00) nor more than Ten million pesos (P10,000,000.00) for each instance of investment fraud plus not more than Ten thousand pesos (P10,000.00) for each day of continuing violation in addition to the other administrative sanction under Section 54 of Republic Act No. 8799: Provided, further, That in case profit is gained or loss is avoided as a result of the violation of this Act or investment fraud, a fine not more than three (3) times the profit gained or loss avoided may also be imposed by the financial regulator: Provided, finally, That in addition to the administrative sanctions that may be imposed, the authority of the financial service provider to operate in relation to particular financial product or service may be suspended or cancelled by the financial regulator.

SEC. 17. Independent Civil Action. - A financial regulator, consistent with public interest and protection of financial consumers, is authorized to institute an independent civil action on behalf of aggrieved financial consumers for violations of this Act and its IRR.

If any of theses proceedings, the financial regulators obtain a civil penalty against any person or entity, or such person or entity agrees to settle such civil penalty, the amount of such civil penalty shall on the motion of the financial regulators, be added to and become part of a disgorgement fund or other fund established for the benefit of the aggrieved financial consumer.

SEC. 18. Implementing Rules and Regulations. - The financial regulators shall prepare the necessary rules and regulations to implement the provisions of this Act within one (1) year from its effectivity.

SEC. 19. Separability Clause. - If any provision of this Act is held unconstitutional or invalid, all other provisions not thereby affected shall remain valid.

SEC. 20. Repealing Clause. - Articles 131 to 147 of Title IV of Republic Act No. 7394 are hereby repealed. All other laws, executive orders, rules and regulations or parts thereof which are inconsistent with this Act are hereby repealed or amended accordingly.

SEC. 21. Effectivity. - The Act shall take effect fifteen (15) days after its publication in the Official Gazette or in at least two (2) newspapers of general circulation.

April 13, 1992

THE CONSUMER ACT OF THE PHILIPPINES

ARTICLE 1. Short Title. — This Act shall be known as the "Consumer Act of the Philippines."

ARTICLE 2. Declaration of Basic Policy. — It is the policy of the State to protect the interests of the consumer, promote his general welfare and to establish standards of conduct for business and industry. Towards this end, the State shall implement measures to achieve the following objectives:

a) protection against hazards to health and safety;

b) protection against deceptive, unfair and unconscionable sales acts and practices;

c) provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer;

d) provision of adequate rights and means of redress; and

e) involvement of consumer representatives in the formulation of social and economic policies.

ARTICLE 3. Construction. — The best interest of the consumer shall be considered in the interpretation and implementation of the provisions of this Act, including its implementing rules and regulations.

ARTICLE 4. Definition of Terms. — For purposes of this Act, the term:

a) "Advertisement" means the prepared and through any form of mass medium, subsequently applied, disseminated or circulated advertising matter.

b) "Advertising" means the business of conceptualizing, presenting or making available to the public, through any form of mass media, fact, data or information about the attributes, features, quality or availability of consumer products, services or credit.

c) "Advertising agency or Agent" means a service organization or enterprise creating, conducting, producing, implementing or giving counsel on promotional campaigns or programs through any medium for and in behalf of any advertiser.

d) "Advertiser" means the client of the advertising agency or the sponsor of the advertisement on whose account the advertising is prepared, conceptualized, presented or disseminated.

e) "Agricultural purpose" means a purpose related to the production, harvest, processing, manufacture, distribution, storage, transportation, marketing, exhibition or disposition of agricultural, fishery or marine products.

f) "Amount financed" in a consumer credit sale constitutes the cash price plus non-finance charges less the amount of any downpayment whether made in cash or in property traded in, or in a consumer loan the amount paid to, receivable by or paid or payable to the buyer or to another person in his behalf.

g) "Banned hazardous substance" means (1) any toy or other articles intended for use by children, which are hazardous per se, or which bear or contain substances harmful to human beings; or (2) any hazardous substance intended or packaged in a form suitable for use in the household, which the implementing agency by regulation, classifies as "banned hazardous substance" notwithstanding the existence of cautionary labels, to safeguard public health and safety: Provided, That the implementing agency may, by regulation, exempt from this Act, articles which by reason of their functional purpose require the inclusion of the hazardous substance involved and which bear appropriate labels giving adequate directions and warnings for their safe use.

Procedures for the issuance, amendment or repeal of regulations pursuant to clause (2) or paragraph (g) of this Article shall be governed by the rules and regulations promulgated by the Department of Health; Provided, That if the Department of Health finds that the distribution for household use of the hazardous substance involved presents an imminent hazard to the public health, it may publish in a newspaper of general circulation a notice of such finding and such substance shall be deemed to be a "banned hazardous substance" pending the issuance of regulation formally banning such substance.

h) "Batch" means a quantity of any drug or device produced during a given cycle of manufacture.

i) "Business name, firm name or style" means any name or designation other than the true name of a person, partnership, corporation or association which is used or signed in connection with his/its business or in

1) any written or printed receipt, including receipt for tax on business;

2) any written or printed contract not verified by a notary public;

3) any written or printed evidence of any agreement or business transaction; and

4) any sign or billboard kept conspicuously exhibited in plain view in or at the place of the business, announcing a firm name or business name or style.

j) "Cash price or delivered price", in case of trade transaction, means the amount of money which would constitute full payment upon delivery of the property (except money) or service purchased at the creditor's place of business. In the case of financial transactions, cash price represents the amount received by the debtor upon consummation of the credit transaction, net of finance charges collected at the time the credit is extended, if any.

k) "Chain distribution plans" or "pyramid sales schemes" means sales devices whereby a person, upon condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments: Provided, That, the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit: Provided, further, That the limitation on the number of participants does not change the nature of the plan.

l) "Closing out sale" means a consumer sale wherein the seller uses the announcement to create the impression that he is willing to give large discounts or merchandise in order to reduce, dispose or close out his inventory and business.

m) "Commerce" means the sale, lease, exchange, traffic or distribution of goods, commodities, productions, services or property, tangible or intangible.

n) "Consumer" means a natural person who is a purchaser, lessee, recipient or prospective purchaser, lessor or recipient of consumer products, services or credit.

o) "Consumer credit" means any credit extended by a creditor to a consumer for the sale or lease of any consumer product or service under which part or all of the price or payment therefor is payable at some future time, whether in full or in installments.

p) "Consumer loan" means a loan made by the lender to a person which is payable in installments for which a finance charge is or may be imposed. This term includes credit transactions pursuant to an open-end-credit plan other than a seller credit card.

q) "Consumer products and services" means goods, services and credits, debts or obligations which are primarily for personal, family, household or agricultural purposes, which shall include but not limited to food, drugs, cosmetics, and devices.

r) "Consumer product safety rule" means a consumer product safety standard described in Article 78 or a rule under this Chapter declaring a consumer product banned hazardous product.

s) "Consumer transaction" means (1) (i) a sale, lease, assignment, award by chance, or other disposition of consumer products, including chattels that are intended to be affixed to land, or of services, or of any right, title, or interest therein, except securities as defined in the Securities Act and contracts of insurance under the Insurance Code, or (ii) grant of provision of credit to a consumer for purposes that are primarily personal, family, household or agricultural, or (2) a solicitation or promotion by a supplier with respect to a transaction referred to in clause (1).

t) "Corrosive" means any substance which on contact with living tissue will cause destruction of tissue by chemical action.

u) "Cosmetics" means (1) articles intended to be rubbed, poured, sprinkled or sprayed on, introduced into or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and (2) article intended for uses as a component of any such article except that such term shall not include soap.

v) "Counterfeit product" means any consumer product which, or the container or labeling of which, without authorization, bears the trademark, trade name, or other identifying mark, imprint, or device, or any likeness thereof, of a consumer product manufacturer, processor, packer, distributor, other than the person or persons who in fact manufactured, processed, packed or distributed such product and which thereby falsely purports or is represented to be the product of, or to have been packed or distributed by such consumer product manufacturer, processor, packer, or distributor.

w) "Credit card" means any card, plate, coupon book or other credit device existing for the purpose of obtaining money, property, labor or services on credit.

x) "Credit Sale" means a sale of products, services or an interest in land to a person on credit where a debt is payable in installments or a finance charge is imposed and includes any agreement in the form of a bailment of products or lease of products or real property if the bailee or lessee pays or agrees to pay compensation for use a sum substantially equivalent to or in excess of the aggregate value of the products or real property involved and it is agreed that the bailee or lessee will become, or for no other or a nominal consideration has the option to become, the owner of the products or real property upon full compliance with the terms of the agreement.

y) "Credit transaction" means a transaction between a natural person and a creditor in which real or personal property, services or money acquired on credit and the person's obligation is payable in installment.

z) "Creditor" means any person engaged in the business of extending credit and shall include any person who as a regular business practice makes loans or sells or rents property or services on a time, credit or installment basis, either as principal or as agent who requires as an incident to the extension of credit, the payment of a finance charge.

aa) "Default or delinquency charge" means, with respect to a consumer credit transaction, the penalty charge payable by the consumer-debtor for failure to pay an amount or installment in full on the date the same becomes due and demandable, or on or before the period specified for the purpose in the consumer credit sale documents.

ab) "Device" means an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part or accessory which is (1) recognized in the official United States Pharmacopoeia-National Formulary (USP-NF) or any supplement to them, (2) intended for use in the diagnosis of disease or other condition or in the cure, mitigation, treatment or prevention of disease, in man or other animals; or (3) intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of its principal intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its principal intended purposes.

ac) "Distributor" means any person to whom a consumer product is delivered or sold for purposes of distribution in commerce, except that such term does not include a manufacturer or retailer of such product.

ad) "Drugs" mean (1) articles recognized in the current official United States Pharmacopoeia-National Formulary, official Homeopathic Pharmacopoeia of the United States, official National Drug Formulary, or any supplement to any of them; and (2) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (3) articles (other than food) intended to affect the structure or any function of the body of man or animals; and (4) articles intended for use as a component of any articles specified in clauses (1), (2), or (3) but do not include devices or their components, parts or accessories.

The term "drug" when used in this Act shall include herbal and/or traditional drug. They are defined as articles from indigenous plant or animal origin used in folk medicine which are: (1) recognized in the Philippine National Formulary; (2) intended for use in the treatment or cure, mitigation of disease symptoms, injury or bodily defect for use in man; (3) other than food, intended to affect the structure of any function of the body of man; (4) put into finishes, ready to use form by means of formulation, dosage or dosage directions; and (5) intended for use as a component of any of the articles specified in clauses (1), (2), (3) and (4) of this paragraph.

ae) "Expiry or expiration date" means the date stated on the label of food, drug, cosmetic, device or hazardous substance after which they are not expected to retain their claimed safety, efficacy and quality or potency and after which it is no longer permissible to sell them.

af) "Extremely flammable" means any substance which has a flash point at or below negative six and six-tenths degrees centigrade as determined by the Tagliabue Open Cub Tester; and the term "combustible" shall apply to any substance which has a flash point of above twenty-six and six-tenths degrees to and including sixty-five and five-tenths degrees centigrade as determined by the Tagliabue Open Cub Tester: Provided, That the flammability or combustibility of solids and of the contents of self-pressurized containers shall be determined through methods found by the implementing agency to be generally applicable to such materials or containers, respectively, and established by regulations issued by it.

ag) "Food" means any substance, whether processed, semi-processed or raw, intended for human consumption and includes chewing gum, drinks and beverages and any substance which has been used as an ingredient or a component in the manufacture, preparation or treatment of food.

ah) "Food additive" means any substance, the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristics of any food (including any substance intended for use in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding food; and including any source of radiation intended for any such use), if such substance is not generally recognized, among experts qualified as having been adequately shown through scientific procedures to be safe under the conditions of the intended use.

ai) "Generic name" is the identification of drugs and medicines by their scientifically and internationally recognized active ingredients or by their official generic name as determined by the Bureau of Food and Drugs of the Department of Health.

aj) "Guarantee" means an expressed or implied assurance of the quality of the consumer products and services offered for sale or length of satisfactory use to be expected from a product or other similar specified assurances.

ak) "Hazardous substance" means: (1) (i) Any substance or mixture of substances which is toxic, corrosive, irritant, a strong sensitizer, flammable or combustible, or generates pressure through decomposition, heat or other means, if such substance or mixture or substances may cause substantial injury or substantial illness during or as a proximate result of any customary or reasonably foreseeable ingestion by children;

(ii) Any substance which the department finds to be under the categories enumerated in clause (1) (i) of this paragraph;

(iii) Any radioactive substance, if, with respect to such substance as used in a particular class of article or as packaged, the Department, upon approval of the Department determines by regulation that the substance is sufficiently hazardous to require labeling in accordance with this section in order to protect the public health;

(iv) Any toy or other articles intended for use by children which the director may, by regulation, determine the presence of an electrical, mechanical or thermal hazard.

(2) This term shall not apply to food, drugs, cosmetics, and devices nor to substances intended for use as fuels when stored in containers and used in the heating, cooking or refrigeration system of a house, but such term shall apply to any article which is not in itself a pesticide but which is a hazardous substance, as construed in clause (a) of paragraph (1), by reason of bearing or containing such harmful substances described therein.

al) "Highly Toxic" means any substance which has any of the following effects: (1) produces death within fourteen days to one-half or more than one-half of a group of ten or more laboratory white rats each weighing between Two hundred and three hundred grams, at a single dose of fifty milligrams or less per kilogram of body weight, when orally administered; or (2) produces death within fourteen days to one-half or more of a group of ten or more laboratory white rats each weighing between two hundred and three hundred grams, when inhaled continuously for a period of one hour or less at an atmospheric concentration of two hundred parts per million by volume or less of gas or vapor or two milligrams per liter by volume or less of mist or dust, provided such concentration is likely to be encountered by man when the substance is used in any reasonably foreseeable manner; or (3) produces death within fourteen days to one-half or more of a group of ten or more rabbits, when tested in a dosage of two hundred milligrams or less per kilogram of body weight, or when administered through continuous contact with the bare skin for twenty-four hours or less.

am) "Home solicitation sale" means consumer sales or leases which are personally solicited by any person or organization by telephone, person-to-person contact or by written or printed communication other than general advertising or consummated at the buyer's residence or a place of business, at the seller's transient quarters, or away from a seller's regular place of business.

an) "Immediate container" means the container or package which is immediately after or near the substance but does not include package liners.

ao) "Imminently hazardous product" means a consumer product which presents an unreasonable risk of death, serious illness or severe personal injury.

ap) "Irritant" means any substance not corrosive within the meaning of paragraph (t) of this Article which, on immediate, prolonged or repeated contact with normal living tissue will induce a local inflammatory reaction.

aq) "Label, labeling" means the display of written, printed or graphic matter on any consumer product, its immediate container, tag, literature or other suitable material affixed thereto for the purpose of giving information as to the identity, components, ingredients, attributes, directions for use, specifications and such other information as may be required by law or regulations.

ar) "Manufacture" means any and all operations involved in the production, including preparation, propagation, processing, formulating, filling, packing, repacking, altering, ornamenting, finishing or otherwise changing the container, wrapper or labeling of a consumer product in the furtherance of the distribution of the same from the original place of manufacture to the person who makes the final delivery or sale to the ultimate consumer.

as) "Manufacturer" means any person who manufactures, assembles or processes consumer products, except that if the goods are manufactured, assembled or processed for another person who attaches his own brand name to the consumer products, the latter shall be deemed the manufacturer. In case of imported products, the manufacturer's representative or, in his absence, the importer, shall be deemed the manufacturer.

at) "Mass media" refers to any means or methods used to convey advertising messages to the public such as television, radio, magazines, cinema, billboards, posters, streamers, hand bills, leaflets, mails and the like.

au) "Materially defective product" means a product which, because of the pattern of the defect, the number of defective products distributed in commerce and the severity of the risk or otherwise, creates a substantial risk of injury to the public.

av) "Mislabeled hazardous substance" means any hazardous substance intended, or packaged in a form suitable, for use in households, especially by children, the packaging or labeling of which is in violation of the special packaging regulation issued by the Department of Health under Article 91 or if such substance fails to bear a label which (1) states conspicuously (i) the name and the exact address of the manufacturer, packer, distributor or seller; (ii) the common or usual name of the hazardous substance or of each component which contributes substantially to the harmfulness of the substance, unless the Department by regulation approved by the Department permits or requires the use of the recognized generic name; (iii) the signal word "danger" on substances which are extremely flammable, corrosive, or highly toxic; (iv) the signal word "warning" or "caution" on all other hazardous substances; (v) a frank statement of the principal hazard or hazards involved, as "flammable", "vapor harmful", "causes burns", "absorbed through skin", or similar wording describing the action to be followed or avoided, except when modified by regulation by the Department pursuant to Section 46; (vi) instructions, when necessary or appropriate, for first aid treatment; (vii) the word "poison" for any hazardous substance which is defined as highly toxic; (viii) instructions for handling and storage of packages which require special care in handling or storage; and (ix) the statement "keep out of the reach of children", or its practical equivalent, if the article is intended for use by children and is not a banned hazardous substance, with adequate directions for the protection of children from the hazard involved. The aforementioned signal words, affirmative statements, description of precautionary measures, necessary instructions or other words or statements may be in the English language or its equivalent in Filipino; and

(2) on which any statement required under clause (1) of this paragraph are located prominently and in contrast by typography are located prominently and in contrast by typography, layout, with other printed matters on the label.

aw) "New Drugs" mean (1) any drug the composition of which is such that said drug is not generally recognized among experts qualified by scientific training and experience to evaluate the safety, efficacy, and quality of drugs as safe, efficacious and of good quality for use under the conditions prescribed, recommended, or suggested in the labeling thereof; or (2) any drug the composition of which is such that said drug, as a result of its previous investigations to determine its safety, efficacy and good quality for use under certain conditions, has become so recognized but which has not, otherwise than in such investigations, been used to a material extent or for a material time under new conditions.

"New Drugs" shall include drugs (a) containing a newly discovered active ingredient; (b) containing a new fixed combination of drugs, either by molecular or physical combination; (c) intended for new indications; (d) an additional new mode of administration; or (e) in an additional dosage or strength of the dosage form, which meets the conditions as defined under the new drug.

The definition of "new drugs" covers to the extent applicable, "new devices".

ax) "New Product" means a consumer product which incorporates a design, material or form of energy exchange which has not previously been used substantially in consumer products and as to which there exists a lack of adequate information to determine the quality and safety of such product if used by the consumers.

ay) "Open-end-credit plan" means a consumer credit extended on an account pursuant to a plan under which:

1) the creditor may permit the person to make purchases or obtain loans, from time to time, directly from the creditor or indirectly by use of credit card, check or other device;

2) the person has the privilege of paying the balance; or

3) a finance charge may be computed by the creditor from time to time on an outstanding unpaid balance.

az) "Package" or "packaging" means any container or wrapping in which any consumer product is enclosed for use in the delivery or display of that consumer product to retail purchasers, but does not include:

1) shipping containers or wrappings used solely for the transportation of any consumer product in bulk or in big quantities by manufacturers, packers, or processors to wholesale retail distributors thereof;

2) shipping containers or outer wrappings used by retailers to ship or deliver any product to retail customers if such containers and wrappings bear no printed matter pertaining any particular product;

3) The wrappers or containers of consumer products sold in small quantities by small retail stores to the consumer which by tradition are wrapped with ordinary paper.

ba) "Person" means any individual, partnership, corporation or association, trust, government or governmental subdivision or any other legal entity.

bb) "Poisonous substance" means any substance capable of destroying life or seriously endangering health when applied externally to the body or introduced internally in moderate doses.

bc) "Price comparison" means the direct comparison in any advertisement of a seller's current price for consumer products or services with any other price or statement of value for such property or services expressed in pesos, centavos, fractions or percentages.

bd) "Price tag" means any device, written, printed, affixed or attached to a consumer product or displayed in a consumer repair or service establishment for the purpose of indicating the retail price per unit or service.

be) "Principal display panel" means that part of the label that is most likely to be displayed, presented, shown or examined under normal and customary conditions of display for retail or sale.

bf) "Private labeler" means an owner of a brand or trademark on the label of consumer product other than a manufacturer of the product.

A consumer product bears a private label if (1) the product or its container is labeled with a brand or trademark of a person other than its manufacturer; or (2) the brand or trademark of the manufacturer of such product does not appear on such label.

bg) "Radioactive substance" means any substance which emits ionizing radiation.

bh) "Referral selling" means the sales device employed by the sellers wherein the buyer is induced to acquire goods or services by representing that after the acquisition of the goods or services, he will receive a rebate, commission or other benefit in return for the submission of names of potential customers or otherwise helping the seller enter into other sales, if the receipt of such benefit is contingent on an event occurring after the sale is made.

bi) "Repair and service firm" means any business establishment, engaged directly or indirectly, in the repair, service or maintenance of any consumer product.

bk) "Retailer" means a person engaged in the business of selling consumer products directly to consumers.

bl) "Sale or distribution" shall mean an act made by a manufacturer or seller, or their respective representative or agent, to make available consumer products, services or credit to the end consumers under a consumer sale transaction. It shall not include sampling or any distribution not for sale.

bm) "Sales Promotion" means techniques intended for broad consumer participation which contain promises of gain such as prizes, in cash or in kind, as 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 the sales, patronage and/or goodwill of a product.

bn) "Seller" means a person engaged in the business of selling consumer products 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.

bo) "Service" shall mean, with respect to repair and service firms, services supplied in connection with a contract for construction, maintenance, repair, processing, treatment or cleaning of goods or of fixtures on land, or distribution of goods, or transportation of goods.

bp) "Services" means services that are the subject of a consumer transaction, either together with, or separate from any kind of personal property, whether tangible or intangible.

bq) "Special packaging" means packaging that is designed or constructed to be significantly difficult for children five years of age to open or to obtain a toxic or harmful amount of the substance contained therein within a reasonable time and not difficult for normal adults to use properly but does not mean packaging which all such children cannot open or obtain a toxic or harmful amount within a reasonable time.

br) "Standard" means a set of conditions to be fulfilled to ensure the quality and safety of a product;

bs) "Strong sensitizer" means any substance which will cause on normal living tissue, allergy or photodynamic quality of hypersensitivity which becomes evident on reapplication of the same substance, to be designated as such by the implementing agency. Before designating any substance as a strong sensitizer, the implementing agency, upon consideration of the frequency of occurrence and severity of the reaction, shall find that the substance has a significant capacity to cause hypersensitivity.

bt) "Substandard product" means a product which fails to comply with an applicable consumer product safety rule which creates a substantial risk of injury to the public.

bu) "Supplier" means a person, other than a consumer, who, in the course of his business, solicits, offers, advertises, or promotes the disposition or supply of a consumer product or who other than the consumer, engages in, enforces, or otherwise participates in a consumer transaction, whether or not any privity of contract actually exists between that person and the consumer, and includes the successor to, or assignee of, any right or obligation on of the supplier.

bv) "Technical personnel of repair and service enterprise" shall mean a machine or technician or any person who works or renders diagnosis or advice in connection with repair, service and maintenance of the consumer products in a repair and service firm.

bw) "Toxic substance" means any substance other than a radioactive substance which can cause injury, illness or death to man through ingestion, inhalation or absorption through any body surface.

bx) "Trade name" or "trademark" means a word or words, name, title, symbol, emblem, sign or device or any combination thereof used as an advertisement, sign, label, poster or otherwise for the purpose of enabling the public to distinguish the business of the person who owns and uses said trade name or trademark.

CHAPTER I Consumer Product Quality and Safety

ARTICLE 5. Declaration of Policy. — It shall be the duty of the State:

a) to develop and provide safety and quality standards for consumer products, including performance or use-oriented standards, codes of practice and methods of tests;

b) to assist the consumer in evaluating the quality, including safety, performance and comparative utility of consumer products;

c) to protect the public against unreasonable risks of injury associated with consumer products;

d) to undertake research on quality improvement of products and investigation into causes and prevention of product related deaths, illness and injuries;

e) to assure the public of the consistency of standardized products.

ARTICLE 6. Implementing Agencies. — The provisions of this Article and its implementing rules and regulations shall be enforced by:

a) the Department of Health with respect to food, drugs, cosmetics, devices and substances;

b) the Department of Agriculture with respect to products related to agriculture, and;

c) the Department of Trade and Industry with respect to other consumer products not specified above.

ARTICLE 7. Promulgation and Adoption of Consumer Product Standards. — The concerned department shall establish consumer product quality and safety standards which shall consist of one or more of the following:

a) requirements as to performance, composition, contents, design, construction, finish, packaging of a consumer product;

b) requirements as to kind, class, grade, dimensions, weights, material;

c) requirements as to the methods of sampling, tests and codes used to check the quality of the product;

d) requirements as to precautions in storage, transporting and packaging;

e) requirements that a consumer product be marked with or accompanied by clear and adequate safety warnings or instructions, or requirements respecting the form of warnings or instructions.

For this purpose, the concerned department shall adopt existing government domestic product quality and safety standards: Provided, That in the absence of such standards, the concerned department shall form specialized technical committees composed of equal number of representatives from each of the Government, business and consumer sectors to formulate, develop and purpose consumer product quality and safety standards. The said technical committees shall consult with the private sector, which may, motu proprio, develop its own quality and safety standards that shall be subject to review and approval of the concerned government agency or agencies after public hearings have been conducted for that purpose; and shall likewise consider existing international standards recognized by the Philippine Government.

ARTICLE 8. Publication of Consumer Product Standards. — The concerned department shall, upon promulgation of the above standards, publish or cause the publication of the same in two (2) newspapers of general circulation at least once a week for a period of not less than one (1) month. It may likewise conduct an information campaign through other means deemed effective to ensure the proper guidance of consumers, businesses, industries and other sectors concerned.

ARTICLE 9. Effectivity of Rules. — a) Each consumer product standard or safety rule shall specify the date such rule is to take effect, which shall not exceed ninety (90) days from the date promulgated unless the concerned department finds, for good cause shown, that a later effective date is in the public interest and publishes its reasons for such finding. After which, it shall no longer be legal to, or cause to, sell or distribute the consumer product not complying with the standards or rules.

b) The department may, by regulation, prohibit a manufacturer from stockpiling consumer products so as to prevent such manufacturer from circumventing the purposes of this paragraph. The term "stockpiling" means manufacturing or importing a product between the date of promulgation of its consumer product safety rule and its effective date, at a rate which is significantly greater than the rate at which such product was produced or imported during a base period, as prescribed in the regulation under this paragraph, ending before the date of promulgation of consumer product safety rule.

ARTICLE 10. Injurious, Dangerous and Unsafe Products. — Whenever the departments find, by their own initiative or by petition of a consumer, that a consumer product is found to be injurious, unsafe or dangerous, it shall, after due notice and hearing, make the appropriate order for its recall, prohibition or seizure from public sale or distribution: Provided, That, in the sound discretion of the department it may declare a consumer product to be imminently injurious, unsafe or dangerous, and order is 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.

The ban on the sale and distribution of a consumer product adjudged injurious, unsafe or dangerous, or imminently injurious, unsafe or dangerous under the preceding paragraph shall stay in force until such time that its safety can be assured or measures to ensure its safety have been established.

ARTICLE 11. 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:

a) give notice to the public of the defect or failure to comply with the product safety standards; and

b) give notice to each distributor or retailer of such product.

The department shall also direct the manufacturer, distributor or seller of such product to extend any or all of the following remedies to the injured person:

a) to bring such product into conformity with the requirements of the applicable consumer product standards or to repair the defect in order to conform with the same;

b) to replace the product with a like or equivalent product which complies with the applicable consumer product standards which does not contain the defect;

c) to refund the purchase price of the product less a reasonable allowance for use; and

d) to pay the consumer reasonable damages as may be determined by the department.

The manufacturer, distributor or seller shall not charge a consumer who avails himself of the remedy as provided above of any expense and cost that may be incurred.

ARTICLE 12. Effectivity of Amendment and Revocation of Consumer Product Safety Rule. — Any amendment or revocation of a consumer product safety rule made by the concerned department shall specify the date on which it shall take effect which shall not exceed ninety days from the date of amendment or revocation is published unless the concerned department finds, for a good cause shown, that a later effective date is in the public interest and publishes its reasons for such finding. The department shall promulgate the necessary rules for the issuance, amendment or revocation of any consumer product safety rule.

ARTICLE 13. New Products. — The concerned department shall take measures to make a list of new consumer products and to cause the publication by the respective manufacturers or importers of such products a list thereof together with the descriptions in a newspaper of general circulation.

ARTICLE 14. Certification of Conformity to Consumer Product Standards. — The concerned department shall aim at having consumer product standards established for every consumer product so that consumer products shall be distributed in commerce only after inspection and certification of its quality and safety standards by the department. The manufacturer shall avail of the Philippine Standard Certification Mark which the department shall grant after determining the product's compliance with the relevant standard in accordance with the implementing rules and regulations.

ARTICLE 15. Imported Products. — a) Any consumer product offered for importation into the customs of the Philippine territory shall be refused admission if such product:

1) fails to comply with an applicable consumer product quality and safety standard or rule;

2) is or has been determined to be injurious, unsafe and dangerous;

3) is substandard; or

4) has material defect.

b) Samples of consumer products being imported into the Philippines in a quantity necessary for purposes of determining the existence of any of the above causes for non-admission may be obtained by the concerned department or agency without charge from the owner or consignee thereof. The owner or consignee of the imported consumer product under examination shall be afforded an opportunity to a hearing with respect to the importation of such products into the Philippines. If it appears from examination of such samples or otherwise that an imported consumer product does not conform to the consumer product safety rule or its injurious, unsafe and dangerous, is substandard or has a material defect, such product shall be refused admission unless the owner or the consignee thereof manifests under bond that none of the above ground for non-admission exists or that measures have been taken to cure them before they are sold, distributed or offered for sale to the general public.

Any consumer product, the sale or use of which has been banned or withdrawn in the country of manufacture, shall not be imported into the country.

c) If it appears that any consumer product which may not be admitted pursuant to paragraph (a) of this Article can be so modified that it can already be accepted, the concerned department may defer final determination as to the admission of such product for a period not exceeding ten (10) days, and in accordance with such regulations as the department and the Commissioner of Customs shall jointly promulgate, such product may be released from customs custody under bond for the purpose of permitting the owner or consignee an opportunity to so modify such product.

d) All modifications taken by an owner or consignee for the purpose of securing admission of an imported consumer product under paragraph (c) shall be subject to the supervision of the concerned department. If the product cannot be so modified, or if the owner or consignee is not proceeding to satisfactorily modify such product, it shall be refused admission and the department may direct redelivery of the product into customs custody, and to seize the product if not so redelivered.

e) Imported consumer products not admitted must be exported, except that upon application, the Commissioner of Customs may permit the destruction of the product if, within a reasonable time, the owner or consignee thereof fails to export the same.

f) All expenses in connection with the destruction provided for in this Article, and all expenses in connection with the storage, cartage or labor with respect to any consumer product refused admission under this Article, shall be paid by the owner or consignee and, in default of such payment, shall constitute a lien against any future importation made by such owner or consignee.

ARTICLE 16. Consumer Products for Export. — The preceding article on safety not apply to any consumer product if:

a) it can be shown that such product is manufactured, sold or held for sale for export from the Philippines, or that such product was imported for export, unless such consumer product is in fact distributed in commerce for use in the Philippines; and

b) such consumer product or the packaging thereof bears a stamp or label stating that such consumer product is intended for export and actually exported.

ARTICLE 17. Powers, Functions and Duties. — In addition to their powers, functions and duties under existing laws, the concerned department shall have the following powers, functions and duties:

a) to administer and supervise the implementation of this Article and its implementing rules and regulations;

b) to undertake researches, develop and establish quality and safety standards for consumer products in coordination with other government and private agencies closely associated with these products;

c) to inspect and analyze consumer products for purposes of determining conformity to established quality and safety standards;

d) to levy, assess, collect and retain fees as are necessary to cover the cost of inspection, certification, analysis and tests of samples of consumer products and materials submitted in compliance with the provisions of this Article;

e) to investigate the causes of and maintain a record of product-related deaths, illnesses and injuries for use in researches or studies on the prevention of such product-related deaths, illnesses and injuries.

f) to accredit independent, competent non-government bodies, to assist in (1) monitoring the market for the presence of hazardous or non-certified products and other forms of violations of Article 18; and (2) other appropriate means to expand the monitoring and enforcement outreach of the department in relation to its manpower, testing and certification resources at a given time.

g) to accredit independent competent testing laboratories.

Prohibited Acts Penalties

ARTICLE 18. Prohibited Acts. — It shall be unlawful for any person to:

a) manufacture for sale, offer for sale, distribute in commerce, or import into the Philippines any consumer product which is not in conformity with an applicable consumer product quality or safety standard promulgated in this Act;

b) manufacture for sale, offer for sale, distribute in commerce, or import into the Philippines any consumer product which has been declared as banned consumer product by a rule in this Act;

c) refuse access to or copying of pertinent records or fail or refuse to permit entry of or inspection by authorized officers or employees of the department;

d) fail to comply with an order issued under Article 11 relating to notifications of substantial product hazards and to recall, repair, replacement or refund of unsafe products;

e) fail to comply with the rule prohibiting stockpiling.

ARTICLE 19. Penalties. — a) Any person who shall violate any provision of Article 18 shall upon conviction, be subject to a fine of not less than One thousand pesos (P1,000.00) but not more than Ten thousand pesos (P10,000.00) or imprisonment of not less than two (2) months but not more than one (1) year, or both upon the discretion of the court. If the offender is an alien, he shall be deported after service of sentence and payment of fine without further deportation proceedings.

b) In case the offender is a naturalized citizen, he shall, in addition to the penalty prescribed herein, suffer the penalty of cancellation of his naturalization certificate and its registration in the civil register and immediate deportation after service of sentence and payment of fine.

c) Any director, officer or agent of a corporation who shall authorize, order or perform any of the acts or practices constituting in whole or in part a violation of Article 18, and who has knowledge or notice of noncompliance received by the corporation from the concerned department, shall be subject to penalties to which that corporation may be subject.

In case the violation is committed by, or in the interest of a foreign juridical person duly licensed to engage in business in the Philippines, such license to engage in business in the Philippines shall immediately be revoked.

CHAPTER II Food, Drugs, Cosmetics and Devices

ARTICLE 20. Declaration of Policy. — The State shall ensure safe and good quality of food, drugs, cosmetics and devices, and regulate their production, sale, distribution and advertisement to protect the health of the consumer.

ARTICLE 21. Implementing Agency. — In the implementation of the foregoing policy, the State, through the Department of Health, hereby referred as the Department, shall, in accordance with the provisions of this Act:

a) establish standards and quality measures for foods, drugs, devices and cosmetics;

b) adopt measures to ensure pure and safe supply of foods and cosmetics, and safe, efficacious and good quality of drugs and devices in the Country;

c) adopt measures to ensure the rational use of drugs and devices, such as, but not limited to, banning, recalling or withdrawing from the market drugs and devices which are unregistered, unsafe, inefficacious or of doubtful therapeutic value, the adoption of an official National Drug Formulary, and the use of generic names in the labeling of drugs;

d) strengthen the Bureau of Food and Drugs.

ARTICLE 22. Rules and Regulations on Definitions and Standards. — Whenever in the judgment of the Department such action will promote honesty and fair dealing in the interest of consumers, it shall promulgate rules and regulations fixing and establishing a reasonable definition and standard of identity, a reasonable standard of quality and/or reasonable standard of fill of containers for food, drugs, cosmetics or devices.

ARTICLE 23. Adulterated Food. — A food shall be deemed to be adulterated:

a)1) if it bears or contains any poisonous or deleterious substance which may render it injurious to health; but in case the substance is not an added substance, such food shall not be considered adulterated under this clause if the quantity of such substance does not ordinarily render it injurious to health;

2) if it bears or contains any added poisonous or deleterious substance other than one which is (i) a pesticide chemical in or on a raw agricultural commodity, (ii) a food additive, (iii) a color additive, for which tolerances have been established and it conforms to such tolerances;

3) if it consists in whole or in part of any filthy, putrid or decomposed substance, or if it is otherwise unfit for food;

4) if it has been prepared, packed or held under unsanitary conditions whereby it may have become contaminated with filth, or whereby, it may have been rendered injurious to health;

5) if it is, in whole or part, the product of a diseased animal or of an animal which has died other than by slaughter;

6) if its container is composed, in whole or in part, of any poisonous or deleterious substance which may render the contents injurious to health; or

7) if it has passed its expiry date.

b)1) If any valuable constituent has been, in whole or in part, omitted or abstracted therefrom and the same has not been substituted by any healthful equivalent of such constituent;

2) if any substance, not a valuable constituent, has been added or substituted or in part therefor;

3) if damage or inferiority has been concealed in any manner; or

4) if any substance has been added thereto or packed therewith so as to increase its bulk or weight, reduce its quality or strength, or make it appear better or of greater value than it is.

c) if it is, or bears or contains a color additive which is unsafe under existing regulations: Provided, That the Department shall promulgate regulations providing for the listing of color additives which are harmless and suitable for use in food for which tolerances have been established;

d) if it is confectionary, and it bears or contains any alcohol or non-nutritive article or substance except harmless coloring, harmless flavoring, harmless resinous glass not in excess of four-tenths (4/10) of one per centum (1%) natural gum and pectin: Provided, That this clause shall not apply to a safe non-nutritive article or substance if, in the judgment of the Department as provided by regulations, (1) such article or substance is of practical functional value in the manufacture, packaging or storage of such confectionery, (2) if the use of the substance does not promote deception of the consumer or otherwise results in adulteration or mislabeling in violation of any provision of this Act, and (3) would not render the product injurious or hazardous to health: Provided, further, That this paragraph shall not apply to any confectionery by reason of its containing less than one-half (1/2) of one per centum (1%) by volume of alcohol, derived solely from the use of flavoring extracts, or to any chewing gum by reason of its containing harmless non-nutritive masticatory substance: Provided, finally, That the Department may, for the purposes of avoiding or resolving uncertainty as to the application of this clause, promulgate regulations allowing or prohibiting the use of particular non-nutritive substances;

e) if it is oleomargarine, margarine or butter and any of the raw materials used therein consists in whole or in part of any filthy, putrid or decomposed substance, or such oleomargarine, margarine or butter is otherwise unfit for food;

f) if it has not been prepared in accordance with current acceptable manufacturing practice established by the Department through regulations.

ARTICLE 24. Regulation of Unprocessed Food. — The provincial, municipal and city governments shall regulate the preparation and sale of meat, fresh fruits, poultry, milk, fish, vegetables and other foodstuff for public consumption, pursuant to the Local Government Code.

ARTICLE 25. Tolerance for Poisonous Ingredients in Food. — Any poisonous or deleterious substance added to any food shall be deemed to be unsafe, except when such substance is required or can not be avoided in its production or can not be avoided by good manufacturing practice. In such case, the Department shall promulgate regulations limiting the quantity therein in such extent as he finds necessary for the protection of public health, and any quantity exceeding the limits so fixed shall be deemed to be unsafe. In determining the quantity of such added substance to be tolerated in different articles of food, the Department shall take into account the extent to which the use of such article is required or can not be avoided in the production or manufacture of such articles and the other ways in which the consumer may be affected by the same or other poisonous or deleterious substance.

ARTICLE 26. Unsafe Food Additives, Exceptions for Conformity with Regulation. — A food additive, with respect to any particular use or intended use, shall be deemed unsafe unless:

a) it and its use or intended use conforms to the terms of an exemption for being solely intended for investigational use by qualified experts; or

b) it and its use or intended use is in conformity with a regulation issued by the Department prescribing the conditions under which such additives may be safely used.

ARTICLE 27. Petition for Regulation of Food Additive. — Any person may, with respect to any intended use of a food additive, file with the Department a petition proposing the issuance of a regulation prescribing the conditions under which such additives may be safely used.

The Department shall (1) establish a regulation prescribing, with respect to one or more proposed uses of the food additive involved, (i) the conditions under which a food additive may be safely used including, but not limited to, specifications as to the particular food, or classes of food, in which such additive may be used, (ii) the maximum quantity which may be used, or permitted to remain in or on such food; (iii) the manner in which such additive may be added to or used in or on such food, and (iv) any directions or other labeling or packaging requirement for such additive deemed necessary to assure the safety of such use, and shall notify the petitioner of such order and the reasons for such action; or (2) deny the petition and notify the petitioner of and the reasons for such action.

The Department may, at any time upon his own initiative, issue a regulation prescribing, with respect to any particular food additive, the conditions under which such additive may be safely used and the reasons thereof, and cause the publication of the same.

ARTICLE 28. Effectivity of Regulations. — The regulations promulgated under the preceding articles shall take effect fifteen (15) days after its publication in a newspaper of general circulation but the Department may stay such effectivity if, after issuance of such order, a hearing is sought by any person adversely affected by such order.

Drugs and Devices

ARTICLE 29. Adulterated Drugs and Devices. — A drug or device shall be deemed to be adulterated:

a)1) if it contains in whole or in part of any filthy, putrid, or decomposed substance which may affect its safety, efficacy or good quality; or (2) if it has been manufactured, prepared or held under unsanitary conditions whereby it may have been contaminated with dirt or filth or whereby it may have been rendered injurious to health; or (3) if its container is composed, in whole or in part, of any poisonous or deleterious substance which may render the contents injurious to health; or (4) if it bears or contains any color other than a permissible one as determined by the Department, taking into consideration standards of safety, efficacy or good quality.

b) If it purports to be or is represented as a drug, the name of which is recognized in an official compendium, and its strength differs from, or its safety, efficacy, quality or purity falls below the standards set forth in such compendium, except that whenever tests or methods of assay as prescribed are, in the judgment of the Department, insufficient for the making of such determination, the Department shall promulgate regulations prescribing appropriate tests or methods of assay in accordance with which such determination as to strength, safety, efficacy, quality or purity shall be made. No drug defined in an official compendium shall be deemed to be adulterated under this paragraph because it differs from the standards of strength, safety, efficacy, quality or purity therefor set forth in such compendium, if its difference in strength, safety, efficacy, quality or purity from such standards is plainly stated in its label and approved for registration as such.

c) If it is not subject to the provisions of paragraph (b) and its strength differs from, or its efficacy, quality or purity falls below, that which it purports or is represented to possess.

d) If a drug or device and any substance has been mixed or packed therewith, or any substance has been substituted wholly or in part thereof, so as to reduce its safety, efficacy, quality, strength or purity.

e) If the methods used in, or the facilities or controls used for its manufacture or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements of this Act as to safety, quality and efficacy, and has the identity and strength, and meets the quality and purity characteristics which it purports or is represented to possess.

ARTICLE 30. Exemption in Case of Drugs and Devices. — a) The Department is hereby directed to promulgate regulations exempting from any labeling or packaging requirement of this Act drugs and devices which are, in accordance with the practice of the trade, to be processed, labeled or repacked in substantial quantities at establishments other than those where originally processed or packed, on condition that such drugs and devices are not adulterated or mislabeled under the provisions of this Act upon removal from such processing, labeling or repacking establishment.

b)1) Drugs intended for use by man which:

(i) are habit-forming;

(ii) because of their toxicity or other potentiality for harmful effect, or method of their use is not safe for use except under the supervision of practitioner licensed by law to administer such drug;

(iii) are new drugs whose applications are limited to investigational use; shall be dispensed only (a) upon written prescription of a practitioner licensed by law to administer such drug, or (b) upon an oral prescription of such practitioner which is reduced promptly to writing and filed by the pharmacist, or (c) by refilling any such written or oral prescription if such refilling is authorized by the prescriber either in the original prescription or by oral order which is reduced promptly to writing and filed by the pharmacist. The act of dispensing a drug contrary to the provisions of this paragraph shall be deemed to be an act which results in the drug being mislabeled while held for sale.

2) Any drug dispensed by filling or refilling a written prescription of a practitioner licensed by law to administer such drug shall be exempt from the requirements of Article 89, except paragraphs (a), (h), (2) and (3), and the packaging requirements of paragraphs (f) and (g), if the drug bears a label containing the name and address of the dispenser, the serial number and date of the prescription or its filling, the name of the prescriber and, if stated in the prescription the name of the patient and the directions for use and cautionary statements, if any, contained in such prescription.

3) The Department may, by regulation, remove drugs subject to Article 89(d) and Article 31 from the requirements of sub-article (b)(1) of this Article, when such requirements are not necessary for the protection of the public health.

4) A drug which is subject to sub-article (b)(1) of this Article shall be deemed to be mislabeled if at any time prior to dispensing, its label fails to bear the statement "Caution: Should not be dispensed without prescription." A drug to which sub-article (b)(1) of this Article does not apply shall be deemed to be mislabeled if at any time prior to dispensing, its label bears the caution statement quoted in the preceding sentence.

ARTICLE 31. Licensing and Registration. — a) No person shall manufacture, sell, offer for sale, import, export, distribute or transfer any drug or device, unless an application filed pursuant to sub-article (b) hereof is effective with respect to such drug or device.

b) Any person may file with the Department, through the Department, an application under oath with respect to any drug or device subject to the provisions of sub-article (a) hereof. Such persons shall submit to the Department: (1) full reports of investigations which have been made to show whether or not such drug or device is safe, efficacious and of good quality for use based on clinical studies conducted in the Philippines; (2) a full list of the articles used as components of such drug or device; (3) a full statement of the composition of such drug or device; (4) a full description of the methods used in and the facilities and controls used for the manufacture of such drug or device; (5) such samples of such drug or device and of the articles used as components thereof as the Department may require; (6) specimens of the labeling proposed to be used for such drug or device; and (7) such other requirements as may be prescribed by regulations to ensure safety, efficacy and good quality of such drug or device.

c) Within one hundred eighty (180) days after the filing of an application under this sub-article, or such additional period as may be agreed upon by the Department and the applicant, the Department shall either (1) approve the application if he then finds that none of the grounds for denying approval specified in sub-article (d) applies, or (2) give the applicant notice of an opportunity for a hearing before the Department under sub-article (d) on the question whether such application is approvable.

d) If the Department finds, after due notice to the applicant and giving him an opportunity for a hearing, that (1) the reports of the investigations which are required to be submitted to the Department pursuant to sub-article (b) hereof, do not include adequate tests by all methods reasonably applicable to show whether or not such drug or device is safe, efficacious and of good quality for use under the conditions prescribed, recommended or suggested in the proposed labeling thereof; (2) the results of such test show that such drug or device is unsafe, inefficacious or of doubtful therapeutic value for use under such conditions or do not show that such drug or device is safe, efficacious or of good quality for use under such conditions; (3) the methods used in, and the facilities and controls used for the manufacture of such drug or device are inadequate to preserve its identity, strength, quality and purity; or (4) upon the basis of the information submitted to him as part of the application, or upon the basis of any other information before him with respect to such drug or device, he has insufficient information to determine whether such drug or device is safe, efficacious or of good equality for use under such conditions; or (5) evaluated on the basis of the information submitted to him as part of the application, and any other information before him with respect to such drug or device, there is a lack of substantial evidence that the drug or device will have the effect it purports or is represented to have under the conditions of use prescribed, recommended or suggested in the proposed labeling thereof; or (6) based on a fair evaluation of all material facts, such labeling is false or misleading in any way; he shall issue an order disapproving the application.

e) The effectiveness of an application with respect to any drug or device shall, after due notice and opportunity for hearing to the applicant, by order of the Department be suspended if it finds (1) that clinical experience, tests by new methods, or tests by methods not deemed reasonably applicable when such application became effective show that such drug or device is unsafe or ineffective for use under the conditions of use upon the basis of which the application became effective, or (2) that the application contains any untrue statement of a material fact. The order shall state the findings upon which it is based.

f) The Department shall promulgate regulations for exempting from the operation of this Article drugs and devices intended solely for investigational used by experts qualified by scientific training and experience to investigate the safety and effectiveness of drugs and devices.

g) No person shall manufacture, sell, offer for sale, import, export, distribute or transfer any drug or device without first securing a license to operate from the Department after due compliance with technical requirements in accordance with the rules and regulations promulgated by the Department pursuant to this Act.

h) No drug or device shall be manufactured, sold, offered for sale, imported, exported, distributed or transferred, unless registered by the manufacturer, importer or distributor thereof in accordance with rules and regulations promulgated by the Department pursuant to this Act. The provisions of Article 31 (b), (d) and (e), to the extent applicable, shall govern the registration of such drugs and devices.

i) The Department shall promulgate a schedule of fees for the issuance of the certificate of product registration and license to operate provided for under this Article.

ARTICLE 32. Dangerous Drugs. — The importation, distribution, manufacture, production, compounding, prescription, dispensing and sale of, and other lawful acts in connection with, dangerous drugs of such kind and quantity as may be deemed necessary according to the medical and research needs of the country and the determination of the quantity/quantities to be imported, manufactured and held in stock at any given time by an authorized importer, manufacturer or distributor of dangerous drugs shall be under the jurisdiction and authority of the Dangerous Drugs Board as provided for by existing laws and regulations.

ARTICLE 33. Banned or Restricted Drugs. — Banned or severely restricted drugs for health and safety reasons in their country of origin shall be banned and confiscated or its uses severely restricted, whichever is appropriate, by the Department. The Department shall monitor the presence in the market of such drugs and cause the maintenance and regular publications of an updated consolidated list thereof.

Certification of Drugs Containing Antibiotics

ARTICLE 34. Certification of Certain Drugs. — a) The Department shall, by regulations, provide for the certification of batches of drugs composed wholly or partially of any kind of antibiotic. A batch of such drug shall be certified if such drug has such characteristics of identity, strength, quality and purity, as the Department prescribes in such regulations as necessary to insure adequately safety and efficacy of use and good quality, but shall not otherwise be certified. Prior to the effective date of such regulations the Department, in lieu of certification, shall issue a release for any batch which, in his judgment, may be released without risk as to the safety and efficacy of its use. Such release shall prescribe the date of its expiration and other conditions under which it shall cease to be effective as to such batch and as to portions thereof. For purposes of this Article and of Article 89 (j), the term "antibiotic drug" means any drug intended for use by man containing any quantity of any chemical substance which is produced by a micro-organism and which has the capacity to inhibit or destroy micro-organisms in dilute solution (including the chemically synthesized equivalent of any such substance).

b) Whenever in the judgment of the Department, the requirements of this Article and of Article 89 (j) with respect to any drug or class of drugs are not necessary to insure safety and efficacy of use and good quality, the Department shall promulgate regulations exempting such drug or class of drugs from such requirements.

c) The Department shall promulgate regulations exempting from any requirement of this Article and of Article 89(j), (1) drugs which are to be stored, processed, labeled, or repacked at establishments other than those where manufactured, or condition that such drugs comply with all such requirements upon removal from such establishments; (2) drugs which conform to applicable standards of identity, strength, quality, and purity prescribed by these regulations and are intended for use in manufacturing other drugs; and (3) drugs which are intended for investigational use by experts qualified by scientific training and experience to investigate the safety and efficacy of drugs.

Cosmetics

ARTICLE 35. Adulterated Cosmetics. — A cosmetic shall be deemed to be adulterated:

a) if it bears or contains any poisonous or deleterious substance which may render it injurious to users under the condition of use prescribed in the labeling thereof, or under the condition of use as are customary or usual: Provided, That this provision shall not apply to color additive hair dye, the label of which bears the following legend conspicuously displayed thereon: "Caution: this product contains ingredients which may cause skin irritation on certain individuals and a preliminary test according to accompanying directions should first be made. This product must not be used for dyeing the eyelashes or eyebrows; to do so may cause blindness" and labeling of which bears adequate directions for such preliminary testing. For purposes of this paragraph (e) the term "hair dye" shall not include eyelash dyes or eyebrow dyes.

b) if it consists in whole or in part of any filthy, putrid, or decomposed substance.

c) if it has been prepared, packed or held under unsanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health.

d) if its container is composed, in whole or in part, of any poisonous or deleterious substance which may render the contents injurious to health.

e) if it is not a hair dye, and it bears or contains color additive other than which is permissible.

f) if any of its substances has been (1) mixed or packed therewith so as to reduce its quality or strength or (2) substituted wholly or in parts therefor.

ARTICLE 36. Factory Inspection. — a) For purposes of enforcement of this Article, officers or employees duly designated by the Department, upon presenting appropriate credentials to the owner, operator, or agent in charge, are authorized (1) to enter, at reasonable hours, any factory, warehouse or establishment in which food, drugs, devices or cosmetics are manufactured, processed, packed or held, for introduction into domestic commerce or are held after such introduction, or to enter any vehicle being used to transport or hold such food, drugs, devices, or cosmetics in domestic commerce; and (2) to inspect, in a reasonable manner, such factory, warehouse, establishment or vehicle and all pertinent equipment, finished and unfinished materials, containers and labeling therein.

b) If the officer or employee making any such inspection of a factory, warehouse or other establishment has obtained any sample in the course of the inspection, upon completion of the inspection and prior to leaving the premises he shall give to the owner, operator, or agent in charge a receipt describing the samples obtained.

c) Whenever in the course of any such inspection of a factory or other establishment where food is manufactured, processed or packed, the officer or employee making the inspection obtains a sample of any such food, and an analysis made of such sample for the purpose of ascertaining whether such food consists in whole or in part of any filthy, putrid or decomposed substance, or is otherwise unfit for food, a copy of the results of such analysis shall be furnished promptly to the owner, operator or agent in charge.

ARTICLE 37. Provisional Permits. — Whenever the Department finds, after investigation, that the sale or distribution in commerce of any class of food, cosmetics, drugs or devices, may be injurious to health, and that such injurious nature cannot be adequately determined after such articles have entered into domestic commerce, it shall promulgate regulations providing for the issuance, suspension and revocation of provisional permits, offer for sale or transfer of such classes of food, cosmetics, drugs or devices to manufacturers, processors or packers of the same in such locality to which shall be attached such conditions governing the manufacture, processing or packing of such consumer products for such temporary period of time as may be necessary to protect public health; and after the effective date of such regulations, and during such temporary period, no person shall, offer for sale or transfer any such food, cosmetics, drugs or devices unless such manufacturer, processor or packer holds such permit.

ARTICLE 38. Publicity and Publication. — a) The Department may cause to be disseminated information regarding food, drugs, devices, or cosmetics in situations involving, in the opinion of the Department, imminent danger to health, or gross deception to the consumer. Nothing in this Article shall be construed to prohibit the Department from collecting, reporting, and illustrating the results of its investigations.

b) The Department shall publish a Drug Reference Manual and Drug Bulletin to serve as reference by manufacturers, distributors, physicians, consumers and such other groups as may be deemed necessary. The Department is hereby authorized to sell the Drug Reference Manual at cost.

ARTICLE 39. Administrative Sanctions. — In addition to the administrative sanctions provided for under Letter of Instructions No. 1223, the Department is hereby authorized to impose, after notice and hearing, administrative fines of not less than One thousand pesos (P1,000.00) nor more than Five thousand pesos (P5,000.00) for any violation of this Act.

Prohibited Acts and Penalties

ARTICLE 40. Prohibited Acts. — The following acts and the causing thereof are hereby prohibited:

a) the manufacture, importation, exportation, sale, offering for sale, distribution or transfer of any food, drug, device or cosmetic that is adulterated or mislabeled;

b) the adulteration or misbranding of any food, drug, device, or cosmetic;

c) the refusal to permit entry or inspection as authorized by Article 36 to allow samples to be collected;

d) the giving of a guaranty or undertaking referred to in Article 41(b) hereof which guaranty or undertaking is false, except by a person who relied upon a guaranty or undertaking to the same effect signed by, and containing the name and address of, the person residing in the Philippines from whom he received in good faith the food, drug, device, or cosmetic or the giving of a guaranty or undertaking referred to in Article 41(b) which guaranty or undertaking is false;

e) forging, counterfeiting, simulating, or falsely representing or without proper authority using any mark, stamp, tag, label, or other identification device authorized or required by regulations promulgated under the provisions of this Act;

f) the using by any person to his own advantage, or revealing, other than to the Department or to the courts when relevant in any judicial proceeding under this Act, any information concerning any method or process which as a trade secret is entitled to protection;

g) the alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to a food, drug, device, or cosmetic, if such act is done while such product is held for sale (whether or not the first sale) and results in such product being adulterated or mislabeled;

h) the use, on the labeling of any drug or in any advertising relating to such drug, of any representation or suggestion that an application with respect to such drug is effective under Article 31 hereof, or that such drug complies with the provisions of such articles;

i) the use, in labeling, advertising or other sales promotion, of any reference to any report or analysis furnished in compliance with Section 19 ofExecutive Order 175, series of 1987;

j) the manufacture, importation, exportation, sale, offering for sale, distribution, or transfer of any drug or device which is not registered with the Department pursuant to this Act;

k) the manufacture, importation, exportation, sale, offering for sale, distribution, or transfer of any drug or device by any person without the license from the Department required in this Act;

l) the sale or offering for sale of any drug or device beyond its expiration or expiry date;

m) the release for sale or distribution of a batch of drugs without batch certification when required under Article 34 hereof.

ARTICLE 41. Penalties. — a) Any person who violates any of the provisions of Article 40 hereof shall, upon conviction, be subject to imprisonment of not less than one (1) year but not more than five (5) years, or a fine of not less than Five thousand pesos (P5,000.00) but not more than Ten thousand pesos (P10,000.00), or both such imprisonment and fine, in the discretion of the Court.

Should the offense be committed by a juridical person, the Chairman of the Board of Directors, the President, General Manager, or the partners and/or the persons directly responsible therefor shall be penalized.

b) No person shall be subject to the penalties of sub-article (a) of this Article for (1) having sold, offered for sale or transferred any product and delivered it, if such delivery was made in good faith, unless he refuses to furnish on request of the Department, the name and address of the person from whom he purchased or received such product and copies of all documents, if any there be, pertaining to the delivery of the product to him; (2) having violated Article 40(a) if he established a guaranty or undertaking signed by, and containing the name and address of, the person residing in the Philippines from whom he received in good faith the product, or (3) having violated Article 40(a), where the violation exists because the product is adulterated by reason of containing a color other than the permissible one under regulations promulgated by the Department in this Act, if such person establishes a guaranty or undertaking signed by, and containing the name and address, of the manufacturer of the color, to the effect that such color is permissible, under applicable regulations promulgated by the Department in this Act.

CHAPTER III Hazardous Substance

ARTICLE 42. Declaration of Policy. — The State shall adopt measures designed to protect the consumer against substances other than food, drugs, cosmetics and devices that are hazardous to his health and safety.

ARTICLE 43. Implementing Agency. — The Department of Health, hereby referred to as the Department, shall enforce the provisions of this Chapter.

ARTICLE 44. Regulations Declaring Hazardous Substances and Establishing Variations and Exemptions. — The Department shall promulgate the rules and regulations governing the implementation of this Article.

To resolve uncertainty as to the coverage of this Article, the Department may, by regulations, declare as hazardous any substance of mixture of substances which he finds meets the requirements of paragraph (ak), clause (1)(i) of Article 4.

If the Department finds that for good and sufficient reasons, full compliance with the labeling requirements otherwise applicable under this Chapter is impracticable or is not necessary for the adequate protection of public health and safety, it shall promulgate regulations exempting such substances from these requirements to the extent he deems consistent with the objective of adequately safeguarding public health and safety, and any hazardous substance which does not bear a label in accordance with such regulations shall be deemed to be a mislabeled hazardous substance.

ARTICLE 45. Imports: Regulations on Imported Hazardous Substances. — a) The Commissioner of Customs shall deliver to the Department, upon its request, samples of hazardous substances being imported or offered for import to the Philippines, giving notice thereof to the owner or consignee who may appear before the Department and exercise the right to make testimony. If it appears from the examination of such samples that such hazardous substance is a mislabeled hazardous substance or banned hazardous substance, then such hazardous substance shall be refused admission except as may be provided in an order issued by the Department authorizing delivery of the refused products or substance under the requirements imposed therein. The Commissioner of Customs shall cause the destruction of any hazardous substance refused admission unless such is exported, under regulations issued by the Commissioner within ninety (90) days from the date of notice of such refusal or within such additional time as may be fixed by him.

b) Pending decision on the admissibility of a hazardous substance being imported or offered for import, the Commissioner of Customs may authorize delivery of such hazardous substance to the owner or consignee upon execution by him of a good and sufficient bond providing for the payment of such liquidated damages in the event of default. If it appears to the Department that the hazardous substance can by relabeling or other action be made to comply with the requirements of this Article final determination as to the admission of such hazardous substance may be deferred and upon filing of a timely written application by the owner or consignee and the execution by him of a bond as provided in the provision of this paragraph. The Department may, in accordance with regulations, authorize the applicant to perform such relabeling or other action specified in such authorization, including destruction or export of such rejected hazardous substance. All such relabeling or other action pursuant to such authorization shall be in accordance with regulations and shall be under the supervision of an officer or employee of the Commission of Customs and the Department.

Prohibited Acts and Penalties

ARTICLE 46. Prohibited Acts. — It shall be unlawful for any person to:

a) introduce or deliver for introduction into commerce of any mislabeled hazardous substance or banned hazardous substance;

b) alter, mutilate, destroy, obliterate or remove the whole or any part of the label of a mislabeled hazardous substance, or banned hazardous substance, if such act is done while the substance is in commerce or while the substance is held for sale, whether or not it is the first sale;

c) receive in commerce any mislabeled hazardous substance or banned hazardous substance and the delivery or preferred delivery thereof at cost or otherwise;

d) give the guaranty or undertaking referred to in paragraph (b) of Article 93 and paragraph (b) of Article 45 if such guaranty or undertaking if false, except by a person who relied upon a guaranty or undertaking which he received in good faith;

e) introduce or deliver for introduction into commerce or receive in commerce and subsequently deliver or preferred at cost or otherwise, of a hazardous substance in a reused food, drug, cosmetic or device container or in a container which, though not a reused container, is identifiable as a food, drug, cosmetic or device container by its labeling or by other identification. The use of a used food, drug, cosmetic or device container for a hazardous substance does not diminish the danger posed by the hazardous substance involved, therefore, such substance shall be deemed a mislabeled hazardous substance.

ARTICLE 47. Penalties, Exception. — a) Any person who violates any of the provisions of Article 46 shall, upon conviction, be subject to a fine of not less than One thousand pesos (P1,000.00) or an imprisonment of not less than six (6) months but not more than five (5) years or both upon the discretion of the court.

b) No person shall be subject to the penalties of paragraph (a) of this Article for (1) having violated paragraph (c) of Article 46 unless he refuses to furnish, upon request by the Department or his representative, the name and address of the person from who he purchased such hazardous substances and (2) having violated paragraph (a) of Article 46, if he establishes a guaranty or undertaking signed by, and containing the name and address of, the person from whom he received in good faith, the hazardous substance to the effect that the hazardous substance is not a mislabeled hazardous substance or banned hazardous within the meaning of that term in this Act.

CHAPTER I Deceptive, Unfair and Unconscionable Sales Acts or Practices

ARTICLE 48. Declaration of Policy. — The State shall promote and encourage fair, honest and equitable relations among parties in consumer transactions and protect the consumer against deceptive, unfair and unconscionable sales acts or practices.

ARTICLE 49. Implementing Agency. — The Department of Trade and Industry, hereby referred to as the Department, shall enforce the provisions of this Chapter.

Regulation of Sales Acts and Practices

ARTICLE 50. Prohibition Against Deceptive Sales Acts or Practices. — A deceptive act or practice by a seller or supplier in connection with a consumer transaction violates this Act whether it occurs before, during or after the transaction. An act or practice shall be deemed deceptive whenever the producer, manufacturer, supplier or seller, through concealment, false representation or fraudulent manipulation, induces a consumer to enter into a sales or lease transaction of any consumer product or service.

Without limiting the scope of the above paragraph, the act or practice of a seller or supplier is deceptive when it represents that:

a) a consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have;

b) a consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not;

c) a consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;

d) a consumer product or service is available to the consumer for a reason that is different from the fact;

e) a consumer product or service has been supplied in accordance with the previous representation when in fact it is not;

f) a consumer product or service can be supplied in a quantity greater than the supplier intends;

g) a service, or repair of a consumer product is needed when in fact it is not;

h) a specific price advantage of a consumer product exists when in fact it does not;

i) the sales act or practice involves or does not involve a warranty, a disclaimer of warranties, particular warranty terms or other rights, remedies or obligations if the indication is false; and

j) the seller or supplier has a sponsorship, approval, or affiliation he does not have.

ARTICLE 51. Deceptive Sales Act or Practices By Regulation. — The Department shall, after due notice and hearing, promulgate regulations declaring as deceptive any sales act, practice or technique which is a misrepresentation of facts other than these enumerated in Article 50.

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

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

d) that when the consumer transaction was entered into, the seller or supplier was aware that there was no reasonable probability or payment of the obligation in full by the consumer; and

e) 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.

ARTICLE 53. Chain Distribution Plans or Pyramid Sales Schemes. — Chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products.

ARTICLE 54. Home Solicitation Sales. — No business entity shall conduct any home solicitation sale of any consumer product or service without first obtaining a permit from the Department. Such permit may be denied suspended or revoked upon cause as provided in the rules and regulations promulgated by the Department, after due notice and hearing.

ARTICLE 55. Home Solicitation Sales; When Conducted. — Home solicitation sales may be conducted only between the hours of nine o'clock in the morning and seven o'clock in the evening of each working day: Provided, That solicitation sales may be made at a time other than the prescribed hours where the person solicited has previously agreed to the same.

ARTICLE 56. Home Solicitation Sales; by Whom Conducted. — Home solicitation sales shall only be conducted by a person who has the proper identification and authority from his principal to make such solicitations.

ARTICLE 57. Receipts for Home Solicitation Sales. — Sales generated from home solicitation sales shall be properly receipted as per existing laws, rules and regulations on sale transactions.

ARTICLE 58. Prohibited Representations. — A home solicitation sale shall not represent that:

a) the buyer has been specially selected;

b) a survey, test or research is being conducted; or

c) the seller is making a special offer to a few persons only for a limited period of time.

ARTICLE 59. Referral Sales. — Referral selling plans shall not be used in the sale of consumer products unless the seller executes in favor of the buyer a written undertaking that will grant a specified compensation or other benefit to said buyer in return for each and every transaction consummated by said seller with the persons referred by said buyer or for subsequent sales that said buyers has helped the seller enter into.

ARTICLE 60. Penalties. — a) Any person who shall violate the provisions of Title III, Chapter I, shall upon conviction, be subject to a fine of not less than Five Hundred Pesos (P500.00) but not more than Ten Thousand Pesos (P10,000.00) or imprisonment of not less than five (5) months but not more than one (1) year or both, upon the discretion of the court.

b) In addition to the penalty provided for in paragraph (1), the court may grant an injunction restraining the conduct constituting the contravention of the provisions of Articles 50 and 51 and/or actual damages and such other orders as it thinks fit to redress injury to the person caused by such conduct.

CHAPTER II Regulation of Practices Relative to Weights and Measures

General Provision

ARTICLE 61. Implementing Agency. — The provincial, city, or municipal treasurers shall strictly enforce the provisions of this Chapter, and its implementing rules and regulations: Provided, That, with respect to the use of the Metric System, it shall be enforced by the Department of Trade and Industry.

ARTICLE 62. Sealing and Testing of Instruments of Weights and Measure. — All instruments for determining weights and measures in all consumer and consumer related transactions shall be tested, calibrated and sealed every six (6) months by the official sealer who shall be the provincial or city or municipal treasurer or his authorized representative upon payment of fees required under existing law: Provided, That all instruments of weights and measures shall continuously be inspected for compliance with the provisions of this Chapter.

ARTICLE 63. Use of Metric System. — The system of weights and measures to be used for all products, commodities, materials, utilities, services and commercial transactions, in all contracts, deeds and other official and legal instruments and documents shall be the metric system, in accordance with existing laws and their implementing rules and regulations.

The Department of Trade and Industry shall also adopt standard measurement for garments, shoes and other similar consumer products.

Prohibited Acts

ARTICLE 64. Fraudulent Practices Relative to Weights and Measures. — The following acts relating to weights and measures are prohibited:

a) for any person other than the official sealer or his duly authorized representative to place or attach an official tag, seal, sticker, mark, stamp, brand or other characteristic sign used to indicate that such instrument of weight and measure has officially been tested, calibrated, sealed or inspected;

b) for any person to imitate any seal, sticker, mark, stamp, brand, tag or other characteristic sign used to indicate that such instrument of weight or measures has been officially tested, calibrated, sealed or inspected;

c) for any person other than the official sealer or his duly authorized representative to alter in any way the certificate or receipt given by the official sealer or his duly authorized representative as an acknowledgment that the instrument for determining weight or measure has been fully tested, calibrated, sealed or inspected;

d) for any person to make or knowingly sell or use any false or counterfeit seal, sticker, brand, stamp, tag, certificate or license or any dye for printing or making the same or any characteristic sign used to indicate that such instrument of weight or measure has been officially tested, calibrated, sealed or inspected;

e) for any person other than the official sealer or his duly authorized representative to alter the written or printed figures, letters or symbols on any official seal, sticker, receipt, stamp, tag, certificate or license used or issued;

f) for any person to use or reuse any restored, altered, expired, damaged stamp, tag certificate or license for the purpose of making it appear that the instrument of weight of measure has been tested, calibrated, sealed or inspected;

g) for any person engaged in the buying and selling of consumer products or of furnishing services the value of which is estimated by weight or measure to possess, use or maintain with intention to use any scale, balance, weight or measure that has not been sealed or if previously sealed, the license therefor has expired and has not been renewed in due time;

h) for any person to fraudulently alter any scale, balance, weight or measure after it is officially sealed;

i) for any person to knowingly use any false scale, balance, weight or measure, whether sealed or not;

j) for any person to fraudulently give short weight or measure in the making of a scale;

k) for any person, assuming to determine truly the weight or measure of any article bought or sold by weight or measure, to fraudulently misrepresent the weight or measure thereof; or

l) for any person to procure the commission of any such offense abovementioned by another.

Instruments officially sealed at some previous time which have remained unaltered and accurate and the seal or tag officially affixed thereto remains intact and in the same position and condition in which it was placed by the official sealer or his duly authorized representative shall, if presented for sealing, be sealed promptly on demand by the official sealer or his authorized representative without penalty except a surcharge fixed by law or regulation.

ARTICLE 65. Penalties. — a) Any person who shall violate the provisions of paragraphs (a) to (f) and paragraph (l) of Article 64 or its implementing rules and regulations shall, upon conviction, be subject to a fine of not less than Two hundred pesos (P200.00) but not more than One thousand pesos (P1,000.00) or by imprisonment of not more than one (1) year or both upon the discretion of the court.

b) Any person who shall violate the provisions of paragraph (g) of Article 64 for the first time shall be subject to a fine of not less than Five hundred pesos (P500.00) or by imprisonment of not less than one (1) month but not more than five (5) years or both, upon the discretion of the court.

c) The owner-possessor or user of instrument of weights and measure enumerated in paragraphs (h) to (k) of Article 64 shall, upon conviction, be subject to a fine of not less than Three hundred pesos (P300.00) or imprisonment not exceeding one (1) year, or both, upon the discretion of the court.

CHAPTER III Consumer Product and Service Warranties

ARTICLE 66. Implementing Agency. — The Department of Trade and Industry, shall strictly enforce the provision of this Chapter and its implementing rules and regulations.

ARTICLE 67. Applicable Law on Warranties. — The provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with conditions and warranties.

ARTICLE 68. Additional Provisions on Warranties. — In addition to the Civil Code provisions on sale with warranties, the following provisions shall govern the sale of consumer products with warranty:

a) Terms of express warranty. — Any seller or manufacturer who gives an express warranty shall:

1) set forth the terms of warranty in clear and readily understandable language and clearly identify himself as the warrantor;

2) identify the party to whom the warranty is extended;

3) state the products or parts covered;

4) state what the warrantor will do in the event of a defect, malfunction of failure to conform to the written warranty and at whose expense;

5) state what the consumer must do to avail of the rights which accrue to the warranty; and

6) stipulate the period within which, after notice of defect, malfunction or failure to conform to the warranty, the warrantor will perform any obligation under the warranty.

b) Express warranty — operative from moment of sale. — All written warranties or guarantees issued by a manufacturer, producer, or importer shall be operative from the moment of sale.

1) Sales Report. — All sales made by distributors of products covered by this Article shall be reported to the manufacturer, producer, or importer of the product sold within thirty (30) days from date of purchase, unless otherwise agreed upon. The report shall contain, among others, the date of purchase, model of the product bought, its serial number, name and address of the buyer. The report made in accordance with this provision shall be equivalent to a warranty registration with the manufacturer, producer, or importer. Such registration is sufficient to hold the manufacturer, producer, or importer liable, in appropriate cases, under its warranty.

2) Failure to make or send report. — Failure of the distributor to make the report or send them the form required by the manufacturer, producer, or importer shall relieve the latter of its liability under the warranty: Provided, however, That the distributor who failed to comply with its obligation to send the sales report shall be personally liable under the warranty. For this purpose, the manufacturer shall be obligated to make good the warranty at the expense of the distributor.

3) Retail. — The retailer shall be subsidiarily liable under the warranty in case of failure of both the manufacturer and distributor to honor the warranty. In such case, the retailer shall shoulder the expenses and costs necessary to honor the warranty. Nothing therein shall prevent the retailer from proceeding against the distributor or manufacturer.

4) Enforcement of warranty or guarantee. — The warranty rights can be enforced by presentment of a claim. To this end, the purchaser needs only to present to the immediate seller either the warranty card or the official receipt along with the product to be serviced or returned to the immediate seller. No other documentary requirement shall be demanded from the purchaser. If the immediate seller is the manufacturer's factory or showroom, the warranty shall immediately be honored. If the product was purchased from a distributor, the distributor shall likewise immediately honor the warranty. In the case of a retailer other than the distributor, the former shall take responsibility without cost to the buyer of presenting the warranty claim to the distributor in the consumer's behalf.

5) Record of purchases. — Distributors and retailers covered by this Article shall keep a record of all purchases covered by a warranty or guarantee for such period of time corresponding to the lifetime of the product's respective warranties or guarantees.

6) Contrary stipulations — null and void. — All covenants, stipulations or agreements contrary to the provisions of this Article shall be without legal effect.

c) Designation of warranties. — A written warranty shall clearly and conspicuously designate such warranty as:

1) "Full warranty" if the written warranty meets the minimum requirements set forth in paragraph (d); or

2) "Limited warranty" if the written warranty does not meet such minimum requirements.

d) Minimum standards for warranties. — For the warrantor of a consumer product to meet the minimum standards for warranty, he shall:

1) remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure to conform to such written warranty;

2) permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to have the defect or to malfunction.

The warrantor will not be required to perform the above duties if he can show that the defect, malfunction or failure to conform to a written warranty was caused by damage due to unreasonable use thereof.

e) Duration of warranty. — The seller and the consumer may stipulate the period within which the express warranty shall be enforceable. If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration.

Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale of new consumer products.

f) Breach of warranties. — 1) In case of breach of express warranty, the consumer may elect to have the goods repaired or its purchase price refunded by the warrantor. In case the repair of the product in whole or in part is elected, the warranty work must be made to conform to the express warranty within thirty (30) days by either the warrantor or his representative. The thirty-day period, however, may be extended by conditions which are beyond the control of the warrantor or his representative. In case the refund of the purchase price is elected, the amount directly attributable to the use of the consumer prior to the discovery of the non-conformity shall be deducted.

2) In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods, cancel and contract and recover from the seller so much of the purchase price as has been paid, including damages.

ARTICLE 69. Warranties in Supply of Services. — a) In every contract for the supply of services to a consumer made by a seller in the course of a business, there is an implied warranty that the service will be rendered with due care and skill and that any material supplied in connection with such services will be reasonably fit for the purpose for which it is supplied.

b) Where a seller supplies consumer services in the course of a business and the consumer, expressly or by implication, makes known to the seller the particular purpose for which the services are required, there is an implied warranty that the services supplied under the contract and any material supplied in connection therewith will be reasonably fit for that purpose or are of such a nature or quality that they might reasonably be expected to achieve that result, unless the circumstances show that the consumer does not rely or that it is unreasonable for him to rely, on the seller's skill or judgment.

ARTICLE 70. Professional Services. — The provisions of this Act on warranty shall not apply to professional services of certified public accountants, architects, engineers, lawyers, veterinarians, optometrists, pharmacists, nurses, nutritionists, dietitians, physical therapists, salesmen, medical and dental practitioners and other professionals engaged in their respective professional endeavors.

ARTICLE 71. Guaranty of Service Firms. — Service firms shall guarantee workmanship and replacement of spare parts for a period not less than ninety (90) days which shall be indicated in the pertinent invoices.

ARTICLE 72. Prohibited Acts. — The following acts are prohibited:

a) refusal without any valid legal cause by the total manufacturer or any person obligated under the warranty or guarantee to honor a warranty or guarantee issued;

b) unreasonable delay by the local manufacturer or any person obligated under the warranty or guarantee in honoring the warranty;

c) removal by any person of a product's warranty card for the purpose of evading said warranty obligation;

d) any false representation in an advertisement as to the existence of a warranty or guarantee.

ARTICLE 73. Penalties. — a) Any person who shall violate the provisions of Article 67 shall be subject to 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 three (3) months but not more than two (2) years or both upon the discretion of the court. A second conviction under this paragraph shall also carry with it the penalty or revocation of his business permit and license.

b) Any person, natural or juridical, committing any of the illegal acts provided for in Chapter III, except with respect to Article 67, shall be liable for a fine of not less than One thousand pesos (P1,000.00) but not more than Fifty thousand pesos (P50,000.00) or imprisonment for a period of at least one (1) year but not more than five (5) years, or both, at the discretion of the court.

The imposition of any of the penalties herein provided is without prejudice to any liability incurred under the warranty or guarantee.

CHAPTER IV Labeling and Fair Packaging

ARTICLE 74. Declaration of Policy. — The State shall enforce compulsory labeling, and fair packaging to enable the consumer to obtain accurate information as to the nature, quality and quantity of the contents of consumer products and to facilitate his comparison of the value of such products.

ARTICLE 75. Implementing Agency. — The Department of Trade and Industry shall enforce the provisions of this Chapter and its implementing rules and regulations: Provided, That with respect to food, drugs, cosmetics, devices, and hazardous substances, it shall be enforced by the concerned department.

ARTICLE 76. Prohibited Acts on Labeling and Packaging. — It shall be unlawful for any person, either as principal or agent, engaged in the labeling or packaging of any consumer product, to display or distribute or to cause to be displayed or distributed in commerce any consumer product whose package or label does not conform to the provisions of this Chapter.

The prohibition in this Chapter shall not apply to persons engaged in the business of wholesale or retail distributors of consumer products except to the extent that such persons:

a) are engaged in the packaging or labeling of such products;

b) prescribe or specify by any means the manner in which such products are packaged or labeled; or

c) having knowledge, refuse to disclose the source of the mislabeled or mispackaged products.

ARTICLE 77. Minimum Labeling Requirements for Consumer Products. — All consumer products domestically sold whether manufactured locally or imported shall indicate the following in their respective labels of packaging:

a) its correct and registered trade name or brand name;

b) its duly registered trademark;

c) its duly registered business name;

d) the address of the manufacturer, importer, repacker of the consumer product in the Philippines;

e) its general make or active ingredients;

f) the net quality of contents, in terms of weight, measure or numerical count rounded of to at least the nearest tenths in the metric system;

g) country of manufacture, if imported; and

h) if a consumer product is manufactured, refilled or repacked under license from a principal, the label shall so state the fact.

The following may be required by the concerned department in accordance with the rules and regulations they will promulgate under authority of this Act:

a) whether it is flammable or inflammable;

b) directions for use, if necessary;

c) warning of toxicity;

d) wattage, voltage or amperes; or

e) process of manufacture used if necessary.

Any word, statement or other information required by or under authority of the preceding paragraph shall appear on the label or labeling with such conspicuousness as compared with other words, statements, designs or devices therein, and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase or use.

The above requirements shall form an integral part of the label without danger of being erased or detached under ordinary handling of the product.

ARTICLE 78. Philippine Product Standard Mark. — The label may contain the Philippine Product Standard Mark if it is certified to have passed the consumer product standard prescribed by the concerned department.

ARTICLE 79. Authority of the Concerned Department to Provide for Additional Labeling and Packaging Requirements. — Whenever the concerned department determines that regulations containing requirements other than those prescribed in Article 77 hereof are necessary to prevent the deception of the consumer or to facilitate value comparisons as to any consumer product, it may issue such rules and regulations to:

a) establish and define standards for characterization of the size of a package enclosing any consumer product which may be used to supplement the label statement of net quality, of contents of packages containing such products but this clause shall not be construed as authorizing any limitation on the size, shape, weight, dimensions, or number of packages which may be used to enclose any product;

b) regulate the placement upon any package containing any product or upon any label affixed to such product of any printed matter stating or representing by implication that such product is offered for retail at a price lower than the ordinary and customary retail price or that a price advantage is accorded to purchases thereof by reason of the size of the package or the quantity of its contents;

c) prevent the nonfunctional slack-fill of packages containing consumer products.

For purposes of paragraph (c) of this Article, a package shall be deemed to be nonfunctionally slack-filled if it is filled to substantially less than its capacity for reasons other than (1) protection of the contents of such package, (2) the requirements of machines used for enclosing the contents in such package, or (3) inherent characteristics of package materials or construction being used.

ARTICLE 80. Special Packaging of Consumer Products for the Protection of Children. — The concerned department may establish standards for the special packaging of any consumer product if it finds that:

a) the degree or nature of the hazard to children in the availability of such product, by reason of its packaging, is such that special packaging is required to protect children from serious personal injury or serious illness resulting from handling and use of such product; and

b) the special packaging to be required by such standard is technically feasible, practicable and appropriate for such product. In establishing a standard under this Article, the concerned department shall consider:

1) the reasonableness of such a standard;

2) available scientific, medical and engineering data concerning special packaging and concerning accidental, ingestions, illnesses and injuries caused by consumer product;

3) the manufacturing practices of industries affected by this Article; and

4) the nature and use of consumer products.

ARTICLE 81. Price Tag Requirement. — It shall be unlawful to offer any consumer product for retail sale to the public without an appropriate price tag, label or marking publicly displayed to indicate the price 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 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, further, 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.

ARTICLE 82. Manner of Placing Price Tags. — Price tags, labels or markings must be written clearly, indicating the price of the consumer product per unit in pesos and centavos.

ARTICLE 83. Regulations for Price Tag Placement. — The concerned department shall prescribe rules and regulations for the visible placement of price tags for specific consumer products and services. There shall be no erasures or alterations of any sort of price tags, labels or markings.

ARTICLE 84. Additional Labeling Requirements for Food. — The following additional labeling requirements shall be imposed by the concerned department for food:

a) expiry or expiration date, where applicable;

b) whether the consumer product is semi-processed, fully processed, ready-to-cook, ready-to-eat, prepared food or just plain mixture;

c) nutritive value, if any;

d) whether the ingredients use are natural or synthetic, as the case may be;

e) such other labeling requirements as the concerned department may deem necessary and reasonable.

ARTICLE 85. Mislabeled Food. — A food shall also be deemed mislabeled:

a) if its labeling or advertising is false or misleading in any way;

b) if it is offered for sale under the name of another food;

c) if it is an imitation of another food, unless its label bears in type of uniform size and prominence, the word "imitation" and, immediately thereafter, the name of the food imitated;

d) its containers is so made, formed, or filled as to be misleading;

e) if in package form unless it bears a label conforming to the requirements of this Act: Provided, That reasonable variation on the requirements of labeling shall be permitted and exemptions as to small packages shall be established by the regulations prescribed by the concerned department of health;

f) if any word, statement or other information required by or under authority of this Act to appear on the principal display panel of the label or labeling is not prominently placed thereon with such conspicuousness as compared with other words, statements, designs or devices in the labeling and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use;

g) if it purports to be or is represented as a food for which a definition or standard of identity has been prescribed unless:

1) it conforms to such definition and standard; and

2) its labels bears the name of the food specified in the definition or standards, and insofar as may be required by such regulations, the common names of optional ingredients other than spices, flavoring and coloring, present in such food;

h) if it purports to be or is represented as:

1) a food for which a standard of quality has been prescribed by regulations as provided in this Act and its quality fall below such standard, unless its label bears in such manner and form as such regulations specify, a statement that it falls below such standard; or

2) a food for which a standard or standards or fill of container have been prescribed by regulations as provided by this Act and it falls below the standard of fill of container applicable thereto, unless its label bears, in such manner and form as such regulations specify, a statement that it falls below such standard;

i) if it is not subject to the provisions of paragraph (g) of this Article unless its label bears:

1) the common or usual name of the food, if there be any; and

2) in case it is manufactured or processed from two or more ingredients, the common or usual name of such ingredient; except the spices, flavorings and colorings other than those sold as such, may be designated as spices, flavorings and colorings without naming each: Provided, That to the extent that compliance with the requirement of clause (2) of this paragraph is impracticable or results in deception or unfair competition, exemptions shall be established by regulations promulgated by the concerned department of health;

j) if it purports to be or is represented for special dietary uses, unless its label bears such information concerning its vitamin or mineral or other dietary properties as the concerned department determines to be, or by regulations prescribed as necessary in order fully to inform purchasers as its value for such uses;

k) if it bears or contains any artificial flavoring, artificial coloring, or chemical preservative, unless it bears labeling, stating that fact: Provided, That to the extent that compliance with the requirements of this paragraph is impracticable, exemptions shall be established by regulations promulgated by the concerned department. The provisions of this paragraph or paragraphs (g) and (i) with respect to the artificial coloring shall not apply in the case of butter, cheese or ice cream.

ARTICLE 86. Labeling of Drugs. — The Generics Act shall apply in the labeling of drugs.

ARTICLE 87. Additional Labeling Requirements for Cosmetics. — The following additional requirements may be required for cosmetics:

a) expiry or expiration date;

b) whether or not it may be an irritant;

c) precautions or contra-indications; and

d) such other labeling requirements as the concerned department may deem necessary and reasonable.

ARTICLE 88. Special Labeling Requirements for Cosmetics. — A cosmetic shall be deemed mislabeled:

a) if its labeling or advertising is false or misleading in any way;

b) if in package form unless it bears a label conforming to the requirements of labeling provided for in this Act or under existing regulations: Provided, That reasonable variations shall be permitted, and exemptions as to small packages shall be established by regulations prescribed by the concerned department;

c) if any word, statement or other information required by or under authority of this Act to appear on the label or labeling is not prominently placed thereon with such conspicuousness, as compared with other words, statements, designs or devices in the labeling, and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use;

d) if its container is so made, formed or filled as to be misleading; or

e) if its label does not state the common or usual name of its ingredients.

ARTICLE 89. Mislabeled Drugs and Devices. — A drug or device shall be deemed to be mislabeled:

a) if its labeling is false or misleading in any way;

b) if it is in package form unless it bears a label conforming to the requirements of this Act or the regulations promulgated therefor: Provided, that reasonable variations shall be permitted and exemptions as to small packages shall be established by regulations prescribed by the concerned department.

c) if any word, statement or other information required by or under authority of this Act to appear on the principal display panel of the label or labeling is not prominently placed thereon with such conspicuousness as compared with other words, statements, designs or devices in the labeling and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use;

d) if it is for use by man and contains any quantity of the narcotic or hypnotic substance alpha-eucaine, barbituric acid, beta-eucaine, bromal, cannabis, carbromal, chloral, coca, cocaine, codeine, heroin, marijuana, morphine, opium, paraldehyde, peyote or sulfonmethane, or any chemical derivative of such substance, which derivative has been designated by the concerned department after investigation, and by regulations, as habit forming; unless its label bears the name and quantity or proportion of such substance or derivative and in juxtaposition therewith the statement "Warning — May be habit forming";

e) its labeling does not bear:

1) adequate directions for use; and

2) such adequate warning against use in those pathological conditions or by children where its use may be dangerous to health, or against unsafe dosage or methods or duration of administration or application, in such manner and form, as are necessary for the protection of users:Provided, That where any requirement of clause (1) of this paragraph, as applied to any drug or device, is not necessary for the protection of the public health, the concerned department may promulgate regulations exempting such drug or device from such requirement;

f) if it purports to be a drug the name of which is recognized in an official compendium, unless it is packaged and labeled as prescribed therein:Provided, That the method of packing may be modified with the consent of the concerned department;

g) if it has been found by the concerned department to be a drug liable to deterioration, unless it is packaged in such form and manner, and its label bears a statement of such precautions, as the concerned department, shall by regulations, require as necessary for the protection of the public health;

h)1) if it is a drug and its container is so made, formed or filled as to be misleading; or

2) if it is an imitation of another drug; or

3) if it is offered for sale under the name of another drug;

i) if it is dangerous to health when used in the dosage, or with the frequency of duration prescribed, recommended or suggested in the labeling thereof;

j) if it is, purports to be or is represented as a drug composed wholly or partly of insulin or of any kind of penicillin, streptomycin, chlortetracycline, chloramphenicol, bacitracin, or any other antibiotic drug, or any derivative thereof, unless:

1) it is from a batch with respect to which a certificate of release has been issued pursuant to regulations of the concerned department; and

2) such certificate of release is in effect with respect to such drug: Provided, That this paragraph shall not apply to any drug or class of drugs exempted by regulations promulgated under Authority of this Act.

ARTICLE 90. Regulation-making Exemptions. — The concerned department may promulgate regulations exempting from any labeling requirements of this Act food, cosmetics, drugs or devices which are, in accordance with the practice of trade, to be processed, labeled or repacked in substantial quantities at establishments other than those where originally processed, labeled or packed on condition that such food, cosmetics, drugs or devices are not adulterated or mislabeled under the provisions of this Act and other applicable laws upon approval from such processing, labeling and repacking establishments.

ARTICLE 91. Mislabeled Hazardous Substances. — Hazardous substances shall be deemed mislabeled when:

a) having been intended or packaged in a form suitable for use in households, especially for children, the packaging or labeling of which is in violation of the special packaging regulations issued by the concerned department;

b) such substance fails to bear a label:

1) which states conspicuously:

(i) the name and the place of business of the manufacturer, packer, distributor or seller;

(ii) the common or usual name or the chemical name, if there be no common or usual name, of the hazardous substance or of each component which contributes substantially to the harmfulness of the substance, unless the concerned department by regulation permits or requires the use of the recognized generic name;

(iii) the signal word "danger" on substances which are extremely flammable, corrosive or highly toxic;

(iv) the signal word "warning" or "caution" with a bright red or orange color with a black symbol on all other hazardous substances;

(v) a clear statement as to the possible injury it may cause if used improperly;

(vi) precautionary measures describing the action to be followed or avoided;

(vii) instructions when necessary or appropriate for first-aid treatment;

(viii) the word "poison" for any hazardous substance which is defined as highly toxic;

(ix) instructions for handling and storage of packages which require special care in handling and storage; and

(x) the statement "keep out of the reach of children", or its practical equivalent, if the article is not intended for use by children and is not a banned hazardous substance, with adequate directions for the protection of children from the hazard involved. The aforementioned signal words, affirmative statements, description of precautionary measures, necessary instructions or other words or statements may be in the English language or its equivalent in Filipino; and

2) on which any statement required under clause 1) of this paragraph is located prominently in bright red and orange color with a black symbol in contrast typography, layout or color with the other printed matters on the label.

ARTICLE 92. Exemptions. — If the concerned department finds that for good or sufficient reasons, full compliance with the labeling requirements otherwise applicable under this Act is impracticable or is not necessary for the adequate protection of public health and safety, it shall promulgate regulations exempting such substances from these requirements to the extent it deems consistent with the objective of adequately safeguarding public health and safety, and any hazardous substance which does not bear a label in accordance with such regulations shall be deemed mislabeled hazardous substance.

ARTICLE 93. Grounds for Seizure and Condemnation of Mislabeled Hazardous Substances. — a) Any mislabeled hazardous substance when introduced into commerce or while held for sale shall be liable to be proceeded against and condemned upon order of the concerned department in accordance with existing procedure for seizure and condemnation of articles in commerce: Provided, That this Article shall not apply to a hazardous substance intended for export to any foreign country if:

1) it is in a package labeled in accordance with the specifications of the foreign purchaser;

2) it is labeled in accordance with the laws of the foreign country;

3) it is labeled on the outside of the shipping package to show that it is intended for export; and

4) it is so exported,

b) any hazardous substance condemned under this Article shall after entry of order of condemnation be disposed of by destruction or sale as the concerned department may direct, and the proceeds thereof, if sold, less the legal cost and charges, shall be paid into the treasury of the Philippines; but such hazardous substance shall not be sold under any order which is contrary to the provisions of this Act: Provided, That, after entry of the order and upon the payment of the costs of such proceedings and the execution of a good and sufficient bond conditioned that such hazardous substance shall not be sold or disposed of contrary to the provisions of this Act, the concerned department may direct that such hazardous substance be delivered to or retained by the owner thereof for destruction or for alteration to comply with the provisions of this Act under the supervision of an officer or employee duly designated by the concerned department. The expenses for such supervision shall be paid by the person obtaining release of the hazardous substance under bond.

c) all expenses in connection with the destruction provided for in paragraphs (a) and (b) of this Article and all expenses in connection with the storage and labor with respect to such hazardous substance shall be paid by the owner or consignee, and default in such payment shall constitute a lien against any importation by such owner or consignee.

ARTICLE 94. Labeling Requirements of Cigarettes. — All cigarettes for sale or distribution within the country shall be contained in a package which shall bear the following statement or its equivalent in Filipino: "Warning" Cigarette Smoking is Dangerous to Your Health". Such statement shall be located in conspicuous place on every cigarette package and shall appear in conspicuous and legible type in contrast by typography, layout or color with other printed matter on the package. Any advertisement of cigarette shall contain the name warning as indicated in the label.

ARTICLE 95. Penalties. — a) Any person who shall violate the provisions of Title III, Chapter IV of this Act, or its implementing rules and regulations, except Articles 81 to 83 of the same Chapter, shall be subject to a fine of not less than Five hundred pesos (P500.00) but not more than Twenty thousand pesos (P20,000.00) or imprisonment of not less than three (3) months but not more than two (2) years or both, at the discretion of the court: Provided, That, if the consumer product is one which is not a food, cosmetic, drug, device or hazardous substance, the penalty shall be a fine of not less than Two hundred pesos (P200.00) but not more than Five thousand pesos (P5,000.00) or imprisonment of not less than one (1) month but not more than one (1) year or both, at the discretion of the court.

b) Any person who violates the provisions of Article 81 to 83 for the first time shall be subject to a fine of not less than Two hundred pesos (P200.00) but not more than Five thousand pesos (P5,000.00) or by imprisonment of not less than one (1) month but not more than six (6) months or both, at the discretion of the court. A second conviction under this paragraph shall also carry with it the penalty of revocation of business permit and license.

CHAPTER V Liability for Product and Service

ARTICLE 96. Implementing Agency. — The Department of Trade and Industry shall enforce the provisions of this Chapter and its implementing rules and regulations.

ARTICLE 97. Liability for the Defective Products. — Any Filipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, presentation or packing of their products, as well as for the insufficient or inadequate information on the use and hazards thereof.

A product is defective when it does not offer the safety rightfully expected of it, taking relevant circumstances into consideration, including but not limited to:

a) presentation of product;

b) use and hazards reasonably expected of it;

c) the time it was put into circulation.

A product is not considered defective because another better quality product has been placed in the market.

The manufacturer, builder, producer or importer shall not be held liable when it evidences:

a) that it did not place the product on the market;

b) that although it did place the product on the market such product has no defect;

c) that the consumer or a third party is solely at fault.

ARTICLE 98. Liability of Tradesman or Seller. — The tradesman/seller is likewise liable, pursuant to the preceding article when:

a) it is not possible to identify the manufacturer, builder, producer or importer;

b) the product is supplied, without clear identification of the manufacturer, producer, builder or importer;

c) he does not adequately preserve perishable goods. The party making payment to the damaged party may exercise the right to recover a part of the whole of the payment made against the other responsible parties, in accordance with their part or responsibility in the cause of the damage effected.

ARTICLE 99. Liability for Defective Services. — The service supplier is liable for redress, independently of fault, for damages caused to consumers by defects relating to the rendering of the services, as well as for insufficient or inadequate information on the fruition and hazards thereof.

The service is defective when it does not provide the safety the consumer may rightfully expect of it, taking the relevant circumstances into consideration, including but not limited to:

a) the manner in which it is provided;

b) the result of hazards which may reasonably be expected of it;

c) the time when it was provided.

A service is not considered defective because of the use or introduction of new techniques.

The supplier of the services shall not be held liable when it is proven:

a) that there is no defect in the service rendered;

b) that the consumer or third party is solely at fault.

ARTICLE 100. Liability for Product and Service Imperfection. — The suppliers of durable or non-durable consumer products are jointly liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or decrease their value, and for those resulting from inconsistency with the information provided on the container, packaging, labels or publicity messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts.

If the imperfection is not corrected within thirty (30) days, the consumer may alternatively demand at his option:

a) the replacement of the product by another of the same kind, in a perfect state of use;

b) the immediate reimbursement of the amount paid, with monetary updating, without prejudice to any losses and damages;

c) a proportionate price reduction.

The parties may agree to reduce or increase the term specified in the immediately preceding paragraph; but such shall not be less than seven (7) nor more than one hundred and eighty (180) days.

The consumer may make immediate use of the alternatives under the second paragraph of this Article when by virtue of the extent of the imperfection, the replacement of the imperfect parts may jeopardize the product quality or characteristics, thus decreasing its value.

If the consumer opts for the alternative under sub-paragraph (a) of the second paragraph of this Article, and replacement of the product is not possible, it may be replaced by another of a different kind, mark or model: Provided, That any difference in price may result thereof shall be supplemented or reimbursed by the party which caused the damage, without prejudice to the provisions of the second, third and fourth paragraphs of this Article.

ARTICLE 101. Liability for Product Quantity Imperfection. — Suppliers are jointly liable for imperfections in the quantity of the product when, in due regard for variations inherent thereto, their net content is less than that indicated on the container, packaging, labeling or advertisement, the consumer having powers to demand, alternatively, at his own option:

a) the proportionate price

b) the supplementing of weight or measure differential;

c) the replacement of the product by another of the same kind, mark or model, without said imperfections;

d) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages if any.

The provisions of the fifth paragraph of Article 99 shall apply to this Article.

The immediate supplier shall be liable if the instrument used for weighing or measuring is not gauged in accordance with official standards.

ARTICLE 102. Liability for Service Quality Imperfection. — The service supplier is liable for any quality imperfections that render the services improper for consumption or decrease their value, and for those resulting from inconsistency with the information contained in the offer or advertisement, the consumer being entitled to demand alternatively at his option:

a) the performance of the services, without any additional cost and when applicable;

b) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages, if any;

c) a proportionate price reduction.

Reperformance of services may be entrusted to duly qualified third parties, at the supplier's risk and cost.

Improper services are those which prove to be inadequate for purposes reasonably expected of them and those that fail to meet the provisions of this Act regulating service rendering.

ARTICLE 103. Repair Service Obligation. — When services are provided for the repair of any product, the supplier shall be considered implicitly bound to use adequate, new, original replacement parts, or those that maintain the manufacturer's technical specifications unless, otherwise authorized, as regards to the latter by the consumer.

ARTICLE 104. Ignorance of Quality Imperfection. — The supplier's ignorance of the quality imperfections due to inadequacy of the products and services does not exempt him from any liability.

ARTICLE 105. Legal Guarantee of Adequacy. — The legal guarantee of product or service adequacy does not require an express instrument or contractual exoneration of the supplier being forbidden.

ARTICLE 106. Prohibition in Contractual Stipulation. — The stipulation in a contract of a clause preventing, exonerating or reducing the obligation to indemnify for damages effected, as provided for in this and in the preceding Articles, is hereby prohibited, if there is more than one person responsible for the cause of the damage, they shall be jointly liable for the redress established in the pertinent provisions of this Act. However, if the damage is caused by a component or part incorporated in the product or service, its manufacturer, builder or importer and the person who incorporated the component or part are jointly liable.

ARTICLE 107. Penalties. — Any person who shall violate any provision of this Chapter or its implementing rules and regulations with respect to any consumer product which is not food, cosmetic, or hazardous substance shall upon conviction, be subject to a fine of not less than Five thousand pesos (P5,000.00) and by imprisonment of not more than one (1) year or both upon the discretion of the court.

In case of juridical persons, the penalty shall be imposed upon its president, manager or head. If the offender is an alien, he shall, after payment of fine and service of sentence, be deported without further deportation proceedings.

CHAPTER VI Advertising and Sales Promotion

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

ARTICLE 109. Implementing Agency. — The Department of Trade and Industry shall enforce the provisions of this Chapter and its implementing rules and regulations: Provided, That with respect to food, drugs, cosmetics, devices and hazardous substances, it shall be enforced by the Department of Health.

False, Deceptive and Misleading Advertisement

ARTICLE 110. False, Deceptive or 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 this 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 said advertisement, or under such conditions as are customary or usual.

ARTICLE 111. Price Comparisons. — Comparative price advertising by sellers of consumer products or services shall conform to the following conditions: a) 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.

b) 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.

c) 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 112. Special Advertising Requirements for Food, Drug, Cosmetic, Device, or Hazardous Substance. — a) No claim in the advertisement may be made which is not contained in the label or approved by the concerned department.

b) No person shall advertise any food, drug, cosmetic, 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.

c) 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.

d) 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.

e) 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 this 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.

f) 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 113. Credit Advertising. — No advertisement to aid, promote, or assist, directly or indirectly, any extension of consumer credit may:

a) 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

b) state that a specified down payment is required in any extension of consumer credit, unless the creditor usually or customarily arranges down payment in that amount.

ARTICLE 114. Advertising of Open-end Credit Plan. — In 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 115. Special Claims. — Any advertisement which makes special claims shall:

a) substantiate such claims; and

b) properly use research result, scientific terms, statistics or quotations.

Promotion of Sales of Consumer Products and Services

ARTICLE 116. Permit to Conduct Promotion. — No person shall conduct any sales campaigns, including beauty contest, national in character, sponsored and promoted by manufacturing enterprises without first securing a permit from the concerned department at least thirty (30) calendar days prior to the commencement thereof. Unless an objection or denial is received within fifteen (15) days from filing of the 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.

ARTICLE 117. 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 118. 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 119. Packaging of Products Under Promotion. — The packaging of the products covered by the sales promotion shall not be tampered, neither shall any change in the product's package be affected without the authority of the sponsoring agency or the owner or manufacturer of the product.

ARTICLE 120. Change in Starting and Termination Dates of Promotion. — The concerned department shall be advised of any delay of starting dates or termination dates and details of any change in the conduct of a sales promotion. Any change in the termination dates shall be published in a newspaper of general circulation before the expiration of the original schedule or the termination date, whichever comes first.

ARTICLE 121. 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 122. Injunctive Relief . — a) Whenever the concerned department has the reason to believe (1) that 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) that 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.

b) Any person who may suffer loss, damage or injury due to a false, misleading or deceptive advertisement as defined in Article 4 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 123. Penalties. — a) 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.

b) 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 an 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 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.

CHAPTER VII Regulation of Repair and Service Firms

ARTICLE 125. Declaration of Policy. — The State shall cause the accreditation of repair and service firms or establishments and their technical personnel in order to protect the interest of the consumers availing of their services.

ARTICLE 126. Implementing Agency. — The Department of Trade and Industry, hereby referred to as the Department, shall enforce the provisions of this Chapter.

ARTICLE 127. Minimum Requirements for Accreditation. — The following shall be the minimum requirements for accreditation or repair and service firms:

a) the duly registered business name, firm name or style of the firm;

b) date of issue and effectivity of the certificate of accreditation;

c) number and skills of technical personnel; and

d) required license for the repair or servicing of any consumer product as required by special laws.

ARTICLE 128. Accreditation of Repair and Service Firm. — No person shall operate a repair and service firm or act as technical personnel therein without first being accredited by the Department.

ARTICLE 129. Certification of Accreditation. — Upon compliance with the requirements for accreditation, the Department shall issue the corresponding certificate of accreditation. A separate certificate shall be required for each branch of an enterprise located in areas outside of the main office. However, with respect to repair and service centers of factory authorized representatives or franchised dealers, such centers may display a certified true copy of the certificate of accreditation of the parent company.

ARTICLE 130. Suspension, Revocation or Cancellation of Certification of Accreditation. — Any certificate of accreditation may be suspended, revoked or cancelled by the Department, for cause, after due notice and hearing.

CHAPTER I Establishment and Composition

ARTICLE 148. National Consumer Affairs Council. — To improve the management, coordination and effectiveness of consumer programs, a National Consumer Affairs Council is hereby created, hereinafter referred to as the "Council".

ARTICLE 149. 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 and Sports;

c) Department of Health;

d) Department of Agriculture;

e) four (4) representatives from consumer organizations of nationwide base to be chosen by the President from among the nominees submitted by the various consumer groups in the Philippines;

f) two (2) representatives from business/industry sector to be chosen by the President from among the nominees submitted by the various business organizations.

ARTICLE 150. Chairman; Functions. — The Council shall be headed and presided by a Chairman who shall be elected by the members from among themselves. He shall establish, with the concurrence of the Council, the policies, procedures and standards to govern the implementation and interpretation of the functions and duties of the Council.

ARTICLE 151. Per Diems of Members. — The members of the Council shall be entitled to an allowance of Five hundred pesos (P500.00) per meeting actually attended but not more than Two thousand pesos (P2,000.00) a month.

ARTICLE 152. The Secretariat. — The Council shall appoint an Executive Director who shall assist the Chairman and act as Secretary of the Council. The Department of Trade and Industry shall provide the Secretariat which shall assist the Council in the effective performance of its functions.

CHAPTER II Powers and Functions

ARTICLE 153. Powers and Functions. — The Council shall have the following powers and functions:

a) to rationalize and coordinate the functions of the agencies charged with consumer programs and enforcement of consumer related laws to the end that an effective, coordinated and integrated system of consumer protection, research and implementation and enforcement of such laws shall be achieved;

b) to recommend new policies and legislation or amendments to existing ones;

c) to monitor and evaluate implementation of consumer programs and projects and to take appropriate steps to ensure that concerned agencies take appropriate steps to comply with the established priorities, standards and guidelines;

d) to seek the assistance of government instrumentalities in the form of augmenting the need for personnel, facilities and other resources;

e) to undertake a continuing education and information campaign to provide the consumer with, among others:

1) facts about consumer products and services;

2) consumer rights and the mechanism for redress available to him;

3) information on new concepts and developments on consumer protection; and

4) general knowledge and awareness necessary for a critical and better judgment on consumption;

5) such other matters of importance to the consumer's general well-being.

ARTICLE 154. Consumer Education in Schools. — The Department of Education, Culture and Sports, with the cooperation and advice of the Council, shall develop and adopt a consumer education program which shall be integrated into existing curricula of all public and private schools from primary to secondary levels.

A continuing consumer education program for out-of-school youth and adults shall likewise be developed and undertaken.

The consumer education program shall include information regarding:

a) the consumer as a responsible member of society and his responsibility to develop:

1) critical awareness which is the responsibility to be alert and questioning about the use of and the price and quality of goods he uses;

2) assertiveness which is the responsibility to assert himself and act so he is assured of a fair deal, aware that for as long as he remains to be a passive consumer he will continue to be exploited;

3) social concern which is the responsibility to be aware of the impact of his consumption on other citizens, especially the disadvantaged; and

4) environmental awareness which is the responsibility to understand the environmental consequences of his consumption, recognizing his individual and social responsibility to conserve natural resources for future generations;

b) consumer rights; and

c) practical problems the consumer faces in daily life.

ARTICLE 155. Concerned Departments, Powers and Duties Under Existing Laws. — The concerned departments shall continue to exercise the powers and duties provided to them under existing laws, unless repealed or modified accordingly.

ARTICLE 156. Consumer Participation. — The Departments shall establish procedures for 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 shall exert efforts to inform consumers of pending proceedings where their participation is important.

ARTICLE 157. Advisory Services. — The departments shall render advisory services upon request. Technical and legal assistance shall be made available to consumers and their organizations and to the general public.

ARTICLE 158. Consumer Program Reforms. — Each concerned Department shall formulate and develop a consumer program consonant with the objectives of its charter or the applicable laws which program shall embody the standards set forth in Sections 156 and 157 of this Act. Copies of these program shall be furnished the Council. The Executive Director shall, among his other functions, monitor and coordinate the implementation by the concerned agencies of their respective consumer programs.

After the close of the fiscal year, the Council shall submit to Congress and the Office of the President, a full report on the progress of the implementation of consumer programs.

CHAPTER III Consumer Complaints

ARTICLE 159. Consumer Complaints. — The concerned department may commerce an investigation upon petition or upon letter-complaint from any consumer: Provided, That, upon a finding by the department of a prima facie violation of any provisions of this Act or any rule or regulation promulgated under its authority, it may motu proprio or upon verified complaint commerce formal administrative action against any person who appears responsible therefor. The department shall establish procedures for systematically logging in, investigating and responding to consumer complaints into the development of consumer policies, rules and regulations, assuring as far as practicable simple and easy access on the part of the consumer to seek redress for his grievances.

ARTICLE 160. Consumer Arbitration Officers. — The concerned Department Secretaries shall appoint as many qualified consumer arbitration officers as may be necessary for the effective and efficient protection of consumer rights: Provided, however, That there shall be not more than ten (10) consumer arbitration officers per province, including the National Capital Region.

ARTICLE 161. Consumer Arbitration Officers; Qualifications. — The consumer arbitration officer must be a college graduate with at least three (3) years experience in the field of consumer protection and shall be of good moral character.

ARTICLE 162. Arbitration Officers; Jurisdiction. — The consumer arbitration officers shall have original and exclusive jurisdiction to mediate, conciliate, hear and adjudicate all consumer complaints, Provided, however, That this does not preclude the parties from pursuing the proper judicial action.

ARTICLE 163. Investigation Procedure. — a) The consumer arbitration officer shall conduct hearings on any complaint received by him or referred by the Council.

b) Parties to the case shall be entitled to notice of the hearing, and shall be informed of the date, time and place of the same. A copy of the complaint shall be attached to the notice.

c) The department shall afford all interested parties the opportunity to submit a statement of facts, arguments, offers of settlement or proposals of adjustments.

d) The Consumer arbitration officer shall first and foremost ensure that the contending parties come to a settlement of the case.

e) In the event that a settlement has not been effected, the Mediation officer may now proceed to formally investigate, hear and decide the case.

f) The Consumer arbitration officer may summon witnesses, administer oaths and affirmations, issue subpoena and subpoena duces tecum, rule upon offers of proof and receive relevant evidence, take or cause deposition to be taken whenever the ends of justice would be served thereby, regulate the course of the hearing, rule on any procedural request or similar matter and decide the complaint.

In hearing the complaint, the mediation officer shall use every and all reasonable means to ascertain the facts in each complaint speedily and objectively without regard to strict rules of evidence prevailing in suits before courts. The complaints shall be decided within fifteen (15) days from the time the investigation was terminated.

ARTICLE 164. Sanctions. — After investigation, any of the following administrative penalties may be imposed even if not prayed for in the complaint:

a) the issuance of a cease and desist order, Provided, however, That such order shall specify the acts that respondent shall cease and desist from and shall require him to submit a report of compliance therewith within a reasonable time;

b) the acceptance of a voluntary assurance of compliance or discontinuance from the respondent which may include any or all of the following terms and conditions:

1) an assurance to comply with the provisions of this Act and its implementing rules and regulations;

2) an assurance to refrain from engaging in unlawful acts and practices or unfair or unethical trade practices subject of the formal investigation;

3) an assurance to comply with the terms and conditions specified in the consumer transaction subject of the complaint;

4) an assurance to recall, replace, repair, or refund the money value of defective products distributed in commerce;

5) an assurance to reimburse the complaint out of any money or property in connection with the complaint, including expenses in making or pursuing the complaint, if any, and to file a bond to guarantee compliance therewith.

c) restitution or rescission of the contract without damages;

d) condemnation and seizure of the consumer product found to be hazardous to health and safety unless the respondent files a bond to answer for any damage or injury that may arise from the continued use of the product;

e) the imposition of administrative fines in such amount as deemed reasonable by the Secretary, which shall in no case be less than Five hundred pesos (P500.00) nor more than Three hundred thousand pesos (P300,000.00) depending on the gravity of the offense, and an additional fine of not more than One thousand pesos (P1,000.00) or each day of continuing violation.

ARTICLE 165. Appeal from Orders. — Any order, not interlocutory, of the Consumer arbitration officer, becomes final and executory unless appealed to the Department Secretary concerned within fifteen (15) days from receipt of such order. An appeal may be entertained only on any of the following grounds:

a) grave abuse of discretion;

b) the order is in excess of the jurisdiction or authority of the consumer arbitration officer;

c) the order is not supported by the evidence or there is serious error in the findings of facts.

ARTICLE 166. Decision on Appeal. — The Secretary shall decide the appeal within thirty (30) days from receipt thereof. The decision becomes final after fifteen (15) days from receipt thereof unless a petition for certiorari is filed with the proper court.

ARTICLE 167. Relation of the Act to Other Rights. — The provisions of this Act shall apply notwithstanding any agreement to the contrary but shall not restrict, limit or derogate from any other rights or remedies of a consumer under any other law.

ARTICLE 168. Application of Laws Enacted Prior to the Act. — All actions or claims accruing prior to the effectivity of this Act shall be determined in accordance with the acts, laws, decrees and regulations in force at the time of the accrual.

ARTICLE 169. Prescription. — All actions or claims accruing under the provisions of this Act and the rules and regulations issued pursuant thereto shall prescribe within two (2) years from the time the consumer transaction was consummated or the deceptive or unfair and unconscionable act or practice was committed and in case of hidden defects, from discovery thereof.

ARTICLE 170. Repealing Clause. — All laws, executive orders, rules and regulations or parts thereof which are inconsistent with this Act are hereby repealed or amended accordingly.

ARTICLE 171. Appropriations. — For the initial operating expenses of the National Consumer Affairs Council, the sum of Two million pesos (P2,000,000.00) is hereby appropriated out of funds of the National Treasury not otherwise appropriated. Thereafter, such sums as may be necessary to carry out its purpose shall be included in the General Appropriations Act.

ARTICLE 172. Separability Clause. — If for any reason any article or provision of this Act or any portion thereof or the application of such article, provision or portion thereof to any person, group or circumstance is declared invalid or unconstitutional, the remainder of this Act shall not be affected by such decision.

ARTICLE 173. Effectivity. — This Act shall take effect thirty (30) days from the date of its publication in the Official Gazette.

Approved: April 13, 1992

Published in the Official Gazette, Vol. 88 No. 24 page 3639 on June 15, 1992.

June 14, 2000

AN ACT PROVIDING FOR THE RECOGNITION AND USE OF ELECTRONIC COMMERCIAL AND NON-COMMERCIAL TRANSACTIONS, PENALTIES FOR UNLAWFUL USE THEREOF, AND OTHER PURPOSES

PART I Short Title and Declaration of Policy

SECTION 1. Short Title. — This Act shall be known and cited as the "Electronic Commerce Act."

SECTION 2. Declaration of Policy. — The State recognizes the vital role of information and communications technology (ICT) in nation-building; the need to create an information-friendly environment which supports and ensures the availability, diversity and affordability of ICT products and services; the primary responsibility of the private sector in contributing investments and services in ICT; the need to develop, with appropriate training programs and institutional policy changes, human resources for the information age, a labor force skilled in the use of ICT and a population capable of operating and utilizing electronic appliances and computers; its obligation to facilitate the transfer and promotion of technology; to ensure network security, connectivity and neutrality of technology for the national benefit; and the need to marshal, organize and deploy national information infrastructures, comprising in both communications network and strategic information services, including their interconnection to the global information networks, with the necessary and appropriate legal, financial, diplomatic and technical framework, systems and facilities.

PART II Electronic Commerce in General

CHAPTER I General Provisions

SECTION 3. Objective. — This Act aims to facilitate domestic and international dealings, transactions, arrangements, agreements, contracts and exchanges and storage of information through the utilization of electronic, optical and similar medium, mode, instrumentality and technology to recognize the authenticity and reliability of electronic data messages or electronic documents related to such activities and to promote the universal use of electronic transactions in the government and by the general public.

SECTION 4. Sphere of Application. — This Act shall apply to any kind of electronic data message and electronic document used in the context of commercial and non-commercial activities to include domestic and international dealings, transactions, arrangements, agreements, contracts and exchanges and storage of information.

SECTION 5. Definition of Terms. — For the purposes of this Act, the following terms are defined, as follows:

(a) "Addressee" refers to a person who is intended by the originator to receive the electronic data message or electronic document, but does not include a person acting as an intermediary with respect to that electronic data message or electronic document.

(b) "Computer" refers to any device or apparatus singly or interconnected which, by electronic, electro-mechanical, optical and/or magnetic impulse, or other means with the same function, can receive, record, transmit, store, process, correlate, analyze, project, retrieve and/or produce information, data, text, graphics, figures, voice, video, symbols or other modes of expression or perform any one or more of these functions.

(c) "Electronic data message" refers to information generated, sent, received or stored by electronic, optical or similar means.

(d) "Information and Communication System" refers to a system for generating, sending, receiving, storing or otherwise processing electronic data messages or electronic documents and includes the computer system or other similar device by or in which data is recorded or stored and any procedures related to the recording or storage of electronic data message or electronic document.

(e) "Electronic signature" refers to any distinctive mark, characteristic and/or sound in electronic form, representing the identity of a person and attached to or logically associated with the electronic data message or electronic document or any methodology or procedures employed or adopted by a person and executed or adopted by such person with the intention of authenticating or approving an electronic data message or electronic document.

(f) "Electronic document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically.

(g) "Electronic key" refers to a secret code which secures and defends sensitive information that crosses over public channels into a form decipherable only with a matching electronic key.

(h) "Intermediary" refers to a person who in behalf of another person and with respect to a particular electronic data message or electronic document sends, receives and/or stores or provides other services in respect of that electronic data message or electronic document.

(i) "Originator" refers to a person by whom, or on whose behalf, the electronic document purports to have been created, generated and/or sent. The term does not include a person acting as an intermediary with respect to that electronic document.

(j) "Service provider" refers to a provider of —

i) Online services or network access, or the operator of facilities therefor, including entities offering the transmission, routing, or providing of connections for online communications, digital or otherwise, between or among points specified by a user, of electronic documents of the user's choosing; or

ii) The necessary technical means by which electronic documents of an originator may be stored and made accessible to a designated or undesignated third party.

Such service providers shall have no authority to modify or alter the content of the electronic document received or to make any entry therein on behalf of the originator, addressee or any third party unless specifically authorized to do so, and who shall retain the electronic document in accordance with the specific request or as necessary for the purpose of performing the services it was engaged to perform.

CHAPTER II Legal Recognition of Electronic Data Messages and Electronic Documents

SECTION 6. Legal Recognition of Electronic Data Message. — Information shall not be denied validity or enforceability solely on the ground that it is in the form of an electronic data message purporting to give rise to such legal effect, or that it is merely incorporated by reference in that electronic data message.

SECTION 7. Legal Recognition of Electronic Documents. — Electronic documents shall have the legal effect, validity or enforceability as any other document or legal writing, and —

(a) Where the law requires a document to be in writing, that requirement is met by an electronic document if the said electronic document maintains its integrity and reliability and can be authenticated so as to be usable for subsequent reference, in that —

(i) The electronic document has remained complete and unaltered, apart from the addition of any endorsement and any authorized change, or any change which arises in the normal course of communication, storage and display; and

(ii) The electronic document is reliable in the light of the purpose for which it was generated and in the light of all relevant circumstances.

(b) Paragraph (a) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the document not being presented or retained in its original form.

(c) Where the law requires that a document be presented or retained in its original form, that requirement is met by an electronic document if —

i) There exist a reliable assurance as to the integrity of the document from the time when it was first generated in its final form; and

ii) That document is capable of being displayed to the person to whom it is to be presented: Provided, That no provision of this Act shall apply to vary any and all requirements of existing laws on formalities required in the execution of documents for their validity.

For evidentiary purposes, an electronic document shall be the functional equivalent of a written document under existing laws.

This Act does not modify any statutory rule relating to the admissibility of electronic data messages or electronic documents, except the rules relating to authentication and best evidence.

SECTION 8. Legal Recognition of Electronic Signatures. — An electronic signature on the electronic document shall be equivalent to the signature of a person on a written document if the signature is an electronic signature and proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document, existed under which —

a.) A method is used to identify the party sought to be bound and to indicate said party's access to the electronic document necessary for his consent or approval through the electronic signature;

b.) Said method is reliable and appropriate for the purpose for which the electronic document was generated or communicated, in the light of all circumstances, including any relevant agreement;

c.) It is necessary for the party sought to be bound, in order to proceed further with the transaction, to have executed or provided the electronic signature; and

d.) The other party is authorized and enabled to verify the electronic signature and to make the decision to proceed with the transaction authenticated by the same.

SECTION 9. Presumption Relating to Electronic Signatures. — In any proceedings involving an electronic signature, it shall be presumed that,

a.) The electronic signature is the signature of the person to whom it correlates; and

b.) The electronic signature was affixed by that person with the intention of signing or approving the electronic document unless the person relying on the electronically signed electronic document knows or has notice of defects in or unreliability of the signature or reliance on the electronic signature is not reasonable under the circumstances.

SECTION 10. Original Documents. — (1) Where the law requires information to be presented or retained in its original form, that requirement is met by an electronic data message or electronic document if:

(a) the integrity of the information from the time when it was first generated in its final form, as an electronic data message or electronic document is shown by evidence aliunde or otherwise; and

(b) where it is required that information be presented, that the information is capable of being displayed to the person to whom it is to be presented.

(2) Paragraph (1) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the information not being presented or retained in its original form.

(3) For the purposes of subparagraph (a) of paragraph (1):

(a) the criteria for assessing integrity shall be whether the information has remained complete and unaltered, apart from the addition of any endorsement and any change which arises in the normal course of communication, storage and display; and

(b) the standard of reliability required shall be assessed in the light of the purpose for which the information was generated and in the light of all the relevant circumstances.

SECTION 11. Authentication of Electronic Data Messages and Electronic Documents. — Until the Supreme Court by appropriate rules shall have so provided, electronic documents, electronic data messages and electronic signatures, shall be authenticated by demonstrating, substantiating and validating a claimed identity of a user, device, or another entity in an information or communication system, among other ways, as follows:

(a) The electronic signature shall be authenticated by proof that a letter, character, number or other symbol in electronic form representing the persons named in and attached to or logically associated with an electronic data message, electronic document, or that the appropriate methodology or security procedures, when applicable, were employed or adopted by a person and executed or adopted by such person, with the intention of authenticating or approving an electronic data message or electronic document;

(b) The electronic data message or electronic document shall be authenticated by proof that an appropriate security procedure, when applicable was adopted and employed for the purpose of verifying the originator of an electronic data message or electronic document, or detecting error or alteration in the communication, content or storage of an electronic document or electronic data message from a specific point, which, using algorithm or codes, identifying words or numbers, encryptions, answers back or acknowledgment procedures, or similar security devices.

The Supreme Court may adopt such other authentication procedures, including the use of electronic notarization systems as necessary and advisable, as well as the certificate of authentication on printed or hard copies of the electronic documents or electronic data messages by electronic notaries, service providers and other duly recognized or appointed certification authorities.

The person seeking to introduce an electronic data message or electronic document in any legal proceeding has the burden of proving its authenticity by evidence capable of supporting a finding that the electronic data message or electronic document is what the person claims it to be.

In the absence of evidence to the contrary, the integrity of the information and communication system in which an electronic data message or electronic document is recorded or stored may be established in any legal proceeding —

(a) By evidence that at all material times the information and communication system or other similar device was operating in a manner that did not affect the integrity of the electronic data message or electronic document, and there are no other reasonable grounds to doubt the integrity of the information and communication system;

(b) By showing that the electronic data message or electronic document was recorded or stored by a party to the proceedings who is adverse in interest to the party using it; or

(c) By showing that the electronic data message or electronic document was recorded or stored in the usual and ordinary course of business by a person who is not a party to the proceedings and who did not act under the control of the party using the record.

SECTION 12. Admissibility and Evidential Weight of Electronic Data Messages or Electronic Documents. — In any legal proceedings, nothing in the application of the rules on evidence shall deny the admissibility of an electronic data message or electronic document in evidence —

a. On the sole ground that it is in electronic form; or

b. On the ground that it is not in the standard written form, and the electronic data message or electronic document meeting, and complying with the requirements under Sections 6 or 7 hereof shall be the best evidence of the agreement and transaction contained therein.

In assessing the evidential weight of an electronic data message or electronic document, the reliability of the manner in which it was generated, stored or communicated, the reliability of the manner in which its originator was identified, and other relevant factor shall be given due regard.

SECTION 13. Retention of Electronic Data Message or Electronic Document. — Notwithstanding any provision of law, rule or regulation to the contrary —

(a) The requirement in any provision of law that certain documents be retained in their original form is satisfied by retaining them in the form of an electronic data message or electronic document which —

i. Remains accessible so as to be usable for subsequent reference;

ii. Is retained in the format in which it was generated, sent or received, or in a format which can be demonstrated to accurately represent the electronic data message or electronic document generated, sent or received;

iii. Enables the identification of its originator and addressee, as well as the determination of the date and the time it was sent or received.

(b) The requirement referred to in paragraph (a) is satisfied by using the services of a third party, provided that the conditions set forth in subparagraphs (i), (ii) and (iii) of paragraph (a) are met.

SECTION 14. Proof by Affidavit. — The matters referred to in Section 12, on admissibility and Section 9, on the presumption of integrity, may be presumed to have been established by an affidavit given to the best of the deponent's knowledge subject to the rights of parties in interest as defined in the following section.

SECTION 15. Cross-Examination. — (1) A deponent of an affidavit referred to in Section 14 that has been introduced in evidence may be cross-examined as of right by a party to the proceedings who is adverse in interest to the party who has introduced the affidavit or has caused the affidavit to be introduced.

(2) Any party to the proceedings has the right to cross-examine a person referred to in Section 11, paragraph 4, sub-paragraph c.

CHAPTER III Communication of Electronic Data Messages or Electronic Documents

SECTION 16. Formation and Validity of Electronic Contracts. — (1) Except as otherwise agreed by the parties, an offer, the acceptance of an offer and such other elements required under existing laws for the formation of contracts may be expressed in, demonstrated and proved by means of electronic data messages or electronic documents and no contract shall be denied validity or enforceability on the sole ground that it is in the form of an electronic data message or electronic document, or that any or all of the elements required under existing laws for the formation of the contracts is expressed, demonstrated and proved by means of electronic data messages or electronic documents.

(2) Electronic transactions made through networking among banks, or linkages thereof with other entities or networks, and vice versa, shall be deemed consummated upon the actual dispensing of cash or the debit of one account and the corresponding credit to another, whether such transaction is initiated by the depositor or by an authorized collecting party: Provided, That the obligation of one bank, entity, or person similarly situated to another arising therefrom shall be considered absolute and shall not be subjected to the process of preference of credits.

SECTION 17. Recognition by Parties of Electronic Data Message or Electronic Document. — As between the originator and the addressee of an electronic data message or electronic document, a declaration of will or other statement shall not be denied legal effect, validity or enforceability solely on the ground that it is in the form of an electronic data message or electronic document.

SECTION 18. Attribution of Electronic Data Message. — (1) An electronic data message or electronic document is that of the originator if it was sent by the originator himself.

(2) As between the originator and the addressee, an electronic data message or electronic document is deemed to be that of the originator if it was sent:

(a) by a person who had the authority to act on behalf of the originator with respect to that electronic data message or electronic document; or

(b) by an information system programmed by, or on behalf of the originator to operate automatically.

(3) As between the originator and the addressee, an addressee is entitled to regard an electronic data message or electronic document as being that of the originator, and to act on that assumption, if:

(a) in order to ascertain whether the electronic data message or electronic document was that of the originator, the addressee properly applied a procedure previously agreed to by the originator for that purpose; or

(b) the electronic data message or electronic document as received by the addressee resulted from the actions of a person whose relationship with the originator or with any agent of the originator enabled that person to gain access to a method used by the originator to identify electronic data messages or electronic documents as his own.

(4) Paragraph (3) does not apply:

(a) as of the time when the addressee has both received notice from the originator that the electronic data message or electronic document is not that of the originator, and has reasonable time to act accordingly; or

(b) in a case within paragraph (3) sub-paragraph (b), at any time when the addressee knew or should have known, had it exercised reasonable care or used any agreed procedure, that the electronic data message or electronic document was not that of the originator.

(5) Where an electronic data message or electronic document is that of the originator or is deemed to be that of the originator, or the addressee is entitled to act on that assumption, then, as between the originator and the addressee, the addressee is entitled to regard the electronic data message or electronic document as received as being what the originator intended to send, and to act on that assumption. The addressee is not so entitled when it knew or should have known, had it exercised reasonable care or used any agreed procedure, that the transmission resulted in any error in the electronic data message or electronic document as received.

(6) The addressee is entitled to regard each electronic data message or electronic document received as a separate electronic data message or electronic document and to act on that assumption, except to the extent that it duplicates another electronic data message or electronic document and the addressee knew or should have known, had it exercised reasonable care or used any agreed procedure, that the electronic data message or electronic document was a duplicate.

SECTION 19. Error on Electronic Data Message or Electronic Document. — The addressee is entitled to regard the electronic data message or electronic document received as that which the originator intended to send, and to act on that assumption, unless the addressee knew or should have known, had the addressee exercised reasonable care or used the appropriate procedure —

(a) That the transmission resulted in any error therein or in the electronic data message or electronic document when the electronic data message or electronic document enters the designated information system, or

(b) That electronic data message or electronic document is sent to an information system which is not so designated by the addressee for the purpose.

SECTION 20. Agreement on Acknowledgment of Receipt of Electronic Data Messages or Electronic Documents. — The following rules shall apply where, on or before sending an electronic data message or electronic document, the originator and the addressee have agreed, or in that electronic document or electronic data message, the originator has requested, that receipt of the electronic document or electronic data message be acknowledged:

a.) Where the originator has not agreed with the addressee that the acknowledgment be given in a particular form or by a particular method, an acknowledgment may be given by or through any communication by the addressee, automated or otherwise, or any conduct of the addressee, sufficient to indicate to the originator that the electronic data message or electronic document has been received.

b.) Where the originator has stated that the effect or significance of the electronic data message or electronic document is conditional on receipt of the acknowledgment thereof, the electronic data message or electronic document is treated as though it has never been sent, until the acknowledgment is received.

c.) Where the originator has not stated that the effect or significance of the electronic data message or electronic document is conditional on receipt of the acknowledgment, and the acknowledgment has not been received by the originator within the time specified or agreed or, if no time has been specified or agreed, within a reasonable time, the originator may give notice to the addressee stating that no acknowledgment has been received and specifying a reasonable time by which the acknowledgment must be received; and if the acknowledgment is not received within the time specified in subparagraph (c), the originator may, upon notice to the addressee, treat the electronic data message or electronic document as though it had never been sent, or exercise any other rights it may have.

SECTION 21. Time of Dispatch of Electronic Data Messages or Electronic Documents. — Unless otherwise agreed between the originator and the addressee, the dispatch of an electronic data message or electronic document occurs when it enters an information system outside the control of the originator or of the person who sent the electronic data message or electronic document on behalf of the originator.

SECTION 22. Time of Receipt of Electronic Data Messages or Electronic Documents. — Unless otherwise agreed between the originator and the addressee, the time of receipt of an electronic data message or electronic document is as follows:

(a.) If the addressee has designated an information system for the purpose of receiving electronic data messages or electronic documents, receipt occurs at the time when the electronic data message or electronic document enters the designated information system: Provided, however, That if the originator and the addressee are both participants in the designated information system, receipt occurs at the time when the electronic data message or electronic document is retrieved by the addressee.

(b.) If the electronic data message or electronic document is sent to an information system of the addressee that is not the designated information system, receipt occurs at the time when the electronic data message or electronic document is retrieved by the addressee;

(c.) If the addressee has not designated an information system, receipt occurs when the electronic data message or electronic document enters an information system of the addressee.

These rules apply notwithstanding that the place where the information system is located may be different from the place where the electronic data message or electronic document is deemed to be received.

SECTION 23. Place of Dispatch and Receipt of Electronic Data Message or Electronic Documents. — Unless otherwise agreed between the originator and the addressee, an electronic data message or electronic document is deemed to be dispatched at the place where the originator has its place of business and received at the place where the addressee has its place of business. This rule shall apply even if the originator or addressee had used a laptop other portable device to transmit or receive his electronic data message or electronic document. This rule shall also apply to determine the tax situs of such transaction.

For the purpose hereof —

a. If the originator or the addressee has more than one place of business, the place of business is that which has the closest relationship to the underlying transaction or, where there is no underlying transaction, the principal place of business.

b. If the originator or the addressee does not have a place of business, reference is to be made to its habitual residence; or

c. The "usual place of residence" in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted.

SECTION 24. Choice of Security Methods. — Subject to applicable laws and/or rules and guidelines promulgated by the Department of Trade and Industry with other appropriate government agencies, parties to any electronic transaction shall be free to determine the type and level of electronic data message or electronic document security needed, and to select and use or implement appropriate technological methods that suit their needs.

PART III Electronic Commerce in Carriage of Goods

SECTION 25. Actions Related to Contracts of Carriage of Goods. — Without derogating from the provisions of Part Two of this Act, this Chapter applies to any action in connection with, or in pursuance of, a contract of carriage of goods, including but not limited to:

(a) (i) furnishing the marks, number, quantity or weight of goods;

(ii) stating or declaring the nature or value of goods;

(iii) issuing a receipt for goods;

(iv) confirming that goods have been loaded;

(b) (i) notifying a person of terms and conditions of the contract;

(ii) giving instructions to a carrier;

(c) (i) claiming delivery of goods;

(ii) authorizing release of goods;

(iii) giving notice of loss of, or damage to goods;

(d) giving any other notice or statement in connection with the performance of the contract;

(e) undertaking to deliver goods to a named person or a person authorized to claim delivery;

(f) granting, acquiring, renouncing, surrendering, transferring or negotiating rights in goods;

(g) acquiring or transferring rights and obligations under the contract.

SECTION 26. Transport Documents. — (1) Subject to paragraph (3), where the law requires that any action referred to in Section 25 be carried out in writing or by using a paper document, that requirement is met if the action is carried out by using one or more electronic data messages or electronic documents.

(2) Paragraph (1) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for failing either to carry out the action in writing or to use a paper document.

(3) If a right is to be granted to, or an obligation is to be acquired by, one person and no other person, and if the law requires that, in order to effect this, the right or obligation must be conveyed to that person by the transfer, or use of, a paper document, that requirement is met if the right or obligation is conveyed by using one or more electronic data messages or electronic documents: Provided, That a reliable method is used to render such electronic data messages or electronic documents unique.

(4) For the purposes of paragraph (3), the standard of reliability required shall be assessed in the light of the purpose for which the right or obligation was conveyed and in the light of all the circumstances, including any relevant agreement.

(5) Where one or more electronic data messages or electronic documents are used to effect any action in subparagraphs (f) and (g) of Section 25, no paper document used to effect any such action is valid unless the use of electronic data message or electronic document has been terminated and replaced by the use of paper documents. A paper document issued in these circumstances shall contain a statement of such termination. The replacement of electronic data messages or electronic documents by paper documents shall not affect the rights or obligations of the parties involved.

(6) If a rule of law is compulsorily applicable to a contract of carriage of goods which is in, or is evidenced by, a paper document, that rule shall not be inapplicable to such a contract of carriage of goods which is evidenced by one or more electronic data messages or electronic documents by reason of the fact that the contract is evidenced by such electronic data message or electronic documents instead of by a paper document.

PART IV Electronic Transactions in Government

SECTION 27. Government Use of Electronic Data Messages, Electronic Documents and Electronic Signatures. — Notwithstanding any law to the contrary, within two (2) years from the date of the effectivity of this Act, all departments, bureaus, offices and agencies of the government, as well as all government-owned and -controlled corporations, that pursuant to law require or accept the filing of documents, require that documents be created, or retained and/or submitted, issue permits, licenses or certificates of registration or approval, or provide for the method and manner of payment or settlement of fees and other obligations to the government, shall —

(a) accept the creation, filing or retention of such documents in the form or electronic data messages or electronic documents;

(b) issue permits, licenses, or approval in the form of electronic data messages or electronic documents;

(c) require and/or accept payments, and issue receipts acknowledging such payments, through systems using electronic data messages or electronic documents; or

(d) transact the government business and/or perform governmental functions using electronic data messages or electronic documents, and for the purpose, are authorized to adopt and promulgate, after appropriate public hearing and with due publication in newspapers of general circulation, the appropriate rules, regulations, or guidelines, to among others, specify —

1) the manner and format in which such electronic data messages or electronic documents shall be filed, created, retained or issued;

2) where and when such electronic data messages or electronic documents have to be signed, the use of an electronic signature, the type of electronic signature required;

3) the format of an electronic data message or electronic document and the manner the electronic signature shall be affixed to the electronic data message or electronic document;

4) the control processes and procedures as appropriate to ensure adequate integrity, security and confidentiality of electronic data messages or electronic documents or records or payments;

5) other attributes required of electronic data messages or electronic documents or payments; and

6) the full or limited use of the documents and papers for compliance with the government requirements: Provided, That this Act shall by itself mandate any department of the government, organ of state or statutory corporation to accept or issue any document in the form of electronic data messages or electronic documents upon the adoption, promulgation and publication of the appropriate rules, regulations, or guidelines.

SECTION 28. RPWEB to Promote the Use of Electronic Documents or Electronic Data Messages in Government and to the General Public. — Within two (2) years from the effectivity of this Act, there shall be installed an electronic online network in accordance with Administrative Order 332 and House of Representatives Resolution 890, otherwise known as RPWEB, to implement Part IV of this Act to facilitate the open, speedy and efficient electronic online transmission, conveyance and use of electronic data messages or electronic documents amongst all government departments, agencies, bureaus, offices down to the division level and to the regional and provincial offices as practicable as possible, government-owned and controlled corporations, local government units, other public instrumentalities, universities, colleges and other schools, and universal access to the general public.

The RPWEB network shall serve as initial platform of the government information infrastructure (GII) to facilitate the electronic online transmission and conveyance of government services to evolve and improve by better technologies or kinds of electronic online wide area networks utilizing, but not limited to, fiber optic, satellite, wireless and other broadband telecommunication mediums or modes.

To facilitate the rapid development of the GII, the Department of Transportation and Communications, National Telecommunications Commission and the National Computer Center are hereby directed to aggressively promote and implement a policy environment and regulatory or non-regulatory framework that shall lead to the substantial reduction of costs of including, but not limited to, lease lines, land, satellite and dial-up telephone access, cheap broadband and wireless accessibility by government departments, agencies, bureaus, offices, government-owned and controlled corporations, local government units, other public instrumentalities and the general public, to include the establishment of a government website portal and a domestic internet exchange system to facilitate strategic access to government and amongst agencies thereof and the general public and for the speedier flow of locally generated internet traffic within the Philippines.

The physical infrastructure of cable and wireless system for cable TV and broadcast excluding programming and content and the management thereof shall be considered as within the activity of telecommunications for the purpose of electronic commerce and to maximize the convergence of ICT in the installation of the GII.

SECTION 29. Authority of the Department of Trade and Industry and Participating Entities. — The Department of Trade and Industry (DTI) shall direct and supervise the promotion and development of electronic commerce in the country with relevant government agencies, without prejudice to the provisions of Republic Act 7653 (Charter of Bangko Sentral ng Pilipinas) and Republic Act No. 337, (General Banking Act) as amended.

Among others, the DTI is empowered to promulgate rules and regulations, as well as provide quality standards or issue certifications, as the case may be, and perform such other functions as may be necessary for the implementation of this Act in the area of electronic commerce to include, but not limited to, the installation of an online public information and quality and price monitoring system for goods and services aimed in protecting the interests of the consuming public availing of the advantages of this Act.

PART V Final Provisions

SECTION 30. Extent of Liability of a Service Provider. — Except as otherwise provided in this Section, no person or party shall be subject to any civil or criminal liability in respect of the electronic data message or electronic document for which the person or party acting as a service provider as defined in Section 5, merely provides access if such liability is founded on —

a.) The obligations and liabilities of the parties under the electronic data message or electronic document;

b.) The making, publication, dissemination or distribution of such material or any statement made in such material, including possible infringement of any right subsisting in or in relation to such material: Provided, That

i. The service provider does not have actual knowledge, or is not aware of the facts or circumstances from which it is apparent, that the making, publication, dissemination or distribution of such material is unlawful or infringes any rights subsisting in or in relation to such material;

ii. The service provider does not knowingly receive a financial benefit directly attributable to the unlawful or infringing activity; and

iii. The service provider does not directly commit any infringement or other unlawful act and does not induce or cause another person or party to commit any infringement or other unlawful act and/or does not benefit financially from the infringing activity or unlawful act of another person or party: Provided, further, That nothing in this Section shall affect —

a) Any obligation founded on contract;

b) The obligation of a service provider as such under a licensing or other regulatory regime established under written law; or

c) Any obligation imposed under any written law;

d) The civil liability of any party to the extent that such liability forms the basis for injunctive relief issued by a court under any law requiring that the service provider take or refrain from actions necessary to remove, block or deny access to any material, or to preserve evidence of a violation of law.

SECTION 31. Lawful Access. — Access to an electronic file, or an electronic signature of an electronic data message or electronic document shall only be authorized and enforced in favor of the individual or entity having a legal right to the possession or the use of the plaintext, electronic signature or file and solely for the authorized purposes. The electronic key for identity or integrity shall not be made available to any person or party without the consent of the individual or entity in lawful possession of that electronic key.

SECTION 32. Obligation of Confidentiality. — Except for the purposes authorized under this Act, any person who obtained access to any electronic key, electronic data message or electronic document, book, register, correspondence, information, or other material pursuant to any powers conferred under this Act, shall not convey to or share the same with any other person.

SECTION 33. Penalties. — The following Acts shall be penalized by fine and/or imprisonment, as follows:

a) Hacking or cracking which refers to unauthorized access into or interference in a computer system/server or information and communication system; or any access in order to corrupt, alter, steal, or destroy using a computer or other similar information and communication devices, without the knowledge and consent of the owner of the computer or information and communication system, including the introduction of computer viruses and the like, resulting in the corruption, destruction, alteration, theft or loss of electronic data messages or electronic documents shall be punished by a minimum fine of One hundred thousand pesos (P100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years;

b) Piracy or the unauthorized copying, reproduction, dissemination, distribution, importation, use, removal, alteration, substitution, modification, storage, uploading, downloading, communication, making available to the public, or broadcasting of protected material, electronic signature or copyrighted works including legally protected sound recordings or phonograms or information material on protected works, through the use of telecommunication networks, such as, but not limited to, the internet, in a manner that infringes intellectual property rights shall be punished by a minimum fine of One hundred thousand pesos (P100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years;

c) Violations of the Consumer Act or Republic Act No. 7394 and other relevant or pertinent laws through transactions covered by or using electronic data messages or electronic documents, shall be penalized with the same penalties as provided in those laws;

d) Other violations of the provisions of this Act, shall be penalized with a maximum penalty of One million pesos (P1,000,000.00) or six (6) years imprisonment.

SECTION 34. Implementing Rules and Regulations. — The DTI, Department of Budget and Management and the Bangko Sentral ng Pilipinas are hereby empowered to enforce the provisions of this Act and issue implementing rules and regulations necessary, in coordination with the Department of Transportation and Communications, National Telecommunications Commission, National Computer Center, National Information Technology Council, Commission on Audit, other concerned agencies and the private sector, to implement this Act within sixty (60) days after its approval.

Failure to issue rules and regulations shall not in any manner affect the executory nature of the provisions of this Act.

SECTION 35. Oversight Committee. — There shall be a Congressional Oversight Committee composed of the Committees on Trade and Industry/Commerce, Science and Technology, Finance and Appropriations of both the Senate and House of Representatives, which shall meet at least every quarter of the first two years and every semester for the third year after the approval of this Act to oversee its implementation. The DTI, DBM, Bangko Sentral ng Pilipinas, and other government agencies as may be determined by the Congressional Committee shall provide a quarterly performance report of their actions taken in the implementation of this Act for the first three (3) years.

SECTION 36. Appropriations. — The amount necessary to carry out the provisions of Sections 27 and 28 of this Act shall be charged against any available funds and/or savings under the General Appropriations Act of 2000 in the first year of effectivity of this Act. Thereafter, the funds needed for the continued implementation shall be included in the annual General Appropriations Act.

SECTION 37. Statutory Interpretation. — Unless otherwise expressly provided for, the interpretation of this Act shall give due regard to its international origin and the need to promote uniformity in its application and the observance of good faith in international trade relations. The generally accepted principles of international law and convention on electronic commerce shall likewise be considered.

SECTION 38. Variation by Agreement. — As between parties involved in generating, sending, receiving, storing or otherwise processing electronic data message or electronic document, any provision of this Act may be varied by agreement between and among them.

SECTION 39. Reciprocity. — All benefits, privileges, advantages or statutory rules established under this Act, including those involving practice of profession, shall be enjoyed only by parties whose country of origin grants the same benefits and privileges or advantages to Filipino citizens.

SECTION 40. Separability Clause. — The provisions of this Act are hereby declared separable and in the event of any such provision is declared unconstitutional, the other provisions to remain in force and effect.

SECTION 41. Repealing Clause. — All other laws, decrees, rules and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.

SECTION 42. Effectivity. — This Act shall take effect immediately after its publication in the Official Gazette or in at least two (2) newspapers of general circulation.

Approved: June 14, 2000

Published in Malaya and Philippine Post on June 19, 2000. Published in the Official Gazette, Vol. 96 No. 48, page 7675 on November 27, 2000.

March 07, 2000

AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS, REPEALING FOR THE PURPOSE REPEALING FOR THE PURPOSE REPUBLIC ACT NO. 1180, AS AMENDED, AND FOR OTHER PURPOSES

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

Section 1. Title – This Act shall be known as the "Retail Trade Liberalization Act of 2000."

Section 2. Declaration of Policy. – It is the policy of the State to promote consumer welfare in attracting, promoting and welcoming productive investment that will bring down price for the Filipino consumer, create more jobs, promote tourism, assist small manufacturers, stimulate economic growth and enable Philippine goods and services to become globally competitive through the liberalization of the retail trade sector.

Pursuant to this policy, the Philippine retail industry is hereby liberalized to encourage Filipino and competitive retail trade sector in the interest of empowering the Filipino consumer through lower prices, higher quality goods, better services and wider choices.

Section 3. Definition. - As used in this Act.

(1) "Retail trade" shall mean any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or good for consumption, but the restriction of this law shall not apply to the following:

(a) Sales by manufacturer, processor, laborer, or worker, to the general public the products manufactured, processed or products by him if his capital dose not exceed One hundred thousand pesos(100,000.00);

(b) Sales by a farmer or agriculturist selling the products of his farm;

(c) Sales in restaurant operations by a hotel owner or inn-keeper irrespective of the amount capital: provided, that the restaurant is incidental to the hotel business; and

(d) Sales which are limited only to products manufactured, processed or assembled by a manufactured, processed or assembled by a manufacturer though a single outlet, irrespective of capitalization.

(2) "Minimum investment per store” shall include the value of the gross assets, tangible or intangible, including but not limited to buildings, leaseholds, furniture, equipment, inventory, and common use investments and facilities such as administrative offices, warehouses, preparation or storage facilities, as reflected in the financial statements following the accounting standards adopted by the Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI), whichever is applicable, shall be prorated among the number of stores being served. The paid-up capital may be used to purchase assets for purpose of complying with the investment requirement per store. (As amended by RA No 11595)

Section 4. Treatment of Natural Born Citizen Who Has Lost His Philippine Citizenship. - A natural-born citizen of the Philippines who resides in the Philippines shall be granted the same rights as Filipino citizens for purposes of this Act.

Section 5. Foreign Equity Participation. - Foreign-owned partnerships, associations, and corporations may, upon registration with the Securities and Exchange Commission (SEC), or in case of foreign-owned single proprietorships, upon registration with the Department of Trade and Industry (DTI), engage or invest in the retail trade business, under the following conditions:

(a) A foreign retailer shall have a minimum paid-up capital of Twenty-five million pesos (P25,000,000.00);

(b) The foreign retailer’s country of origin does not prohibit the entry of Filipino retailers; and

(c) In the case of foreign retailers engaged in retail trade through more than one (1) physical store, the minimum investment per store must be at least Ten million pesos (P10,000,000.00): Provided, That this requirement shall not apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to comply with the minimum investment per store at the time of the effectivity of this Act: Provided, further, That proof of qualification to engage in retail trade under Republic Act No. 8762 and its implementing rules and regulations is submitted to the DTI.”

The foreign retailer shall be required to maintain in the Philippines at all times the paid-up capital of Twenty-five million pesos (P25,000,000.00), unless the foreign retailer has notified the SEC or the DTI, whichever is appropriate, of its intention to repatriate its capital and cease operations in the Philippines. The actual use in Philippine operations of the minimum paid-up capital shall be monitored by the SEC, or by the DTI, whichever is appropriate.

Failure to maintain in the Philippines the paid-up capital required in the preceding paragraph, prior to notification of the SEC or the DTI, whichever is appropriate, shall subject the foreign retailer to penalties or restrictions on any future trading activities/business in the Philippines.

For purposes of registration with the SEC or DTI, the foreign retailer shall submit a certification from the Bangko Sentral ng Pilipinas (BSP) of the inward remittance of its capital investment, or in lieu thereof, such other proof certifying that is capital investment is deposited and maintained in a bank in the Philippines. (As amended by RA No 11595)

Section 6. Review of the Minimum Paid-up Capital Requirement. - The DTI, SEC, and the National Economic and Development Authority (NEDA) shall review the required minimum paid-up capital every three (3) years from the effectivity of this Act. The DTI, SEC, and NEDA shall each report its recommendation to Congress. (As amended by RA No 11595)

Section 7. Labor Policy. – In all cases, the employment of foreign nationals by foreign retailers shall comply with the applicable provisions of the Labor Code on the determination of nonavailability of a competent, able and willing Filipino citizen before engaging the services of a foreign national, with due regard to the State policy under the Constitution to promote the preferential use of Filipino labor. (As amended by RA No 11595)

Section 8. Qualification of Foreign Retailers. - (As deleted by RA No 11595)

Section 9. Promotion of Locally Manufactured Products. - (As deleted by RA No 11595)

Section 8. Promotion of Locally Manufactured Products. – Foreign retailers are encouraged to have a stock inventory of products which are made in the Philippines. (As inserted by RA No 11595)

Section 9. Prohibited Activities of Qualified Foreign Retailers. – Qualified foreign retailers shall not be allowed to engage in certain retailing activities outside their accredited stores through the use of mobile or rolling stores or carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores and such other similar retailing activities: Provided, That a detailed list of prohibited activities shall hereafter be formulated by the DTI. [10] (As renumbered by RA No 11595)

Section 10. Implementing Agency: Rule and Regulations. – The monitoring and regulation of foreign retailers allowed to engage in retail trade in the Philippines shall be the responsibility of the SEC, with respect to partnerships, associations, and corporations, or of the DTI, with respect to single proprietorships. Both agencies shall keep a record of the entities engaged in retail trade in the Philippines that are registered with them.

Within ninety (90) days after the approval of this Act, the DTI, in coordination with the SEC and NEDA, shall formulate and issue the implementing rules and regulations necessary for the implementation of this Act. (As renumbered and amended by RA No 11595)

Section 11. Penalty Clause. - Violation of any of the provisions of this Act shall be punishable by imprisonment of not less than four (4) years to six (6) years and a fine of not less than One million pesos (P1,000,000.00) but not more than Five million pesos (P5,000,000.00). In the case of partnerships, associations, or corporations, the penalty shall be imposed upon its partners, president, directors, general manager, and other officers responsible for the violation. If the offender is not a citizen of the Philippines, he or she shall be deported immediately after service of sentence. If the Filipino offender is a public officer or employee, he or she shall, in addition to the penalty prescribed herein, suffer dismissal and permanent disqualification from public office. (As renumbered and amended by RA No 11595)

Section 12. Repealing Clause. – Republic Act No. 1180, as amended, is hereby repealed. Republic Act No. 3018, as amended, and all other laws, executive orders, rules and regulations or parts thereof inconsistent with this Act are repealed or modified accordingly.

Section 13. Separability Clause. – If any provisions of this Act shall be held unconstitutional, the other provisions not otherwise affected thereby shall remain in force and effect.

Section 14. Effectivity. – This act shall take effect fifteen (150 days after its approval and publication in at least two (2) newspapers of general circulation in the Philippines.

Approved: March 07, 2000

May 27, 1992

AN ACT PROVIDING PROTECTION TO CONSUMERS BY STABILIZING THE PRICES OF BASIC NECESSITIES AND PRIME COMMODITIES AND BY PRESCRIBING MEASURES AGAINST UNDUE PRICE INCREASES DURING EMERGENCY SITUATIONS AND LIKE OCCASIONS

SECTION 1. Short Title. — This Act shall be referred to as the "Price Act."

SECTION 2. Declaration of Basic Policy. — It is the policy of the State to ensure the availability of basic necessities and prime commodities at reasonable prices at all times without denying legitimate business a fair return on investment. It is also a declared policy of the State to provide effective and sufficient protection to consumers against hoarding, profiteering and cartels with respect to the supply, distribution, marketing and pricing of said goods, especially during periods of calamity, emergency, widespread illegal price manipulation and other similar situations. To these ends, the State shall:

(1) Develop, adopt and promulgate measures to promote productivity in basic necessities and prime commodities;

(2) Develop an improved and efficient transport and distribution system;

(3) Develop, adopt and promulgate measures to stabilize prices at reasonable levels;

(4) Institute appropriate penalties for illegal price manipulation and other violations of this Act; and

(5) Establish a mechanism that will readily protect consumers from inadequate supply and unreasonable price increase on occasions of calamities, emergencies and like occurrences.

SECTION 3. Definition of Terms. — For purposes of this Act, the term:

(1) "Basic necessities" are goods vital to the needs of consumers for their sustenance and existence in times of any of the cases provided under Section 6 or 7 of this Act such as, but not limited to, rice, corn, root crops, bread; fresh, dried or canned fish and other marine products; fresh pork, beef and poultry meat; fresh eggs; potable water in bottles and containers; fresh and processed milk; fresh vegetables and fruits; locally manufactured instant noodles; coffee; sugar; cooking oil; salt; laundry soap and detergents; firewood; charcoal; household liquefied petroleum gas (LPG) and kerosene; candles; drugs classified as essential by the Department of Health and such other goods as may be included under Section 4 of this Act; (as amended by RA No 10623)

(2) "Buffer fund" means a contingent fund in the budget of the implementing agency which shall not be used in its normal or regular operations but only for purposes provided for in this Act;

(3) "Implementing agency" means the department, agency or office of the Government which has jurisdiction over a basic necessity or prime commodity as defined in this Act, which shall be:

(a) The Department of Agriculture, with reference to agricultural crops, fish and other marine products, fresh meat, fresh poultry and dairy products, fertilizers, and other farm inputs;

(b) The Department of Health, with reference to drugs;

(c) The Department of Environment and Natural Resources, with reference to wood and other forest products; and

(d) The Department of Trade and Industry, with reference to all other basic necessities and prime commodities.

(4) "Panic-buying" is the abnormal phenomenon where consumers buy basic necessities and prime commodities grossly in excess of their normal requirement resulting in undue shortages of such goods to the prejudice of less privileged consumers;

(5) "Person" means a natural person or juridical person;

(6) "Prevailing price" means the average price at which any basic necessity has been sold in a given time within a month from the occurrence of any of the conditions enumerated under Section 6 of this Act;

(7) "Price ceiling" means the maximum price at which any basic necessity or prime commodity may be sold to the general public; and

(8) "Prime commodities" are goods not considered as basic necessities but are essential to consumers in times of any of the cases provided under Section 7 of this Act such as, but not limited to, flour; dried, processed or canned pork, beef and poultry meat; dairy products not falling under basic necessities; onions, garlic, vinegar, patis, soy sauce; toilet soap; fertilizer, pesticides and herbicides; poultry, livestock and fishery feeds and veterinary products; paper; school supplies; nipa shingles; sawali; cement; clinker; GI sheets; hollow blocks; plywood; plyboard; construction nails; batteries; electrical supplies; light bulbs; steel wire; all drugs not classified as essential drugs by the Department of Health and such other goods as may be included under Section 4 of this Act. (as amended by RA No 10623)

SECTION 4. Inclusion or Exclusion from the Coverage of this Act. — Upon petition of the concerned parties or motu proprio action from the concerned agency of the Price Coordinating Council and after public hearing, the implementing agency, with the approval of the President, may include in the definition of basic necessities or prime commodities types and brands of the goods or may exclude from the coverage of this Act, types or brands of the goods included in the definition of basic necessities and prime commodities, which may be deemed as nonessential goods or luxury goods: Provided, That, any type or brand so excluded may be reinstated by the implementing agency during occasions of acute shortage in the supply of the basic necessity or prime commodity to which the excluded type or brand used to belong. (as amended by RA No 10623)

SECTION 5. Illegal Acts of Price Manipulation. — Without prejudice to the provisions of existing laws on goods not covered by this Act, it shall be unlawful for any person habitually engaged in the production, manufacture, importation, storage, transport, distribution, sale or other methods of disposition of goods to engage in the following acts of price manipulation of the price of any basic necessity or prime commodity.

(1) Hoarding, which is the undue accumulation by a person or combination of persons of any basic or prime commodity beyond his or their normal inventory levels or the unreasonable limitation or refusal to dispose of, sell or distribute the stocks of any basic necessity of prime commodity to the general public or the unjustified taking out of any basic necessity or prime commodity from the channels of reproduction, trade, commerce and industry. There shall be prima facie evidence of hoarding when a person has stocks of any basic necessity or prime commodity fifty percent (50%) higher than his usual inventory and unreasonably limits, refuses or fails to sell the same to the general public at the time of discovery of the stocks. The determination of a person's usual inventory shall be reckoned from the third month immediately preceding before the discovery of the stocks in case the person has been engaged in the business for at least three (3) months; otherwise, it shall be reckoned from the time he started his business.

(2) Profiteering, which is the sale or offering for sale of any basic necessity or prime commodity at a price grossly in excess of its true worth. There shall be prima facie evidence of profiteering whenever a basic necessity or prime commodity being sold: (a) has no price tag; (b) is misrepresented as to its weight or measurement; (c) is adulterated or diluted; or (d) whenever a person raises the price of any basic necessity or prime commodity he sells or offers for sale to the general public by more than ten percent (10%) of its price in the immediately preceding month: Provided, That, in the case of agricultural crops, fresh fish, fresh marine products, and other seasonal products covered by this Act and as determined by the implementing agency, the prima facie provisions shall not apply; and

(3) Cartel, which is any combination of or agreement between two (2) or more persons engaged in the production, manufacture, processing, storage, supply, distribution, marketing, sale or disposition of any basic necessity or prime commodity designed to artificially and unreasonably increase or manipulate its price. There shall be prima facie evidence of engaging in a cartel whenever two (2) or more persons or business enterprises competing for the same market and dealing in the same basic necessity or prime commodity, perform uniform or complementary acts among themselves which tend to bring about artificial and unreasonable increase in the price of any basic necessity or prime commodity or when they simultaneously and unreasonably increase prices on their competing products thereby lessening competition among themselves.

SECTION 6. Automatic Price Control. — Unless otherwise declared by the President, prices of basic necessities in an area shall automatically be frozen at their prevailing prices or placed under automatic price control whenever:

(1) That area is proclaimed or declared a disaster area or under a state of calamity;

(2) That area is declared under an emergency;

(3) The privilege of the writ of habeas corpus is suspended in that area;

(4) That area is placed under martial law;

(5) That area is declared to be in a state of rebellion; or

(6) A state of war is declared in that area.

If the prevailing price of any basic necessity is excessive or unreasonable, the implementing agency may recommend to the President the imposition of a price ceiling for the sale of the basic necessity at a price other than its prevailing price.

Unless sooner lifted by the President, price control of basic necessities under this section shall remain effective for the duration of the condition that brought it about, but not for more than sixty (60) days: Provided, That, in the case of basic necessities that are wholly imported and deregulated under existing laws such as, but not limited to, household LPG and kerosene, price control thereon shall remain effective for a period of not more than fifteen (15) days, taking into consideration the current inventory or supply levels thereof. (as amended by RA No 10623)

The terms "disaster" and "calamity" shall include those brought about by natural or man-made causes, whether local or foreign.

SECTION 7. Mandated Price Ceiling. — The President, upon the recommendation of the implementing agency, or the Price Coordinating Council, may impose a price ceiling on any basic necessity or prime commodity if any of the following conditions so warrants:

(1) The impendency, existence, or effects of a calamity;

(2) The threat, existence, or effect of an emergency;

(3) The prevalence or widespread acts of illegal price manipulation:

(4) The impendency, existence, or effect of any event that causes artificial and unreasonable increase in the price of the basic necessity or prime-commodity; and

(5) Whenever the prevailing price of any basic necessity or prime commodity has risen to unreasonable levels.

SECTION 8. Determination of Price Ceilings. — In determining the reasonable price ceiling, the following factors may be taken into consideration:

(1) The average price, in the last three (3) months immediately preceding the proclamation of the price ceiling, of the basic necessity or prime commodity under consideration;

(2) The supply available in the market;

(3) The cost to the producer, manufacturer, distributor or seller including but not limited to:

(a) The exchange rate of the peso to the foreign currency with which a basic necessity or prime commodity or any component, ingredient or raw material thereof was paid for;

(b) Any change in the amortization cost of machinery brought about by any change in the exchange rate of the peso to the foreign currency with which the machinery was bought through credit facilities;

(c) Any change in the cost of labor brought about by a change in the minimum wage; and

(d) Any increase in the cost of transporting or distributing the basic necessity or prime commodity to the area of destination.

(4) Such other factors or conditions which will aid in arriving at a just and reasonable price ceiling.

SECTION 9. Allocation of a Buffer Fund to the Implementing Agency. — The implementing agency may procure, purchase, import, or stockpile any basic necessity or prime commodity, devise ways and means of distributing them for sale at reasonable prices in areas where there is shortage of supply or a need to effect changes in its prevailing price. For any or all of these purposes, a buffer fund shall be allocated in the annual appropriations of the implementing agencies.

SECTION 10. Powers and Responsibilities of Implementing Agencies. — To carry out the intents and purposes of this Act, the head of the implementing agency shall have the following additional powers and responsibilities:

(1) He shall, with the approval of the President, promulgate rules, regulations, and procedure for the implementation of this Act;

(2) He shall develop, promulgate and implement all programs, projects or measures to promote productivity in all basic necessities and prime commodities under his agency's jurisdiction;

(3) He shall promote and facilitate the establishment of an effective procurement, storage, marketing and distribution system of basic necessities and prime commodities to ensure their availability in all areas of the country where they are needed;

(4) During instances of panic-buying, he may, with the approval of the President, institute temporary measures to ensure orderly and equitable distribution to consumers of basic necessities and prime commodities in the affected area;

(5) Form time to time, he may issue suggested reasonable retail prices for any or all basic necessities and prime commodities under his jurisdiction for the information and guidance of producers, manufacturers, traders, dealers, sellers, retailers, and consumers;

(6) He shall cause the immediate dissemination of any mandated price ceiling for any basic necessity or prime commodity under his agency's jurisdiction through publication in a newspaper of general circulation in the area affected, and through broadcast by radio, or whenever deemed to materially make dissemination of the information more effective, by television. He may also cause the information to be disseminated through posting in public markets, supermarkets or other public places;

(7) He may, upon approval of the President, and subject to existing laws, rules and regulations on bidding, enter into any agreement with any local or foreign producer, manufacturer, supplier, distributor, or seller for the procurement of supplies of stocks of any basic necessity or prime commodity for purposes of buffer stocking: Provided, That, in areas where there are shortages or rampant illegal manipulation of prices, he may order their immediate sale;

(8) He may, subject to existing laws, rules and regulations on bidding, enter into any agreement with owners or operators of warehouses or storage houses or with owners, operators of franchise holders of vehicles or public utilities for the storage, transport, or distribution of any basic necessity or prime commodity;

(9) He may conduct investigations of any violation of this Act and, after due notice and hearing, impose administrative fines in such amount as he may deem reasonable which shall in no case be less than One thousand pesos (P1,000) nor more than One million pesos (P1,000,000). In the imposition of administrative fines the following factors shall be taken into consideration:

(a) Whether the subject of the violation is a basic necessity or a prime commodity; violations involving basic necessities shall be deemed more serious;

(b) Whether the subject of the violation is under price control under Sections 6 and 7 of this Act; violations involving basic necessities and prime commodities under price control shall be deemed more serious;

(c) The number of violations committed; respondents who had previously been found to have violated any of the provisions of this Act shall be imposed a higher fine; and

(d) Such other considerations as may be deemed necessary to carry out the intents and purposes and provisions of this Act.

(10) He may require the attendance and testimony of witnesses or the production of goods, objects, books, papers, documents, contracts, records, financial statements, accounts, agreements and such other evidences material in the determination of any violation of this Act;

(11) Without prejudice to the power to issue temporary closure or temporary restraining order for a period which shall not be more than ten (10) days, he may, after due notice and hearing issue cease and desist orders; reprimand; censure; suspend, revoke or cancel any permit, license, authority or registration issued by his office; or order the permanent closure of any establishment violating the provisions of this Act;

(12) He may initiate summary proceedings to cause the seizure by the Government of basic necessities and prime commodities subject of a violation of this Act and order their sale to the public at reasonable prices whenever the nature of or the demand for such goods so requires: Provided, That, pending litigation, the proceeds of the sale shall be held in trust or escrow by the implementing agency: Provided, further, That, should the owner of the basic necessity or prime commodity seized and sold be found not liable for the violation which was the basis of the seizure, the proceeds from their sale shall be paid to him, otherwise, they shall accrue to the general fund of the Government and: Provided, finally, That, the head of the implementing agency shall cause the broadcast in radio or television and the publication in at least two (2) newspapers of general circulation of the fact of sale or disposition of such seized goods at least three (3) days before the date of sale or disposition;

(13) He may initiate action and cause the prosecution before the proper court of law of violations of this Act;

(14) He may deputize and enlist the assistance of any government official or agency in carrying out the provisions of this Act; and

(15) Such other functions and ancillary powers as may be necessary to effectively implement this Act.

SECTION 11. Price Coordinating Council. — There is hereby created a Price Coordinating Council, hereinafter referred to as the Council, to be composed of the following members:

(1) The Secretary of Trade and Industry, as chairman;

(2) The Secretary of Agriculture;

(3) The Secretary of Health;

(4) The Secretary of Environment and Natural Resources;

(5) The Secretary of Local Government;

(6) The Secretary of Transportation and Communications;

(7) The Secretary of Justice;

(8) The Secretary of Energy;

(9) The Director General of the National Economic and Development Authority;

(10) One (1) representative from the consumers' sector;

(11) One (1) representative from the agricultural producers' sector;

(12) One (1) representative from the trading sector; and

(13) One (1) representative from the manufacturers' sector.

(as amended by RA No 10623)

The sectoral representatives of the Price Coordinating Council shall be appointed by the President for a term of one (1) year, without prejudice to reappointment for another term.

The Council shall meet every quarter and whenever the President or the Chairman shall convene the same. Each member shall receive reasonable reimbursements for transportation.

Members from the government sector may designate their representative to the Council;

The Department of Trade and Industry shall provide the secretariat to the Council from its existing organizational structure.

SECTION 12. Functions of the Price Coordinating Council. — The Price Coordinating Council shall have the following functions;

(1) It shall coordinate the productivity, distribution and price stabilization programs, project and measures of the Government and develop comprehensive strategies to effect a general stabilization of prices of basic necessities and prime commodities at affordable levels;

(2) It shall report at least semi-annually to the President and to the Congress of the Philippines the status and progress of the programs, projects, and measures undertaken by each implementing department, agency or office as well as the comprehensive strategies developed by the Council to stabilize the prices of basic necessities and prime commodities. The report shall include goods that have been included or excluded from the list of basic necessities and prime commodities as provided for under Section 4 of this Act; (as amended by RA No 10623)

(3) It shall advise the President on general policy matters for promotion and improvement in productivity, distribution and stabilization of prices of basic necessities and prime commodities;

(4) It may require from its members or any other government agency such information as it may deem necessary, and conduct public hearings for purposes of assessing the supply, distribution and price situation of any basic necessity or prime commodity;

(5) It shall publicize from time to time developments in productivity, supply, distribution and prices of basic necessities and prime commodities; and

(6) Whenever automatic price control of basic necessities is imposed under Section 6 of this Act, it shall cause the immediate dissemination of their prevailing prices or the price ceilings imposed in lieu thereof, as the case may be, through publication in a newspaper of general circulation in the area affected, and through broadcast by radio and, whenever the same is deemed to materially make dissemination of the information more effective, by television. It may also disseminate the information through posting in public markets, supermarkets and other public places.

SECTION 13. The Price Action Officer: Powers and Functions. — Whenever the President deems it necessary, he may appoint any of the members of the Price Coordinating Council as Price Action Officer for the duration of the automatic price control under Section 6 of this Act who shall have the following powers and functions:

(1) He shall carry out, implement and enforce the policies and decisions of the Council;

(2) He shall coordinate the actions of all implementing agencies involved in the monitoring and investigation of abnormal price movements and shortages of basic necessities and prime commodities;

(3) He may call upon any official, agent, employee, agency or instrumentality of the national or local government for any other assistance that he may deem necessary to carry out the purposes of this Act;

(4) He shall establish linkage and coordinate with nongovernment or private organizations in the affected are to assist in the monitoring and implementation of price control therein; and

(5) He shall exercise such other functions and duties as may be given to him by the President.

SECTION 14. Role of the National Statistics Office. — The National Statistics Office shall conduct independent periodic surveys and studies of the selling prices of all basic necessities and prime commodities all over the country as well as their share or effect on the family income of the different economic groups in the country for purposes of serving as database for government efforts to stabilize prices, as well as evaluating the effectivity of the same.

SECTION 15. Penalty for Acts of Illegal Price Manipulation. — Any person who commits any act of illegal price manipulation of any basic necessity or prime commodity under Section 5 hereof shall suffer the penalty of imprisonment for a period of not less than five (5) years nor more than Fifteen (15) years, and shall be imposed a fine of not less than Five thousand pesos (P5,000) nor more than Two million pesos (P2,000,000)

SECTION 16. Penalty for Violation of Price Ceiling. — Any person who violates Section 6 or 7 of this Act shall suffer the penalty of imprisonment for a period of not less than one (1) year nor more than ten (10) years or a fine of not less than Five thousand pesos (P5,000) nor more than One million pesos (P1,000,000), or both, at the discretion of the court.

SECTION 17. Violation by Juridical Persons. — Whenever any violation of the provisions of this Act is committed by a juridical persons, its officials or employees, or in case of a foreign corporation or association, its agent or representative in the Philippines who are responsible for the violation shall be held liable therefor.

SECTION 18. Violation by Aliens. — In case of aliens, in addition to the penalty provided in Section 15 or 16 of this Act, the offender shall, upon conviction and after service of sentence, be immediately deported without need of any further proceedings.

SECTION 19. Violation by Government Officials or Employees. — Any public official or employee who, by reason of his office, with or without consideration, conspires in the commission or knowingly conceals violations of any of the provisions of this Act shall likewise be principally responsible for the violation and shall suffer the additional penalty of permanent disqualification to hold public office.

SECTION 20. Criminal Penalties Without Prejudice to Administrative Sanctions. — The foregoing criminal penalties shall be without prejudice to the administrative sanctions which the implementing agency may impose under this Act or under any other law.

SECTION 21. Relations of the Price Act to Other Laws, Presidential Issuances. — Nothing in this Act shall be constructed as removing or diminishing the jurisdiction of any agency of Government on certain goods or products conferred by other laws or presidential issuances.

SECTION 22. Separability Clause. — If, for any reason, any provision of this Act or the application of such provision to any person group or circumstance is declared invalid or unconstitutional, the remainder of this Act shall not be affected by such declaration.

SECTION 23. Repealing Clause. — To the extent inconsistent with this Act, the following laws and letters of instruction are hereby repealed:

(1) Republic Act No. 4164, entitled "An Act to Prevent the Excessive Increase in the Price of Certain Prime Necessities of life on the Occasion of a Public Calamity, Penalizing the Violation Thereof, and for other Purposes."

(2) Presidential Decree No. 1674, entitled "Providing a Mechanism for Price Regulation, Creating a Price Stabilization Council, Prescribing its Powers and Responsibilities and for other Purposes;

(3) Letter of Instruction No. 1305, entitled "Directing Measures to Prevent Cement Hoarding, Price Manipulation and Profiteering."

(4) Letter on Instruction No. 1342, entitled "Ordering Immediate Measures to Prevent Price Manipulation and to Protect Consumers; and

(5) Letter of Instruction No. 1359, entitled "Directing Measures to Prevent Hoarding, Profiteering and Price Manipulation.

All laws, and rules and regulations inconsistent herewith are hereby likewise repealed or modified accordingly.

SECTION 24. Effectivity Clause. — This Act shall take effect three (3) days after its publication in two (2) national newspapers of general circulation.

Approved: May 27, 1992

Published in Malaya and the Philippine Times Journal on June 4, 1992. Published in the Official Gazette, Vol. 88 No. 27 page 4312 on July 6, 1992.

December 19, 2008

AN ACT ESTABLISHING A COMPREHENSIVE FIRE CODE OF THE PHILIPPINES,

REPEALING PRESIDENTIAL DECREE NO. 1185 AND FOR OTHER PURPOSES

SECTION 1. This Act shall be known as the "Fire Code of the Philippines of 2008".

SECTION 2. It is the policy of the State to ensure public safety, promote economic development through the prevention and suppression of all kinds, of destructive fires, and promote the professionalization of the fire service as a profession. Towards this end, the State shall enforce all laws, rules and regulations to ensure adherence to standard fire prevention and safety measures, and promote accountability in the fire protection and prevention service.

SECTION 3. Definition of Terms. — As used in this Fire Code, the following words and phrases shall mean and be construed as indicated:

Abatement — Any act that would remove or neutralize a fire hazard.

Administrator — Any person who acts as agent of the owner and manages the use of a building for him.

Blasting Agent — Any material or mixture consisting of a fuel and oxidizer used to set off explosives.

Cellulose Nitrate or Nitro Cellulose — A highly combustible and explosive compound produced by the reaction of nitric acid with a cellulose material.

Cellulose Nitrate Plastic (Pyroxylin) — Any plastic substance, materials or compound having cellulose nitrate (nitro cellulose) as base.

Combustible Flammable or Inflammable — Descriptive of materials that are easily set on fire.

Combustible Fiber — Any readily ignitable and free burning fiber such as cotton, oakum, rags, waste cloth, waste paper, kapok, hay, straw, spanish moss, excelsior and other similar materials commonly used in commerce.

Combustible Liquid — Any liquid having a flash point at or above 37.8ºC (100ºF).

Corrosive Liquid — Any liquid which causes fire when in contact with organic matter or with certain chemicals.

Curtain Board — A vertical panel of non-combustible or fire resistive materials attached to and extending below the bottom chord of the roof trusses, to divide the underside of the roof into separate compartments so that heat and smoke will be directed upwards to a roof vent.

Cryogenic — Descriptive of any material which by its nature or as a result of its reaction with other elements produces a rapid drop in temperature of the immediate surroundings.

Damper — A normally open device installed inside air duct system which automatically closes to restrict the passage of smoke or fire.

Distillation — The process of first raising the temperature in separate the more volatile from the less volatile parts and then cooling and condensing the resulting vapor so as to produce a nearly purified substance.

Duct System — A continuous passageway for the transmission of air.

Dust — A finely powdered substance which, when mixed with air in the proper proportion and ignited will cause an explosion.

Electrical Arc — An extremely hot luminous bridge formed by passage of an electric current across a space between two conductors or terminals due to the incandescence of the conducting vapor.

Ember — A hot piece or lump that remains after a material has partially burned, and is still oxidizing without the manifestation of flames.

Finishes — Materials used as final coating of a surface for ornamental or protective purposes.

Fire — The active principle of burning, characterized by the heat and light of combustion.

Fire Trap — A building unsafe in case of fire because it will burn easily or because it lacks adequate exits or fire escapes.

Fire Alarm — Any visual or audible signal produced by a device or system to warn the occupants of the building or fire fighting elements of the presence or danger of fire to enable them to undertake immediate action to save life and property and to suppress the fire.

Fire Door — A fire resistive door prescribed for openings in fire separation walls or partitions.

Fire Hazard — Any condition or act which increases or may cause an increase in the probability of the occurrence of fire, or which may obstruct, delay, hinder or interfere with fire fighting operations and the safeguarding of life and property.

Fire Lane — The portion of a roadway or public-way that should be kept opened and unobstructed at all times for the expedient operation of fire fighting units.

Fire Protective and Fire Safety Device — Any device intended for the protection of buildings or persons to include, but not limited to, built-in protection system such as sprinklers and other automatic extinguishing system, detectors for heat, smoke and combustion products and other warning system components, personal protective equipment such as fire blankets, helmets, fire suits, gloves and other garments that may be put on or worn by persons to protect themselves during fire.

Fire Safety Constructions — Refers to design and installation of walls, barriers, doors, windows, vents, means of egress etc. integral to and incorporated into a building or structure in order to minimize danger to life from fire, smoke, fumes or panic before the building is evacuated. These features are also designed to achieve, among others, safe and rapid evacuation of people through means of egress on construction which are sealed from smoke or fire, the confinement of fire or smoke in the room or floor of origin and delay their spread to other parts of the building by means of smoke sealed and fire resistant doors, walls and floors. It shall also mean to include the treatment of buildings components or contents with flame retardant chemicals.

Flash Point — The minimum temperature at which any material gives off vapor in sufficient concentration to form an ignitable mixture with air.

Forcing — A process where a piece of metal is heated prior to changing its shape or dimensions.

Fulminate — A kind of stable explosive compound which explodes by percussion.

Hazardous Operation/Process — Any act of manufacturing, fabrication, conversion, etc., that uses or produces materials which are likely to cause fires or explosions.

Horizontal Exit — Passageway from one building to another or through or around a wall in approximately the same floor level.

Hose Box — A box or cabinet where fire hoses, valves and other equipment are stored and arranged for fire fighting.

Hose Reel — A cylindrical device turning on an axis around which a fire hose is wound and connected.

Hypergolic Fuel — A rocket or liquid propellant which consist of combinations of fuels and oxidizers which ignite spontaneously on contact with each other.

Industrial Baking and Drying — The industrial process of subjecting materials to heat for the purpose of removing solvents or moisture from the same, and/or to fuse certain chemical salts to form a uniform glazing on the surface of materials being treated.

Jumper — A piece of metal or an electrical conductor used to bypass a safety device in an electrical system.

Occupancy — The purpose for which a building or portion thereof is used or intended to be used.

Occupant — Any person actually occupying and using a building or portions thereof by virtue of a lease contract with the owner or administrator or by permission or sufferance of the latter.

Organic Peroxide — A strong oxidizing organic compound which releases oxygen readily. It causes fire when in contact with combustible materials especially under conditions of high temperature.

Overloading — The use of one or more electrical appliances or devices which draw or consume electrical current beyond the designed capacity of the existing electrical system.

Owner — The person who holds the legal right of possession or title to a building or real property.

Oxidizing Material — A material that readily yields oxygen in quantities sufficient to stimulate or support combustion.

Pressurized or Forced Draft Burning Equipment — Type of burner where the fuel is subjected to pressure prior to discharge into the combustion chamber and/or which includes fans or other provisions for the introduction of air at above normal atmospheric pressure into the same combustion chamber.

Public Assembly Building — Any building or structure where fifty (50) or more people congregate, gather, or assemble for any purpose.

Public Way — Any street, alley or other strip of land unobstructed from the ground to the sky, deeded, dedicated or otherwise permanently appropriated for public use.

Pyrophoric — Descriptive of any substance that ignites spontaneously when exposed to air.

Refining — A process where impurities and/or deleterious materials are removed from a mixture in order to produce a pure element or compound. It shall also refer to partial distillation and electrolysis.

Self-closing Doors — Automatic closing doors that are designed to confine smoke and heat and delay the spread of fire.

Smelting — Melting or fusing of metallic ores or compounds so as to separate impurities from pure metals.

Sprinkler System — An integrated network of hydraulically designed piping installed in a building, structure or area with outlets arranged in a systematic pattern which automatically discharges water when activated by heat or combustion products from a fire.

Standpipe System — A system of vertical pipes in a building to which fire hoses can be attached on each floor, including a system by which water is made available to the outlets as needed.

Vestibule — A passage hall or antechamber between the outer doors and the interior parts of a house or building.

Vertical Shaft — An enclosed vertical space of passage that extends from floor to floor, as well as from the base to the top of the building.

SECTION 4. Applicability of the Code. — The provisions of the Fire Code shall apply to all persons and all private and public buildings, facilities or structures erected or constructed before and after its effectivity.

SECTION 5. Responsibility for the Enforcement of this Code. — This Code shall be administered and enforced by the Bureau of Fire Protection (BFP), under the direct supervision and control of the Chief of the Bureau of Fire Protection, through the hierarchy of organization as provided for in Chapter VI of Republic Act No. 6975. With the approval of the Secretary of the Department of the Interior and Local Government (DILG), the Chief, BFP, is hereby authorized to:

a. Issue implementing rules and regulations, and prescribe standards, schedules of fees/fire service charges and administrative penalties therefor as provided in the pertinent provisions of this Code;

b. Reorganize the BFP as may be necessary and appropriate;

c. Support and assist fire volunteers, practitioners and fire volunteer organizations in the country who shall undergo mandatory fire suppression, inspection, rescue, emergency medical services and related emergency response trainings and competency evaluations to be conducted by the BFP. In the case of the fire practitioners, they shall undergo mandatory continuous professional education and competency evaluation of their expertise, knowledge and skills in the area of fire science, engineering and technology to be conducted by the BFP.

The BFP may enter into external party agreements for the conduct of trainings, education and evaluation of fire volunteers, practitioners and fire volunteer organizations, which shall be under the full control and supervision of the BFP: Provided, however, That during firefighting operations, fire volunteer organizations shall be under the direct operational control of the fire ground commanders of the BFP;

d. Enter into long term agreement, either through public biddings or negotiations in accordance with the provisions of Republic Act No. 9184, otherwise known as the Government Procurement Reform Act of 2003, for the acquisition of fire prevention, fire protection and fire fighting investigation, rescue, paramedics, hazardous material handling equipment, supplies, materials and related technical services necessary for the fire service;

e. Enter into Memoranda of Agreement with other departments, bureaus, agencies, offices and corporations of the government, as well as private institutions, in order to define areas of cooperation and coordination and delineate responsibility on fire prevention education, fire safety, fire prevention, fire suppression and other matters of common concern;

f. Call on the police, other law enforcement agencies, and local government assistance to render necessary assistance in the enforcement of this Code;

g. Designate a fire safety inspector through his/her duly authorized representative, who shall conduct an inspection of every building or structure within his area of responsibility at least once a year and every time the owner, administrator or occupant shall renew his/her business permit or permit to operate;

No occupancy permit, business or permit to operate shall be issued without securing a Fire Safety Inspection Certificate (FSIC) from the Chief, BFP, or his/her duly authorized representative;

h. Inspect at reasonable time, any building, structure, installation or premises for dangerous or hazardous conditions or materials as set forth in this Code, provided that in case of single family dwelling, an inspection must be upon the consent of the occupant or upon lawful order from the proper court. The Chief, BFP or his/her duly authorized representative shall order the owner/occupant to remove hazardous materials and/or stop hazardous operation/process in accordance with the standards set by this Code or its implementing rules or regulations or other pertinent laws;

i. Where conditions exist and are deemed hazardous to life and property, to order the owner/occupant of any building or structure to summarily abate such hazardous conditions;

j. Require the building owner/occupant to submit plans and specifications, and other pertinent documents of said building to ensure compliance with applicable codes and standards; and

k. Issue a written notice to the owner and/or contractor to stop work on portion of any work due to absence, or in violation of approved plans and specifications, permit and/or clearance or certification as approved by the Chief, BFP or his/her duly authorized representative. The notice shall state the nature of the violation and no work shall be continued on that portion until the violation had been corrected.

SECTION 6. Technical Staff. — The Chief, BFP shall constitute a technical staff of highly qualified persons who are knowledgeable on fire prevention, fire safety, and fire suppression. They may be drawn not only from the organic members of the BFP and other government offices and agencies, but also from other sources in the latter case, they will either be appointed into the service or hired as consultants in accordance with law. The technical staff shall study, review and evaluate latest developments and standards on fire technology; prepare plans/programs, on fire safety, prevention and suppression and evaluate implementation thereof; develop programs on the professionalization of the fire service; coordinate with appropriate government and private institutions for the offering of college courses on fire technology and fire protection engineering; propose amendments to the fire Code; advise the Chief, BFP on any matter brought to his attention; and perform such other functions as directed on any matter brought to his attention and perform such other functions as directed by higher authorities.

SECTION 7. Inspections, Safety Measures, Fire Safety, Constructions and Protective and/or Warning Systems. — As may be defined and provided in the rules and regulations, owners, administrators or occupants of buildings, structures and their premises or facilities and other responsible persons shall be required to comply with the following, as may be appropriate:

a) Inspection Requirement — A fire safety inspection shall be conducted by the Chief, BFP or his duly authorized representative as prerequisite to the grants of permits and/or licenses by local governments and other government agencies concerned, for the:

(1) Use or occupancy of buildings, structures, facilities or their premises including the installation or fire protection and fire safety equipment, and electrical system in any building structure or facility; and

(2) Storage, handling and/or use of explosives or of combustible, flammable, toxic and other hazardous materials;

b) Safety Measures for Hazardous Materials — Fire safety measures shall be required for the manufacture, storage, handling and/or use of hazardous materials involving:

(1) cellulose nitrate plastic of any kind;

(2) combustible fibers;

(3) cellular materials such as foam, rubber, sponge rubber and plastic foam;

(4) flammable and combustible liquids or gases of any classification;

(5) flammable paints, varnishes, stains and organic coatings;

(6) high-piled or widely spread combustible stock;

(7) metallic magnesium in any form;

(8) corrosive liquids, oxidizing materials, organic peroxide, nitromethane, ammonium nitrate, or any amount of highly toxic, pyrophoric, hypergolic, or cryogenic materials or poisonous gases as well as material compounds which when exposed to heat or flame become a fire conductor, or generate excessive smoke or toxic gases;

(9) blasting agents, explosives and special industrial explosive materials, blasting caps, black powder, liquid nitro-glycerine, dynamite, nitro cellulose, fulminates of any kind, and plastic explosives containing ammonium salt or chlorate;

(10) firework materials of any kind or form;

(11) matches in commercial quantities;

(12) hot ashes, live coals and embers;

(13) mineral, vegetable or animal oils and other derivatives/by-products;

(14) combustible waste materials for recycling or resale;

(15) explosive dusts and vapors; and

(16) agriculture, forest, marine or mineral products which may undergo spontaneous combustion;

(17) any other substance with potential to cause harm to persons, property or the environment because of one or more of the following: a) The chemical properties of the substance; b) The physical properties of the substance; c) The biological properties of the substance. Without limiting the definition of hazardous material, all dangerous goods, combustible liquids and chemicals are hazardous materials.

c) Safety Measures for Hazardous Operation/Processes — Fire safety measures shall be required for the following hazardous operation/processes:

(1) welding or soldering;

(2) industrial baking and drying;

(3) waste disposal;

(4) pressurized/forced-draft burning equipment;

(5) smelting and forging;

(6) motion picture projection using electrical arc lamps;

(7) refining, distillation and solvent extraction; and

(8) such other operations or processes as may hereafter be prescribed in the rules and regulations.

d) Provision on Fire Safety Construction, Protective and Warning System — Owners, occupants or administrator or buildings, structures and their premises or facilities, except such other buildings or structures as may be exempted in the rules and regulations to be promulgated under Section 5 hereof, shall incorporate and provide therein fire safety construction, protective and warning system, and shall develop and implement fire safety programs, to wit:

(1) Fire protection features such as sprinkler systems, hose boxes, hose reels or standpipe systems and other fire fighting equipment;

(2) Fire alarm systems;

(3) Fire walls to separate adjoining buildings, or warehouses and storage areas from other occupancies in the same building;

(4) Provisions for confining the fire at its source such as fire resistive floors and walls extending up to the next floor slab or roof, curtain boards and other fire containing or stopping components;

(5) Termination of all exits in an area affording safe passage to a public way or safe dispersal area;

(6) Stairway, vertical shafts, horizontal exits and other means of egress sealed from smoke and heat;

(7) A fire exit plan for each floor of the building showing the routes from each other room to appropriate exits, displayed prominently on the door of such room;

(8) Self-closing fire resistive doors leading to corridors;

(9) Fire dampers in centralized airconditioning ducts;

(10) Roof vents for use by fire fighters; and

(11) Properly marked and lighted exits with provision for emergency lights to adequately illuminate exit ways in case of power failure.

SECTION 8. Prohibited Acts. — The following are declared as prohibited act and omission:

a. Obstructing or blocking the exit ways or across to buildings clearly marked for fire safety purposes, such as but not limited to aisles in interior rooms, any part of stairways, hallways, corridors, vestibules, balconies or bridges leading to a stairway or exit of any kind, or tolerating or allowing said violations;

b. Constructing gates, entrances and walkways to building components and yards, and temporary or permanent structures on public ways, which obstruct the orderly and easy passage of fire fighting vehicles and equipment;

c. Prevention, interference or obstruction of any operation of the fire service, or of duly organized and authorized fire brigades;

d. Obstructing designated fire lanes or access to fire hydrants;

e. Overcrowding or admission of persons beyond the authorized capacity in movie houses, theaters, coliseums, auditoriums or other public assembly buildings, except in other assembly areas on the ground floor with open sides or open doors sufficient to provide safe exits;

f. Locking fire exits during period when people are inside the building;

g. Prevention or obstruction of the automatic closure of fire doors or smoke partitions or dampers;

h. Use of fire protective or fire fighting equipment of the fire service other than for fire fighting except in other emergencies where their use are justified;

i. Giving false or malicious fire alarms;

j. Smoking in prohibited areas as may be determined by fire service, or throwing of cigars, cigarettes, burning objects in places which may start or cause fire;

k. Abandoning or leaving a building or structure by the occupant or owner without appropriate safety measures;

l. Removing, destroying, tampering or obliterating any authorized mark, seal, sign or tag posted or required by the fire service for fire safety in any building, structure or processing equipment; and

m. Use of jumpers or tampering with electrical wiring or overloading the electrical system beyond its designated capacity or such other practices that would tend to undermine the fire safety features of the electrical system.

SECTION 9. Violations, Penalties and Abatement of Fire Hazards. — Fire hazards shall be abated immediately. The Chief, BFP or his/her duly authorized representative, upon the report that a violation of this Code or other pertinent laws, rules and regulations is being committed, shall issue notice/order to comply to the owner, administrator, occupant or other person responsible for the condition of the building or structure, indicating among other things, the period within which compliance shall be effected, which shall be within ten (10) to fifteen (15) days after the receipt of the notice/order, depending on the reasonableness to adequately comply with the same.

If after the lapse of the aforesaid period, the owner, administrator, occupant or other responsible persons failed to comply, the Chief, BFP or his/her duly authorized representative shall put up a sign in front of the building or structure that it is a fire hazard. Specifically, the notice shall bear the words "WARNING: THIS BUILDING/STRUCTURE IS A FIRE HAZARD", which shall remain posted until such time that the owner, administrator, occupant or other persons responsible for the condition of the building, structure and their premises or facilities abate the same, but such period shall not exceed fifteen (15) days from the lapse of the initial period given in the notice/order to comply.

Finally, with the failure of the owner, administrator, occupant or other persons responsible for the condition of the building, structure and their premises or facilities to comply within the period specified above, the Chief, BFP may issue order for such abatement. If the owner, administrator or occupant of buildings, structure and their premises or facilities does not abate the same within the period fixed in said order, the building, structure, premises or facilities shall be ordered closed by the Chief, BFP or his/her duly authorized representative notwithstanding any permit clearance or certificate earlier issued by the local authorities.

Any building or structure assessed and declared by the Chief, BFP or his/her duly authorized representative as a

firetrap on account of the gravity or palpability of the violation or is causing clear and present imminent fire danger to

adjoining establishments and habitations shall be declared a public nuisance, as defined in the Civil Code of the Philippines

in a notice to be issued to the owner, administrator, occupant or other person responsible for the condition of the building, structure and their premises or facilities. If the assessed value of the nuisance or the amount to be spent in abating the

same is not more than One hundred thousand pesos (P100,000.00), the owner, administrator or occupant thereof shall

abate the hazard within Fifteen (15) days, or if the assessed value is more than One hundred thousand pesos (P100,000.00),

within thirty (30) days from receipt of the order declaring said building or structure a public nuisance; otherwise, the

Chief, BFP or his/her duly authorized representative shall forthwith cause its summary abatement. Failure to comply

within five (5) days from the receipt of the notice shall cause the Chief, BFP or his/her duly authorized representative to

put up a sign in front of the building or structure, at or near the entrance of such premises, notifying the public that such

building or structure is a "FIRE TRAP", which shall remain until the owner, administrator, occupant or other person responsible

for the condition of the building, structure and their premises or facilities abate the same within the specified period.

Summary abatement as used herein shall mean all corrective measures undertaken to abate hazards which shall include, but not limited to remodeling, repairing, strengthening, reconstructing, removal and demolition, either partial or total, of the building or structure. The expenses incurred by the government for such summary abatement shall be borne by the owner, administrator or occupant. These expenses shall constitute a prior lien upon such property.

SECTION 10. Enforcement of the Lien. — If the owner, administrator or occupant fails to reimburse the government of the expenses incurred in the summary abatement within ninety (90) days from the completion of such abatement, the building or structure shall be sold at public auction in accordance with existing laws and rules. No property subject of lien under Section 9 hereof, may be sold at a price lower than the abatement expenses incurred by the government. The property shall be forfeited in favor of the government if the highest bid is not at least equal to the abatement expenses.

SECTION 11. Penalties. —

1. Against the private individual:

a) Administrative fine — Any person who violates any provision of the Fire Code or any of the rules and regulations promulgated under this Act shall be penalized by an administrative fine of not exceeding Fifty thousand pesos (P50,000.00) or in the proper case, by stoppage of operations or by closure of such buildings, structures and their premises or facilities which do not comply with the requirements or by both such administrative fine and closure/stoppage of operation to be imposed by the Chief, BFP: Provided, That the payment of the fine, stoppage of operations and/or closure of such buildings, structures, and their premises or facilities shall not absolve the violator from correcting the deficiency or abating the fire hazard. The decision of the Chief, BFP, under this subsection, may be appealed to the Secretary of the Interior and Local Government. Unless ordered by the Secretary of the Interior and Local Government the appeal shall not stay the execution of the order of the Chief, BFP. The decision of the Secretary of the Interior and Local Government shall be final and executory.

b) Punitive — In case of willful failure to correct the deficiency or abate the fire hazard as provided in the preceding subsection, the violator shall, upon conviction, be punished by imprisonment of not less than six (6) months nor more than six (6) years, or by a fine of not more than One hundred thousand pesos (P100,000.00) or both such fine and imprisonment: Provided, however, That in the case of a corporation, firm, partnership or association, the fine and/or imprisonment shall be imposed upon its officials responsible for such violation, and in case the guilty party is an alien, in addition to the penalties herein prescribed, he shall immediately be deported: Provided, finally, That where the violation is attended by injury, loss of life and/or damage to property, the violator shall be proceeded against under the applicable provisions of the Revised Penal Code.

Any person who, without authority, maliciously removes the sign that a building or structure is a fire hazard/firetrap placed by the authorized person in this Code shall be liable for imprisonment for thirty (30) days or a fine not exceeding One hundred thousand pesos (P100,000.00) or both in the discretion of the court.

Any person, who disobeys the lawful order of the fire ground commander during a firefighting operation shall be penalized with imprisonment of one (1) day to thirty (30) days and a fine of Five thousand pesos (P5,000.00).

2. Against the public officer/employee

a) Administrative — The following acts or omissions shall render the public officer/employee in charge of the enforcement of this Code, its implementing rules and regulation and other pertinent laws, administratively liable, and shall be punished by reprimand, suspension or removal in the discretion of the disciplining authority, depending on the gravity of the offense and without prejudice to the provisions of other applicable laws:

(1) Unjustified failure of the public officer/employee to conduct inspection of buildings or structures at least once a year;

(2) Deliberate failure to put up a sign in front of the building or structure within his/her area of responsibility found to be violating this Code, its implementing rules and regulations and other pertinent laws, that the same is a "FIRE HAZARD" or a "FIRE TRAP";

(3) Endorsing to the Chief, BFP or his/her duly authorized representative for the certification, or submitting a report that the building or structure complies with the standards set by this Code, its implementing rules or regulations or other pertinent laws when the same is contrary to fact;

(4) Issuance or renewal of occupancy or business permit without the fire safety inspection certificate issued by the Chief, BFP or his/her duly authorized representative;

(5) Failure to cancel the occupancy or business permit after the owner, administrator, occupant or other person responsible for the condition of the building, structure and other premises failed to comply with the notice/order for compliance with the standards set by this Code, its implementing rules and regulations and other pertinent laws, within the specified period;

(6) Failure to abate a public nuisance within fifteen (15) days after the owner, administrator, occupant or other responsible person failed to abate the same within the period contained in the notice to abate;

(7) Abusing his/her authority in the performance of his/her duty through acts of corruption and other unethical practices; or

(8) Other willful impropriety or gross negligence in the performance of his/her duty as provided in this Act or its implementing rules and regulations.

b) Punitive — In case of willful violation involving the abovementioned acts or omissions enumerated under Section 11 subparagraph 2(A), the public officer/employee shall, upon conviction, be punished by imprisonment of not less than six (6) months nor more than six (6) years, or by a fine of not more than One hundred thousand pesos (P100,000.00) or both such fine and imprisonment: Provided, That where the violation is attended by injury, loss of life and/or property, the violator shall be proceeded against under the applicable provisions of the Revised Penal Code.

SECTION 12. Appropriation and Sources of Income. —

a. To support the manpower; infrastructure and equipment needs of the fire service of the BFP, such amount as may be necessary to attain the objectives of the Fire Code shall be appropriated and included in the annual appropriation of the BFP.

b. To partially provide for the funding of the fire service the following taxes and fees which shall accrue to the general fund of the National Government, are hereby imposed:

(1) Fees to be charged for the issuance of certificates, permits and licenses as provided for in Section 7 (a) hereof;

(2) One-tenth of one per centum (0.1%) of the verified estimated value of buildings or structures to be erected, from the owner thereof, but not to exceed Fifty thousand (P50,000.00) pesos, one half to be paid prior to the issuance of the building permit, and the balance, after final inspection and prior to the issuance of the use and occupancy permit;

(3) One-hundredth of one per centum (0.10%) of the assessed value of buildings or structures annually payable upon payment of the real estate tax, except on structures used as single family dwellings;

(4) Two per centum (2%) of all premiums, excluding re-insurance premiums for the sale of fire, earthquake and explosion hazard insurance collected by companies, persons or agents licensed to sell such insurances in the Philippines;

(5) Two per centum (2%) of gross sales of companies, persons or agents selling fire fighting equipment, appliances or devices, including hazard detection and warning systems; and

(6) Two per centum (2%) of the service fees received from fire, earthquake, and explosion hazard reinsurance surveys and post loss service of insurance adjustment companies doing business in the Philippines directly through agents.

SECTION 13. Collection of Taxes, Fees and Fines. — All taxes, fees and fines provided in this Code shall be collected by the BFP: Provided, That twenty percent (20%) of all such collections shall be set aside and retained for use by the city or municipal government concerned, which shall appropriate the same exclusively for the use of the operation and maintenance of its local fire station, including the construction and repair of fire station: Provided, further, That the remaining eighty (80%) shall be remitted to the National Treasury under a trust fund assigned for the modernization of the BFP.

SECTION 13-A. Assessment of Fire Code Taxes, Fees and Fines. — The assessment of fire code taxes, fees and fines is vested upon the BFP. The BFP shall, subject to the approval of the DILG, prescribe the procedural rules for such purpose.

SECTION 13-B. Collection and Assessment of Local Taxes, Fees and Fines. — The collection and assessment of taxes, fees and fines as prescribed in the Local Government Code, except those contained in this Code, shall be the function of the concerned local government units.

SECTION 13-C. Use of Income Generated from the Enforcement of the Fire Code. — The Chief, BFP is authorized, subject to the approval of the Secretary of the Interior and Local Government, to use the income generated under the Fire Code for procurement of fire protection and fire fighting investigation, rescue, paramedics, supplies and materials, and related technical services necessary for the fire service and the improvement of facilities of the Bureau of Fire Protection and abatement of fire hazards.

The BFP shall determine the optimal number of equipment, including, but not limited to, fire trucks and fire hydrants, required by every local government unit for the proper delivery of fire protection services in its jurisdiction.

In the procurement of firefighting and investigation supplies and materials, the Bureau of Product Standards of the Department of Trade and Industry shall evaluate, determine and certify if the supply so procured conforms to the product standards fixed by the BFP. For this purpose, the BFP shall submit to the Bureau of Product Standards a detailed set of product standards that must be complied with in the procurement of fire fighting and investigation supplies and materials within six (6) months from the effectivity of this Act.

SECTION 13-D. Monitoring the Implementation of the Fire Code and the Amount of the Fees Collected. — The Chief, BFP shall, within six (6) months from the effectivity of this Code, submit to the Secretary of the Interior and Local Government for his/her approval, a management tool or mechanism that would ensure effective monitoring of the enforcement of the Fire Code to include the amount of Fire Code fees collected.

SECTION 14. Within sixty (60) days from the effectivity of this Act, the Secretary of the Interior and Local Government shall issue the rules and regulations for its effective implementation.

SECTION 15. Presidential Decree No. 1185 is hereby repealed. All laws, presidential decrees, letters of instructions, executive orders, rules and regulations insofar as they are inconsistent with this Act, are hereby repealed or amended as the case may be.

SECTION 16. In case any provision of this Act or any portion thereof is declared unconstitutional by a competent court, other provisions shall not be affected thereby.

SECTION 17. This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in two (2) national newspapers of general circulation.

Approved: December 19, 2008

Published in The Manila Times on January 5, 2009.