OBE Syllabus

CONSUMER PROTECTION LAW

AND COMPETITION LAW COMPLIANCE
1st Semester, AY 2018-2019
Atty. Leah Jose-Sebastian

I. COURSE IDENTIFICATION
A. Course Code
B. Course Title Consumer Protection Law and
Competition Law Compliance
C. Course Credit 2 units
D. Course Classification Elective
E. Course Prerequisite Constitutional Law; Civil Law;
Corporation Law; Intellectual Property
Law; Criminal Law
II. COURSE DESCRIPTION:

This is a 2-subject course that focuses on the legal framework in the Philippines for consumer
protection against (a) unsafe and sub-standard products and services, and (b) improper or
illegal business conduct that harms consumers such as (i) unconscionable sales acts and
practices, and (ii) anti-competitive behavior of persons and entities engaged in any trade,
industry and commerce in the Philippines.

Part A. Consumer Protection Law

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 (i) This course examines the general legal principles, policy considerations,
requirements and standards, as well as topical areas, relating to consumer protection
in the Philippines which apply to various types of products and services as well as
sales, advertising and promotion practices, as governed by laws such as, but not
limited to, The Consumer Act (RA 7394), The Price Act (RA 7581), and the Food,
Drug, and Cosmetic Act (RA 3720), as amended by Executive Order No. 175 and the
FDA Act of 2009 (RA 9711). It utilizes a wholistic approach which considers, in each
case, the different actors and processes relating to the marketing, sale and
distribution of products and services, the relevant consumer rights, what constitutes
a violation of consumer rights, the consequent injury to the consumer and to other
parties who may be affected by the consumer transaction, the persons liable for such
injury, the redress required, and the remedies available to concerned parties.

(ii) Topics in this elective course are related to core Law subjects such as
Constitutional Law, Corporation Law, Obligations and Contracts, Civil Law and Criminal
Law, thus enabling Law students to apply the relevant provisions of these laws in the
assessment, handling and resolution of consumer issues and disputes.

Part B. Competition Law Compliance

(i) This course examines the general legal principles, requirements and standards, as
well as topical areas, of Competition Law in the Philippines, as governed by the
Philippine Competition Act (RA 10667), its Implementing Rules and Regulations
and other competition-related laws. It utilizes a practical approach whereby
theory (i.e., Competition-related laws, regulations and State policies) is studied and
applied in the context of (i) local and global business realities (i.e., the challenges

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 and restrictions that confront business organizations and the regulatory structures
within which they must function) that require competent legal guidance
(complementing guidance by experts in Economics), (ii) the current decisions and
actions taken by Government authorities within and outside the Philippines against
conduct deemed anti-competitive, and (iii) what multi-stakeholder organizations
are doing to embed compliance (e.g., best practices of trade associations).

(ii) Topics in this elective course are related to core Law subjects such as
Constitutional Law, Corporation Law, Obligations and Contracts and Intellectual
Property Law, thus enabling Law students to spot and address Competition Law
issues in these areas of law practice.

II. COURSE OBJECTIVES:

Part A. Consumer Protection Law

At the end of this course, the students will be able to:

1. Fully understand the legal framework of consumer protection in the Philippines, the
relevant standards for legally compliant products and services under various trade- and
industry- related laws and the liabilities of the different actors in the supply chain for
safe and quality consumer products and services;
2. Fully understand the standards of business conduct and sales, advertising and
promotion practices that apply to manufacturers and sellers of consumer products and
providers of consumer services; and
3. Identify and apply the proper remedy for the enforcement of specific consumer rights

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 and resolution of consumer issues and disputes.

Part B. Competition Law Compliance

At the end of the course, the students will be able to:

1. Fully understand the legal framework of Competition Law in the Philippines, its legal
basis and underlying economic objectives, preparatory to legal practice in a business
environment, whether as advocates for businesses in dominant positions or for new
entrants, for consumers or for Government regulators;

2. Identify anti-competitive conduct of persons and entities under the Philippine

Competition Act (Republic Act 10667) and its IRR and other relevant competition-
related laws as well as potential Competition Law issues in various commercial activities
and business situations, evaluate their effects and consequences (including cost of non-
compliance) within and outside the Philippines, and craft possible remedies and
alternatives to eliminate or reduce the risk of non-compliance, preparatory to legal
counseling on Competition Law safeguards and compliance as an integral part of
socially responsible legal risk management; and

3. To identify windows of opportunity for pro-competitive business undertakings and

commercial activities within the law, preparatory to providing legally defensible
business solutions that enable, rather than limit, business growth for the benefit of
society.

IV. COURSE COVERAGE:

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I. Overview

A. Constitutional Basis for Consumer Protection

1987 Constitution

1. Art. II, Sec. 15

2. Art. XVI, Sec. 9
3. Art. XVI, Sec. 11 (2)
4. Art. XIII, Sec. 11
5. Art. XIII, Sec. 12
6. Art. XV, Sec. 3 (2)

Case:
Roma Drug v. RTC of Guagua
G.R. No. 149907, April 16, 2009

B. Basic Concepts and Principles

1. Consumer transaction under the Consumer Act (RA 7394)

a. Art. 4, par. s), RA 7394

2. Subject matter of consumer transaction

a. Consumer products and services under the Consumer Act
Art. 4, pars. q), g), u), ab), ad), ag), ah), ak), bo), bp), RA 7394

b. Health products under the Food and Drug Administration Act of 2009 (RA
9711), amending the Food, Drug and Cosmetic Act (RA 3720)

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Sec. 10, pars. (e), (f), (g), (h), (ee), (ff), (gg), (hh), RA 3720 as amended by RA 9711

c. Basic necessities and prime commodities under the Price Act (RA 7581)
Secs. 3, pars. (1), (8), RA 7581 as amended by RA 10623

d. Food under Food Safety Act of 2013 (RA 10611)

Sec. 4 (g), RA 10611

e. Toys and Games under the Toy and Game Safety Labeling Act of 2013 (RA
10620)
Sec. 4, RA 10620

f. Telecommunications services under the Public Telecommunications Policy

Act (RA 7925)
Sec. 3 (a), RA 7925

g. Motor vehicles under the Lemon Law (RA 10642)

Sec. 3 (a), (j) RA 10642

h. Drugs and medicines under the Universally Accessible Cheaper and Quality
Medicines Act of 2008 (RA 9502)
Sec. 4 (c), (d) and Sec. 23, RA 9502

i. Electric service under Electric Power Industry Reform Act (RA 9136)
Sec. 41, RA 9136
Magna Carta for Residential Electricity Consumers

3. Parties involved in, liable for, or affected by a consumer transaction

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a. Supplier
Art. 4, par. bu), RA 7394

b. Manufacturer
Art. 4, par. ac), RA 7394
Sec. 10, Par. (v), RA 3720, as amended by RA 9711

c. Seller (Reseller)/Distributor/Importer/Exporter/Wholesaler/Trader
Art. 4, pars. ac), bn), RA 7394
Sec. 10, pars. (r), (bb), (cc), RA 3720 as amended by RA 9711
Sec. 10, par. (mm), RA 3720 as amended by RA 9711

d. Buyer/Retailer/Dealer
Art. 4, par. bk), RA 7394
Sec. 10, par. (mm), RA 3720 as amended by RA 9711

e. Intellectual Property Rights Licensor (or Private Labeler) and Licensee

Secs. 4.1, 4.2, 85, 89, 90, RA 8293 (Intellectual Property Code)
Sec. 4, pars. bf), bx) RA 7394

f. Creditor in a consumer credit transaction

Art. 4, pars. o), x) z), RA 7394

g. Agent/Contractor/Service provider (e.g., packer, transporter, logistics

service provider, warehouse operator)

h. Advertiser
Art. 4 (d), RA 7394

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i. Consumer
Art. 4 (n), RA 7394

j. Third parties affected by a consumer transaction

Case:

Petron Corp. v. Sps. Jovero, et al.

G.R. No. 151038, January 18, 2012

4. Activities in connection with, or with a view to, consumer transactions

a. Licensing
Art. 10 (y), (ii), RA 3720 as amended by RA 9711
Art. 31, RA 7394

b. Registration
Art. 10 (kk), RA 3720 as amended by RA 9711
Art. 31, RA 7394

c. Standardization
Art. 5, 7, 14, RA 7394
RA 4109

d. Manufacture; Labeling; Packaging

Sec. 4, pars. ar), aq), az), RA 7394
Title III, Chapter IV, RA 7394

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Sec. 10, pars. (i), (jj), RA 3720 as amended by RA 9711

e. Advertising
Art. 4, pars. a), b), RA 7394
Sec. 4 (a), RA 10611
Art. 110, RA 7394

f. Sales promotion
Art. 4, par. bm), RA 7394
Art. 109, 116-121, RA 7394

Cases:

Pepsi-Cola Products Phils. v. Pagdanganan

G. R. No. 167866, October 12, 2006

Department of Health v. Philip Morris Philippines Manufacturing, Inc.

G.R. No. 202943, March 25, 2015

Pharmaceutical and Healthcare Assoc. of the Philippines v. Duque III

G.R. NO. 173034, October 9, 2007

g. Credit transaction
Art. 4, par. y), RA 7394

h. Price monitoring and regulation

Sec. 18, 19, 23, RA 9502
Sec. 6, 7, 8, RA 7581

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i. Traceability
Sec. 4 (mm), RA 10611

j. Product recall
Art. 10, RA 7394
Sec. 4 (i), RA 3720 as amended by RA 9711
FDA Circular 2016-012 (Guidelines on Product Recall)

II. Rights of Consumers

Art. 2, RA 7394

1. Right to availability of basic necessities and prime commodities at

reasonable prices at all times
Sec. 5, RA 7581

2. Right to protection against hazards to health and safety

Title II, Chapter I, II, III, RA 7394
Secs. 14, 15, 18, 19, 23, 24, RA 3720, as amended by RA 9711
Sec. 11, RA 3720 as amended by RA 9711
Secs. 5, 6, 8, 9, 12, 13, 14, RA 10611
Sec. 4, RA 8203

3. Right against deceptive, unfair and unconscionable sales acts and practices
Title III, Chapter I and II, RA 7394
Title III, Chapter VI, RA 7394
Secs. 3 (i), 4, RA 10909 (No Shortchanging Act of 2016)

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DTI Administrative Order No. 10-04, s. 2010 (Guidelines on the Issuance, Use and
Redemption of Gift Checks, Certificates of Gift Cards)

Cases:

Autozentrum Alabang, Inc. v. Spouses Bernardo, et al.

G.R. No. 214122, June 08, 2016

Aowa Electronic Philippines, Inc. v. DTI

G.R. No. 189655, April 2011

4. Right to information and education to facilitate sound choice and the

proper exercise of rights by the consumer
Sec. 169 (False Designations of Origin; False Description or Representation), RA 8293
Secs. 6, 7, 11, RA 6657
Sec. 29, RA 3720, as amended by RA 9711
Sec. 40, RA 10173
Secs. 13, 14, 34, 35, RA 9211

5. Right of choice over goods and services offered in the market under the
Philippine Competition Act (RA 10667)
Sec. 2, RA 10667

6. Right to redress
Art. 11, RA 7394
Art. 68, par. f), RA 7394
Arts. 97, 100-102, 106, 122 (b), RA 7394

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7. Right of representation in the formulation of social and economic policies
Art. 156, RA 7394
Sec. 11 (9), RA 7581

8. Rights as telecommunications users under the Public Telecommunications

Policy Act
Sec. 20, RA 7925

9. Protection of consumer rights in electronic transactions

Joint DTI – DOH – DA Administrative Order No. 1, Series of 2008 (Rules and
Regulations for consumer protection in a transaction covered by RA 7394 through
electronic means under the E-Commerce Act)
BSP Circular No. 542, Series of 2006 (Consumer Protection for Electronic Banking)
BSP Circular No. 857, Series of 2014 (BSP Regulations on Financial Consumer
Protection)

10. Rights of privacy, security and confidentiality in matters relating to ICT

(information and communications technology) under the Department of
Information And Communications Technology Act of 2015 (RA 10844)
Sec. 6, IV, (n), RA 10844

11. Right to privacy, security and confidentiality of personal information

under the Data Privacy Act (RA 10173)
Secs. 11-20, RA 10173

12. Right against unsolicited commercial communications under the

Cybercrime Prevention Act (RA 10175)
Sec. 4 (3), RA 10175

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13. Right to consumer protection in respect of subscriptions to Broadcast,
CATV, Telecommunications, Value Added Services and Content Provider
services
NTC Memorandum Circular No. 05-06-2007 dated 8 June 2007

14.Right to claims settlement as Planholder under the Pre-Need Code (RA

9829)
Sec. 4, pars. b), c), d), 14, 18, 19, 25, 26, RA 9829

15. Passenger’s Rights under the Air Passengers Bill of Rights

Joint DOTC-DTI Administrative Order No. 1, Series of 2012

III. Legal Aspects of Consumer Transactions

A. Warranties
Art. 1545, Civil Code
Art. 1653, Civil Code
Arts. 67, 68, 70, 169, RA 7394
Sec. 3, pars. (m), (n), (h), Secs. 5-8, RA 10642

1. Express warranty
Art. 1546, Civil Code

2. Implied warranty
Arts. 1547, Civil Code

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3. Warranty in case of eviction
Arts. 1548 – 1559, Civil Code

4. Warranty against hidden defects or encumbrances upon the thing sold

Arts. 1561 – 1571, Civil Code
Cases:
Ang v. Court of Appeals
G.R. No. 177874, September 29, 2008

De Guzman v. Toyota Cubao, Inc.

G.R. No. 141480, November 29, 2006

Isidro v. Nissan Motor Phils.

G.R. No. 136500, December 3, 1999

G.A. Machineries, Inc. v. Yaptinchay

G.R. No. L-30965, November 29, 1983

B. Product liability; remedies

1. Liability for damage caused by defective products and services

Civil Code, Art. 19, 20, 21, 24
Civil Code, Art. 1161, 1162
Civil Code, Arts. 2176, 2177
Sec. 12 (a), RA 3720, as amended by RA 9711

Case:

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 Radio Communications of the Phils., Inc. v. Verchez
G.R. No. 164349, January 31, 2006

2. Strict liability; what must be proved

Civil Code, Art. 2187
Title III, Chapter V, Liability for Product and Services, RA 7394

Cases:

Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals

G.R. No. 110295, October 18, 1993

Navida, et al. v. Hon. Teodoro Dizon, Jr.

G.R. No. 125078, May 30, 2011

Moran, Jr. v. Office of the President

G.R. No. 192957, September 29, 2014

Nutrimix Feeds Corp. v. Court of Appeals

G.R. No. 152219, October 25, 2004

3. Corporate criminal liability; liability of corporate officers

Case:

Ching vs. Secretary of Justice

G.R. 164317, 6 February 2006

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C. Contract of Adhesion

Cases:

Radio Communications of the Phils., Inc. v. Verchez

G.R. No. 164349, January 31, 2006

Cabanting v. BPI Family Savings Bank, Inc.

G.R. No. 201927, February 17, 2016

D. Consumer Issues

1. Unauthorized entities and activities

2. Unregistered products

Case:

Republic v. Drugmaker’s Laboratories, Inc.

G.R. No. 190837, March 5, 2014

3. Adulteration
Case:
Department of Health v. Phil Pharma Wealth, Inc.
G.R. No. 182358, February 20, 2013

4. Misbranding or mislabeling
5. Underfilling

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6. Counterfeit Products
7. Unfair Competition (Passing Off)
8. False and/or Misleading Advertising and Promotion
9. Unauthorized access and/or misuse of personal and confidential information
10. Fraud
11. Negligence in supply of products or provision of services

Case:

Mercury Drug Corp. v. De Leon

G.R. No. 165622, October 17, 2008

Radio Communications of the Phils., Inc. v. Verchez

G.R. No. 164349, January 31, 2006

Closing Activity:
Drafting pleadings based on a hypothetical product recall scenario:
Group 1 – Memorandum for Complainant
Group 2 – Memorandum for Defendant
Group 3 - Decision

IV. Regulation of Business Conduct and Trade Practices

A. Self-regulation in Advertising
ASC Code of Ethics

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B. Regulating Competition in the Market

1. Overview of competition

2. The Necessity for Competition Law

1987 Constitution, Article XII, Sec. 1, Sec. 6, Sec. 19
Republic Act No. 10667, Philippine Competition Act (PCA), Sec. 2

Case:
Tatad v. Secretary of the Department of Energy
281 SCRA 330 (1997)

3. Basic Concepts and Principles

a. Agreements

PCA, Section 4(b)

b. Entity and Single Economic Entity

PCA, Section 4(h), Section 14 (c)

Case:

American Needle, Inc. v. National Football League

130 S. Ct. 2201 (2010)

c. Horizontal agreements and Vertical agreements

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d. Monopolies

Case:

Agan, Jr. v. Philippine International Air Terminals Co., Inc.

402 SCRA 612 (2003)

e. Cartels; express cartels; hub and spoke cartels

RA 7581, Price Act, Section 5

f. Combinations in restraint of trade

Case:

Gokongwei, Jr. v. Securities and Exchange Commission

89 SCRA 336 (1979)

g. Abuse of Dominance

PCA, Sec. 15

h. Tying arrangements and Exclusive Dealing Arrangements

PCA, Sec. 15 (c)

Case:

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United States vs. Microsoft (Civil Action No. 98-1232 (TPJ))
Judge Jackson’s Conclusions of Law, April 2000
https://cyber.harvard.edu/msdoj/conclusions-l.html

h. Block-booking and Pooling Agreements

Case:

United States vs Paramount Pictures, Inc.

334 US 131 (1948)

i. Exclusivity and undue restraint of trade

Case:

Avon Cosmetics, Inc. v. Luna

511 SCRA 376 (2006)

j. Fair competition vs ruinous competition

Cases:

Energy Regulatory Board v. Court of Appeals

G.R. No. 113079, April 20, 2001

k. Unfair Competition

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Civil Code, Art. 28

Cases:

Willaware Products Corporation v. Jesichris Manufacturing Corporation

734 SCRA 238 (2014)

Coca-Cola Bottlers, Phils., Inc. v. Gomez

571 SCRA 18 (2008)

l. Relevant Market

PCA, Sec. 4 (k)

PCA, Sec. 24

Case:

Avon Cosmetics v. Luna

511 SCRA 376 (2006)

m. Price fixing; scrutiny of price fixing

PCA, Sec. 14 (a) (1), (2)

n. Resale Price Maintenance

PCA, Sec. 14 (c)

PCA, Sec. 15 (e)

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Case:
Leegin Creative Leather Products, Inc. v. PSKS, Inc.
551 US 877 (2007)

o. Predatory Pricing

PCA, Sec. 15 (a)

Case:

Energy Regulatory Board v. Court of Appeals

357 SCRA 30 (2001)

4. Monopolies and the Government

a. 1987 Constitution, Art. XII, Sec. 11

Case:

Tawang Multi-Purpose Cooperative vs La Trinidad Water District

646 SCRA 20 (2011)

b. 1987 Constitution, Art. XII, Sec. 19

Case:

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Garcia vs Executive Secretary
583 SCRA 118 (2009)

5. In-scope hardcore prohibitions under the PCA

a. Anti-competitive agreements prohibited per se

PCA, Sec. 14, Sec. 26

b. Abuse of dominant position

PCA, Sec. 15, Sec. 27

c. Anti-competitive mergers and acquisitions

PCA, Sec. 20

6. “Windows of Opportunity” within the PCA

a. Exemptions from Prohibited Mergers and Acquisitions

PCA, Sec. 21

b. Exceptions to Anti-Competitive Agreements

PCA, Sec. 14

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c. Exceptions to Abuse of Dominant Position

PCA, Sec. 15

d. Forbearance

PCA, Sec. 28

e. Trade Associations

PCA, Sec. 48

7. Enforcement and Remedies

a. Powers, Functions and Jurisdiction of the Philippine Competition Commission

PCA, Chapter II, Section 12

PCA, Sec. 31, last paragraph
PCA, Sec. 32

b. Investigations, Non-adversarial Remedies, Adjudication

Rules of Procedure of the Philippine Competition Commission

c. Review of Mergers and Acquisitions

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PCA, Chapter IV
PCC Rules on Merger Procedure
PCC Merger Review Guidelines
PCC Commission Decisions on Mergers and Acquisitions at
http://phcc.gov.ph/category/resources/phcc-decisions/

d. Enforcement and Leniency

PCA, Chapter VII

e. Prohibition on Issuance of Injunction

Chapter VIII, Section 47

f. Dawn Raid Investigations

PCA, Section 12 (g)

g. Fines and Penalties

PCA, Chapter VI
PCA, Section 41

h. Private Action; claim for damages under the Civil Code

PCA, Sec. 45

Reports:

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 1. Interfaces with Competition Law: IP Law, E-commerce, Big Data
2. Competitive Analysis of Trade Practices

Prepared by:
Name of Faculty:
Leah Jose-Sebastian
Signature

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