G.R. No. 189655. April 13, 2011
AOWA ELECTRONIC PHILIPPINES, INC., PETITIONER, VS. DEPARTMENT OF TRADE AND INDUSTRY, NATIONAL CAPITAL REGION, RESPONDENT.
NACHURA, J.:
The facts, as quoted by the CA from the Adjudication Officer’s findings, are as follows:
DTI-NCR’s records show that numerous administrative complaints have
been filed against Aowa Electronic Philippines, Inc. by different
consumers, or a total of at least two hundred and seventy-three (273)
from the year 2001 until 2007. The facts narrated in the said complaints
consistently contain a common thread, as follows:
- A target customer is approached by Aowa’s representatives, usually
in a mall and informs the former that he/she has won a gift or is to
receive some giveaways. In certain cases, when the target customer
expresses interest in the said “gift” or giveaway, Aowa’s
representatives then verbally reveal that the same can only be claimed
or received upon purchase of an additional product or products, which
are represented to be of high quality. However, consumer complainants
allege that such products are substantially priced. - An initial gift is offered to the target customer, and upon
acceptance, the customer is invited to [Aowa’s] store/outlet. It is at
that point that the customer is informed that he/she has qualified for a
raffle draw or contest, entitling them to claim an additional “gift.”
In the same manner, such additional gift can be received only upon the
purchase of additional products, also represented to be of high quality,
and sometimes similarly alleged to be substantially charged. - [In] the course of enticing the target customer to purchase the
additional product, they are physically surrounded by Aowa’s
representatives, otherwise known to many as “ganging up” o[n] customers.
- Although the customer is required to purchase an additional
product to claim the offered “gift/s,” this is not disclosed during the
initial stages of the sales pitch. The revelation is only done when the
target customer is being surrounded by Aowa’s representatives within its
showroom/store/outlet.In some cases, when customers state that they are short of cash,
[Aowa’s] representatives urge said customers to use their credit card or
to withdraw from an Automated Teller Machine (ATM). There are even
instances where [Aowa’s] representatives accompany a customer to his/her
residence, where the latter can produce their (sic) means of payment.In view thereof, DTI-NCR filed a Formal Charge against AOWA for
violation of Articles 50 and 52 of the Consumer Act of the Philippines,
praying that a Cease and Desist Order be issued, and [an] administrative
fine be imposed, and other reliefs or remedies be granted as may be
just and equitable under the circumstances.[5]
The CA further narrates:
When asked to Answer, AOWA denied having violated the provisions of
the Consumer Act. A notice of preliminary conference was thereafter
issued, giving the parties to find (sic) ways and means to expedite the
proceedings, but the scheduled preliminary conference had to be
terminated, as the proposal to enter into a plea bargain agreement did
not ensue. As a consequence thereof, both parties were required to
submit their respective position papers.Meanwhile, a Preventive Measure Order (PMO) was issued by the DTI
in order to prohibit AOWA from continuing with the act complained of
until such time that a sale promotion permit is secured or obtained from
the DTI.In their position paper, AOWA vehemently denied committing any
violation of the provisions of the Consumer Act as it does not employ
the marketing scheme described in the formal charge. AOWA argued that
the mere filing of the consumer complaint does not prove outright that
an offense has been committed by it, meaning that it is not a conclusive
proof that it is violating the law it is charged of. It stressed that
all of the consumer complaints against it have not prospered, as the
cases have been amicably settled. In addition, majority of the consumer
complaints which served as basis for the filing of the formal charge are
already deemed barred by prescription. As far as it is concerned
therefore, AOWA claims that the complaint[s are] based on mere
assumption and not on established facts.[6]
On April 10, 2008, after considering the arguments of petitioner Aowa
Electronic Philippines, Inc. (Aowa) and respondent DTI-National Capital
Region (NCR), the Adjudication Officer found that the complaints against
Aowa continued to increase despite its claims of amicable settlement.
He also found that Aowa submitted no proof of such amicable settlement.
Based on the numerous complaints against Aowa, the Adjudication Officer
held that the DTI had sufficiently established prima facie
evidence against Aowa for violation of the applicable provisions of
Republic Act (R.A.) No. 7394, or the Consumer Act of the Philippines
(the Consumer Act), and its Implementing Rules and Regulations (IRR).
Furthermore, the Adjudication Officer highlighted that Aowa failed to
secure any Sales Promotion Permit from the DTI for Aowa’s alleged
promotional sales. Thus, he ruled:
WHEREFORE, foregoing premises considered, and by virtue of the
power and mandate vested in this Department, to promote and encourage
fair, honest and equitable relations among parties in consumer
transactions and protect the consumer against deceptive, unfair and
unconscionable sales act or practices, [Aowa] is hereby declared liable
under the Consumer Act of the Philippines and the Rules and Regulations
Implementing the same.As a consequence thereof, it is hereby ordered, that –
a) [Aowa] must permanently cease and desist from operating its business in all its stores/outlets nationwide;
b) [Aowa’s] Certificates of Business Name Registration for all its
stores/outlets applying the sales scheme in question be cancelled;c) [Aowa’s] application for the registration of the same or
another business name be withheld by DTI if the nature thereof is the
same as that mentioned in this case;d) [Aowa] must pay and/or refund to those who filed administrative
complaint[s] with any DTI Office, the amount of money paid in
consideration for the purchase of products sold in [Aowa’s]
stores/outlets as a precondition to the claim of the gift/reward
promised to be given to said complainants[; and]e) [Aowa] must pay a one time Administrative Fine of Three Hundred
Thousand Pesos (P300,000.00), Philippine currency, either in cash or in
the form of Company or Manager’s check, at the DTI Cashier’s Office,
4th Floor, Trade and Industry Building, 361 Sen. Gil Puyat Ave., Makati
City.Let a copy of this Decision be furnished to all Heads of DTI
Provincial and Area Offices who are hereby directed to disseminate
copies hereof to the Heads of Business Permit Bureau/Division of the
different municipalities or cities within their respective jurisdictions
for their appropriate action.
SO ORDERED.[7]
Aggrieved, Aowa sought recourse from the DTI Appeals Committee, ascribing grave abuse of discretion to the Adjudication Officer.
On August 26, 2008, the DTI Appeals Committee dismissed Aowa’s
appeal and sustained the Adjudication Officer’s decision. It held that
the techniques and schemes employed by Aowa were fraudulent, as they
were being used as a bait to lure customers into buying its products.
The DTI Appeals Committee noted that Aowa’s act of giving gifts and
prizes to its prospective customers in order to entice the latter to
enter Aowa’s store and to purchase its products is a common thread in
every complaint lodged against Aowa before the DTI.[8]
Unperturbed, Aowa filed a petition for certiorari under Rule
65 of the Rules of Civil Procedure before the CA. On June 23, 2009, the
CA affirmed the findings and ruling of the DTI Appeals Committee. The
CA heavily relied on the findings of the Adjudication Officer and the
DTI Appeals Committee, showing that Aowa committed acts of
misrepresentation against its customers, clearly violative of the
Consumer Act. Likewise, the CA affirmed the lower agencies’ findings
that Aowa indeed did not secure any Sales Promotion Permit for its
promotional sales.[9]
Unyielding, Aowa filed its motion for reconsideration, which the CA, however, denied in its Resolution[10] dated September 29, 2009.
Hence, this petition based on the following grounds:
[I.] WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY
ERRED WHEN IT RULED THAT THERE IS SUFFICIENT BASIS IN THE FILING OF THE
FORMAL CHARGE AGAINST HEREIN PETITIONER NOTWITHSTANDING THE FACT THAT
THE SAID FORMAL CHARGE WAS MERELY BASED ON CONSUMER COMPLAINTS WHICH
HAVE ALL BEEN AMICABLY SETTLED AND DISMISSED. MOREOVER, THE HEREIN
RESPONDENT DOES NOT HAVE ANY PERSONAL KNOWLEDGE OF THE CIRCUMSTANCES
SURROUNDING ALL THE CONSUMER COMPLAINTS FILED AGAINST THE PETITIONER[;][II.]
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY ERRED
WHEN IT AFFIRMED THE HARSH AND EXCESSIVE DECISION OF THE DEPARTMENT OF
TRADE AND INDUSTRY, APPEALS COMMITTEE ORDERING THE HEREIN PETITIONER TO
PERMANENTLY CEASE AND DESIST FROM OPERATING ITS BUSINESS AND IN ADDITION
TO PAY THE MAXIMUM FINE PROVIDED UNDER THE LAW NOTWITHSTANDING THE FACT
THAT THE FORMAL CHARGE IS NOT SUPPORTED BY ANY CONCRETE, SUFFICIENT AND
CONVINCING EVIDENCE[; AND][III.] WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN ITS RULING THAT THE ASSAILED RESOLUTION’S ORDER MAY BE ENFORCED
NATIONWIDE DESPITE THE FACT THAT THE COMPLAINT PERTAINS TO CASES IN THE
NATIONAL CAPITAL REGION ONLY[.][11]
Aowa claims that the complaints filed against it merely pertain to
cases in the NCR, hence, there was no basis for the DTI to presume that
the alleged offenses committed by petitioner are likewise practiced in
other places in the country; that DTI never denied Aowa’s averment that
the cases filed against it by customers were already and actually
settled; that the mere filing of numerous complaints does not prove
outright that an offense has been committed; and that the complaints
were based on mere assumptions and not on established facts. Moreover,
Aowa’s act of amicably settling the cases with the consumer-complainants
manifests Aowa’s good faith and fair dealing with its patrons, not
commensurate with the penalty of closure and the maximum fine imposed by
the DTI. Finally, Aowa denies that it committed fraud and/or deceit in
violation of the Consumer Act. Good faith must always be presumed. Aowa
postulates that like other companies, its sales personnel are employed
to convince potential customers to purchase the products they are
selling, inclusive of enthusiasm in sales talk and overzealousness which
cannot and should not be considered as deceit. Customers in this case
were never deprived of their prerogative to refuse the offer of the
sales agents of Aowa, as the terms and conditions of the sale were fully
explained to all of its customers.[12]
On the other hand, the DTI, through the Office of the Solicitor General
(OSG), claims that there is sufficient basis for the filing of the
formal charge against petitioner; that through Assistant Secretary Ma.
Theresa L. Pelayo, acting as Regional Caretaker, it filed the formal
charge against Aowa based on the numerous complaints filed against the
latter and pursuant to Article 159[13] of the Consumer Act; that said complaints constituted prima facie
violation of the Consumer Act; that, as such, Aowa has the burden to
overcome the presumption by proof to the contrary; and that Aowa,
however, failed to discharge the said burden. The OSG argues that,
contrary to Aowa’s assertion, the amicable settlement allegedly entered
by Aowa and its consumer-complainants is not a ground for the dismissal
of the formal charge because Aowa, despite respondent’s issuance of a
Preventive Measure Order[14]
(PMO) on July 31, 2009, continues to enter and engage in the same acts
and/or transactions complained of. Consonant with the findings of the
lower agencies and the CA, the OSG asseverates that Aowa, after it was
afforded its right to due process, was correctly found liable for
violation of the Consumer Act through misrepresentation, and for its
failure to secure any Sales Promotion Permit from the DTI. Moreover, the
directive of the Adjudication Officer of closure and imposition of the
maximum fine of P300,000.00 is in accordance with law and its IRR.[15]
Correlatively, Aowa assailed the validity of the PMO with the
Regional Trial Court (RTC) of Makati City, Branch 143, docketed as Civil
Case No. 09-723. The RTC, however, dismissed the case for lack of
jurisdiction. Unyielding, in a Petition for Prohibition, Aowa went to
the CA which, in its Resolution[16]
dated October 27, 2009, dismissed Aowa’s case for its failure to file
the petition within the prescribed period. The said CA Resolution became
final and executory on January 28, 2010.[17]
In a Manifestation,[18]
the counsel of Aowa intimated that Aowa no longer intends to file a
reply to the OSG’s Comment, on the ground that the discussions made
therein had already been addressed in the instant Petition. Counsel,
however, also intimated that Aowa left its known office address without
informing him of the location of its new office.
The sole issue in this case is whether or not the CA committed any
reversible error in affirming the findings and ruling of the
Adjudication Officer and the DTI Appeals Committee.
The Petition is bereft of merit.
Contrary to Aowa’s postulations, the DTI has the authority and the
mandate to act upon the complaints filed against Aowa. Article 2 of the
Consumer Act clearly sets forth the policy of the State on consumer
protection, viz.:
ART 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:
This policy is reiterated in Article 48 of the Consumer Act, which provides that “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.”
Verily, as espoused by the OSG, the DTI validly invoked Article 159 of
the Consumer Act in order to effectuate this policy of the State by
filing a formal charge against Aowa. It is indubitable that the DTI is
tasked to protect the consumer against deceptive, unfair, and
unconscionable sales, acts, or practices, as defined in Articles 50 and
52 of the Consumer Act.[19]
The law is clear. Articles 50 and 52 of the Consumer Act provide:
ART. 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:
consumer product or service has the sponsorship, approval, performance,
characteristics, ingredients, accessories, uses, or benefits it does
not have;
deteriorated, altered, reconditioned, reclaimed or second-hand state;
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; andART. 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:
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;
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;
when the consumer transaction was entered into, the consumer was unable
to receive a substantial benefit from the subject of the transaction;
supplier was aware that there was no reasonable probability or payment
of the obligation in full by the consumer; and
to enter into was excessively one-sided in favor of the seller or
supplier.
It cannot be gainsaid that the DTI acted on the basis of about 273
consumer complaints against Aowa, averring a common and viral scheme in
carrying out its business to the prejudice of consumers. Complaints —
filed by consumers residing not only within the NCR but also in the
provinces[20] -continued to be
filed even after the formal charge and the issuance of the PMO. In this
regard, we quote with affirmation and accord respect to the factual
findings of the CA, to wit:
[Aowa], in employing the sales scheme described by customers
in their complaints in order to entice customers to purchase [its]
products clearly violated Article 52 of the Consumer Act of the
Philippines. As found by public respondent DTI whose findings We
heretofore adopt:“It is undisputed that the techniques/scheme employed by
[Aowa] were fraudulently (sic) considering that the same were being used
as a bait to lure customers into buying it products. [Aowa’s] customary
act of giving gifts and the so called prizes to its prospective
customers in order to entice them to enter the store outlet and later
convincing (sic) them to purchase the products [it is] selling are (sic)
but common trends (sic) that occurred in every complaint lodged against
[Aowa] before the DTI-NCR and regional offices. In such manner, it is
evident that the said scheme is actually the means by which [Aowa]
operates its business. Simply, it is intrinsically connected to the
business itself of and had [Aowa] not employed those techniques,
customers would not have transacted with it.”In doing so, [Aowa], as seller, through its representatives stationed
usually in malls, entice consumers into purchasing their products by
taking advantage of the latter’s physical or mental infirmity,
ignorance, illiteracy, lack of time or the general conditions of the
environment or surroundings. This is done by misrepresenting to the
consumer that he/she has won a gift or is to receive some giveaways when
in truth, these gifts can only be claimed or received upon purchase of
an additional product or products, again misrepresented by [Aowa to] be
of high quality. This is how [Aowa] operates its business, and not
simply as a means of promotional sale. The act sought to be avoided and
punished under the Consumer Act has clearly been committed by Aowa.[21]
By reason of the special knowledge and expertise of the DTI over
matters falling under its jurisdiction, it is in a better position to
pass judgment on the issues, and its findings of fact in that regard,
especially when affirmed by the CA, are generally accorded respect, if
not finality, by this Court.[22]
Furthermore, Aowa failed to refute DTI’s finding that it did not secure
any permit for its alleged promotional sales. In sum, Aowa failed to
show any reversible error on the part of the CA in affirming the ruling
of the DTI as to warrant the modification much less the reversal of its
assailed decision.
A final note.
In these trying times when fly-by-night establishments and syndicates
proliferate all over the country, lurking and waiting to prey on
innocent consumers, and ganging up on them like a pack of wolves with
their sugar-coated sales talk and false representations disguised as
“overzealous marketing strategies,” it is the mandated duty of the
Government, through its various agencies like the DTI, to be wary and
ready to protect each and every consumer. To allow or even tolerate the
marketing schemes such as these, under the pretext of promotional sales
in contravention of the law and its existing rules and regulations,
would result in consumers being robbed in broad daylight of their hard
earned money. This Court shall not countenance these pernicious acts at
the expense of consumers.
WHEREFORE, the Petition is DENIED and the Court of Appeals Decision dated June 23, 2009 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Carpio (Chairperson), Peralta, Abad, and Mendoza, JJ., concur.
[1] Rollo, pp. 11-32.
[2] Penned by Associate
Justice Jose L. Sabio, Jr., with Associate Justices Vicente S.E. Veloso
and Ricardo R. Rosario, concurring; id. at 36-52.
[3] Id. at 54-58.
[4] Id. at 59-66.
[5] Supra note 2, at 37-39.
[6] Id. at 39-40.
[7] Supra note 4, at 65-66.
[8] Supra note 3.
[9] Supra note 2.
[10] Rollo, pp. 68-69.
[11] Supra note 1, at 20-21.
[12] Id.
[13] Article 159 of the
Consumer Act provides, to wit:
ART. 159. Consumer Complaints. – The concerned department may commence
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 commence 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.
[14] Entitled “Department of
Trade and Industry-National Capital Region, Hon. Vice-President Manuel
‘Noli’ de Castro and Jesse Hermogenes T. Andres v. Aowa Electronics
Philippines, Inc. Home Depot Macapagal Avenue, Pasay City,” particularly
docketed as Adm. Case No. 09-186; rollo, pp. 152-153.
[15] Id. at 132-149.
[16] Id. at 176-177.
[17] Id. at 178.
[18] Id. at 193-195.
[19] Islamic Da’wah Council of the Phils., Inc. v. Office of the Executive Secretary, 453 Phil. 440, 451-452 (2003).
[20] Rollo, pp. 167-175.
[21] Supra note 2, at 45-46.
[22] Metal Forming Corp. v. Office of the President, 317 Phil. 853, 861 (1995).