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Original Article | Open Access | Int. J. Manag. Account. 2024; 6(4), 71-84 | doi: 10.34104/ijma.024.071084

Review on the Implementation of the Consumer Act of the Philippines: Insights to Its Plausible Future

Merian Arellano-Asas* Mail Img

Abstract

As a developing Southeast Asian nation, the Philippines has experienced economic growth, leading to challenges in ensuring consumer protection. This study reviewed the level of implementation of the Consumer Act of the Philippines (Act) and explored insights into its plausible future. This used both quantitative and qualitative components. This was conducted in Capiz. For the survey, respondents comprised consumers buying in Roxas City supermarkets and grocery stores selling basic commodities. For Focus Group Discussion (FGD), business owner representatives, Department of Trade and Industry implementers, and consumer organization members participated. For the challenges encountered in the Act implementation, respondents believed that the law protects their rights, but they lacked awareness of how to enforce it with perceived weaknesses in the Acts effectiveness in enforcing penalties. For the level of implementation, respondents believed that the Act effectively ensured the quality and safety of consumer products in the market, reduced deceptive, unfair, and conscionable sales acts or practices, provided efficient resolution for valid warranty claims, protected against misleading or deceptive packaging techniques, holds businesses accountable for product and service imperfection, prevents misleading advertisements and fraudulent sales promotion practices, regulates service and repair enterprises, and ensures effective consumer complaints handling. Consumers perceived that the Acts provision on penalties was inadequate, ineffective in addressing broader issues, inadequate provision on warranties, labeling, and fair packaging, and no provision on claims for damages, with gaps in addressing issues on sales promotion, service, and consumer complaints handling. Participants highlighted the need to promote consumer education, clearer guidelines on acceptable sales practices, and areas for improvement in online marketplaces, consumer awareness, and enhanced enforcement capabilities. Overall, strengthened consumer advocacy, enforcement training, and education, provision of harsher penalties, collaboration with other stakeholders, enhanced screening measures on online shopping platforms, and streamlined online dispute resolutions.

INTRODUCTION

As a developing Southeast Asian nation, the Philipines have experienced economic growth, leading to a significant increase in consumer spending and a more diverse marketplace. This leads to the challenges in ensuring consumer protection. Concerns regarding product quality and safety, deceptive, unfair, and unconscionable sales acts or practices, product and service warranties, labeling and fair packaging, liability for products and services, advertising and sales promotion, and regulation of service and repair enterprises have become increasingly prevalent. In response to these concerns, lawmakers passed the Republic Act No. 7394, also known as the Consumer Act of the Philippines in 1992. This landmark legislation aimed to strengthen consumer rights and establish a legal framework for consumer protection and fair business practices.  

Despite its objectives, the effectiveness of the Consumer Act of the Philippines implementation has been subject to public scrutiny.  Consumers in the Philippines continue to face several challenges related to safety and quality product and misleading, biased, and unacceptable sales acts or practices among others. This raises questions about the effectiveness of the law in providing adequate protection to consumers and promoting fair business practices.  The Consumer Act of the Philippines is a crucial piece of legislation that aims to promote consumer protection and welfare in the country. The Act has undergone several reviews and is supported by Department Administrative Orders and Department Orders since its enactment in 1992 to keep up with the changing consumer landscape in the Philippines, particularly in the digital age. Despite these reforms, however, various challenges remained in the realm of consumer protection, such as safety and quality product, misleading, biased, and unacceptable sales and practices.

Primarily, in the aforementioned key areas, there are concerns regarding monitoring and enforcement, consumer awareness regarding consumer rights and responsibilities, and the redress mechanisms provided under the law.  As such, this research aimed to fully delve into the Philippines Consumer Act implementation, present the current status of its implementation in key areas, and gather insights that would help future policy directions which ultimately contribute to a more robust and effective structure for protection of the consumer and eventually lead to a fairer and safer marketplace for all stakeholders.

METHODOLOGY

This research employed an exploratory sequential approach and a mixed-methods review comprised of quantitative and qualitative components since it aimed to determine the challenges encountered in the Act implementation, the level of implementation of the said law, and what specific insights for its plausible future. Creswell and Creswell, (2020) presented the guidelines for an exploratory sequential approach to conducting research. This involves an interchangeable mix of two phases: a qualitative interview for exploratory purposes; and a quantitative method that will test the theory and concepts gathered in the first phase or vice versa. A qualitative research approach based on Focus Group Discussion (FGD) was also employed. This, along with the discussions following the presented challenges using the Futures Triangle Theory by Sohail Inayatullah, (2023) were the bases for the questions for the survey, and the subject of the items to be deliberated during the Focus Group Discussion. For the survey, questions centered on the challenges encountered in Consumer Act implement-ation and its respective levels of implementation were utilized.  For the FGD, several stakeholders such as Department of Trade and Industry implementers, business sectors representative, and members of consumer organizations were invited to discuss the sentiments and future insights, revolving around the aforementioned law. Additionally, the results were synthesized using thematic analysis. Following the standards of Clarke and Braun, (2017) thematic analysis was used to identify, analyze, and interpret patterns and themes within the qualitative data, the discussions during the FGD, and create a systematic list of codes and themes to underline the concept and create a framework for analyzing the observations for the insights required in this study. After the conclusion of the quantitative and qualitative part, the result of the survey, and the transcribed themes of the FGD, data triangulation was used to answer the objectives outlined. The research was conducted in the province of Capiz. For the survey part, the respondents were comprised of consumers, who were buying in Roxas City super-markets and grocery stores, selling basic commodities. For the participants in the FGD, the business owner representative, Department of Trade and Industry (DTI) implementers, and consumer organization members participated.

The research used non-probability quota sampling and purposive sampling techniques in selecting the respondents for the survey and participants for the FGD, respectively. For the survey, quota sampling was used to select the respondents. The controlled quota was the consumers in groceries and supermarkets, who were of buying age (18 years old and above). For the FGD, purposive sampling was used. This research utilized two researcher-made instruments. The survey questionnaire containing 50 questions was created following the objectives of the research. The researcher utilized an interview guide containing probing and open-ended questions to ask the partici-pants. Construct and criterion-related validity measures were used. The survey and FGD question-naires were validated by the members of the advisory committee, various stakeholders and a licensed psy-chometrician. The recommendations and suggestions were used to further improve the instruments, checklists, and summary, and were integrated into the research fully. In assessing the instruments reliability, several methods were used: inter-rater and intra-rater reliability testing; pilot testing; and consensus meetings among the advisory committee and licensed psychometrician. In measuring this, Cronbachs alpha was used. In testing the actual reliability of the questionnaire, it was subjected to random testing among 30 respondents, following the criteria. Then, the results were collected and tested, showing a reliability coefficient of 0.930, indicating that the questionnaire was reliable in measuring the research objectives.

The variables that appeared in the study were a combination of categorical and numeric variables in a Likert scale form for the survey.  Additionally, relevant data during the Focus Group Discussion were extracted and analyzed using thematic analysis techniques. The researcher secured the necessary permits and letters of communication before the conduct of the survey to the establishments and the respondents. The data gathering procedure was conducted physically through the schedule in various establishments aforementioned. The researcher, along with assistant and enumerators, handed out survey forms for a week from 3:00-6:00 PM at seven different establishments with a total of 105 respondents. After the survey was conducted, it was thoroughly reviewed before encoding into a spreadsheet for statistical analysis. Letters of communication were also for-warded to the participants of the Focus Group Discussion a week before the online discussion. After the conclusion of the study, the video and audio recording of the study was transcribed and reflected in codes and themes, following the procedure for thematic analysis. For the qualitative part, the survey results were analyzed using linear regression analysis with the challenges encountered in the Consumer Act implementation as the predictors and the level of implementation as the dependent variable. The researcher focused on identifying themes, patterns, and trends that emerge from the data related to the research questions. For the quantitative part, the researcher-moderator extracted and transcribed the key insights and recommendations of the participants.

The researcher observed strict adherence to policies regarding plagiarism, and adherence to the Data Privacy Act in processing the relevant information in the gathered survey results. Before conducting the survey, the respondents were informed about the purpose and objectives of the research. A consent form was given to them, informing the extent of the research, their voluntary participation, the benefits in the participation, assurance of confidentiality the security of the gathered data, their consent in picture and video capture, the extent of the sharing of the results, and the right to refuse or withdraw. After data gathering, the interview forms were processed.  For the Focus Group Discussion (FGD), a letter of invitation was given to the target participants, as well as a consent form. Both a video and audio recording were taken with the attendees consent during the FGD. These recordings were only used for educational purposes and were submitted to the College of Management after the conclusion of the study.

RESULTS AND DISCUSSION

Challenges Encountered in Implementing the Consumer Act of the Philippines in terms of consumer awareness, Redress Mechanisms, and Rules and Regulations

Table 1 shows the challenges encountered in implementing the Philippine Consumer Act in terms of consumer awareness, redress mechanisms, and rules and regulations. The result revealed a grand mean score of 4.19, verbally interpreted as “implemented”. The data set for the five (5) statements showed the respondent responses with means ranging from 3.87 to 4.56. The result infers that the respondents believe that the Philippine Consumer Act offers sufficient legal protection for their rights, suggesting some level of understanding of the provisions of the law. This means that consumers have a working knowledge of their rights and are aware that they have recourse for redress under the Consumer Act. 


Furthermore, this implication reflects that despite this awareness of these rights, there is a gap in the knowledge on enforcing these rights, particularly regarding awareness and accessing the redress mechanisms. This also means that disparity in the mean scores highlights the need for increased public education campaigns to bridge the gap between legal protections and practical consumer knowledge. In terms of consumer awareness, the gap between the highest and overall mean scores suggests a disconnect. The respondents may know their rights on paper but lack awareness of how to enforce them. This could be due to limited public education campaigns or difficulty accessing information about the Act. In terms of redress mechanisms, the statement about filing complaints having a lower score indicates perceived difficulties in the process. There might be complex procedures, a lack of accessible channels for filing complaints, or respondents might be unaware of available mechanisms. The result conformed to the recommendation of King et al. (2019) that retailers need to improve their complaint management systems, which trickles down to creating alternatives to remedy a consumer complaint.  In terms of enforcement of penalties, the lowest score of 3.87 for the statement about penalties being a deterrent suggests that the respondents might perceive weak enforcement. 


This could be due to a belief that penalties are too low, or that violations are rarely penalized, leading to a sense of impunity for businesses. This was consistent with the law itself, the Consumer Act of the Philippines, in which the penalties may only range from PhP500 up to PhP300,000 (Consumer Act of the Philippines, 1992). Additionally, following the recommendation of the Association of Southeast Asian Nations, (2014) consumer agencies must create institutional frameworks that would ensure penalizations and increase punitive penalties for erring businesses.


  Table 1: Challenges Encountered in Implementing the Consumer Act of the Philippines.

Statements

Mean

Verbal Interpretation

The Consumer Act of the Philippines adequately protects my rights as a consumer.

4.56

Highly Implemented

The government effectively enforces that provision of the Consumer Act to protect consumers.

4.31

Highly Implemented

The process of filing complaints under the Consumer Act is straightforward and

accessible.

4.10

Implemented

The Consumer Act provisions promote fair competition among business.

4.16

Implemented

There is public awareness about the provisions and benefits of the Consumer Act for them to make an informed purchasing decision.

4.15

Implemented

The Consumer Act needs to be updated to address emerging consumer protection issues such as online shopping and e-commerce.

4.29

Highly Implemented

The Consumer Act adequately protects vulnerable consumes such as the elderly and low-income individuals.

4.27

Highly Implemented

The penalties for businesses that violate the Consumer Act are sufficiently deterrent.

3.87

Implemented

Businesses are transparent about their products and services as mandated by the Consumer Act.

4.10

Implemented

Businesses actively engage in initiatives to promote consumer welfare beyond legal requirements.

4.11

Implemented

Grand Mean

4.19

Implemented

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Article Info:

Academic Editor

Dr. Doaa Wafik Nada, Associate Professor, School of Business and Economics, Badr University in Cairo (BUC), Cairo, Egypt.

Received

June 6, 2024

Accepted

August 15, 2024

Published

August 22, 2024

Article DOI: 10.34104/ijma.024.071084

Corresponding author

Merian Arellano-Asas*

Senior Trade and Industry Development Specialist, OIC, Division Chief, Department of Trade and Industry, Roxas City, Capiz, Philippines.

Cite this article

Asas MA. (2024). Review on the implementation of the consumer act of the Philippines: insights to Its plausible future, Int. J. Manag. Account6(4), 71-84. https://doi.org/10.34104/ijma.024.071084

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