Contents

I. INTRODUCTION....................................................................................................................1

A. BACKGROUND..................................................................................................................1

B. OBJECTIVE OF THE STUDY............................................................................................2

II. ISSUES.....................................................................................................................................3

A. LAW: Republic Act No. 7394 or The Consumer Act of the Philippines...........................3

B. IMPLEMENTATION OF A LAW: Republic Act 8792 or E-Commerce Act of 2000.......7

III. RECOMMENDATIONS....................................................................................................12

A. Republic Act No. 7394 or The Consumer Act of the Philippines:.....................................12

B. IMPLEMENTATION OF E-GOVERNMENT THROUGH THE E-COMMERCE ACT

OF 2000.....................................................................................................................................15

IV. CONCLUSION...................................................................................................................18

V. BIBLIOGRAPHY..................................................................................................................19

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I. INTRODUCTION

A. BACKGROUND

The Philippine business environment is made up of a trilateral relationship

between the government, business entities and stakeholders [ CITATION Car10 \l

2057 ]. Their roles are interdependent, thus, any problem encountered by one of these

members will also be detrimental to the development of the other.

The government through its legislative body enacts laws that recognize various

interests of business entities and stakeholders. Basically, these laws regulate the rights

of both parties in order to achieve harmony and balance in the business environment.

Since a law is an instrument for achieving the desired economic developments in a

country [ CITATION Dav72 \l 2057 ], continuous amendments are necessary in order

for the government to cope up with recent trends in the very dynamic field of business.

On the other hand, business entities are providers of goods and services to the

public. Without them, the basic needs of the people such as food, shelter and clothing

will be hardly satisfied. Thus, the State should also be able to provide resources that can

be utilized by these entities for their survival in the very competitive environment of

business in the Philippines. However, they should also be regulated to avoid abusive

practices that will hinder economic and social development of the country.

Lastly, stakeholders such as the consumers have rights which should be

protected by the state and respected by the business entities. Their money which they

use to buy goods and services from the business entities fuel our country’s economy,

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 hence, the government should be able to protect their rights in order to achieve utmost

satisfaction in every purchase that these consumers make.

These interdependent roles in the trilateral relationship motivate the need for

further reforms in the Philippine’s business system, particularly in laws, implementation

of laws and technology. As such, the researcher deems it necessary to provide

recommendations on how to overcome the current issues encountered in the current

Philippine business environment.

B. OBJECTIVE OF THE STUDY

This paper aims to:

 Identify current issues encountered in a specific Philippine business law;

 Identify problems in the implementation of a business law in the

Philippines; and

 Provide recommendations on how to solve the identified issues and

problems in the Philippine business environment.

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II. ISSUES

Certain issues exist in the current Philippine business environment. This paper

focuses on the specific limitations in law, implementation of a law and technology which

affect all members of the business environment.

A. LAW: Republic Act No. 7394 or The Consumer Act of the Philippines

As businesses evolved due to competition, aggressive marketing strategies are

employed by companies to attract customers. These strategies provide challenges to

consumers since these made it difficult for them to judge the true quality and value of

products and services. Furthermore, technological advances also necessitate consumers

to be fully equipped with skills and knowledge in discerning the quality of modern

gadgets and tools. Considering such challenges and state’s duty to protect consumers

from trade malpractices and from substandard and hazardous products, as expressed in

Article XVI, Section 9 of the 1987 Philippine Constitution, the government recognized

the necessity to enact a law that will strengthen the protection of consumers in the

country. Limited consumer protection was present until Republic Act No. 7394,

otherwise known as The Consumer Act of the Philippines was enacted in 1992. The law

was intended primarily to establish standards of conduct of business in the country and

provide a legal basis for the protection of consumers. As such, its objectives focus on

consumer protection against deceptive, unfair and unconscionable sales acts or

practices; hazards to health and safety; and necessity of continuing consumer

information and education.

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 Moreover, various measures were initiated by the Government, through RA

7394, to strengthen its regulatory powers in protecting the consumers. The Bureau of

Trade Regulation and Consumer (BTRC) protection was established to act as the

government’s coordinating and regulatory body for Philippine trade, industry and

investment activities. BTRC is also mandated to promote an “empowered and

responsible consumer sector.” Furthermore, the Department of Agriculture provided

various implementing agencies the jurisdiction over complaints on agricultural

commodities. These include among others, the National Food Authority for rice and

corn, National Meat Inspections Commission for processed and unprocessed meats,

Bureau of Fisheries and Aquatic Resources for fish and fishery products. The

government also encouraged department stores and establishments to create a

Consumer’s Welfare Desk to assists consumers. The Department of Education was also

directed through RA 7394 to provide a consumer education program to all public and

private schools from primary to secondary levels.

ISSUE:

The increase in commodity flow from 98.27 tons in 2006, to 110.95 tons in 2009,

signifies active trading in the country [ CITATION Nat10 \l 2057 ]. Furthermore, the

increasing trend in personal consumption from 2005 to 2009 implies a boost in

consumers’ purchasing activities.

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 Table 1. Personal Consumption Expenditures in the Philippines
2003 to 2009
(in million pesos, at current prices)

GROWTH
YEAR AMOUNT
RATE
2009 5,397,699 2.21%
2008 5,281,071 14.51%
2007 4,611,883 9.04%
2006 4,229,502 12.12%
2005 3,772,247 12.71%
2004 3,346,718 12.00%
2003 2,988,240

These increasing trends in commodity flow and personal consumption indicate

the need to empower consumerism in the country. Consumerism was defined by

Webster’s dictionary as “a movement for the protection of the consumer against

defective products, misleading advertising, etc.” However, RA No. 7394 does not

explicitly provide the specific rights of consumers that the government should protect

and regulate. The law does not provide a clear-cut declaration and enumeration of a

consumer’s rights and privileges that he or she can exercise. Thus, consumers are

unaware and not empowered of the specific rights being protected by the said law.

Furthermore, consumers have limited ground on which to they can defend themselves

against misleading advertisements and limited information provided by companies.

With inadequate data at hand, consumers are very vulnerable to abusive practices of

business entities. Thus, the right to product information should be explicitly expressed in

the law to force business entities to fully disclose relevant details of its products at all

stages of the transaction. For instance, in the case of Philippine Prudential Life

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 Insurance scam[ CITATION Ant10 \l 2057 ] as exposed by the media, consumers,

mostly professionals, were deceived by its agents by providing limited information

about the insurance policy being marketed and were pressured and forced to purchase

the insurance products by immediately swiping their ATMs and credit cards.

Furthermore, consumers’ complaints were not attended by the said company, forcing

the individuals to resort help from the media. If these consumers are explicitly given by

law the rights to be informed, heard, to service and choose freely, the entity itself will

somehow self-regulate to respect such rights, and the consumer will be responsible

enough to exercise those specific rights. .

RA 7394 protects consumers through the doctrine of strict liability under its

Article 97 which provides that "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. " However, it can also be noted that in Philippine setting, caveat

emptor doctrine or “let the buyer beware” is still the norm, wherein, the buyer shall at

all times be vigilant about the products he buys. This should not be the case due to the

complexity of consumer products, particularly technological devices, available in the

market today. Thus, through the declaration of rights of consumers, the doctrine of

strict liability will be strengthened. The practice should be “let the seller beware” of the

rights of the consumers. Hence, the RA 7394 should be amended to include additional

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 chapter for the bill of consumer rights which will serve as a basis for government to

improve current consumer protection programs.

B. IMPLEMENTATION OF A LAW: Republic Act 8792 or E-Commerce Act of

2000

The United Nations defined electronic commerce or e-commerce as “buying,

selling, marketing, distributing and servicing of products or services via Internet and

other open networks.” The E-Commerce Act of 2000 was enacted in June 14, 2000, after

the ILOVEYOU virus, created by Onel de Guzman, attacked the information systems in

various countries all over the world. The law aims to recognize the authenticity and

reliability of electronic documents related to economic activities and to promote the

universal use of electronic transaction in the government and general public.

Its salient features include the following:

 It gives legal recognition of electronic data messages, electronic

documents, and electronic signatures.

 Allows the formation of contracts in electronic form.

 Makes banking transactions done through ATM switching networks

absolute once consummated.

 Parties are given the right to choose the type and level of security methods

that suit their needs.

 Provides the mandate for the electronic implementation of transport

documents to facilitate carriage of goods. This includes documents such

as, but not limited to, multi-modal, airport, road, rail, inland waterway,

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 courier, post receipts, transport documents issued by freight forwarders,

marine/ocean bill of lading, non-negotiable seaway bill, charter party bill

of lading.

 Mandates the government to have the capability to do e-commerce within

2 years or before June 19, 2002.

 Mandates RPWeb to be implemented. RPWeb is a strategy that intends to

connect all government offices to the Internet and provide universal access

to the general public. The Department of Transportation and

Communications, National Telecommunications Commission, and

National Computer Center will come up with policies and rules that shall

lead to substantial reduction of costs of telecommunication and Internet

facilities to ensure the implementation of RPWeb.

 Made cable, broadcast, and wireless physical infrastructure within the

activity of telecommunications.

 Empowers the Department of Trade and Industry to supervise the

development of e-commerce in the country. It can also come up with

policies and regulations, when needed, to facilitate the growth of e-

commerce.

 Provided guidelines as to when a service provider can be liable.

 Authorities and parties with the legal right can only gain access to

electronic documents, electronic data messages, and electronic signatures.

For confidentiality purposes, it shall not share or convey to any other

person.

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  Hacking or cracking, refers to unauthorized access including the

introduction of computer viruses, is punishable by a fine from 100

thousand to maximum commensurating to the damage. With

imprisonment from 6 months to 3 years.

 Piracy through the use of telecommunication networks, such as the

Internet, that infringes intellectual property rights is punishable. The

penalties are the same as hacking.

 All existing laws such as the Consumer Act of the Philippines also applies

to e-commerce transactions.

ISSUES:

1. Implementation of E-Government

One of the objectives of the E-Commerce Act of 2000 is to promote the

universal use of electronic transaction in the government and general public. E-

government refers to the use by government agencies of information and

communication technologies (ICT) that have ability to transform relations with

citizens, businesses, government employees and other arms of the government in

the delivery of services [ CITATION Emm02 \l 2057 ]. Examples are

information kiosks, SMS services, e-procurement system and the like. Basically,

e-government aims to enhance the delivery of services to the people and business

entities by promoting transparency and efficiency in every transaction.

However, in United Nations E-Government Survey in 2010, the

Philippines’ rank went down from 66 in 2008 to 78 in 2010. The data used in

measuring the performance of the country in e-government were information

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 services, transactional services and connected services. Moreover, according to

the survey, most of the portals of the south-eastern countries became stagnant

since the 2008 survey in terms of developing features.

Table 2. E-government Development in Southeast Asia (2010 vs 2008)

E-Government
World E-government
Development Index
Country Development Ranking
Value
2010 2008 2010 2008
Singapore 0.7476 0.7009 11 23
Malaysia 0.6101 0.6063 32 34
Brunei Darussalam 0.4796 0.4667 68 87
Thailand 0.4653 0.5031 76 64
Philippines 0.4637 0.5001 78 66
Vietnam 0.4454 0.4558 90 91
Indonesia 0.4026 0.4107 109 106
Cambodia 0.2878 0.2989 140 139
Myanmar 0.2818 0.2922 141 144
Lao People’s Democratic 0.2637 0.2383 151 156
Republic
Timor-Leste 0.2273 0.2462 162 155

Subregional Average 0.4250 0.4290

World Average 0.4406 0.4514

The researcher visited various government websites to verify the

implementation of E-government in the country. Among the websites visited

were:

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 Table 3: Visited Philippine Government Websites

AGENCY REMARKS
National Labor  Accomplishment and Issuances data were not
Relations Commission updated.
National Statistical  Website unavailable.
Coordination Board
Department of Foreign  Regularly updated, have search features, site
Affairs, POEA,DOF map.
 Application guidelines, procedures and
application forms and requirements are
available
DBM, DTI,NSO,  Interactive, up-to-date information and
GSIS, BSP, COA, BIR downloadable issuances.
 Contains databases that present a wide array of
data.

Based on the researcher’s observations, most of the government websites

are geared towards news and current events, job postings, feedback forms, and

multimedia elements. The websites lack commonality or uniformity since they

are created based on the initiative of each agency concerned rather than a central

authority that handles government websites. Furthermore, agencies with front

line services such as NSO and GSIS still have no online application and payment

facilities. Furthermore, relevant economic data are limited especially in the case

of the National Statistical Coordinating Board whose website is unavailable as of

December 15, 2010. Another limitation of the websites is the lack of historical

data on issuances and statistics. Lastly, updated financial reports are not available

on each government website available, however, in the Commission on Audit

websites, financial reports for CY 2009 of all government agencies are not yet

available.

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III. RECOMMENDATIONS

A. Republic Act No. 7394 or The Consumer Act of the Philippines:

To strengthen RA 7394, a consumer bill of rights should be added to its current

provisions. The rights identified by the International Organization of Consumer Unions

(IOCU) can be adapted [ CITATION Leo08 \l 2057 ]. To wit:

1. Right to basic needs. This refers to the right to basic goods and services

at affordable prices and of good quality which guarantee survival.

The government should therefore:

 Create projects that promote economic development,

such as improving infrastructures to attract investors who

will give more jobs to the people.

 Prioritize and implement programs that are beneficial to

the health of the people.

2. Right to safety. The right to be protected against the marketing of goods

or the provision of services that are hazardous to health and life.

This should empower the current system of product recalls. As

current practice, our country relies only on other countries’ recall

initiation such as the case of Fisher Price Toys (recalled on September 30,

2010) and Graco Strollers (recalled on October 20, 2010) which were

recalled in the United States due to faulty specifications that cause

danger to the well-being of a child. Consequently, recalls in the

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 Philippines of the said products were also announced through local

media. With the enforcement of the right to safety, the government

should be able to recall products based on Philippine safety standards.

3. Right to information. The right to be protected against dishonest or

misleading advertising or labelling and the right to be given the facts and

information needed to make an informed choice.

The government should:

 develop more effective consumer information programs;

 monitor proper labelling of products;

4. Right to choose. The right to choose products and services at competitive

prices with an assurance of satisfactory quality.

To enforce this right, the government should regulate closely

business practices that will limit the exercise of this right, such as mergers

of banks (limits consumer’s choice of financial services); application of

patents (will provide consumers more choices of product variety) and the

like. An Antitrust Act should also be enacted to prohibit monopolies,

manipulate prices and price discrimination among consumers.

5. Right to representation. The right to express consumers’ interests in the

making and execution of government policies and law which affect their

well-being by getting the best value for their hard-earned peso.

The government should encourage the creation of formal

consumer groups as representation to the Congress. The partylist system

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 can be used as a medium to represent consumers in the legislative

process.

6. Right to redress. The right to be compensated for misrepresentation,

inferior or substandard goods or unsatisfactory services.

The government should be able to provide accessible avenues

where disputes between business entities and consumers can be settled

efficiently. The process of resolving the dispute should be inexpensive

and convenient on the part of the consumers.

7. Right to consumer education. The right to acquire the knowledge and

skills necessary to become an intelligent and well-informed consumer.

The government as well as business entities should provide

education programs in baranggays to reach low-income consumers.

Furthermore, consumer education should also be strengthened in schools

through incorporating consumer education subject in the curriculum.

8. Right to healthy environment. The right to live and work in an

environment which is neither threatening nor dangerous and which

permits a life of dignity and well being.

The government and business entities should adopt policies and

safety measures in the production, storage and use of chemicals and

medicines. Furthermore, companies should use raw materials which are

not harmful to the environment and to the people.

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 B. IMPLEMENTATION OF E-GOVERNMENT THROUGH THE E-COMMERCE

ACT OF 2000

Article XIV, Section 10 of the 1987 Philippine Constitution provides that “it is the

duty of the State to give priority to research and development, invention,

innovation, and their utilization; and to science and technology education, training

and services. As such, to be abreast with our Southeast Asian neighbors, the

Philippines ‘ Government Information Strategic Plan (GISP) is an important tool

in achieving a well-developed e-government in the country. To compliment the

GISP, the researcher deemed the following recommendations useful in achieving

an effective e-government country.

 People

The bureaucratic culture of the government hinders the development in

public service. Civil servants should be provided with adequate training,

workshops and incentives in order to be motivated in contributing to the

implementation of E-government. The government should equip the

employees with skills and knowledge in ICT in order for them to

appreciate the benefits of the project. Moreover, the unwillingness to

adapt change and lack of interest in the project are factors that

contribute in the failure of full implementation of e-government. These

attitudes may still be corrected if incentives are performance-based.

With performance-based incentives, the employees will be motivated in

contributing to the attainment of Government’s goals. Furthermore,

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 demerits should also be implemented to discourage the non-cooperation

of employees to government’s projects.

 Resources

The initial stage of E-government is costly to implement. To reduce cost,

outsourcing can be an option for the government. Government projects

are attractive to private investors since these satisfy basic services

needed by the public, hence, this will give the private investors an

assurance in the income. In such case, the private investor will be willing

to assume some financial risks related to the project.

 Government’s Frontline Services

E-government initiatives should start with the government’s frontline

services such as renewal of licenses, passport application, birth and

marriage, NBI certificates application. In this prioritization, the

government will be able to reduce cost associated with such services and

satisfy immediately the need of the public of efficient government

services.

 Public awareness campaign

Promotions through different media should be made to make the public

aware of the various government services available online. With this

information campaign, public awareness will be raised. Hence, this will

increase the demand of online government services, thus, reducing the

costs on both the public and government. Lastly through public

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 awareness campaign, the public will be able to recognize the efforts of

the government in improving public service. through limitation if not

total elimination of red tape and corruption, transparency, efficiency and

convenience.

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IV. CONCLUSION

Based on the foregoing, RA 7394 or The Consumer’s Act of the Philippines

should be amended to incorporate the rights of consumers. By expressly stating the

rights of the consumers in the said law there will be a stronger basis for consumer

programs.

On the other hand, e-governance should be reinforced to limit if not totally

eliminate red tape and corruption, transparency, efficiency and convenience. E-

government is a means to overcome limitations of time, resources and accessibility,

hence, the public has better access to government services. E-government also

contribute to make the public more informed on the services of government that they

can avail. As such, government tend to be more accountable on their services.

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V. BIBLIOGRAPHY

Caraan, D. H. (2010). The Philippine Legal Environment and Theoretical Foundation. De La

Salle University, Manila: BNG 5000 Class.

De Leon, H. S. (2008). Textbook on the Philippine Constitution. Manila: Rex Publishing.

Llana, E. C. (2002). E-Government in the Philippines: Benchmarking Against Global Best

Practicies. Manila: Digital Philippines.

Mueller, S. (2007). Legal Implications of E-Commerce. Bangkok, Thailand: United Nations

ESCAP.

National Statistics Office. (2010). Domestic Trade Statistics. Manila: National Statistics Office.

Taberna, A. (Performer). (2010, December 6). XXX. Quezon City, NCR, Philippines.

Trubek, D. M. (1972). An Essay over the Study of Law and Development. Yale Law Journal ,
42-47.

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