The Department of Trade and Industry (DTI) has issued Department Administrative Order (DAO) No. 21-03, or the Guidelines for Payments Options on the Purchase of Consumer Products and Services, which states that the public can choose from different modes of payment when availing of products and services.
Earlier this month, DTI secretary Ramon Lopez reportedly signed the order to prohibit installment-only scheme on all commodities, including motorcycles. DAO No. 21-03, which took effect on April 23, 2021, is part of the agency’s mandate to protect consumers against “Deceptive, Unfair, and Unconscionable Sales Acts and Practices.”
According to the news release: “The DAO mandates all persons and companies, whether registered or unregistered, engaged in the sale or offer for sale of consumer products and services, to provide consumers the option to pay in cash, in installment, or a combination of the two, whenever they make a purchase.
“An ‘installment only’ mode of payment is strictly prohibited. Further, the guidelines specify that there should be no additional charge on the selling price if the mode of payment is through debit/credit/prepaid cards, QR codes, electronic fund transfers, or other digital means available, as preferred by the buyer.”
The guidelines also state that the seller cannot impose interest that has more than the market-oriented interest rate “unless expressly stipulated in writing,” in accordance with Article 1956 of the Civil Code. An advance interest of more than a year cannot be collected, while documents showing ownership of the buyer must be released for bigger items. In case of repossession, the seller has to comply with the necessary requirements.
Violation can result in imprisonment for a period of five months to one year, or a fine ranging from P500 to P10,000 (or both), depending on the court’s discretion.
DTI Consumer Protection Group (CPG) Undersecretary Atty. Ruth B. Castelo stressed: “The DTI highlights the consumers’ right to choose not only on products and services that she/he needs but also the mode of payment for these goods or services. The DTI reminds all sellers to comply with DAO No. 21-03 to avoid being penalized.”