Aowa vs. DTI

G.R. No. 189655, April 13, 2011

FACTS:

The DTI-NCR records show at least 273 administrative complaints against Aowa Electronics Philippines, Inc. from the year 2001 to 2007. The facts narrated in the consumer complaints consistently contain a common thread that a target costumer is approached by Aowa’s representative usually in the mall and inform the former that he/she has won a gift or a “give-away.” Aowa’s representatives then verbally reveal that the said gift can only be claimed upon purchase of additional products. An initial gift is also offered to target customer and upon acceptance, the customer is invited to Aowa’s store or outlet. It is that point that the customer is informed that he/she is qualified for a raffle draw or contest entitling him to additional gift. In the same manner, the additional gift can be received only upon purchase of additional products. In the course of enticing the target customer to purchase additional products, they are physically surrounded (a.k.a ganging up) by Aowa’s representatives. The purchase of additional products is not disclosed during the initial stage of the sales pitch. The revelation is done only when the customer is already being surrounded by Aowa’s representatives.

As a result, DTI-NCR filed a Formal Charge against Aowa before the DTI-NCR Adjudication Officer for violation Articles 50 and 52 of the Consumer Act of the Philippines praying that a cease and desist order be issued and administrative fines be imposed.

The Adjudication Officer held that DTI-NCR had sufficiently established prima facie evidence against Aowa for violation of the Consumer Act and its Implementing Rules and Regulations. Furthermore, the Adjudication Officer highlighted that Aowa failed to secure any Sales Promotion Permit. Thus, a Decision was made declaring Aowa liable for Deceptive, Unfair and Unconscionable Sales act or Practices.

Aowa appealed the Adjudication Officer’s Decision before the Appeals Committee (OLA). On August 26, 2008, the Appeals Committee sustained the Decision and held that the schemes and techniques employed by Aowa were fraudulent.

Feeling aggrieved, Aowa elevated the Decision of the Appeals Committee to the Court of Appeals (CA) under Rule 65 of the Rules of Civil Procedure. However, on June 23, 2009, the CA affirmed the findings of the Appeals Committee.

Still unsatisfied, Aowa finally elevated the case before the Supreme Court by filing a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure seeking the reversal of the CA Decision. Briefly stated, Aowa raised among others the following errors before the high tribunal:

1. There is no sufficient basis in the Formal Charge against Aowa since the charge is merely based on consumer complaints which have all been amicably settled.

2. The CA erred when it affirmed the harsh and excessive Decision of DTI notwithstanding the fact that the Formal Charge is not supported by any concrete, sufficient and convincing evidence.

3. The complaints against Aowa pertain to cases in the NCR, hence, there was no basis for DTI to presume that the allege offenses are likewise practice in other places in the country.

4. Aowa also argued that like other companies, sales personnel employed enthusiasm and overzealousness in sales talk to convince potential customers which cannot and should not be considered as deceit.

ISSUE:

Whether or not the CA committed any reversible error in affirming the findings and ruling of the Adjudication Officer and the DTI Appeals Committee.

HELD:

In sustaining the CA Decision, the Supreme Court held that “it is indubitable that the DTI is tasked to protect the consumers against deceptive, unfair and unconscionable sales, acts or practices as defined in Article 50 and 52 of the Consumer Act.” 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 comsumers. Complaints- filed by consumers not only within NCR but also in the provinces- continued to be filed even after the formal charge and the issuance of PMO.

In giving due respect to factual findings of DTI, the Supreme Court held: “By reason of the special knowledge and expertise of DTI over matters falling under its jurisdiction, it is in better position to pass judgment on the issues, and its findings of fact in that regard, especially when confirmed by the CA, are generally accorded with respect, if not finality, by this Court. Furthermore, Aowa failed to refute DTI’s finding that it did not secure any permit for its alleged promotional sale.”

“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 false fellester.blogspot.com 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 to 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 theses pernicious acts at the expense of the consumers”. (Case Digest by Atty. Fel Lester Brillantes)