THE Department of Trade and Industry (DTI) has clarified that the recently issued Department Administrative Order (DAO) 21-03 on payment options applies to all retail establishments on the purchase of consumer goods and services.
Consumer products and services are defined as “goods, services and credits, debts or obligations which are primarily for personal, family, household or agricultural purposes, which shall include but are not limited to food, drugs, cosmetics and devices.
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.
The DTI said 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 DAO took effect on April 23, 2021.
The new DAO was made in response to complaints of buyers after some car and motorcycle dealerships imposed installment as the only mode of payment acceptable.
This order also applies to all retail establishments selling products and services.
Ines Cajegas, chief of the Consumer Protection Division of DTI-Cebu, said buying small items in the grocery or sari-sari stores like sardines is done in cash, while in bigger stores or supermarkets, the options to pay in cash and via credit cards are also offered.
Purchasing a movie ticket can also be done through cash or credit card. Consumers normally pay in cash because it is still considered a small value purchase.
For consumers who choose to pay on installment, the guidelines state that “no interest shall be due unless expressly stipulated in writing in accordance with Article 1956 of the Civil Code” and that the seller shall not impose an interest rate more than the market-oriented interest rate. The seller also must not collect advance interest of more than a year. Additionally for bigger items, the seller is required to release documents that will show ownership of the buyer and must comply with the requirements in case of repossession of products purchased on installment.
Cajegas said if there’s no disclosure on interest, then no interest shall be imposed on the installment purchase of the consumer. She added that there is “technically and legally no cap on interest because the Usury Law has been suspended.”
The Bangko Sentral ng Pilipinas determines the market-oriented interest. (JOB with KOC)