DOJ Opinion No. 003, s. 2000

DOJ OPINION NO. 003 , s. 2000 January 7, 2000 Atty. Ma. Teresa Arao-Mahiwo Director, Bureau of Trade Regulations and Consumer Protection Department of Trade and Industry 2nd Floor, Trade and Industry Building 361 Sen. Gil J. Puyat Avenue Makati City M a d a m : Submitted to this Department by that Office is the request for the proper interpretation of the pertinent provisions of the Consumer Act of the Philippines (R.A. No. 7394), specifically, on chain distribution plan/pyramid sales scheme and referral selling and for the determination of a probable cause for violation of R.A. No. 7394 which would warrant the filing of a criminal and/or administrative case. cdlex The request, it appears, is raised in connection with the scheme/plan adopted by Goldquest International Ltd., a foreign corporation organized and existing under the laws of British Virgin Islands, which was duly licensed as a representative office by the Securities and Exchange Commission (SEC) and the operation of which is being looked into by that Office, in coordination with SEC's Prosecution and Enforcement Division, in response to several queries received regarding the firm's operation. It is stated that Goldquest's operation or scheme involves the selling, on retail, of its products at US$700.00, full payment, or US$300.00, downpayment, with the US$400.00 balance to be paid out through referral commission or sweat equity"; that upon purchase of a gold coin, one becomes a tracking center owner and can start referring people to Goldquest with a maximum daily earning potential of $2,400.00; that to qualify under the scheme, one must have a sponsor, must purchase any of the selected Goldquest's gold coins or jewelry, and must fill up a Customer Retail Purchase Order Form (CRPO) which contains a disclaimer, and a Tracking Center Owner Application Form which, like the CRPO, contains a representation provision that the customer is absolutely not required to purchase anything in order to be a Goldquest Tracking Center Owner, and that which a customer may refund his money within 12 months, the refund is not in cash but in the form of a half ounce gold coin. It is also averred that anti-pyramid legislations, specifically the Consumer Act of the Philippines (R.A. No. 7394), are designed to protect individuals from being defrauded through illegitimate program which lure participants with the promise of easy money by compensating them from the investments of additional participants rather than from legitimate product sales. prcd After considering the facts and circumstances set forth above, this Department is constrained to refrain from commenting and/or ruling thereon for the reason that the issues raised involve the substantive rights of a private party, the Goldquest International Ltd., upon which the opinion of the Secretary of Justice would have no binding effects, and which might, in all probability, be litigated judicially. This is in consonance with the long established precedents to the effect that the Secretary of Justice, as Attorney General, should not render opinion on questions/issues which, as in this case, are judicial in nature or which might subsequently be litigated judicially. (Sec. of Justice Opns. Nos. 43 and 126, s. 1979, citing opinions; also, Opn. No. 112, current series, citing opinions). Moreover, the opinion that may be rendered by this Department on the issues raised would necessarily and inevitably involve an interpretation of the contracts executed by and between Goldquest and its prospective "customers/purchasers." Unfortunately, however, the Secretary of Justice does not render opinion or give legal advice on issues involving interpretation of contracts (id., No. 109, current series; also, Opn. No. 10, s. 1979). Finally, the determination of whether or not there have been violations of the Consumer Act in the instant case would depend upon a finding on questions of fact which are not readily discernible from the query. Besides, the existence or absence of criminal violation is addressed to the prosecuting officer. As the Department once stated: "Whether the elements (of the crime are) present in the instant case, I cannot, it is easy to see, determine at present. Therefore, any opinion that I might render on your query would be purely hypothetical or anticipatory, hence, not determinative of the question. Besides, said opinion would not serve any useful purpose. For if I should rule, say, that there would be no violation of said Act, this would neither be conclusive nor binding upon the prosecuting officers upon whom the law devolves the duty of deciding whether or not to file a complaint for violation of said Act, after an investigation into the facts of the case and according to whether the evidence is sufficient to warrant prosecution (Maddela vs. Aquino, 104 Phil. 433 [1958]; Gonzales vs. CFI of Bulacan, 63 Phil. 846 [1936]). Such opinion on my part would also be misconstrued as undue interference in or intrusion into the exercise of the discretion of the prosecuting officers in making such determination, which discretion must be 'free from pressure and other irrelevant considerations'. (People vs. Santos, 30 SCRA 100 [1969], U.S. vs. Abanzado, 37 Phil. 658 [1918])." (id., No. 189, s. 1975; also, No. 29, s. 1976; No. 67, s. 1984). cdlex Very truly yours, (SGD.) JUSTICE SERAFIN R. CUEVAS Secretary