I heard that a new law was passed that now requires business establishments to give exact change to their customers. Will they be guilty of violating the law even if the change amounts only to a few centavos? What are the penalties for violating this law? Thank you for your advice!
Dear Mark Henry,
There is indeed a law that now prohibits business establishments from giving insufficient change to their customers and which provides for penalties to those who will violate this prohibition. This law is Republic Act. (RA) 10909, or the “No Shortchanging Act of 2016.”
Among the purposes of RA 10909 is to protect the interest and general welfare of consumers by implementing measures that institutionalize the practice of giving exact change to consumers and to guard consumers against deceptive and unfair sales acts and practices (Sec. 2, Ra 10909).
According to this law:
“xxx It shall be unlawful for any business establishment to shortchange a consumer, even if such change is only of a small amount. Nothing in this act shall be construed as a restriction for business establishments to give an amount greater than the sufficient change.
xxx It shall also be unlawful for any business establishment which sells goods or provides services to give the change in any form other than the present currency or to ask the consumers for permission to be exempted from the provisions of this Act for any reason, including the non availability of small bills or coins.” (Sec. 4, Ibid) Emphasis supplied.
As expressly mentioned in the cited provision, it is illegal to shortchange a customer even if such change is only a small amount. Shortchanging of a customer even if the amount is in centavos is considered as a violation of the law. This shortchanging involving a consumer’s change, even down to the smallest centavo, is precisely what the law intends to prohibit since this law makes it the duty of business establishments to give the exact change to the consumers without waiting for them to ask for their change. (Id)
With regard to the penalties provided by this law, business establishments who shall violate the provisions of this act shall be required to pay a fine of P500 or three percent of the gross sales of the business establishment on the day of the violation, whichever is higher for the first offense. A second offense carries a fine of P5,000 or five percent of the gross sales of the business establishment on the day of the violation, whichever is higher. For the third offense, a violator shall be fined PI5,000 or seven percent of the gross sales of the business establishment on the day of the violation, whichever is higher, and the license to operate the business establishment shall be suspended for three months. And for the fourth offense, a violator shall be fined P25,000 or 10 percent of the gross sales of the business establishment on the day of the violation, whichever is higher, and the license to operate the business establishment shall be revoked. (Sec. 6, Id.)
In addition to the amount of the fines mentioned above, the total amount of change the establishment failed or refused to give shall be paid by the establishment to the complaining customer who may file a complaint against the erring business establishment by submitting a letter of complaint to the Department of Trade and Industry (DTI) not later than ten (10) working days after a violation has been committed. The DTI will then conduct an investigation of the complaint filed and issue its decision and findings to determine the violation, if any, of a business establishment. (Sec. 5, Id.)
In summary, the practice of giving insufficient change to a customer even in the smallest amount in centavo is now illegal and is punished by law. Business establishments are now required to strictly observe this prohibition against shortchanging. On the other hand, consumers are encouraged to exercise their rights by complaining against the illegal practice of giving an insufficient change.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to email@example.com