It has become lamentable that “while the telecom companies, retail establishments, and other commercial companies have earned so much from their prepaid subscribers, they continue to engage in a rather unethical business practice, which is the imposition of expiration on prepaid cards or gift certificates”.

Third District Rep. Arthur Yap expressed this in pushing for the passage of “Prepaid Expiration Prohibition Act of 2016”.

In his Bill passed in the House of Representatives, Yap describes it as unethical business practice to impose an expiration on the prepaid services wherein it gives the effect that the seller has the “right to unilaterally decide not to deliver the goods or provide the services”.

“This is an unethical business practice. There is no basis, whatsoever, for the imposition of the expiration. It is downright cheating the consumers of the moneys they paid for. In fact, such practice can also be deemed illegal. Theconsumers, as buyers, have paid or gave consideration (in advance) for service or goods to be provided or sold by the seller-establishment. This is basically a contract of sale, except that the goods or services were paid in advance. This variation is even very favorable to the merchant establishment as it has been paid already, even if it still has to deliver the goods or render services,” according to Yap.

While a contract of sale is bilateral, in this scenario, “the seller does have any right to unilaterally decide not to deliver the goods or provide the services by imposing an expiration of the time the buyer should get the goods or use the services”.

“It should never be construed that the buyer purchased the prepaid card or the gift certificate.  This is because such items are worthless. Its value is in the amount of goods or services such card or certificate can purchase from the merchant. Sadly however, this business practice continues to pervade,” Yap lamented.

Yap cited an instance where “the National Telecommunications Commission, upon a directive by Congress, increased the shelf life or the expiration of cell phone cards. And it was as if such act was manna from heaven that the consumers should be very grateful for. It was like thanking the robber for sparing the life of the victim”.

Through his Bill, Yap seeks to prohibit the imposition of expiration for all prepaid cards or devices.

“It likewise prohibits the refusal of establishments to honor prepaid devices on the ground of its expiry. And, it seeks to provide for criminal penalties for establishments violating such prohibitions. This bill is a reform measure aimed at changing the way big business conduct their enterprise and empowering consumers who long been prey to such incessant greed,” Yap explained.

The prepaid services and goods, supposedly, have been projected by retailers to benefit the marginal customers and have become attractive as the prepaid options can have substantial cost reductions over postpaid counterparts because they allow customers to monitor and budget usage in advance.

The concept of prepayment for goods or services embraced in the Philippines several decades ago through “gift certificates” which served as “cash vouchers issued by, purchased from, and accepted as, payment for goods sold in department stores, supermarkets and other retail establishments”, according to Yap.

“Today, the prepaid concept has permeated almost all spectra of commercial transactions. With the use of the technology of storing of monetary values in common prepaid cards, goods and services can now be prepaid, including public utility services, restaurants, cable or satellite television, internet service provider, highway toll fees, medical and even other professional services,” he added.

The prepaid service becomes prominent in the telecommunications sector, citing that “in the late 1990’s when the telecom companies suffered from what is then referred to as “subscription fraud”, resort was made to the use of selling of prepaid cards instead of the then usual post paid or plan based subscription”.

“Today, more than 95 percent of the income of the telecom company giants, arguably the biggest income earners in the country, are from prepaid subscribers.  Out of the estimated 70 million combined mobile phone subscriber base of the three telecom companies, less than 2 million are postpaid subscribers,” according to Yap.

He added that one of the country’s largest telecom firm confirmed in its financial statement for the first quarter this year, the adherence to the business model of preference for prepaid subscribers.

Yap cited the financial statement which stated that “The predominance of prepaid service reflects one of the distinguishing characteristics of the Philippine cellular market. The growth in our prepaid service has enabled us to increase and broaden our subscriber base rapidly while controlling credit risk and reducing billing and administrative costs on a per subscriber basis.”

In his proposed “Prepaid Expiration Prohibition Act of 2016”, Yap pushed for the prohibition of the imposition of expiration of prepaid cards, certificates or other devices of prepayment of goods and services, and providing penalties for violations.

In his Bill, Yap proposed that it be declared a State policy “to protect and empower consumers, reform the unprincipled business practices of big establishments”.

It is proposed that “the imposition of an expiration of the date to use a prepaid device is hereby prohibited…and the refusal of an establishment to honor a prepaid device due to its expiration shall likewise be prohibited”.

In is proposed that any goods or services provider who shall be found guilty of violating it when it becomes a law shall be punished with imprisonment ranging from 30 days to six months or fine ranging from P1,000 to P10,000 or both for first offense; imprisonment ranging from six months and one day to two years or fine ranging from P20,000 to P50,000, or both for second offense; and imprisonment ranging from two years and one day to six years, or fine of ranging from P100,000 to P500,000 or both for the succeeding offense.

“If the establishment is a juridical person, the penalty of imprisonment shall be imposed against the responsible officer”.