THIRTEENTH CONGRESS 
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OF THE PHILIPPINE 
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First Regular Session 
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s. No. 
Introduced by Senator S. R. Osmeiia 111 
EXPLANATORY NOTE 
Joan Robinson and H. Chambelin coined the term “monopolistic 
competition’’ to describe a type of market situation that is closer to reality than 
the highly idealised notion of perfect-competition on one extreme, and monopoly 
on the other extreme. 
The theory of monopolistic competition rests on the notion of contestable 
markets. A firm exercises monopoly powers over its own branded products, 
which it differentiates from the generic product through advertising. The 
contestability of such monopoly depends upon the capability of new entrants to 
grab segments of the market through further product differentiation and 
advertising. 
Advertising plays a central role in the present consumerist society, 
disseminating product information among consumers, thereby empowering them 
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to make wiser, more intelligent consumption choices. Advertising wields a 
powerful influence on people’s preferences, on occasion creating demand for 
hitherto unimagined goods, and leaving its subliminal imprint on the public 
psyche. 
The pervasive influence of advertising, especially as it invades our homes 
through TV, radio and print media underscores the need for a public policy that 
will safeguard the public from abusive advertising practices. The youth, 
especially, have to be protected from the effects of advertising claims that have 
no basis in truth; those that seek maliciously to inflict harm on other producers; 
and those, that popularize anti-social and immoral values. 
This bill addresses the above concerns by proposing minimum ethical 
standards that advertisers should conform to, and through the establishment of 
the National Advisory Board on the Advertising Industry, a government agency 
that will oversee the implementation of the provisions of this bill. 
In view of the foregoing, early passage of this bill is earnestly requested. 
Senator 


THIRTEENTH CONGRESS OF THE REPU 
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OF THE PHILIPPINE 
First Regular Session 
E N A T  
. No. 
Introduced by Senator S. R. 
AN ACT 
REGULATING THE ADVERTISING INDUSTRY IN ORDER T 
CONSUMERS, PROMOTE THE GENERAL WELFARE, AND ENCOURAGE 
ADVERTISING WHICH UPHOLDS TRUTH AND INCULCATES IN OUR 
PEOPLE DESIRABLE MORAL VALUES AND CULTURAL TRADITIONS, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 1, Nafional Policy and Principles. - The Constitution provides 
that “the Advertising Industry is impressed with the public interest, and shall be 
regulated 
by laws for the protection of consumers and the promotion of the 
general welfare (Section 11 (2), Article XVI).” 
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To add substance to this Constitutional mandate, it shall be the duty of the 
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advertising industry and the media to : (a) preserve, enrich and promote the 
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Filipino national heritage and‘ cultural traditions; (b) sell only ‘those goods  and^ 
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products which are not hazardous to the health and well-being of our people; (c) 
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avoid the use of alien and unrealistic lifestyle and tends to promote the way of 
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life which is not Filipino or Asian in origin; and (d) inhibit themselves from selling 
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or advertising for sale any service of thing which lends itself to an unwholesome, 
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unhealthy, or illegal activity or situation. 
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SECTION 2. Unlawful Practices. - It shall be unlawful for any natural or 
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juridical person or entity engaged in advertising or in media which is utilized by the 
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advertising industry, to advertise any good, product, service or idea: 
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( I )  Without the adequate warning that it is hazardous to the health, well- 
being or development of any person; 
For purposes of this provision, any good, product, service or idea is. 
hazardous when it is a source of danger to life, health or development of a 
person, including the unborn child, 
or when it exposes a person or 
substantially increases the danger or a person to injury, pain or loss, as 
determined by the proper government body. 
A warning is adequate when it is reasonably sufficient to give notice 
beforehand of the danger to a person’s life, health or development, as may 
be determined by the proper government body. 
(2) Using advertising materials which tend to detract from the dignity and 
honor of our people, demean, impugn or degrade our Filipino national 
heritage, or otherwise tend to insult or humiliate our people, in general and 
our women, in particular; 
(3) In a manner which distorts the truth, or is false, deceptive or misleading; 
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An advertisement is truthful when it is in accord with fact and reality 
or with the generally accepted body 
of scientific knowledge and 
technology; and advertisement is also truthful when it avoids distortion, 
misrepresentation or false claims. 
In determining whether an advertising is false, 
deceptive or 
misleading, the following, among others, shall be taken into account: (a) 
representations made by the advertiser; (b) 
the extent to which the 
advertisement 
fails ‘to reveal material facts in the light of such 
representations, or materials with respect to consequences which may 
result from the use or application of consumer products of services to 
which the advertisement relates under the conditions prescribed in said 
advertisement, or under such conditions as are customary or usual. 
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(4) Which lends itself to illegal or immoral activities; 
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(5) By engaging in activities which violate or tend to violate any provisions of 
the Constitution of law. 
SECTION 3. Penalties and Sancfion , - Any natural or juridical person or 
entity violating this Act shall suffer the penalty of a fine in the amount of Ten 
Thousand Pesos (PI 0,000.00) and the suspension, non-renewal, or cancellation 
of the right to operate or otherwise engage in the activities of the advertising. 
industry in the Philippines. 
SECTION. 4. National Advisory Board on Advertising Industry. - There 
is hereby created the National Advisory Board on the Advertising Industry (NABAI) 
an agency attached to the Department of Trade and Industry to advise the 
Secretary on the formulation of rules and regulations, issuance of directives, 
program development, and all other matters related to the implementation of this 
Act. The Advisory Board shall be composed of five members, namely: (1) The 
President of the Philippine Board of Advertising; (2) a representative of the Press 
Secretary; 
(3) 
a representative of the media; (4) 
a representative of duly- 
accredited Consumer Organizations of Associations; and (5) a representative of 
the private sector or general public . 
The representative of the media, Consumer Organizations or Associations, 
and the private sector shall be appointed by the President of the Philippines upon 
the recommendation of the Secretary, for a term of three (3) years: Provided, 
That for the first three (3) appointees, one (1) shall serve for one (1) year, 
one(1) shall serve for two (2) years, and one (1) shall serve for three (3) years. 
The Advisory Board shall annually elect a Chairman from among its members. 
To assist the Secretary and the Advisory Board, the Secretary shall 
designate an Executive Director and a Secretariat from among the staff of the 
Department, with such allowances as may be approved by the Secretary, subject 
to existing laws and regulations and auditing and accounting laws. 
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Thereafter, the operating expenses of the Advisory Board and the 
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Secretariat and for the implementation of this Act shall be included in the budget of 
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the Department as part of its annual appropriations. 
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SEeTION 5 . Funds. - There is hereby authorized to be appropriated the 
amount of One million pesos (P1,000,000.00) for the operations of the Board and 
the Secretariat and the implementation of this Act. 
SECTION 6 , Transitory Provisions. - Advertisements which violate this 
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Act and which are being presented through any form of media upon the approval of 
this Act shall be withdrawn from public presentation within six (6) months’ flom’ 
the approval of this Act. 
SECTION 7. Separability Clause. - If any provision of this Act shall be 
declared unconstitutional or invalid, other provisions thereof not affected thereby 
shall continue to be in full force and effect. 
SECTION 7. Repealing Clause. - Article I1 0 of Republic Act No. 7394, 
otherwise known as “The Consumer Act of the Philippines,” is hereby repealed. 
All laws, decrees, and orders inconsistent with this Act are hereby repealed, 
amended or otherwise revoked. 
SECTION 8. Effectivity. - This Act shall take effect upon its approval and 
completion of its publication in at least two (2) national newspapers of general 
circulation. 
Approved, 
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