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FOURTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
8 
JUN -3 ;;,;ii 15'1 
SENATE 
S. NO. 
8 
Introduced by Senator Manny Villar 
EXPLANATORY NOTE 
This bill seeks to curb the growing threat of pyramid schemes as a way of 
defrauding individuals and groups of their hard earned money. In the Philippines, 
multinational corporations and local companies have engaged in this scheme in 
the form of multi-level marketing. Pyramiding is deceptive because it is based on 
the premise that investments could be recouped by way of recruiting additional 
participants, with the money flowing upward to the top. Representations used to 
promote pyramid schemes often emphasize the quick and sizable profits but 
what is not disclosed is the fact that when potential recruits diminish and the 
point of saturation reached, many late entrants lose their investments. 
The present version of the Consumer Act of the Philippines was 
inadequate to protect Filipino consumers. Revisions should be made in order to 
directly address this issue and so that the gaps in the law will not be exploited by 
unscrupulous individuals or groups. 
Hence, the immediate approval of this measure is earnestly requested 


FOURTEENTH CONGRESS OF THE) 
First Regular Session 
REPUBLIC OF THE PHILIPPINES ) 
8 JUM -3 
[\If) 1179 
Introduced by Senator Manny Villar 
AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT 7394, 
OTHERWISE KNOWN AS THE CONSUMER ACT OF THE PHILIPPINES, 
PROVIDING PENALTIES THEREFORE AND FOR OTHER PURPOSES. 
DEFINING FOR THE PURPOSE THE CRIME OF PSEUDO-INVESTMENTS, 
Be if enacted by the Senate and the House of Representatives in 
Congress assembled: 
SECTION 1. The following provisions of the Consumer Act are hereby 
Title Article 4(k) Pseudo-Investments refer to but are not limited to 
amended to read as follows: 
(1) "Pyramid sales scheme or "chain distribution plan" ,refers 
to sales devices whereby a person. upon condition that he 
makes an investment by way of purchasing goods or paying 
a fee, is panted by the manufacturer or Ms representative a 
right to sell products and services as well as recruit one or 
more additional persons who will afro be granted such right 
to recruit upon condition of making similar investments; 
(2) Ponzi schemes" refers to a business structure similar to 
the pyramid scheme operated by a person or group, natural 
or Juridica4 where there is no true product or service being 
offered in exchange for the investment and where the money 
tendered by new investors are paid to earlier investors; 
(3) "Telemarketing fraud" refers to a scheme where high 
pressure tactics are made over the phone with the intent to 
make the investor buy into a fraudulent or non-existent 
investment offering; 
(4) "Technology fraud" refers to a scheme wherein investors 
are lulled into making purchases or investments of non- 
existent products through the Internet home or cyber 
shopping. 
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Title 111 Chapter 1 Article 53. Pseudo-In vestment Schemes. 
Pseudo-Investment Schemes as defined in Title I Article 4(k) 
of this Act shall not be employed in the sale of consumer 
products and services. 
Article 60. Penalties. Any person who shall violate the 
provisions of Title 111 Chapter I, 
shall upon conviction, be 
subject to a fine not less than (fine Hundred Thousand 
Pesos (P 104000.00) [Five Hundred Pesos (P 500.00)] but 
not more than Five Hundred Thousand Pesos (P 
500,000.00) [Ten Thousand Pesos (P 10,000.00)) And [or) 
Imprisonment of not less than Two (2) Years [ five (5) 
months] but not more than Four (4) Years [one (1) yearj [or 
both] upon the discretion of the court. 
SECTION 2. Repealing Clause - All laws, decrees, executive orders, 
rules and regulations or parts thereof contrary to, or inconsistent with this act are 
hereby modified or repealed accordingly. 
SECTION 3. Effectivity - This Act shall take effect fifteen (15) days 
following the completion of Its publication in the Official Gazette or in two (2) 
national newspapers of general circulation. 
Approved, 
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