FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
SENATE 
S. No.1085 
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. 
MANNY V, LLAR 
" . ( 


• 
FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
SENATE 
S.No. 1085 
Introduced by Senator Manny Villar 
AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT 7394, 
OTHERWISE KNOWN AS THE CONSUMER ACT OF THE PHILIPPINES, 
DEFINING FOR THE PURPOSE THE CRIME OF PSEUDO-INVESTMENTS, 
PROVIDING PENALTIES THEREFORE AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and the House of Representatives in 
Congress assembled: 
SECTION 1. The following provisions of the Consumer Act are hereby 
amended to read as follows; 
Title Article 4(k) Pseudo-Investments refer to but are not limited 
to; 
. 
(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 MAK;ING 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 
1 


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. 
Title III 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 III Chapter 1, shall upon conviction, be 
subject to a fine not less than ONE HUNDRED THOUSAND 
PESOS (P 100,000.00) [Five Hundred Pesos (P 500.00)] but 
not more than ,FIVE HUNDRED THOUSAND PESOS 
(P500,00o.oO) [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) year] 
[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 ac~ordingly. 
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, 
2