Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILLNO.__ 1415

Introduced by Representative Harlin Cast. Abayon

EXPLANATORY NOTE

This bill secks to curb the growing threat of pyramid schemes as a way of defrauding
individuals and groups of their hard earned money. This measure was previously filed by Senator
Manny Villar in the 15" Congress. Passage of this Bill is earnestly sought now in the 16"

Congress.

HARLIN CAST, ABAYON
Representative
First District of Norther Samar


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SIXTEENTH CONGRESS
First Regular Session

= BILL

Introduced by Representative Harlin Cast. Abayon

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 MAKING SIMILAR INVESTMENTS;

(2) PONZ! 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 .

Title II! Chapter 1 Article 53. PSEUDO-IN VESTMENT SCHEMES,

PSEUDO-INVESTMENT SCHEMES AS DEFINED IN TITLE
1 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 Ill Chapter 1, shall upon conviction, be
subject to a fine nét less than ONE HUNDRED THOUSAND
PESOS (P 100,000.00) (Five Hundred Pesos (P 500.00)] but
not more than .FIVE HUNDRED THOUSAND PESOS
(P500,000.00) [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) 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 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,