Advertising Rules in the Philippines: Prohibited Claims and Standards

Advertising rules in the Philippines are anchored on one principle: advertisements must not deceive, mislead, or take advantage of consumers. The Consumer Act of the Philippines (Republic Act No. 7394) declares it State policy to protect consumers against deceptive, unfair and unconscionable sales acts and practices. For online selling, the Internet Transactions Act of 2023 (Republic Act No. 11967) adds specific disclosure duties for e-retailers, online merchants, e-marketplaces, and digital platforms.

How Philippine law treats advertising

The Consumer Act's Article 2 sets out the State policy of protecting consumer interests, promoting general welfare, and establishing standards of conduct for business and industry. Among the objectives listed is protection against deceptive, unfair and unconscionable sales acts and practices. Article 3 adds that the best interest of the consumer shall be considered in the interpretation and implementation of the provisions of the Act, including its implementing rules and regulations.

The Consumer Act's Article 4 defines the terms used throughout the law, including "Advertisement," "Advertising," "Advertising Agency or Agent," "Advertiser," and "Mass Media." These definitions establish who is covered and what forms of commercial communication fall within the law's scope. The exact wording of each definition should be read in the statute itself, as reproduced in the firm's library copy of Republic Act No. 7394.

The core prohibition: no deceptive or unfair claims

The Consumer Act's declared policy under Article 2 is to protect consumers against deceptive, unfair and unconscionable sales acts and practices. This is the general standard that governs advertising claims. A claim that misrepresents a product's attributes, features, quality, or availability runs against this policy.

Article 3 of the Consumer Act provides that the best interest of the consumer shall be considered in the interpretation and implementation of the provisions of the Act, including its implementing rules and regulations. This means ambiguities in advertising claims are not resolved in favor of the advertiser.

Price comparison and price display rules

The Consumer Act's Article 4 defines Price comparison as the direct comparison in any advertisement of a seller's current price for consumer products or services with any other price or statement of value for such property or services expressed in pesos, centavos, fractions or percentages. Advertisers making price comparisons must ensure the comparison is not misleading.

The Internet Transactions Act reinforces price transparency online. Under Section 23(a), an e-retailer or online merchant must indicate the price of goods and services offered, consistent with Article 81 of the Consumer Act. E-marketplaces and other digital platforms must also require merchants to indicate the name and brand, price, description, and condition of the goods or services in their product offers.

Advertising rules for online merchants and platforms

The Internet Transactions Act imposes disclosure duties that function as advertising standards for e-commerce:

• E-marketplaces must ensure that internet transactions on their platform are clearly identifiable as e-commerce transactions, identify the persons on whose behalf the transaction is made, and identify any promotional offer — including any discount, premium, or gift — with the conditions to qualify made accessible, clear, and unambiguous (Section 21).
• Other digital platforms must enable consumers to distinguish between commercial and non-commercial or private accounts, and must prohibit the sale and advertisement of regulated goods unless the necessary permits and license information are provided (Section 22).
• E-retailers must publish on their homepage their corporate and trade or business name, the address of their physical shop or place of business, and contact details including a mobile or landline number and a valid e-mail address (Section 23(f)).

These provisions matter for advertising because promotional posts, sponsored listings, and product pages are all subject to the same transparency requirements.

Penalties for prohibited advertising claims

The Internet Transactions Act penalizes deceptive, unfair or unconscionable sales acts or practices done through the internet. Under Section 29(b), an online merchant or e-retailer found guilty of such acts faces, in addition to penalties under the Consumer Act:

• First offense: a fine ranging from Twenty thousand pesos (P20,000.00) to One hundred thousand pesos (P100,000.00).
• Second offense: a fine ranging from One hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00).
• Third and subsequent offenses: a fine ranging from Five hundred thousand pesos (P500,000.00) to One million pesos (P1,000,000.00).

Violations of the disclosure duties under Sections 21, 22(b), (c) or (d), and 23(a), (f), or (i) carry separate fines under Section 29(e). The DTI Secretary may increase the schedule of fines every five years to maintain their real value, and in fixing the amount, must consider both the gravity and the duration of the violation.

Who enforces advertising rules

The Department of Trade and Industry (DTI) exercises regulatory jurisdiction over the use of the internet for e-commerce by e-marketplaces, online merchants, e-retailers, digital platforms, and third-party platforms (Section 12 of the Internet Transactions Act). The DTI Secretary may issue a compliance order to require conformity with the Internet Transactions Act, the Consumer Act, or other applicable trade and consumer protection issuances (Section 14).

The DTI Secretary may also issue a takedown order directing the removal of a listing or offer when, among other grounds, the goods or services are prohibited or regulated under existing laws, are subject to a cease and desist order, or otherwise threaten public or personal safety (Section 15). The violating entity must be given an opportunity to be heard within forty-eight (48) hours from issuance.

Frequently asked questions

What makes an advertisement illegal in the Philippines? An advertisement is illegal when it constitutes a deceptive, unfair or unconscionable sales act or practice. The Consumer Act's declared policy is to protect consumers against such practices, and the Internet Transactions Act penalizes them when done online.

Are online promotions covered by advertising rules? Yes. E-marketplaces must ensure that any promotional offer, including any discount, premium, or gift, is identified and that the conditions to qualify are accessible, clear, and unambiguous (Section 21 of the Internet Transactions Act).

What penalties can an online seller face for false advertising? Under Section 29(b) of the Internet Transactions Act, fines range from P20,000 to P100,000 for a first offense, up to P500,000 to P1,000,000 for a third and subsequent offense, in addition to penalties under the Consumer Act.

Practical takeaways

• The Consumer Act prohibits deceptive, unfair and unconscionable sales acts and practices, and the best interest of the consumer governs how the law is interpreted.
• Advertising is defined broadly to cover any form of mass media, including billboards, leaflets, and online posts.
• Online merchants must clearly disclose price, name and brand, description, and condition of goods or services.
• E-marketplaces must make promotional offers and their conditions clear and unambiguous.
• The DTI can issue compliance orders and takedown orders, and impose fines that increase for repeat offenses.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 7394 - THE CONSUMER ACT OF THE PHILIPPINES

• REPUBLIC ACT NO. 11967 - AN ACT PROTECTING ONLINE CONSUMERS AND MERCHANTS ENGAGED IN INTERNET TRANSACTIONS, CREATING FOR THIS PURPOSE ELECTRONIC COMMERCE BUREAU, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.