Mr. Jose P. Quiambao

September 21, 1987 Mr. Jose P. Quiambao Panlilio Quiambao & Co. No. 7 Lachica Bldg., Marlim Avenue Diamond Subdivision, Balibago, Angeles City Sir : This has reference to your letter dated August 19, 1987, requesting for the opinion of this Commission on whether or not the nature of the business that your prospective client proposes to engage in is within the purview of the "advertising industry" and as to whether there are limitation therefor. cdlex It appears that your client is a foreigner. The nature of business will be to solicit ads from various companies or customers to be published in a local paper exclusively for said ads. The paper will be published regularly to be distributed free to the advertisers, and will not contain any news. You now require the opinion of this Commission whether or not the above business is within the concept of advertising and therefore subject to ownership restrictions. Article XVI, Sec. 11 of the Philippine Constitution provides en toto , and we quote: "SECTION 11. (1) The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly named and managed by such citizens. The Congress shall regulate or prohibit monopolies in commercial mass media when the public interest so requires. No combinations in restraint of trade or unfair competition therein shall be allowed. (2) The advertising industry is impressed with public interest, and shall be regulated by law for the protection of consumers and the promotion of the general welfare. Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry. The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines." From the above, it is clear that only Filipino citizens and corporations can own and manage mass media. It is likewise clear that only Filipino citizens or corporations owning at least 70% of the capital can engage in the advertising industry. Be that as it may, there is a need, however, to define the term "mass media". The term "mass media" in the Constitution refers to any medium of communication, a newspaper, radio, motion pictures, television, designed to reach the masses and that tends to set the standards, ideals and aims of the masses. (Op. 163, s. 1973) The distinctive features of any mass media undertaking, is the dissemination of information and ideas to the public, or a portion thereof. (Op. No. 120, s. 1982) The citizenship requirement is intended to prevent the use of such facility by aliens to influence public opinion to the detriment of the best interests of the nation. If the publication is intended for dissemination in the Philippines, albeit to a limited community of Korean residents, the undertaking is subject to the constitutional provision making mass media a completely nationalized activity . (Emphasis supplied) (Opinion No. 24, s. 1986, of the Ministry of Justice) Likewise, there is a need to distinguish advertising agencies from mass media. In its Opinion No. 22, s. 1975, the Ministry of Justice has ruled that "essentially the function of advertising agencies is to serve as agents or counsellors of advertisers by writing, preparing or producing the commercial messages or materials used by advertisers in selling their goods and services and by selecting and recommending the medium or media to be used as the vehicle for disseminating such messages to the public. It is pointed out that advertising agencies do not actually disseminate the materials they prepare as they have to utilize or avail of the facilities of mass media, i.e., newspapers, radio, television, etc., . . . I agree with you that advertising agencies are not mass media, as this term is understood in its ordinary acceptation which is the connotation that the Constitution should be deemed to employ." "If the advertising agency actually disseminates information, or operates or controls or otherwise engages in the business of mass media . . . they would come within the purview of the constitutional limitation." It is, therefore, opined that the constitutional provision prescribing Filipino ownership of at least 70% of the capital refers to advertising agencies. The said provision is not a license or permit for advertising agencies to engage in mass media. In this instance, since the paper will be distributed to customers in the Philippines, the same would fall under the category of advertising which is included in the definition of "mass media", and therefore comes within the purview of the said constitutional limitation. Please be advised accordingly. prcd Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman