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Interference with

Prospective Advantage
If there is no contract yet and the

defendant is only being sued for


inducing another not to enter into a
contract with the plaintiff, the tort
committed is appropriately called
interference
with
prospective
advantage.

Tuttle vs. Buck


Defendant in said case was a wealthy

banker and a man of considerable


influence in the community. He
maliciously established a barber shop
and employed his influence to attract
the customers of the plaintiffs barber
shop. The defendants sole purpose in
establishing his shop was to ruin the
plaintiff. Having successfully ruined the
plaintiff, the defendant sued the former.

The Court sustained the plaintiff stating that:

When a man starts an opposition place of


business, not for the sake of profit himself, but
regardless of loss to himself, and for the sole
purpose of driving his competitor out of
business, and with the intention of himself
retiring upon the accomplishment of his
malevolent purpose, he is guilty of a wanton
wrong and an actionable tort. In such a case he
would not be exercising his legal right, or doing
an act which can be judged separately from the
motive which actuated him. To call such conduct
competition is a perversion of terms. It is simply
the
application
of
force
without
legal
justification, which in its moral quality may be
no better than highway robbery.

Unfair Competition
Article 27 of the Civil Code provides

that unfair competition in agricultural,


commercial or industrial enterprises,
or in labor through the use of force,
intimidation, deceit, machination or
any unjust, oppressive or highhanded
method shall give rise to a right of
action by the person who thereby
suffers damage.

Section

2 of Article XIV of the


Constitution provides: The State
shall regulate or prohibit private
monopolies when the public interest
so requires. No combinations in
restraint
of
trade
or
unfair
competition shall be allowed.

Article

186.Monopolies
and
combinations in restraint of trade.- The
penalty of prision correccional in its
minimum period or a fine ranging from
200 to 6,000 pesos, or both, shall be
imposed upon:

1. Any person who shall enter into any

contract or agreement or shall take part


in any conspiracy or combination in the
form of a trust or otherwise, in restraint of
trade or commerce or to prevent by
artificial means free competition in the
market;

2. Any person who shall monopolize

any merchandise or object of trade or


commerce, or shall combine with any
other
person
or
persons
to
monopolize and merchandise or
object in order to alter the price
thereof by spreading false rumors or
making use of any other article to
restrain free competition in the
market;

3. Any person who, being a manufacturer, producer,

or processor of any merchandise or object of


commerce or an importer of any merchandise or
object of commerce from any foreign country, either
as principal or agent, wholesaler or retailer, shall
combine, conspire or agree in any manner with any
person likewise engaged in the manufacture,
production, processing, assembling or importation
of such merchandise or object of commerce or with
any other persons not so similarly engaged for the
purpose of making transactions prejudicial to lawful
commerce, or of increasing the market price in any
part of the Philippines, of any such merchandise or
object of commerce manufactured, produced,
processed, assembled in or imported into the
Philippines, or of any article in the manufacture of
which such manufactured, produced, or imported
merchandise or object of commerce is used.

Passing Off and


Disparagement of
Products
The Intellectual Property Code or

Republic Act No. 8293 gives a


definition of the term unfair
competition.

Section

168.Unfair
Competition,
Rights,
Regulation and Remedies. - 168.1. A person who
has identified in the mind of the public the goods
he manufactures or deals in, his business or
services from those of others, whether or not a
registered mark is employed, has a property right
in the goodwill of the said goods, business or
services so identified, which will be protected in the
same manner as other property rights.
168.2. Any person who shall employ deception or
any other means contrary to good faith by which he
shall pass off the goods manufactured by him or in
which he deals, or his business, or services for
those of the one having established such goodwill,
or who shall commit any acts calculated to produce
said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.

168.3. In particular, and without in any way limiting

the scope of protection against unfair competition, the


following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives
them the general appearance of goods of another
manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in
which they are contained, or the devices or words
thereon, or in any other feature of their appearance,
which would be likely to influence purchasers to
believe that the goods offered are those of a
manufacturer or dealer, other than the actual
manufacturer or dealer, or who otherwise clothes the
goods with such appearance as shall deceive the
public and defraud another of his legitimate trade, or
any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like
purpose;

(b) Any person who by any artifice, or

device, or who employs any other


means calculated to induce the false
belief that such person is offering the
services of another who has identified
such services in the mind of the public;
or
(c) Any person who shall make any
false statement in the course of trade
or who shall commit any other act
contrary to good faith of a nature
calculated to discredit the goods,
business or services of another.

Interference
Unfair

competition includes cases


involving the tort of interference with
contractual
relations
and
interference
with
prospective
advantage.

Misappropriation
International News Service vs. Associated Press
The defendant INS was held to have been guilty of unfair competition when it appropriated news taken from bulletins issued by
complainant Associated Press. The parties were competitors in the gathering and distributions of news and its publication for profit
in newspapers in the U.S. The Court explained that news of current events are not copyrightable and may be regarded as common
property. However, competitors are under a duty to conduct its own business so as not unnecessarily or unfairly injure that of the
other.

Monopolies and Predatory


Pricing

Gokongwei vs. The Securities and Exchange Commission


There are other legislation in this jurisdiction, which prohibit monopolies and combinations in restraint of trade. Basically, these
anti-trust laws or laws against monopolies or combinations in restraint of trade are aimed at raising levels of competition by
improving the consumers effectiveness as the final arbiter in free markets. These laws are designed to preserve free and unfettered
competition as the rule of trade. The law against monopolies and combinations that, by reason of the inherent nature of the
contemplated acts, prejudice the public interest by unduly restraining competition or unduly obstructing the course of trade.

FRAUD
A false representation of a matter of fact

whether by words or by conduct, by false or


misleading allegations, or by concealment of
what should have been disclosedthat deceives
and is intended to deceive another so that the
individual will act upon it to her or his legal injury.
Fraud is commonly understood as dishonesty
calculated for advantage. A person who is
dishonest may be called a fraud. In the legal
system, fraud is a specific offense with certain
features.

Anti-fraud provisions of
the Securities Regulations
Sec 26. Fraudulent transactions- (a) it shall be
Code:
unlawful for any person, directly, or indirectly, in
connection with the purchase or sale of any securities26.1 Employ any device, scheme, or
artifice
to defraud;
26.2 Obtain money or property by means of
any untrue statement of a material fact or any
omission to state a material fact necessary in order
to make the statements made, in the
light of the circumstances under which they
were made, not misleading; or

26.3 Engage in any act, transaction,


practice, or
course of business which
operates or
would operate as a
fraud or deceit upon
any
person.

OBJECTIVE
The essential objective of securities

legislation is to protect those who do


not know market conditions from
overreaching of those who do.
Implicit from any violation of the
Securities Regulation Code is the
liability for damages caused by such
violation.

CHARLES HUGHES & CO. v.


SECURITIES AND EXCHANGE
Petitioner was incorporated on April 9, 1940,
COMMISSION

under the laws of New York, and maintains its


principal office and place of business in New York
City. It is engaged in over-the-counter trading in
securities as a broker and dealer, being
registered as such with the Commission. The
dealings which resulted in the revocation were
continued sales of securities to customers at
prices very substantially over those prevailing in
the over-the-counter market, without disclosure
of the mark-up to the customers.
The Commission concluded that such practices
constituted fraud and deceit upon the customers.

MISTATEMENTS
KINDS:
1.False Registration Statement
2.Prospectus and the like

1. FALSE REGISTRATION
STATEMENT
PLAINTIFF:

Sub-section 56.1 of the Securities

Regulation Code gives right:


Any person acquiring a security, the
registration statement of which or any
part thereof contains on its effectivity
an untrue statement of a material fact
required to be stated therein or
necessary to make such statements
not misleading, and who suffers
damage, to sue for damages.

He is not entitled to damages if at


the time of such acquisition he knew
of such untrue statement or
omission.

Limitations with respect to matters


stated in an income statement:
56.2 of Securities Regulation Code
If the person who acquired the security did so
after the issuer has made generally available to
its security holders an income statement
covering a period of at least twelve (12) months
beginning from the effective date of the
registration statement, then the right of
recovery under this subsection shall be
conditioned on proof that such person acquired
the security relying upon such untrue statement
in the registration statement or relying upon
the registration statement and not knowing of
such income statement, but such reliance may
be established without proof of the reading of
the registration statement by such person.

DEFENDANTS:
(a) The issuer and every person who signed
the registration statement;
(b) director or partner or any person with
similar functions at the time of the filing of
the registration statement or any part,
supplement or amendment thereof with
respect to which his liability is asserted;
(c) Every person who is named in the
registration statement as being or about to
become a director of, or a person performing
similar functions, or a partner in, the issuer
and whose written consent thereto is filed
with the registration statement;

(e) Every person who, with his written consent,

which shall be filed with the registration


statement, has been named as having prepared
or certified any part of the registration
statement, or as having prepared or certified
any report or valuation which is used in
connection with the registration statement,
with respect to the statement, report, or
valuation, which purports to have been
prepared or certified by him.
(f) Every selling shareholder who contributed to
and certified as to the accuracy of a portion of
the registration statement, with respect to that
portion of the registration statement which
purports to have been contributed by him.
(g) Every underwriter with respect to such
security.

DEFENSES:
The defendants are free from liability if

they can prove that at the time of


acquisition, the plaintiff knew of the untrue
statement or omission.
The plaintiff cannot be said to have relied
on the untrue statement if he was aware of
the falsity thereof.
It is an assumption of risk because the
plaintiff made the investment knowing the
danger thereof on account of the false
statements

DAMAGES:
Suits may be filed before the Regional

Trial Court;
RTC may award damages in the amount
not exceeding TRIPLE the amount of the
transactions plus actual damages.

LIABILITY
2 or more persons: SOLIDARY
However, any person who becomes liable for

the payment of such damages may recover


contribution from any other person who, if sued
separately, would have been liable to make the
same payment unless the former wars guilty of
fraudulent representation and the latter was
not.
All persons held liable shall contribute equally
to the total liability adjudged therin.

2. PROSPECTUS and the


like
A formal legal document, which is

required by and filed with the


Securities and Exchange Commission,
that provides details about an
investment offering for sale to the
public. A prospectus should contain the
facts that an investor needs to make
an informed investment decision.
Also known as an "offer document."

Civil liabilities for the false statements in the prospectus,


communications and reports are defined in:
SEC. 57. Civil Liabilities Arising in Connection With
Prospectus, Communications and Reports. - 57.1. Any
person who:
(a) Offers to sell or sells a security in violation of Chapter III;
or
(b) Offers to sell or sells a security, whether or not
exempted by the provisions of this Code, by the use of any
means or instruments of transportation or communication,
by means of a prospectus or other written or oral
communication, which includes an untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements, in the light of the
circumstances under which they were made, not misleading
(the purchaser not knowing of such untruth or omission),
and who shall fail in the burden of proof that he did not
know, and in the exercise of reasonable care could not have
known, of such untruth or omission, shall be liable to the
person purchasing such security from him, who may sue to
recover the consideration paid for such security with
interest thereon, less the amount of any income received
thereon, upon the tender of such security, or for damages if
he no longer owns the security.

(c) Any person who shall make or cause to


be made any statement in any report or
document filed pursuant to this Code or any
rule or regulation thereunder, which
statement was at the time and in the light
of the circumstances under which it was
made false or misleading with respect to
any material fact, shall be liable to any
person who, not knowing that such
statement was false or misleading, and
relying upon such statements, shall have
purchased or sold a security at a price
which was affected by such statement, for
damages caused by such reliance, unless
the person sued shall prove that he acted in
good faith and had no knowledge that such
statement was false or misleading.

PRESCRIPTIVE PERIOD
No action shall be maintained to

enforce any liability unless brought


within 2 years after the discovery of the
facts constituting cause of action and
within 5 years after such cause of
action accrued.