IS THERE AN ACT CALLED ILLEGAL OR UNLAWFUL ADVERTISING

30 Aug

TECHNOLOGY AND THE LAW

IS THERE AN ACT CALLED ILLEGAL OR UNLAWFUL ADVERTISING

 THE SITUATION

 Here’s the situation – an event is being held; a particular person or group of persons sponsored the said event; and during this event, some other individuals take the opportunity to promote their own products, goods, services, or trade, business or profession and getting some exposure when in fact they did not spend any amount of money to contribute for the expense of the event; in other words, without paying sponsorship fee. To be more specific or to give a specific scenario, it’s like this — there’s an event sponsored by a corporation and during the event, another corporation asked some beautiful and pretty ladies to attend the said event; the latter corporation provided these ladies with t-shirts to wear and in the said t-shirts were prints advertising the latter corporation; the latter corporation also paid the tickets of these ladies to enable them to attend to said event; and during the event, the cameraman happened to caught sight of these ladies, and having been mesmerized by the beauty of these ladies, zoomed them in using the camera and these ladies appear in the widescreen; waves their hand or points to their t-shirt; thus giving  the corporation who hired them free exposure or advertisement.

Note that for the purpose of the discussion, I will be referring to them as corporations, but this situation may happen between or may involve any two persons, and when we say person, it may be natural or juridical; juridical for example corporation, partnership or any entity which under the law or by legal fiction are considered person. I may refer to them also as parties, and again, this situation may happen or may involve any two parties where a party may mean an individual or may mean a group of persons.

 THE MAIN ISSUE

To introduce our main issue, I may state it this way: “is a corporation, who having not spent a single centavo to plan and make the event into fruition or who had not paid any sponsorship fee, as the event being sponsored by another corporation, and taking advantage of the event and finding it as an opportune time to promote or advertise their stuffs, be legally liable?

 INTRODUCTION

 To determine whether there is a liability, we need to recall the sources of obligation. Article 1157 of the New Civil Code enumerated from where obligations arise. Obligations may arise from law, from contracts, from quasi-contracts, acts or omission punished by law; and quasi-delicts. For some commentators the enumeration should be trimmed down to only two, namely 1) law and 2) contract; for the simple reason that the other enumerations are governed by provisions of law and therefore, may be merged and classified under law. Having said that, it is assumed, as provided by the situation, there is no contract between the sponsoring corporation and this other corporation. We can say they are perfect stranger. Therefore, should there be any liability of the other corporation to the sponsoring corporation, said liability or obligation will only arise from law.

So the first question to ask in resolving the main issue — what law or laws should apply?

LAWS BEING CONSIDERED

At first glance, it may seems that the laws applicable are commercial laws and so one only need to search for some familiar statutes on commerce and one will easily realize whether there is any violation of the said laws. I can only think of the Intellectual Property Code of the Philippines as the relevant laws in resolving the issue. I was thinking also whether The Consumer Act may come into play.

But be reminded that liability can be criminal or civil; and if we talked about criminal and civil liabilities, we need to consider the applicability of the Revised Penal Code and the Civil Code of the Philippines; after all, these two codes are considered as the general laws as compared to the Intellectual Property Code which we may consider as a special law being for a specific application. It is also settled that the Civil Code is applied suppletorily in the absence of clear provisions in the special laws. Whether it is the provisions of the Civil Code which explicitly states that provisions of the Civil Code are to govern or whether it is the special laws which invoke the applicability of Civil Code provisions, it is clear that the Civil Code may be applied as much as practicable.

 Having narrowed down the list and having determined which laws to scrutinize, we discuss under which particular law or laws the act or probably an omission as described or narrated in the issue, may fall.

To make thing simple, and taking a view of a layman, we may just assume that what we are trying to work out here is a simple case of whether or not there is an illegal advertising. As far as I can remember, I never encountered the term “illegal advertising” as a crime or offense in any statute books, or probably, I was unmindful back then. But definitely, one may argue that if there is an act such as advertising, then probably, there may be a way to do it illegally. But this is not necessarily be so; unless there is a law punishing such an act, there can never be a crime or offense for such an act. But maybe, “illegal” may not be the right term, the right term may have been “unlawful”. While some may say that “illegal” and “unlawful” practically mean the same thing and both terms can be used interchangeably, there is a quite a distinction. Illegal means against or not authorized by law with a connotation that it involves criminality.  Unlawful, on the other hand, means contrary to or prohibited, or unauthorized by law, but not necessarily implying the element of criminality. Unlawful therefore is broad enough to include illegal.

And probably still, illegal advertising is known by any other term or maybe it is but a form of a known unlawful act or omission. Probably, it may be under what we commonly heard of as the unfair competition.

 SPECIAL LAWS AND THE REVISED PENAL CODE 

Actually, it is the Intellectual Property Code of the Philippines (Republic Act No. 8293) which defines what is, or provides which constitutes, unfair competition. Section 168 of said Act essentially states that unfair competition is the employment of 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 results. Section 168 likewise contemplates another form of unfair competition, which is the disparagement of products as embodied in Section 168.3[c] which provides that 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.

From the foregoing, the act or omission as stated in the issue at bar does not fall in any form of unfair competition as contemplated in the Intellectual Property Code of the Philippines. Just to recall, the act or omission we are dealing with is something like illegal advertising, where one person advertises his products when he should have not done so. Under the Intellectual Property Code, what constitutes unfair competition is the act of passing off of one’s product as that of another. It may also be an unfair competition if the act is considered as disparagement of the products. It is clear that the “passing off” or the disparagement of the product is very far from what our situation is all about.

But unfair competition is not exclusively mentioned in the Intellectual Property Code. Unfair competition is also mentioned in Article 189 of the Revised Penal Code; but, unfair competition there seemed to contemplate of something like “passing off” or something dealing with registration of trade-mark, trade-name or service mark or something about the origin and description of products; which again, I could say is far from what our situation is all about. Also, be reminded that the said provision of the Revised Penal Code is expressly repealed by the Intellectual Property Code and is superseded by the provisions of the Intellectual Property Code, one of which we have just discussed earlier.

But then again, unfair competition also appears in the New Civil Code under Article 28. Unfair competition here seems to be so broad that we just need to discuss it later.

Since it is settled that the act or omission we coined as illegal advertising is not within the purview of Intellectual Property Code, then we may need to search for other provisions of the Intellectual Property Code where the said act or omission may fall under. But having skimmed the entirety of the said Code, seems not to find any other applicable or pertinent provisions as the Code deals with the issue of ownership or who has the better right over an intellectual property, which is not at issue in the case at bar.

Since we did not find Intellectual Property Code as applicable, then we proceed with probing the provisions of Revised Penal Code. But then again I did not find any pertinent provisions of the Revised Penal Code applicable to our case. It leaves me to conclude that the act or omission as stated in our case here does not involve violation of any penal laws, whether under the general law which is the Revised Penal Code or under any special laws such as the Intellectual Property Code; and therefore the corporation or any party taking advantage of free exposure in an event sponsored by another corporation is not criminally liable. In one  latin legal maxim, it is said that “nullum crimen sine poena, nulla poena sine lege” – which can be translated to as “there is no crime without a penalty, and there is no penalty without a law.” Stated differently, the point is, before one can say whether there is violation of a right, there must be a law; and to make an act criminal, there must be a penal law punishing it.

THE NEW CIVIL CODE

Since it cannot be established that the act done is punishable under the Revised Penal Code or under another law, specifically the Intellectual Property Code of the Philippines, we can now proceed with the New Civil Code. If a party cannot be held criminally liable, can it be civilly liable instead?

Even if there is no criminal liability on the part of the defendant, he may still be held civilly liable. If we can recall, unfair competition is also mentioned in the New Civil Code and as we have said, it is broad as compared to the scope of the provisions appearing in the Revised Penal Code or in the Intellectual Property Code. Article 28 states that “unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage.” Here it is mentioned that there shall give rise to a right of action by the person who thereby suffers damage. To make more obvious what I tried to point out, a person (in our case the sponsoring corporation) should suffer damage.

Before we decide whether there is damage to the sponsoring corporation, we may consider other concepts or principles under the Civil Code. We may need to tackle abuse of right and unjust enrichment. And if everything else fails to find fault in the act or omission, we are considering then, that the said act may be scrutinized under the “catch-all provisions” of the Civil Code, and so, the alleged violator, may not be faultless after all.

The principle of the abuse of right stated in Article 19 of the Civil Code departs from the classical theory that “he who uses a right injures no one.” Article 19 sets certain standards which may be observed not only in the exercise of one’s right but also in the performance of one’s duty (p. 53, The Law on Persons and Family Relations, Rabuya, 2006 ed.). Now to understand the principle better, we may need to know the elements of abuse of the right. Based on the provision itself, the elements are: 1)           there is a legal right or duty; 2) which is exercised in bad faith; 3) for the sole purpose of prejudicing or injuring another. Now under this principle, we need to define bad faith and also we need to determine whether on the said act, is there the sole purpose of prejudicing or injuring another. Looking back, we seemed to have a hanging question back there; and we seemed to have some more here. For us not to forget we should be listing them down and here they are:

1. Whether the sponsoring corporation suffer any damage by the act of the “opportunist” corporation?

2. Whether there was bad faith on the part of this “opportunist” corporation?

3. Whether the act of this “opportunist” corporation is for the sole purpose of injuring another?

Before we answer them, we may need to analyze first the principle of unjust enrichment as they may pose the same questions or issues and so we don’t need to deal with them separately. The principle that no one shall enrich himself at the expense of another is embodied in Articles 21, 22, and 23 of the New Civil Code; but the pertinent provision may be Article 22 and 23 only. Article 22 states that “every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him;” while Article 23 states that “even when an act or event causing damage to another’s property was not due to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited.”

Points of interest in Article 22 is the phrase “at the expense of another” and the phrase “the same shall return.” The first phrase may pertain to the damage caused to another; and so, should we need to make an issue out of it, it may have been covered by the first in the list of our pending issues. Out of the second phrase, we may just come up with a question “is there an obligation to return any?”;  making that our fourth hanging questions. And of Article 23, I guess there’s no need to dig into it deeper. Actually Articles 22 and 23 seems to have nothing to do with our main issue for the said articles seem to deal with certain tangible thing or property and therefore is capable of being destroyed or returned; whereas our main issue seems to deal with an unrealized or indeterminate benefit, or some intangibles. We just tried to extend the application of these provisions to see whether there could have been some points being missed.

We may need to know the elements or requisites of unjust enrichment. Here are the elements:

  1. That the defendant has been enriched
  2. That the defendant suffered a loss
  3. That the enrichment of the defendant is without just or legal ground
  4. That the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. (p. 68, The Law on Persons and Family Relations, Rabuya, 2006 ed.)

Based on these requisites, what appears repeatedly, although being stated using the different wordings, is the reference to damage or the suffering of loss. So, we don’t need to add another one in our list of pending issues.

Then lastly, we have the catch-all provisions as embodied in Articles 19, 20, and 21. We are already familiar with Article 19 as we have discussed about the abuse of right. But what can be observed from Article 20 and 21, those provisions deal again with damage.

So I guess our list of pending issues is complete. Just to repeat, below are the four issues we need to resolve in order to answer the ultimate issue at hand.

1.Whether the sponsoring corporation suffer any damage by the act of the “opportunist” corporation?

2. Whether there was bad faith on the part of this “opportunist” corporation?

3. Whether the act of this “opportunist” corporation is for the sole purpose of injuring another?

4. Whether or not there appears to be an obligation to return a thing or the equivalent, if any?”

On the first question, I don’t believe that the sponsoring corporation suffered any damage. In general science, there is a relationship called commensalism and therefore, I can consider the relationship between these corporations at issue as something like that. In commensalism, an organism benefitted from another while the other suffered no injury nor received any benefit on return; or put simply, a relationship where an organism benefitted from the other organism without affecting the latter. An example is a tree and a vine. While the vine may need the tree to climb to for it to grow, the tree does not get anything from the vine nor was it being injured. So it is quite possible that while a party benefitted, other party may not mind it benefitting at all. But again, since a party benefitted, then there could have been unjust enrichment. Since there is no damage being done to the sponsoring corporation, there can never be unjust enrichment to talk about, neither there can be an abuse of a right in the absence of injury to another.

On the second question, was there bad faith on the part of the corporation given free exposure? Well I can say no. For me, there can only be bad faith when there is an intent to benefit at the expense of another or an act or manoeuvre to expose the other party to risk or loss. In a case, it was said that “malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill will.” (Luzon Brokerage, Co., Inc. vs. Maritime Building, Co., Inc., 43 SCRA 93). Since we have established that there is no damage or injury to the sponsoring corporation, then there can be no bad faith. It is but natural for a person, whether a natural or juridical, to seek to be at an advantageous situation; and advantageous does not necessarily mean prejudicial to another party.

As for the third question, since we have ruled out damage to the sponsoring corporation, I don’t think I need to elaborate further. And even if the injury may be referring to injury to be inflicted to another other than the sponsoring corporation, I don’t think that the sole purpose of this benefitting corporation is to solely cause injury to another. Definitely, its purpose is to promote its products or goods, to establish goodwill probably, or to appear visible so people will remember it and its product.

As to the fourth question, I can’t think of anything which the benefitting party should be returning to the sponsoring party. First, it may not be true that said corporation did not spend anything. First, it bought a ticket to attend or make others to attend such event. So we can say that actually, there’s a symbiotic relationship whereby the sponsoring corporation benefitted in the form of ticket sales while the “opportunistic” corporation benefitted for having attended the event for whatever reason it has for participating or attending such event. Also, it may be worth pointing out that the “opportunist” corporation did not really make any further efforts in order to promote its brand. To recall, it is the cameraman who gave those ladies free exposure. If the cameraman would have decided not to focus on them, there should have been no issue. He has control on what may appear on the screen. If the ladies employed or commissioned by the “opportunist corporation” which may be a competitor of the sponsoring corporation, were given exposure, then the sponsoring corporation should have advised its cameraman to avoid giving exposure to its competitor. I don’t think that there is a law which prohibits a corporation to attend to an event sponsored by its competitor unless the event is such a private one or definitely for valid reason of refusal to admit such expectators or visitors.

Also, it might even be conceived that by zooming in into the images of the ladies, the cameraman is thinking that it gives more excitement to the event, and attracting more people to watch, and could have contributed to the success of the event in general for what could have boost the reputation of a sponsoring corporation in holding such event is the attendance of so many people, what more if those people attending are attention-getting; so I believe the cameraman did just what is expected of him; that is to capture every pleasing sight or happening or even fascinating people.

But I may need to explain that my argument is not applicable only based on the premise that the tactics employed by a corporation is the sending of beautiful ladies in an event sponsored by another. Whatever tactics the advertising corporation employed, as long as not coupled with other unlawful acts, will be covered by my arguments.

Finally, I need not discuss the principle of damnun absque injuria or “loss or damage without injury” for as I have said, I see no damage nor injury nor loss on the part of the sponsoring corporation in said situation. But it is important to note that damnun absque injuria  emanates from a classical theory which states that “he who exercise his right injures no one.” And if there be damage, then let’s just say that it’s covered by this principle, although really there should be another lengthy discussion for that.

CONCLUSION

It is clear that I am convinced that there is no violation on the part of the corporation which took the opportunity to promote its brand in a way which may appear to some as something unethical or against moral standards. Some may argue then that since the act is unethical therefore, the said corporation should be held liable still. It would seem then that if that corporation cannot be held criminally or civilly liable, it can be held morally liable. But a moral or natural obligation is different from a legal obligation or duty. Moral obligation is an obligation arising out of consideration of right and wrong; but it does not necessary constitutes a legal duty. Article 1423 of the New Civil Code classifies obligations into civil or natural. “Civil obligations are a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof.”

 It is clear there is a moral obligation is not something which is enforceable before a court of law. Mere natural obligation does not grant a right of action to enforce its performance. And so since I see that there is no law violated, there can be no legal remedy for the allegedly offended party. Moral obligation is not something which is demandable before a court a law.

In the absence of any law regulating advertisements, it will be worth noting that conduct of advertising firms and the sponsorship thing, as of now, is being governed by the Code of Ethics of Advertising Board of the Philippines. But note also that such code of ethics has binding effect only to its member. But violating the code of ethics may not really result to imposing penalties except termination of membership or fine, but then again, the courts will not interfere in the internal affairs of an organization in the absence of violation of a positive law enacted by the duly constituted legislative body.

To finally conclude, since there is no law punishing such act or making such act a source of obligation, whether be under penal or civil laws, there can never be an unlawful or illegal advertisement within the context of the situation contemplated.

REFERENCES:
The Intellectual Property Code of the Philippines

The Revised Penal Code

The Civil Code of the Philippines

Luzon Brokerage, Co., Inc. vs. Maritime Building, Co., Inc., 43 SCRA 93

The Law on Persons and Family Relations, 2006 edition, by Rabuya

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