No Free Ride

Pedro (wearing white sando, navy blue board shorts, black sunday slippers, and police shades) standing at the corner of Pablo Ocampo and Taft Avenue Sts, Pasay City.  Today is May 15, 2013, at 11:10 o’clock in the morning; the sun is as if at the biggest and the hottest point during that day.  Pedro was already too late for the agreed time and place of assembly, which was 09:00 am at the corner of Pablo Ocampo and Taft Avenue Sts, Pasay City, where a coaster would fetch them to San Juan, Batangas.

Pedro, although exasperated, is determined join his high school friends in soaking the world renowned infinity pools of Batangas.  After five minutes of thinking and planning for his next course of action, Pedro noticed a group of students (college freshmen perhaps – wearing summer outfits) rushing towards him and instantly stop upon reaching that part of the walkway, where he is standing.  Pedro was lost in the mob of students.

Suddenly, a bus (60 sitters) made a turn and stop at the portion of the road just adjacent to the walkway where Pedro and students stand.  Pedro noticed a streamer hanged in the side of the bus, facing Pedro.  The streamer contains the phrase: “Group 4 – bound to San Juan, Batangas”.

As soon as the Bus’ door opens, the group of students rushed towards the bus’ ingress in panic, as if they are on a competition in getting the front row in a movie house.  Due to the continuous running, brisk walking, and tagging, Pedro was washed by the stampede into the direction of the bus’ door.  After few seconds, Pedro – without his consent – was already inside of the bus.

Pedro, tired and sweating, looks at the bus sits as if those are cotton beds – very tempting, very inviting.  Without any second thought, Pedro occupied the nearest available sit.  Pedro closed his eyes, felt the comfort of sitting in a tourist coach, and minutes later – Pedro was already dreaming of paradise.

After two hours, Pedro was awakened by commotion.  Students were already disembarking from the coach.  Pedro asked his seatmate, “where am I?” the student (female – average look) replied: “we are in San Juan, Batangas!”  Alas! Pedro is exactly at the place where he wanted – without him knowing!  Above all, Pedro arrived at Batangas at no cost!  Pedro just experienced a free ride.

Pedro, upon stepping his right foot into the ground, heard sounds of drums and trumpets – as if they were rejoicing for the arrival of a king!  Seconds later, two ladies approached Pedro holding an enormous sized-check! The check was payable to Cash, amounting to P100,000.00.  The two ladies occupied the left and right sides of Pedro, instructing the latter to hold the check while the flashes of camera sparks all over the place.  Pedro just was awarded as the 100,000th visitor of the resort.  Pedro won the price at no cost!

What a day!

Pedro actually rode with a group of students – having their summer camp at Batangas.  These students, chipped part of their allowances and savings in order to pay for the transportation cost (rental fee of the coach) from Pasay to Batangas.  Pedro on the other hand, incurred no single centavo for his ride.  Moreover, if Pedro did not make a free trip in the coach, the P100,000.00 would have been awarded to a student participant.

Nemo ex alterius incommode debet lecupletari (no man ought to be made rich out of another’s injury), as can be gleaned from the above story, Pedro enriched himself – his transportation from Pasay to Batangas imposed no monetary cost unto him and he also thwarted a chance from a bona fide student – who could have won the 100,000th visitor award.

Do the students have a valid cause action against Pedro?

The case of Pedro can be compared to a situation during prominent events, wherein different Companies pay certain monetary or non-monetary contributions to the event organizer/s for a chance to have the formers’ names, trademarks, service marks, etc. captured in the cameras; flashed on the monitors; printed in the leaflets, posters and streamers; and similar mode of publicity; as a gold, silver, primary, secondary, etc. sponsor of the event.

However, without the knowledge of the sponsors and organizers, few other companies clandestinely share in the sponsors’ privilege – that is, the opportunity to have their distinct marks publicized throughout the celebration of the event.  These unscrupulous companies usually contract certain individuals to wear apparels containing the former’s logo or any distinct mark that would immediately make a reasonable man connect that particular mark to the former.

There are however times when these companies – gained publicity thru persons who voluntarily use/display the products of the former during the duration of the event.   The publicity is indirectly created thru the selfie shots or group shots made by these individuals.  Those shots incidentally emphasize the logo or distinctive marks of those companies (who are not event sponsors).  Subsequently, when those shots are uploaded   to different social media, the public (social media subscribers/viewers) would somehow recognize those marks and connect them with the ongoing event.  As such, the owners of those marks were able to penetrate the event and having acquired the benefits an event sponsor without having paid any centavo for the cost of sponsorship.  The owners of the marks had experienced a “free ride”.

Just like the case of Pedro, is it proper to demand damages against these free-riders? Or would it be possible to enjoin these selfie/group shots owners not to upload their photos into social media or any public performance?

In France, the authorities prohibit television and radio personalities to mention the terms “facebook” of “twitter” unless it’s in direct relation to a specific news story on the subject.  In the words of certain CSA spokesperson Christine Kelly:

 “Why give preference to Facebook, which is worth billions of dollars, when there are many other social networks that are struggling for recognition. This would be a distortion of competition. If we allow Facebook and Twitter to be cited on air, it’s opening a Pandora’s Box — other social networks will complain to us saying, ‘why not us?”[i]

France had already recognized the evil brought into the industry of these “free-riders”.  French authorities refer to such effect as “distortion of competition”.

Unfortunately, there is yet no rule in the Philippines, which is equivalent to that in France.

In the Philippines, however, there were already court cases involving “unfair competition”.  From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public of the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public.[ii]

Jurisprudence also formulated the following “true test” of unfair competition: whether the acts of the defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular trade to which the controversy relates.  One of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent to deceive, actual or probable must be shown before the right to recover can exist.[iii]

In our case, there should exist that the stranger (non-sponsor) ever attempted to portray in the public that it is one of the sponsor in the event, where in reality it is not.  Specifically, the legitimate sponsor should adduce sufficient evidence to show that the stranger’s acts intended to deceive the public as to the legitimacy of his sponsorship.  Failure to show such intent would not be considered as “unfair competition”.

Meanwhile, the 1987 Philippine Constitution provides that, “The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations.”[iv]

The above provision contains the “doctrine of incorporation”.  Wherein the generally accepted principles of international law are deemed incorporated in our domestic laws without the need of an enabling legislation.  It also stipulates the State’s policy to adopt international agreement or treaties which is compatible to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations.  In relation to the mentioned state policy, the Philippines signed the 1967 Paris convention for the Protection of Industrial Property.

ARTICLE 10bis[v] of the Paris Convention considered the following as “unfair competition”, thus prohibited:

1. all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;

2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;

3. indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.

The first prohibition entails that all acts which tends to confuse by any means whatever with the commercial activities of a competitor.  Relating this treaty provision with our case, it would imply that the acts of the non-sponsor companies in meddling (free-riding) with the bona-fide sponsors, creating a premise in the minds of ordinary observers that such non-sponsor were really and legally are sponsors of said event, would be equivalent to the phrase “to confuse by any means… the commercial activity of a competitor”.  Thus, such act is clearly prohibited under the treaty.

Moreover, said competitor cannot assail that such exclusivity of the right to “publicize” throughout the event would constitute a “monopoly”.  In the first place, prior to such event, all of the companies who wanted to participate as sponsors were given an equal chance.  However, since only few took such chance, it should follow that all others are deemed to have waived their right to participate.

Further, granting but not admitting that such “exclusive right” is considered monopoly, the “monopoly per se is not prohibited.  The 1987 Philippine Constitution is clear on that matter, it provides that “The state shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.”[vi]

Monopolies are not prohibited as such (rule of reason) and it is only when the public interest is affected that monopolies may be regulated.[vii]

As regards to those who upload selfie/group shots emphasizing non-sponsor marks, can their right to upload such pictures into the internet or to have them exhibited to the public be curtailed?  If yes, will be curtailment not be a violation of the freedom of expression under the Bill of Rights?

Section 4, Article II of the 1987 Philippine Constitution provides that, “No law shall be passed abridging the freedom of speech, of expression, or the press, or the right of the people peaceably to assemble and petition the government for redress of grievance.”

In one case,[viii] the Court held that the right of freedom of expression indeed, occupied a preferred position in the “hierarchy of civil liberties”.  It is not, however, without limitations.  From the language of the specific constitutional provision, it would appear that the right is not susceptible to any limitation.  No law may be passed abridging the freedom of speech and of the press.  The realities in life complex society preclude however, a literal interpretation, freedom of expression is not absolute.  It would be too much to insist that all times under all circumstances it should remain unfettered and unrestrained.  There are other societal values that press for recognition.[ix]  It would however, necessary to have a Supreme Court decision in order to place the “unfair competition” under the umbrella of those societal values that weighs higher compared to the freedom of expression.

Absence of such Supreme Court ruling would however, not make a deprived person without any remedy under the law.   Prevailing jurisprudence defines a right as a power, privilege, or immunity guaranteed under a constitution, statute or decisional law, or recognized as a result of long usage, constitutive of a legally enforceable claim of one person against another.  The abuse of rights rule established in Article 19 of the Civil Code requires every person to act with justice, to give everyone his due; and to observe honesty and good faith.  When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held accountable.  In this instance, the issue is not so much about the existence of the right or validity of the order of demolition as the question of whether or not petitioners have acted in conformity with, and not in disregard of, the standard set by Article 19 of the Civil Code.[x]

Article 22 of the Civil Code provides 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.  The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as “basic principles to be observed for the rightful relationship between human beings and for the stability of the social order, . . . designed to indicate certain norms that spring from the fountain of good conscience, . . . guides human conduct [that] should run as golden threads through society to the end that law may approach its supreme ideal which is the sway and dominance of justice.[xi]

In relation to the above Civil code provision on human relations, article 2176 of the Civil Code also provides that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

The elements of quasi-delict are as follows: (a) damages suffered by the plaintiff, (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff.

A careful examination of the facts in our case shows that the all the element of quasi-delict are present.  The damages suffered by legitimate sponsors/event’s organizers – they are being disadvantaged; the fault or negligence on the part of the owner of the photos; and the effect of uploading of the photographs on the level of playing fields between the legitimate sponsors and the strangers.

Granting that these persons, who took and subsequently uploaded to the internet or made public exhibition of their selfie/groups shots emphasizing non-sponsors’ logo/marks, are just exercising their freedom of expression.  It would be improper if upon the exercise of such right they fail to observe honesty and good faith.  The presence of apparent marks/logos of non-sponsor companies should have immediately register unto their minds that such would affect the rights of legitimate sponsors.  They could have at least remedied the possible effect of their acts by tampering or covering or blurring those non-sponsor marks.

It had been said that the main purpose of prohibitory laws is “to make equal the unequal”.  Public policy and good customs decries “unfair advantage” or “unfair competition”.  The presence of such would likely distort market forces and prevent the level playing field among industry participants.

If these “unfair advantage” or “unfair competition” thru the clandestinely meddling in the legitimate sponsors’ privilege – that is, the opportunity to have their distinct marks publicized throughout the celebration of the event are not immediately regulated then legitimate sponsors would eventually feel more secure with their money spent elsewhere.

Finally, let share to you a statement made by the Court in one case decided way back in 1975 “A person must not be allowed to get a free ride on the reputation of another, for a self-respecting person or a reputable business concern does not remain in the shelter of another’s popularity and goodwill but builds one of his own.”[xii]


[i] Paul Sawers, The words “Facebook” and “Twitter” have been banned from French TV, citing the statement of CSA spokesperson Christine Kelly.  Source: http://thenextweb.com/socialmedia/2011/06/03/the-words-facebook-and-twitter-have-been-banned-from-french-tv/

[ii] Super Commercial Enterprises Inc., vs. Kunnan, G.R. No. G.R. No. 169974,April 20, 2010

[iii] Super Commercial Enterprises Inc., vs. Kunnan, G.R. No. G.R. No. 169974,April 20, 2010

[iv] Article II, Section 2 of the 1987 Philippine Constitution

[v] Paris convention for the Protection of Industrial Property (1967)

[vi] Article XII, Section 19, Philippine Constitution

[vii] Super Commercial Enterprises Inc., vs. Kunnan, G.R. No. G.R. No. 169974,April 20, 2010

[viii] Philippine Blooming Mills Employees Organization vs. Philippine Blooming Mills Co. Inc., 51 SCRA 191 (1963)

[ix] Gonzales vs. COMELEC, 27 SCRA 835 (1960)

[x] Rellosa vs. Pellosis, G.R. No. 138964, August 9, 2001

[xi] Advanced Foundation Const. systems Corp. vs. New world Properties and Ventures, Inc., G.R. No. 143154 & 143177

[xii] Philippine Nut Industry, Inc. vs. Standard Brands Inc., G.R. No. L-23035, July 31, 1975

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