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. BuckDefendant 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 CompetitionArticle 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.

International News Service vs. Associated PressThe 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.Misappropriation

Gokongwei vs. The Securities and Exchange CommissionThere 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.

Monopolies and Predatory Pricing

FRAUDA false representation of a matter of factwhether 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 Code:Sec 26. Fraudulent transactions- (a) it shall be unlawful for any person, directly, or indirectly, in connection with the purchase or sale of any securities-26.1Employ any device, scheme, or artifice to defraud;26.2Obtain 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

26.3Engage in any act, transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

OBJECTIVEThe 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 COMMISSIONPetitioner was incorporated on April 9, 1940, 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.

MISTATEMENTSKINDS:False Registration StatementProspectus and the like

FALSE REGISTRATION STATEMENTPLAINTIFF: 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.

LIABILITY2 or more persons: SOLIDARYHowever, 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 likeA 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.