CHAPTER 7

THE FIRM AND THE CONSUMERS

Ma. Jecah Desiree P. Velasco

Crystel Simeon
Triszha Angelie Mae R. Ambrocio
Jay Pambid
Honey Fe A. Ramos
Princess Aleth Toledo
Elaine Gaddi
Arnel Aranzaso
Franc Ashley Kaye F. Gregorio

I. Introduction
A customer always purchases a product/service, but might not be the end user.
A customer becomes a consumer if they make a purchase and use the
product/service themselves.
As we already mentioned in previous chapters, we depend our needs almost
entirely from the products being manufactured by capitalists. It is because of the
enormity of influence that corporations and businesses have over our lives. We
may also identify the forms of commercial frauds that are being employed in the
corporate world, as well as the laws through whose provisions consumers can find
solace and protection.

Example: FAST-FOOD RESTAURANT

-EXPECTATION VS. REALTY
-ADS VS. REALITY

Filipinos are not alien to these scenarios of deception in advertising. Advertisers

exaggerate. Businessmen amplify. And consumers, well, are gullible. They know
the exaggeration, the untruthful embroidery, but are nevertheless easily tricked -
as if naively allowing the capitalists to mislead them.

Is this kind of advertising illegal?. While most consumers would answer in the
affirmative, not all legal systems are on the same page. For one, the Philippines
expressly allow this kind of advertising. Under Article 1340 of the Civil Code of the
Philippines, “The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent”.

II. ADULTERATION
The social media has been the most convenient forum for voicing out their
dismay and rage of people who have been victimized with adulterated products
in its simplest sense, adulteration is the unethical practice of debasing a pure or
genuine commodity by imitating or counterfeiting it, by adding something to
increase its bulk or volume, or by substituting an inferior product for a superior
one for the purpose of profit and gain.

Article 23. ADULTERATED FOOD - A food shall be deemed

To be adulterated;

1. If it bears/ contains any poisonous/ deleterious substance which may render it

to injuries to health.
2. If it bears/ contains any added poisonous/ deleterious substance othe than one
which is pesticide chemical or a raw of agricultural commodity.
3. If it is consists in whole/ in part of any filthy, decomposed subatance, otherwise
unfit for food.
4. If it has been prepared, packed, or held under unsanitary conditions.
5. If it is in whole/ part of the product of a diseased animal.
6. If its container is composed the whole/ part of the product of any poisonous
substance that may rendered the contents injuries to health.
7. If it has passed its expiry date.

Article 29. ADULTERATED DRUGS AND DEVICES - A drug or device

shall be deemed to be adulterated.

If a drug or device and any substance has been mixed or packed therewith, or any
substance has been substituted wholly or in part thereof, so as to reduce its
safety, efficacy, quality, strength or purity.

Article 35. ADULTERATED COSMETICS - A cosmetic shall be deemed to

be adulterated.

If it is not hair dye, and it bears or contains color additive other than which is
permissible.

FRAUD

Any deliberate action of businesses or individuals to deceive others in

regards to integrity of food to gain undue advantage. Food fraud occurs

when food or drink is sold in way that deliberately mislead or deceives

consumer or customer for financial gain.

Dolo causante- a deception used by the one party prior to or

simultaneous with the contract, in order to secure the consent of the

other.

 Present only at the time of birth of the obligation.

 Employed for the purpose of securing the consent of the other party

to enter into the contract.

 Result in the vitiation of consent.
 Gives right to the rise to file for the annulment of the contract before the
court.

Dolo incidente - - dolo incidente or incidental fraud which is referred to

article1344, are those which are not serious in character and without which the
other party would still have entered into the contract.

 Present only during the performance of a pre-existing obligation

 Employed for the purpose of evading the normal fulfillment of the obligation
 Result in the nonfulfillment or breach of the obligation.
 Give rise to the recover damage through the appropriate action before the
court.

III. A. FALSE AND DECEPTIVE ADVERTISMENT

False advertising is defined as the act of publishing, transmitting, or otherwise
publicly circulating an advertisement containing a false claim, or statement, made
intentionally to promote the sale of property, goods, or services.
People who stay up late at night, or in the afternoons when nobody seems to be
watching on TV, have most likely been a spectator, alebit consciously, with TV
channels or segments exclusively reserved for advertising or shopping. Normally,
they show too=good-to-true products, with overly hyperbolic promises, and an
guarantee of having the best bargain for your money. While, as mentioned above,
the Civil Code of the Philippines allows the usual exaggeration in advertising (as
long as the consumerr has the opportunity to know the facts and circumstances
sorrounding the product), an entirely false, misleading and deceptive
advertisement is not within the clout of tolerance provided by law.

Advertisements operate on two

Tracks: the conscious, using information you can read and

Understand, and, more commonly, the subconscious, usingi Information and

techniques that you are not clearly aware advertising industries are doing pretty
well in terms of drawing us in. Most of us think we are deeply rational but we are
really not.

*Subconscious advertisement techniques can include making soda poured over ice
in a glass have a high amount of bubbles or increasing the noise of a steak sizzling
on a Grill. “It riggers our craving instinct,another common subconscious
advertising technique is creating a sense of urgency.

They most likely use Time pressure – ‘buy it now before it’s gone. Appeal to
vanity – ‘oh that looks great on you.The make people think it will make them cool:
‘it’s just like the one that [name of celebrity has.

Make them think if they don’t buy it, it makes them look cheap or poor – ‘Maybe
you can’t afford it?’ In an insecure person their immediate response may be to
deny this – which gets past ‘price resistance.)

*C. Advertisements using fictitious or obsolete testimonials other than R.A. 7394,
any person who ended up buying a product. Due to the false and deceptive
advertisement may also find resort in the Civil Code of the Philippines, as this
scheme can also constitute fraud. He/she may also enforce the implied warranties
attached to the product purchased, as mandated by law. Implied warranties are
those which. Although not written in the contract or not expressly agreed upon, the
seller is nevertheless liable for in case of breach such as the warranty against
hidden defects and warranty against eviction. This can also be found under The
Civil Code of the Philippines.

At the end of the day, it will always be important to be extra cautious.

Lastly, pay attention to advertised money-back guarantees and the claims they
make.

Ill.B DECEPTIVE PACKAGING

There is deceptive packaging when the packaging is specifically designed to

mislead and deceive consumers.

There are two types of deceptive packaging:

a) Slack fill packaging- where containers like cartons, tin cans and certain
plastics are only filled up to fifty to seventy percept of capacity.
b) Excess package cushioning - where a larger container is used than what is
needed to protect the contents.

Ill.C. MISBRANDING
Misbranding is the labelling of a product so that it replicates another, more
famous or profitable, product; or giving misinformation as to the actual content
or ingredients of the item.
In the Philippines, in compliance with international laws and treatises, RA 8293
(Intellectual Property Code) was enacted to address this problem, among others.
This law prohibits the infringement of trademark and unfair competition.
First, trademark is that visible sign capable of distinguishing the goods of an
enterprise and shall include a stamped or marked container or goods.

The elements of trademark infringement under RA 8293 are as follows:

1. Trademark being infringe is registered in the Intellectual property Office;

however, in infringement of trade name, the same need not be registered;
2. The trademark or trade name is reproduced, counterfeited, copied, or
colorably imitated by the infringer;
3. The infringing mark or trade name is used in connection with the sale,
offering for sale, or advertising of any goods, business or services; or the
infringing mark or trade name is applied labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services;
4. The use or application Of the infringing mark or trade name is likely to
Cause confusion or mistake or to deceive purchasers or others as to the
goods or services themselves or as to the source or origin of such goods or
services or the identity od such business; and
5. It is without the consent of the trademark or trade name owner or the
assignee thereof.
The types of confusion that would warrant trademark infringement are the
following:

1. Confusion of goods — when an otherwise prudent purchaser is induced to

purchase one product in the belief that he is purchasing another, in which
case defendant’s goods are then bought as the plaintiff’s and its poor
quality reflects badly on the plaintiffs reputation.
2. Confusion of business—wherein the goods of the parties are different but
the defendant’s product can reasonably (though mistakenly) be assumed
to originate from the plaintiff, thus deceiving the public into believing that
there is some connection between the plaintiff and defendant which, in
fact, does not exist.

On the other hand, unfair competition, under Section 168.2 of the Intellectual
Property Law, involves employing deception or any other means contrary to good
faith by which a person passes off his goods or business or services for those of
one who has already established goodwill thereto. The essential elements of
unfair competition with respect to goods are:

1. Confusing similarity in the general appearance of the goods, and

2. Fraud or intent to deceive the public and defraud a competitor.

The primary test of unfair competition is 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.

I. INSIDER TRADING

Insider trading is the buying or selling of a publicly traded company's

stock by someone who has non-public, material information about that
stock. Insider trading can be either illegal or legal depending on when the
insider makes the trade and the laws of the country the person is in.
 Getting involve in Inside trading:

1. Stocks have offered the most potential for growth.

Investing in stocks or stocks mutual funds is so important when
saving for retirement or other far-off goals. The Growth stocks, which are
the shares of businesses whose earnings or sales are anticipated to expand
at a considerably higher rate than the rest of the market, are generally
held by investors using a growth investing approach.

2. You can ride out the ups and downs of stocks.

So, you may know that it makes sense to own more stocks, but market
downturns might still make you nervous. The headlines can be scary.
Remember this: It may be painful for a while, but if the stock market
behaves as it has over long periods, you should eventually be better off.

3. You don’t need to invest all your money in stocks.

It would not be a good idea to put all your savings and money in the
stock market if you are just starting out and have no idea how it works.
As a beginner, always spend as much as you are willing to lose.

THE RISE OF AN AMERICAN INSTITUTION: THE STOCK

MARKET

 In 1792 before the revolution British laws governing trade were strict

yet, they ships the merchants and deliver it to the nearby warehouses

or stores.
 Throughout the middle ages, merchants assembled in the middle of

town to exchange and trade goods from countries and worldwide.

Therefore colonists are not allowed to make their own income.

 In 1896 the Dow Jones industrial average is created. It is a price

weighted average. So they started to managed industrial companies.

 In 2008 the stock market crashes after the bust of the housing

market
THE PHILIPPINE STOCK MARKET
The other aspect which is in term of improving the product mix of the stock market
is still a long way off in future development the expansion in product depend more
on the level of development of the country progress and new opportunities that
open up and how the pse take up the challenges in 2001 republic act
8799(securities regulation act)imposed requirement for the expansion of the pse in
order to increase the representation of non-stock broker interest the appointment of
five independent member of the pse board made possible broader representation of
the interest of investing public in the stock market further reform and initiative
moved the domestic bourse toward more modern practices accessing improved
technology of trading helping to make trading of security shirf to modern speed as
well as electronically secure access to modern communication technology was the
key to these changes. In fact the phil.market has been the most consistent in that it
has operated contiously for many decades without interrupation it has a history
longer than the most of these other stock market the manila stock exchange
established in 1927is one decade older than the malaysia stock exchange
(1937)from which singapore own house was born thailand was founded in 1961
and that of indonesia thus. The challenges for the challenges for the future of the
phil. Market are many the growth of the local stock market depends in part on the
push for internal reform within the pse that is in proper tune with the demad of the
market place much also rest on what national government does to assure that the
economic growth path of the country is sustained in additional there also have the
fraudelent transaction involving securities and stock and also deceits in the stock
market known as inside trading which involves and individual inside the company
who know such information inside the organization

EX-DEUTSCHE BANK BROKER AMONG TWO GUILTY IN

INSIDER- TRADING CASE
By Suzi Ring and Jeremy Hodges
- A former corporate broker at the lender and accountant Andrew Hind were
convicted by majority verdict in London. Three other men were cleared following
nine days of deliberations in what is considered the country beggist insider
trading case. They were accused of making 7.4 million pounds ($10.7 million)
from trading six stock including sky PLC and legal.
DAWN RAIDS
The investigation dates back to 2007 and Les to a series of dawn raids tree years
later. The regulator which brought it’s first insider-trading case in 2009, would
take a tougher approach following the financial crisis. The result follow the FCA’s
lead role in taking market manipulation scandals including those involving the
interbank offered rate and foreign currency exchange.

OPERATION TABERNULA
The men used modern technology and old- school skulduggery to hide their
trades. The group gave themselves nicknames such as “fatty” “nobu” and “frui”.

GAMBLING EXPLOIDS
Flam Boyant 50-years old was only charged with insider dealing he was cautioned
by the judge about answering questions that could incriminate him at one point
when his testimony was dismissed as a result of coincidence from the insular
world of the city of London or step to conceal their action from employer, rather
than police. The two day trades also argued the whole stock market operated on
rumors, most of which were false.