Republic of the Philippines

REGIONAL TRIAL COURT

7th Judicial Region
Branch 9
Cebu City, Cebu

JUAN D. TAMAD,
Plaintiff,
Civil Case No.: CV-123456
-versus- For: Action for specific
Performance & Damages
HAHAHA ONLINE STORE, &
SHOPZADA INC.,
REPRESENTED BY SCOOTER BRAUN,
Defendants
x ------------------------------ x

POSITION PAPER FOR DEFENDANT

The DEFENDANT SHOPZADA INC., REPRESENTED BY

SCOOTER BRAUN, through counsels and unto this Honorable
Court, most respectfully submits that:

PREFERATORY STATEMENT

(1) The Plaintiff in this case is Juan D. Tamad (Mr. Tamad) is a

Filipino security guard, residing at 89 Camansi St.,
Mambaling, Cebu City, Philippines.

(2) The Defendants in this case are as follows:

A. Shopzada, Inc. (Shopzada) is a corporation duly

organized, registered and existing under and by
virtue of the laws of the Republic of the Philippines
 having a principal place of business at 14/F, E-Bloc 2
Bldg, W Geonzon St., 6000 Cebu City

B. HAHAHA ONLINE STORE (HaHaHa) is a business

duly registered before the DTI under Mr. Marvin D.
Mangingilad, who is of legal age, Taiwanese, married
to a Filipina and having a residence at 11th Flr.,
AppleOne-Equicom Tower, Mindanao Ave., Cebu
Business Park, 6000 Cebu City.

C. Scooter Braun is of legal age, Single, Filipino citizen

and the duly elected President and legal
representative of Shopzada, Inc.

I. STATEMENT OF FACTS

(3) Plaintiff is a Filipino security guard residing at 89 Camansi

St., Mambaling, Cebu City and he is currently assigned at
Marina Malls in Lapu-Lapu City.

(4) On 03 Nov 2020, the security agency announced that all

employees are invited to attend the Annual Dress-Up
Christmas Party on 30 Nov 2020 (Monday). All participants
were encouraged to wear their best costume and to
showcase their creativity.

(5) Mr. Tamad got excited and immediately rushed to the

Shopzada to buy the necessary attire. Fortunately, there is
an upcoming Shopzada 11.11 online sale which offers great
discounts to online shoppers. So, he took advantage of the
sale and added to cart the items he needed.

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(6) On 28 Nov 2020, all of Mr. Tamad’s online orders were
delivered. However, he was shocked by what he received.
He refused to accept the Hoodie Jacket. As for the Airpods
Pro, he has no choice but to accept since it was too late to
verify the authenticity of the product.

II. ISSUES

(7) The issues presented before in this case at bar read as

follows:

A. Whether or not Shopzada, HaHaHa Online Store

committed breach in the contract of sale with Mr. Tamad.

B. What are the available rights, remedies of Mr. Tamad?

a. What is/are the liability/ies of Shopzada, HaHaHa
Online Store to Mr. Tamad.
b. What is/are the responsibility/ies of Mr. Tamad, as a
buyer, before making the online purchase?

C. Based on the problem presented, what are the respective

rights and obligations (if any) of the following parties:
a. Shopzada towards HaHaHa Online Store
b. Shopzada towards Juan D. Tamad

III. DISCUSSION

As to the First Issue (A):

(8) There is breach when a party fails or refuses to perform

his obligation without legal justification. As provided in
Art. 1170 of the Civil Code it states;

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 Those who in the performance of their
obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene
the tenor thereof, are liable for damages.

(9) In the case of the item Airpods Pro, the product snapshot
[1]
indicates clearly that it is 100% original apple Airpods
Pro 3. It even indicated on the snapshot [1]; the logo of apple
brand placed at the upper left side. The defendants clearly
made a deliberate and intentional evasion of the
fulfillment of their obligation through fraud by false
representation that the Airpods Pro are genuine apple
brand as represented in the snapshot [1]. Without the fraud,
the petitioner would not have given his consent to
purchase the product online. The petitioner has the right
to have the purchase annulled or set aside on the ground
of the fraud as provided in the above rule.

(10) In the case of hoodie fashion jacket, the rule is provided in

Article 1546 that states:

Art. 1546. Any affirmation of fact or any promise

by the seller relating to the thing is an express
warranty if the natural tendency of such
affirmation or promise is to induce the buyer to
purchase the same, and if the buyer purchases the
thing relying thereon. No affirmation of the value
of the thing, nor any statement purporting to be a
statement of the seller's opinion only, shall be
construed as a warranty, unless the seller made
such affirmation or statement as an expert and it
was relied upon by the buyer.

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 Art. 1562. In a sale of goods, there is an implied
warranty or condition as to the quality or fitness
of the goods, as follows:

Where the buyer, expressly or by implication,

makes known to the seller the particular purpose
for which the goods are acquired, and it appears
that the buyer relies on the seller's skill or
judgment (whether he be the grower or
manufacturer or not), there is an implied warranty
that the goods shall be reasonably fit for such
purpose;

The seller is liable for his express warranties and

for the implied warranties of presence of hidden
defects even if the owner is not aware or have not
known, fitness or merchantable quality and the
conformity in relation to the description.

(11) There is express warranty because of the affirmation of the

fact and promise of the seller relating to the thing that it
is genuine and original, which induce the buyer to
purchase the hoodie fashion jacket without which Mr.
Tamad would not have decided to purchase the said things
had he has known the defects.

(12) A warranty is a collateral undertaking and as such it

follows the principal wherever it goes. Being part of the
contract of sale, it is immaterial whether the seller did not
know that it was true or false. No intent is necessary to
make the seller liable for his warranty. It is the natural
consequences of what the seller says and the reliance
thereon by the buyer that alone are important.

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(13) In order to constitute a warranty, it is necessary that the
representation or affirmation be actually intended by the
seller as a warranty. It is well settled rule that apparent
intent to warrant constitute the same. If the representation
is clear and positive, not a mere expression of opinion, and
the buyer understand it as a warranty, and relying on it,
purchases, the seller cannot escape liability by claiming
that he did not intend what his language declared. Under
Art. 1546, the phrase “natural tendency must be to induce
the buyer to purchase the goods”, clearly express that the
seller’s intention to warrant is unimportant. It is the
natural tendency of the affirmation or promise to induce
the buyer to purchase, is the most important, and not the
intention of the seller to warrant, and the absence of an
intention to warrant is of no consequence.

(14) Since the seller makes an express warranty, it is

immaterial whether or not he acted in good faith in making
the statements leading up to the sale. The seller is liable
for breach of warranty even if he acted in good faith in
making the warranty or even if he was not aware of the
falsity of the warranty.

(15) In the case at bar, the warranty exists at the time of sale or
form part of the transaction of sale in which it is within
the contemplation of the provision of the law aside from
the fact that it is expressly written and as such it shall
constitute as warranty.

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As to the Second Issue (B.a):

(16) The petitioner has the option either: (1) to withdraw from
the contract also known as accion redhibitoria or action for
rescission, or (2) demand a proportionate reduction of the
price also known as accion quanti minoris, with a right to
damages in either case. In order to for the buyer to be
entitled with the actual damages, he must present proof
that he suffered damage as a result of the breach by the
seller’s warranty. The foregoing remedies and rights of the
buyer are embodied in the following rule, Art. 1567; Mr.
Tamad may elect between withdrawing from the contract
and demanding a proportionate reduction of the price,
with damages in either case.

As to the Second Issue (B.b):

(17) The buyer should be cautious and employ all reasonable,

necessary and available means in order not to be trapped
in an unfavorable online transaction. The law provides a
right to inspect, as a precedent to ownership but on the
other hand, it implies also the responsibility of the buyer
to inspect and examine first before engaging online
purchases. The right to inspection is embodied in the
following law.

Art. 1584. Where goods are delivered to the buyer, which

he has not previously examined, he is not deemed to have
accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of
ascertaining whether they are in conformity with the
contract if there is no stipulation to the contrary.

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 Right of inspection as a rule is entitled to the buyer as a
fair opportunity to inspect or examine the article tendered
to determine whether it conforms to the contract. If the
article or commodity does not correspond in kind, quality,
condition, or amount to that which he has contracted for,
the buyer may reject it.

(18) The delivery referred to in said article, as can be gathered

from its context, is actual delivery. The ownership of the
goods shall be transferred only upon actual delivery
subject to a reasonable opportunity of examining them if
they are in conformity with the contract. The right of
examination or inspection is thus a condition precedent to
the transfer of ownership.

(19) The buyer has the responsibility to determine if the

product sought to be bought complied to the specification
required. The buyer must do the following in order to
prevent or encounter problem of non-conformance to his
requirement; do some basic research before making any
purchase (ask a friend, critically read customer reviews,
and check the Internet for public warnings, recall
advisories and the like), carefully read the product
description and do not be misled by over-the-top and
unsubstantiated claims, be inquisitive; don’t be shy in
asking the seller as many relevant questions as you
would like about the product, examine the product
photo and detect indicators for bogus or imitation
products such as low quality image, logo discrepancy
and other inconsistencies with the original item, beware
of these typical red flags (inadequate product
information, labelling in foreign characters, poor quality
photos, grammatical mistakes, misspellings, wild claims,
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 unresponsive sellers), be sceptical about extra low
prices, huge discounts and offers that are too good to be
true. These few steps shall prevent the buyer from
engaging bogus online transaction and shall save time,
effort, money and suit or action as a consequence of
dealing with unreliable products through online
marketplaces or platforms.

As to the Third Issue (C.a):

(20) The following are the rights and/or obligations of

Shopzada to HaHaHa:

(21) Shopzada has the right to remove HaHaHa from the

e-commerce platform of the former for violating the
Terms of Service.

(22) Shopzada may also block delivery of a

communication (including, without limitation, status
updates, postings, messages and/or chats) to or from
the Services as part of our effort to protect the
Services or our Users, or otherwise enforce the
provisions of these Terms and Conditions [1]
.

(23) Shopzada acted immediately upon learning about Mr.

Tamad’s unfortunate transaction with HaHaHa. As
can be seen from “Exhibit A”, a snapshot that
certifies that HaHaHa is now removed from the
Platform and all its pending transactions were
blocked to protect the interests of the platform
users.

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As to the Third Issue (C.b):

(24) The following are rights and/or obligations of the

Shopzada to the Mr.Tamad:

(25) Shopzada being an online marketplace where the seller

and buyer meet together for online business
transaction shall not be liable for any liability
whatsoever from the buyer. It is designed as a venue
to assist transactions between buyers and sellers, and
not a platform for advertisements.

(26) Online marketplaces are mere platforms that

bring together merchants and consumers. They
are not actually the seller of the items posted on
their sites. Neither are they the manufacturers of
the counterfeit products being sold.

(27) Shopzada is an online platform service that provides a

place and opportunity for the sale of goods between
the buyer and the seller. Article 1458 of the Civil Code
states that a Contract of Sale is a contract or agreement
wherein one party (seller/vendor) obligates himself to
deliver and transfer something to the other party
(buyer/vendee/purchaser), who, on his part, obligates
himself to pay the price. The actual contract of sale is
directly between the buyer and seller and Shopzada is
not a party to that or any other contract between Buyer
and Seller and accepts no obligations in connection
with any such contract. Parties to such transaction will
be entirely responsible for the sales contract between
them, warranty of purchase and the like.

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(28) Neither can the buyer sought to enforce the
online marketplace’s liability for contributory
infringement, but that would have been a more
plausible strategy.

(29) The concept of contributory infringement

originates from tort law and suggests that a
party, who directly contributes to another’s
infringement, should also be held liable. In the
Philippines, said concept was introduced by
Republic Act No. 10372 (“R.A. 10372”), which
amended the Intellectual Property Code. Under
Section 22 of R.A. 10372, to be liable for
contributory infringement, one must: (1) benefit
from the infringing activity; (2) have been given
notice of the infringing activity and a grace
period to act on the same; and (3) have the right
and ability to control the activities of the person
committing the infringement.

(30) While Section 22 of R.A. 10372 pertains to

copyright infringement, it may be argued that it
also applies to trademark infringement in the e-
commerce context by analogy. Hence, to find an
online marketplace liable for contributory
infringement, one must prove that the online
marketplace received fees or gained profits for
each sale of fake goods; was notified of the
infringement and failed to promptly take down
the counterfeit products; and had direct control
over the sales of illicit goods on its platform. The

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 failure to show any one of these elements
absolves the online marketplace from liability.

(31) As of this writing, there has yet to be any

jurisprudence on the liability of online
marketplaces for counterfeit products in the
country. However, there is an American
jurisprudence for that matter for guidance.

(32) The landmark case on contributory infringement

in the realm of e-commerce in the United States
is Tiffany (NJ) Inc. v. eBay, Inc. [2]
The iconic
jewelry brand, Tiffany, filed a case for direct and
contributory infringement against the world’s
largest online marketplace, eBay, based on the
sale of counterfeit Tiffany products on the said
platform.

(33) In absolving eBay from liability for direct

infringement, the court ruled that eBay did not
directly sell the counterfeit items, nor did it
suggest endorsement or sponsorship by Tiffany.
Concerning the charge for contributory
infringement, the court found no liability on the
part of eBay. The court opined that while eBay
had control over the sales of counterfeit goods,
it did not know or have reason to know which
products were fake. Moreover, eBay’s prompt
action in taking down the counterfeit products
from its site upon notice shows lack of intent to
create a forum for counterfeiters.

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As to the Third Issue (C.c):

(34) The following are rights and/or obligations of the HaHaHa

to the Shopzada:

(35) HaHaHa has the right against copyright infringement and

the right to protect its own term and patent.

(36) As a seller, it has the obligation to offer, and actual delivery

of the items to the buyers and comply with applicable laws
and the specification listed and made available to the
buyer and the platform including the warranties,
specifications, photos, sample performance criteria and all
applicable quality, safety and hygiene requirements and be
free from defects.

(37) HaHaHa also has the right to set its own payment methods
and shipping terms and it has the obligation to pay its own
taxes and obligation to conform the terms and conditions
set by Shopzada.

(38) Article 1305 of the Civil Code defines a contract as a

meeting of the minds between two or more parties,
whereby one binds himself with respect to the other, or
where both parties bind themselves reciprocally, in favor
of one another, to fulfil a prestation to give, to do or not
do. The Terms and Condition of Shopzada serves as a
contract to be perform by both parties and any violation
thereof then Shopzada reserves the right to , at its own
discretion remove the offending shop.

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As to the Third Issue (C.d):

(39) The following are rights and/or obligations of the HaHaHa

to Mr. Tamad:

(39) As the seller, HaHaHa has the obligation to transfer

ownership, deliver the thing with its accession and
accessories if any, warranty against hidden defects and to
take care of the thing, pending delivery with proper
diligence.

As to the Third Issue (C.e):

(40) The following are rights and/or obligations of Mr. Tamad

to Shopzada:

(41) Mr. Tamad has the obligation to observe and follow the
Guidelines set by Shopzada, he has the right and freedom to
choose the products posted in the platform. If he has the
intention to purchase products the price shall be the purchase
price. The buyer is also entitled to apply for the return of the
purchased item and refund prior to the expiration set by
Shopzada,

As to the Third Issue (C.f):

(42) The following are rights and/or obligations of the Mr.

Tamad to the HaHaHa:

(43) Mr. Tamad as the buyer has the obligation to accept

delivery, to pay the price. The buyer has also the
right to a reasonable opportunity to examine the
goods before accepting them according to Article
1584 of the Civil Code.

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IV. PRAYER

WHEREFORE, premises considered, it is respectfully

prayed that the petitioner shall be allowed to withdraw or
rescind from the contract and be entitled for damages and for
such and other reliefs as may be deemed just and equitable in
the premises.

8 December 2020, Cebu City, Philippines

Respectfully submitted

ABEJARDO-DACLAN-SAGARINO-SUSON-TRIA
LAW OFFICES
ABC Hotel 107 F. Ramos St., Cebu City, 6000 Cebu

By
NINOTCHKA N. TRIA II
Roll No. 19895
PTR No. 325766/01-21-23/Cebu
IBP P.R No. 455219/02-05-22/Cebu

For the Defendant

Copy furnished:
ATTY. DONALD SALANG
Counsel for Mr. Juan Tamad
Cebu City, Philippines

ATTY. IAN KHARLO TORREFRANCA

Counsel for HaHaHa Online Store
Cebu City, Philippines

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References:
1. Shopzada Terms of Service (https://shopzada.ph/docs/3586)
“TERMS OF USE 6.4 You (online seller) acknowledge
that Shopzada and its designees shall have the right (but not the
obligation) in their sole discretion to pre-screen, refuse, delete,
stop, suspend, remove or move any Content, including without
limitation any Content or information posted by you, that is
available on the Site. Without limiting the foregoing, Shopzada
and its designees shall have the right to remove any Content (i)
that violates these Terms of Service; (ii) if we receive a complaint
from another User; (iii) if we receive a notice of intellectual
property infringement or other legal instruction for removal; or
(iv) if such Content is otherwise objectionable. We may also block
delivery of a communication (including, without limitation, status
updates, postings, messages and/or chats) to or from the Services
as part of our effort to protect the Services or our Users, or
otherwise enforce the provisions of these Terms and Conditions.
xxx“

2. TIFFANY (NJ) INC. and TIFFANY and COMPANY v. eBay, Inc. 600
F.3d 93 (2d Cir. 2010)

3. XXX

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“EXHIBIT A”

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