CHAPTER IV

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents the analysis and interpretation of the data gathered from

relevant sources such as laws, domestic jurisprudence, and articles.

1. Understanding the Legal Treatment of Bot Scalping in the Philippines: A

Comprehensive Analysis of Constitutional, Civil, Criminal, and Regulatory

Frameworks

a. Constitutional Parameters: Examining Bot Scalping Practices within the

Philippines

The 1987 Philippines Constitution is known as the Fundamental Law of the land.

Laws, statutes, ordinances, or administrative orders that are issued in contrast with the

Constitution shall be declared unconstitutional.

a.1. Non-impairment Clause

No law impairing the obligation of contract shall be passed. 1 The Supreme Court

explained that the purpose of the non-impairment clause of the Constitution is to

safeguard the integrity of contracts against unwarranted interference by the State. 2 As a

rule, contracts should not be tampered with by subsequent laws that would change or

modify the rights and obligations of the parties. 3 Impairment is anything that diminishes

the efficacy of the contract.4 There is an impairment if a subsequent law changes the

terms of a contract between the parties, imposes new conditions, dispenses with those

agreed upon or withdraws remedies for the enforcement of the rights of the parties. 5
1
Phil. Const. art. III, S10.
2
Congressman Enrique T. Garcia v. Hon. Renato C. Corona, et al., G.R. No. 132451, December
17, 1999.
3
Id.
4
Id.
5
Id.
 The purpose of the non-impairment clause of the Constitution is to safeguard the

integrity of contracts against unwarranted interference by the State. 6 As a rule, contracts

should not be tampered with by subsequent laws that would change or modify the rights

and obligations of the parties.7

Based on the foregoing, the State cannot enact a law that would impair an existing

contract. A subsequent law would violate the non-impairment clause of the Constitution

if the subsequent law modifies, changes the term of the contract, imposes new

conditions, or dispenses with those that are already agreed upon by the parties. it also

violates the non-impairment clause if the law diminishes the efficacy of the contract

entered into by the parties.

Contract, voluntarily entered into by the parties has the force and effect of law.

Parties are bound by the terms and conditions they set forth in the contract. Thus, they

are obliged to comply with their contract in good faith. Jurisprudence provides that it is

well-established that a contract is the law between the parties.8 Obligations arising from

contracts have the force of law between the contracting parties and should be complied

with in good faith.9

However, the non-impairment clause in the Constitution is not absolute. The State

may impair the contract under its police power. The Supreme Court held the non-

impairment clause of the Constitution must yield to the loftier purposes targeted by the

Government.10 Freedom of contract and enterprise, like all other freedoms, is not free

6
Goldenway Merchandising Corp. v. Equitable PCI Bank, G.R. No. 195540, March 13, 2013.
7
Id.
8
IP E-Game Ventures, Inc. v. George H. Tan, G.R. No. 239576, June 30, 2021.
9
Id.
10
Philippine Association of Service Exporters, Inc. v. Hon. Franklin M. Drilon, G.R. No. 81958, June
30, 1988.
from restrictions.11 In addition, the Supreme Court ruled that unless the stipulations in a

contract are contrary to law, morals, good customs, public order, or public policy, the

same are binding as between the parties .12 Thus, if the provision of the contract is

contrary to law, morals, good custom, public order, or public policy, the contract is

invalid.

The Supreme Court held that when a party reneges on his or her obligations

arising from contracts in bad faith, the act is contrary to morals, good customs, and

public policy.13 Likewise, the Supreme Court explained that an agreement is against

public policy if it is injurious to the interest of the public, contravenes some established

interest of society, violates some public statute, is against good morals, tends to

interfere with the public welfare or safety, or as it is sometimes put, if it is a war with the

interests of society and is in conflict with the morals of the time.14

Thus, based on the foregoing, although the parties may enter into a contract and

may stipulate any provisions they like, such right is not absolute since the state may still

regulate such contract if it is contrary to law, morals, good custom, public order, or

public policy. The state may enact a law that may impair such contract without violating

the non-impairment clause of the constitution.

a.2. Monopolies

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. 15

11
Id.
12
Id.
13
Arco Pulp and Paper Co., Inc., v. Dan T. Lim, G.R. No. 206806, June 25, 2014.
14
Mathew S. Tee v. Tacloban Electric and Ice Plant Co., Inc., et. al., G.R. No. L-11980, February
14, 1959.
15
Phil. Const. art. XII, S19.
The simplest form of monopoly exists when there is only one seller or producer of a

product or service for which there are no substitutes.16

The Supreme Court held that “Section 19, Article XII of our Constitution is antitrust

in history and in spirit. It espouses competition. The desirability of competition is the

reason for the prohibition against restraint of trade, the reason for the interdiction of

unfair competition, and the reason for regulation of unmitigated monopolies.” 17

Based on the foregoing, the state may prohibit or restrain a trade wherein there is

no competition among sellers. There is no competition when the consumers do not have

any choice in making purchases. Thus, there is unfair competition when the market is

dominated or manipulated by one seller.

In scalping through the use of bots, scalpers buy all the available supplies in the

market through the use of bots. There are different kind of bots, as discussed in Chapter

2 of this study. Bots makes their checking out process faster than any human.

Compared to a manual user, a scalper bot can finish checkout significantly faster. 18

There is no way that a human being can compete with the speed at which scalping bots

execute their transactions, meaning that it’s difficult or even impossible for people

without these tools to buy tickets in bulk before attackers have already snatched up all

inventory; scalpers often try to resell high-value tickets at inflated prices on secondary

markets.19

16
Congressman Enrique T. Garcia v. Hon. Renato C. Corona, et al., G.R. No. 132451, December
17, 1999.
17
Tatad v. The Secretary of the Department of Energy and Edcel C. Lagman, et al. v. Hon. Ruben
Torres, et al., G.R. No. 124360, November 5, 1997.
18
Vladimir Vittek, Webscraping tool for automating checkout process, at 6 (2022), Masaryk
University.
19
Scalper Bots, available at https://netacea.com/glossary/scalper-bots/ (last accessed May 17,
2024).
 They use bots to purchase all the available supplies in the market, depriving the

consumers of exercising their right to choose from goods available in the market. And

scalpers manipulate the market by creating an artificial shortage. Consumers are left

with no choice but to purchase items from scalpers at exorbitant prices. Thus, they are

engaging in unfair competition.

b. Bot Scalping and the Civil Code: An Examination of Applicability and

Legal Implications.

Under the Civil Code, the five sources of obligation are Law, contract, delict, quasi-

delict, and quasi-contract. Thus, the researcher examined the applicability or non-

applicability of the provisions of the Civil Code to a person engaged in the acts of bot

scalping.

b.1. Abuse of Right

Every person must, in the exercise of his rights and in the performance of his

duties, act with justice, give everyone his due, and observe honesty and good faith. 20

Supreme Court explained that under the abuse of rights principle found in Article 19 of

the Civil Code, a person must, in the exercise of legal right or duty, act in good faith. 21

He would be liable if he instead acted in bad faith, with intent to prejudice another. 22

Good faith refers to the state of mind which is manifested by the acts of the individual

concerned.23 It consists of the intention to abstain from taking an unconscionable and

unscrupulous advantage of another.24 Malice or bad faith, on the other hand, implies a

20
An Act to Ordain and Institute the Civil Code of the Philippines (Civil Code), Republic Act 386
(1950) art. 19.
21
California Clothing Inc. and Michelle S. Ybanez v. Shirley G. Quinones, G.R. No. 175822, October
23,2013.
22
Id.
23
Id.
24
Id.
conscious and intentional design to do a wrongful act for a dishonest purpose or moral

obliquity.”25

A right, though by itself legal because recognized or granted by law as such, may

nevertheless become the source of some illegality. 26 A person should be protected only

when he acts in the legitimate exercise of his right; that is when he acts in the with

prudence and in good faith, but not when he acts with negligence or abuse. 27 There is

an abuse of right when it is exercised only for the purpose of prejudicing or injuring

another.28

Thus, a person may be held civilly liable for acting in bad faith. A person shall bear

in mind that in exercising his right, no person shall be prejudiced. Although he is acting

in the exercise of his rights, the exercise of such right must be without the intent of

prejudicing another. The Supreme Court held that Article 19 imposes upon all persons

exercising their legal rights the duty to act with justice, give everyone his due, and to

observe honesty and good faith.29 Failure to discharge such duties is compensable

under Article 20 if the act is "contrary to law"; and under Article 21 if the act is legal but

"contrary to morals, good customs, or public policy.30

It is a well-settled rule that every person is presumed to be in Good faith and those

who alleged the contrary have the burden to prove such bad faith. Bad faith can be

inferred from the circumstances of each case. Bad faith is essentially a state of mind

affirmatively operating with furtive design or with some motive of ill-will. 31 It does not

25
Id.
26
Elmer T. Rabuya, 2021, Civil Law Reviewer Volume 1, (Manila:Rex Book Store), 27.
27
Id.
28
Id.
29
TOCOMS Philippines, Inc., v. Philips Electronics and Lightning, Inc., G.R. No. 214046, February
05, 2020.
30
Id.
31
Manolo P. Samson v. Court of Appeals, G.R. No. 108245, November 25, 1994.
simply connote bad judgment or negligence.32 It imports a dishonest purpose or some

moral obliquity and conscious doing of wrong.33

Based on the foregoing, retailers and consumers may hold scalpers civilly liable

under the abuse of right provision in the Civil Code. Although scalpers have the right to

enter a contract with the retailers or manufacturers, such right is exercised to prejudice

others.

One of the intention of scalpers is to buy all the products available in the market

through the use of bots. Another is that they intend to create an artificial shortage. Thus,

consumers are left with no choice but to purchase before them at exorbitant prices.

Bad faith can be inferred from their acts of using bots, in placing their purchases

online, to make it more easier for them to complete the process of purchasing online, to

the prejudice of others. Also, they use pre-filled bots, which has fake user account.

Further, Scalpers use bots to purchase all the available items online so that regular

consumers will not have any chance of purchasing them at the retail price. They have

the intention to purchase all the available items in the market so that regular customers

or purchasers will be left with no choice but to purchase the items with them, thus

gaining more profit.

b.2. Fraud

There is fraud when, through insidious words or machinations of one of the

contracting parties, the other is induced to enter into a contract which, without them, he

would not have agreed to.34 Fraud must be causal. The Supreme Court explained that in

32
Samson v. C.A., G.R. No. 108245.
33
Id.
34
Article 1338 of the Civil Code.
order for fraud may vitiate consent, it must be the causal (dolo causante), not merely the

incidental (dolo incidente), inducement to the making of the contract.35

Causal fraud is a statement made by a person that would mislead another to

enter into a contract. It can be made before entering the contract. The Supreme Court

defines causal fraud as a deception employed by one party prior to or simultaneous to

the contract in order to secure the consent of the other. 36 The Supreme Court further

held that bad faith is synonymous with fraud and involves a design to mislead or

deceive another, not prompted by an honest mistake as to one's rights or duties, but by

some interested or sinister motive.37

Fraud is synonymous with bad faith in the sense that there is an intent to defraud

or prejudice another. Fraud is committed by a person with the intent to take advantage

of another. Bad faith can be inferred from the act of a person defrauding another to

enter into a contract. Since without such machination words the parties will not enter

into the contract. Like bad faith, fraud must be proved by clear and convincing evidence.

As held by the Supreme Court, Causal fraud or bad faith on the part of one of the

contracting parties which allegedly induced the other to enter into a contract must be

proved by clear and convincing evidence.38

As discusses, in scalping through the use of bots, scalpers use bots that are pre-

filled with fake user details that they use in purchasing items. Scalpers also use bots to

purchase all the items available in the market to create an artificial shortage. They use

bots to make it easier for them to finish the checking out process or to purchase in bulk,

35
Spouses Fernando and Lourdes Viloria v. Continental Airlines, Inc., G.R. No. 188288, January 16,
2012.
36
Samson v. C.A., G.R. No. 108245.
37
Id.
38
Id.
and in just a second, items are already sold out. Thus, depriving regular consumers of

their chance of purchasing these items at the retail price and depriving the consumers

of their right to choose from goods and services available in the market. They also use

bots to be notified of any restocking made by manufacturers.

From the foregoing, there is fraud in scalping since scalpers use bots which is pre-

filled with fake accounts to purchase products. However, not all scalpers are using bots

which is pre-filled with fake accounts. Thus, scalpers cannot be prosecuted under fraud.

Only those who use bots which are pre-filled with fake accounts or user-account may be

prosecuted under fraud.

c. Bot Scalping: Assessing the Revised Penal Code and Legal Ramifications

The Revised Penal Code provides for acts which are punishable under Philippine

legislation. Thus, the researcher examined the applicability or non-applicability of the

provisions of the Revised Penal Code to a person engaged in the act of Scalping.

c.1. Monopolies and combinations in restraint of trade

Article 186 of the Revised Penal Code has been amended by R.A. No. 1956 and

was repealed by R.A. No. 10667 or known as the Philippine Competition Act. This Act is

applicable to any person or entity engaged in trade, industry, and commerce in the

Philippines and to international trade having direct, substantial, and reasonable

foreseeable effects in trade, industry, or commerce in the Philippines, including those

that result from acts done outside the Philippines.39

The law prohibits Anti-Competitive agreements, abuse of dominant position, and

entering into anti-competitive mergers and acquisitions.

39
An Act Providing for a National Competition Policy Prohibiting Anti-Competitive Agreements,
Abuse of Dominant Position and Anti-Competitive Mergers and Acquisitions, Establishing the Philippine
Competition Commission and Appropriating Funds therefor (Philippine Competition Act), Republic Act No.
10667, S3.
 c.2. Anti-Competitive Agreements

Anti-Competitive Agreements are agreements between or among competitors,

wherein it will restrict competition as to price, or components thereof, or other terms of

trade40. The law also prohibits agreements, between or among competitors which have

the object or effect of preventing, restricting, or lessening competition through setting,

kmiting, or controlling production, markets, technical development, or investment. 41 Or

through dividing or sharing the market, whether by volume of sales or purchases,

territory, type of goods or services, buyers or sellers, or any other means.42

Examples of Anti-Competitive agreements are price fixing, output limitation, market

sharing, and bid rigging. In price-fixing, businesses agree to directly fix purchase or

selling price, instead of letting supply and demand determine the price of the goods and

services.43 In Output limitation, businesses agree to limit production by restricting output

or setting quotas, creating an artificial shortage in the market that subsequently drives

up prices.44 In market sharing, businesses divide the market and claim dominance

according to territory, customer demographic, sales volume, or type, creating local

monopolies that deprive consumers of choices.45 In Bid rigging, businesses agree to fix

the price at an auction or manipulate bids, forcing buyers to select the higher-priced

“pre-selected” bid instead of the best price.46

Cartel is an organization formed by competitors in a specific industry, which

enables them to set prices or control levels of production. 47 Agreement to form cartels or
40
R.A. No. 10667, S 14 (a) (1).
41
R.A. No. 10667, S 14 (b) (1).
42
R.A. No. 10667, S 14 (b) (2).
43
Primer An overview of the Philippine Competition Act, available at https://www.phcc.gov.ph-/wp-
content/uploads/2017/03/Primer-on-the-Philippine-Competition-Act.pdf (last accessed May 1, 2024).
44
Id.
45
Id.
46
Id.
47
Id.
collude are considered anti-competitive agreements.48 The PCC defines cartels as

“businesses conniving to manipulate the market to their advantage (that) cause

significant harm to consumers by engaging in coordinated anti-competitive behavior

such as price-fixing, bid-rigging, output restriction, and market allocation.”49

There is cartel, when competitors form organization to set prices or to control the

productions. However, this is not the scenarios with scalpers. As discussed, scalpers

use bots to purchase all the inventories available in the market and to purchase

products in a bulk. They did not produce the products. They purchase products form

manufacturers or authorized resellers. The prices set by scalpers are based on the

demand of each product. The higher the demand the higher the price set by them.

On the other hand, scalpers may form a cartel by forming association and

purchasing all the available inventory in the market through the use of bots, creating an

artificial shortage. Scalpers may be prosecuted under Philippine Competition Act,

provided that scalpers will form cartel, otherwise they cannot be prosecuted under this

law.

Anti-competitive agreements are agreements between manufacturers wherein it

prevents competition among them. What the law prohibits are the unfair acts committed

by the manufacturers. Thus, this does not apply to scalping since the scalpers do not

enter into an agreement with the manufacturer in order to restrict competition. The

contract that scalpers enter with the manufacturer is a contract of sale.

48
Id.
49
Kris Crismundo, PCC To Probe Possible Cartel Amid High Onion Prices, available at
https:/-/www.pna.gov.ph/articles/1195412 (last accessed May 17, 2024).
 In scalping through the use of bots, the manufacturers do not connive with the

scalpers in setting their prices. It is the unilateral act of scalpers. Scalpers purchase

items that are in-demand since they know that they sell it at exorbitant price.

Like during the COVID-19 pandemic. Alcohol, face masks, and face shields were

also subject to scalping since there was high demand for the said products. However,

this kind of scalping is prohibited under The Consumer Act since it is considered as

unfair and unconscionable sales practice since scalpers are taking advantage of

consumers in time of need. And The Price Act since such practice is considered as

profiteering.

Also, manufacturers do not limit the production of their products in bad faith to

create artificial shortages. Most of the items subject to scalping are limited editions. And

the reason for the scarcity of some of the products is circumstances beyond the will of

the manufacturers, like the closure of businesses because of the COVID-19 pandemic.

Moreover, it is the scalpers who create artificial shortages. As discussed, scalpers

use bots to purchase all the inventories available in the market. Scalpers create the

artificial shortage to make sure that consumers are left with no choice but to purchase

items from them even at exorbitant prices. Thus, the Philippine Competition Act does

not punish a person engaged in scalping through the use of bots under Anti-competitive

agreement.

c.3. Abuse of Dominant Position

The law guarantees that consumers can exercise their right of choice over goods

and services which is offered in the market. Thus, the law also prohibits one or more

entities from abusing their dominant position by engaging in conduct that would
substantially prevent, restrict, or lessen competition through the sale of goods or

services below cost,50 by directly or indirectly imposing unfair purchase or selling prices

on their competitors, customers, suppliers or consumers, 51 or by Limiting production,

markets or technical development to the prejudice of consumers. 52 Dominant position

refers to a position of economic strength that an entity or entities hold which makes it

capable of controlling the relevant market independently from any or a combination of

the following: competitors, customers, suppliers, or consumers.53

In order for there to be abuse of dominant position, two essential elements must

be met: first, dominance, and second, abuse. 54 To be clear, Section 15 does not prohibit

being dominant in the market per se.55 Instead, what the provision prohibits is the

acquisition, maintenance, and increase of market share by substantially preventing,

restricting, or lessening competition.56

Having a dominant position is not prohibited by law. What is prohibited is the

abuse of such dominant position. As ruled by the Supreme Court, an entity is not

prohibited from, or held liable for prosecution and punishment for, simply securing a

dominant position in the relevant market in which it operates. It is only when that entity

50
R.A No. 10667, S 15 (a).
51
R.A No. 10667, S 15 (h).
52
R.A No. 10667, S 15 (i).
53
R.A No. 10667, S 4 (g).
54
Gian Angelo E. Chua, Anti-Competitive Behaviors through Consumer Switching Constraints
Imposed by Mobile Telecommunications firms in the Philippines, available at https://www.asean-
competition.org/research/uploads/admin-f88de83727/files/blogs/Research%20Articles/ANTI-COMPETITI-
VE%20BEHAVIORS%20THROUGH%20CONSUMER%20SWITCHING%20CONSTRAINT-S
%20IMPOSED%20BY%20MOBILE%20TELECOMMUNICATIONS%20FIRMS%20I-N%20THE%-
20PHILIPPINES%2C%20Gian%20Angelo%20E.%20.pdf (last accessed May 2, 2024).
55
Id.
56
Id.
engages in conduct in abuse of its dominant position that it will be exposed to

prosecution and possible punishment.57

An entity may be considered to have a dominant position if it is capable of

controlling the relevant market. Relevant market refers to the market in which a

particular good or service is sold and which is a combination of the relevant product

market and the relevant geographic market.58 The Commission will determine whether

or not an entity has a dominant position in a relevant market by taking into account a

number of factors specified in the Competition Act, including market share. 59 The

Competition Act does, however, create a rebuttable presumption of dominance with a

50% or more market share in the relevant market.60

Having a dominant position in the market is not prohibited, what is prohibited is

abusing such dominant position. The Supreme Court held that an entity with a dominant

position in a relevant market is deemed to have abused its dominant position if it

engages in a conduct that would substantially prevent, restrict, or lessen competition. 61

Before an entity may be held liable under the Philippine Competition Act, the entity

must first have a dominant position in the market. It is said that an entity has a dominant

position if it holds 50% or more of the market share.

Scalpers, who use bots, do not hold a dominant position in a relevant market. They

cannot be held liable under the Philippine Competition Act since they did not restrict

competition. What scalpers do is that they buy in-demand products, through the use of
57
Gio-Samar, Inc., v. Department of Transportation and Communications and Civil Aviation
Authority of the Philippines, G.R. No. 217158, March 12, 2019.
58
Id.
59
A guide to the Philippine Competition Act, available at
https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2015/11/a-guide-to-the-philippine-
competition-act.pdf (last accessed May 2, 2024).
60
Id.
61
Gio-Samar, Inc., v. Department of Transportation and Communications and Civil Aviation
Authority of the Philippines, G.R. No. 217158, March 12, 2019.
bots, and sell them at exorbitant prices. They purchase all the available inventories in

the market, however, they did not restrict or prohibit competition. Nor do they create

barriers for other entities to participate in the market.

Scalpers do not restrict other entities from entering into the market. They only

purchase products through the use of bots. They are not manufacturers. If they will

create barriers for other manufacturers to enter into the market, it would be impossible

for them to obtain products that they are selling.

c.4. Entering into anti-competitive mergers and acquisitions

And lastly, the law prohibits the acquisition or merger of two entities that would

result in lessening, restricting, or preventing market competition. 62 Merger takes place

when two or more entities combine to form a new entity.63

In scalping through the use of bots, there is no merger since scalpers only

purchase products, through the use of bots, that an entity or retailers are selling. They

do not purchase an entity to get the said items. The intention of scalpers is just to

purchase all the available products in the market to gain more profit.

c.5. Estafa

Estafa is an offense that involves deceit, fraud, or misrepresentation to perpetrate

damage to another. The offender deceived another to enter into a transaction.

The Supreme Court held that: “The elements of the crime of estafa by means of

false Pretenses or Fraudulent Acts, are the following: 1.) there must be a false pretense,

62
R.A No. 10667, S 20.
63
R.A No. 10667, S 4 (j).
fraudulent act or fraudulent means; 2.) such false pretense, fraudulent act or fraudulent

means must be made or executed prior to or simultaneously with the commission of the

fraud; 3.) the offended party must have relied on the false pretense, fraudulent act, or

fraudulent means, that is, he was induced to part with his money or property because of

the false pretense, fraudulent act, or fraudulent means; and 4.) as a result thereof, the

offended party suffered damage.64

c.2.1. There must be a false pretense, fraudulent act or fraudulent means

Fraud define as the voluntary execution of a wrongful act, or a willful omission,

knowing and intending the effects which naturally and necessarily arise from such act or

omission.65 In its general sense, fraud is deemed to comprise anything calculated to

deceive, including all acts and omissions and concealment involving a breach of legal or

ethical duty, trust, or confidence justly reposed, resulting in damage to another, or by

which an undue and unconscientious advantage is taken of another.66

Fraud is also described as embracing all multifarious means which human

ingenuity can device, and which are resorted to by one individual to secure an

advantage over another by false suggestions or by suppression of truth and includes all

surprise, trick, cunning, dissembling, and any unfair way by which another is cheated. 67

While deceit can be defined as the false representation of a matter of fact whether by

words or conduct, by false or misleading allegations, or by concealment of that which

should have been disclosed which deceives or is intended to deceive another so that he

shall act upon it to his legal injury.68

64
People of the Philippines v. Nenita T. Juego, G.R. No. 123162, October 13, 1998.
65
Spouses Isidro Dulay III* and Elena Dulay v. People of the Philippines, G.R. No. 215132,
September 13, 2021.
66
Id.
67
Id.
68
Id.
 The offender must use a false representation which led the victim into entering the

contract. Without such false representation, the victim would not enter contract with the

offender. The offender intends to conceal such fact since without such concealment the

victim will not enter into a contract with the offender.

In scalping through the use of bots, scalpers use bots to purchase all the available

products in the market to create an artificial shortage. They also, use bots that are pre-

filled with fake user details that they use in purchasing items. However, scalpers do not

deceived customers into entering contract with them.

In Estafa, it is material that the offender shall deceive the offender which leads the

offended to give his money or property. Which is not true in scalping through the use of

bots since consumers are well aware that they are dealing with scalpers. Thus, a

person engage in the practice of scalping through the use of bots cannot be charged

with Estafa.

c.2.2. Such false pretense, fraudulent act or fraudulent means must be

made or executed prior to or simultaneously with the commission of the

fraud

The Fraudulent act must be executed before or simultaneously with the

commission of the fraud. To constitute estafa the fraud must be committed before or

simultaneously with the commission of the fraud, otherwise, estafa will not arise. In one

of the cases previously decided by the Supreme Court, the Court ruled that the second

element of estafa, that the false pretense must be made prior or simultaneously with the

commission of the fraud, is present when the offender held himself out to the buyer as a
duly authorized person to sell the Lot of the owner, however, the authorization is limited

only to received payment from the buyer.69

In scalping, scalpers use bots to purchase all the available products in the market

and to create an artificial shortage. Likewise, scalpers are using bots that are pre-filled

with fake user accounts.

As discussed, scalpers do not deceived the consumers to purchase or into

entering contract with them. Consumers are well aware that they are dealing with

scalpers. However, consumers are left with no choice but to purchase before scalpers

since, scalpers already purchase all the available stocks of a certain product in the

market, through the use of bots.

c.2.3. The offended party must have relied on the false pretense, fraudulent

act, or fraudulent means, that is, he was induced to part with his money or

property because of the false pretense, fraudulent act, or fraudulent means

It is necessary that the offended party must rely on the false pretense committed

by the offender to part with his property. It must be the reason why the offended party

enter into a contract with the offender. If such false pretense or the concealed

information was disclosed, the offended party will not parted with his property.

As discussed, scalpers do not deceive the consumers to purchase or into entering

contract with them. Consumers are well aware that they are dealing with scalpers. They

are purchasing products before scalpers, since scalpers purchase all the products

available in the market, through the use of bots.

c.2.4. As a result thereof, the offended party suffered damages

69
Ariola v. People, G.R. No. 199975, February 24, 2020.
 It is essential that the offended party suffer damages as a result from his reliance

to the false pretense committed by the offender. Without such damage the offender

cannot be charged with estafa.

Based on the foregoing, a person engaged with scalping cannot be charged with

Estafa under the Revised Penal Code since not all the elements are present.

As discussed, in scalping, scalpers are using bots that are pre-filled with fake user

account. Scalpers also use bots to purchase all the available products in the market to

create an artificial shortage.

There is no false pretense. The consumer knows that the scalpers are selling a

certain product for exorbitant prices. The reason why they are purchasing those items,

even if they are being sold for exorbitant prices, is that they are left with no choice. The

damage that they suffered was that they were deprived of their chance of buying those

items at regular prices.

d. Cybercrime Prevention Act and Bot Scalping: Evaluating Legal Relevance

and Enforcement Challenges

Republic Act No. 10175 also known as the Cybercrime Prevention Act of 2012

punishes computer-related offenses. Thus the researcher examined the applicability or

non-applicability of the Cybercrime Prevention Act to a person engaged in the act of

scalping through the use of bots.

The law provides for three (3) categories of offenses. First is the Offenses against

the confidentiality, integrity and availability of computer data and systems. Second is

Computer-related offenses. And the third is the content-related offenses.

 d.1.Illegal access

The first category, illegal access has been defined as the access to the whole or

any part of a computer system without right. 70 There is violation of cybercrime law if the

offender access the computer of the offended without a right or without the authority.

In scalping through the use of bots, there is no illegal access. Scalper does not

access illegally the computer or system of the manufacturers or retailers. In fact,

manufacturers and retailers launch their products online. They open their website for

prospective buyers. Scalpers do not hack the computer systems of manufacturers or

retailers to purchase a certain item. What the scalpers do is they use bots to check out

easily those items, and as a result, in just a couple of seconds they already purchase

said item, unlike a regular customer who would take minutes before they can check out

such items. They also use bots to purchase items in bulk. Scalpers are not hacking any

computer system. Thus, this cannot apply to Scalping.

d.2.Misuse of Devices

The law also punishes the misuse of Devices. It prohibits the use, production, sale,

procurement, importation, distribution, or otherwise making available, without right, of a

device, including a computer program, designed or adapted primarily for the purpose of

committing any of the offenses under this Act. 71 Or a computer password, access code,

or similar data by which the whole or any part of a computer system is capable of being

accessed with intent that it be used for the purpose of committing any of the offenses

70
An Act Defining Cybercrime, Providing for the Prevention, Investigation, Suppression and the
Imposition of Penalties therefor and for Other Purposes, Republic Act No. 10175, S 4 (a) (1).
71
R.A. No. 10175, S 4 (5) (i) (aa).
under this Act.72 Further, it prohibits the possession of an item referred to in the two

preceding sentences with intent to use said devices for the purpose of committing any

of the offenses under this section.73

What the law prohibits is the sale or distribution of a device designed for the

purpose of committing any of the offenses enumerated under the said law. Thus, a

person engaged in scalping through the use of bots cannot be held liable for violation of

Cybercrime law under the misuse of Devices.

In scalping through the use of bots, scalpers do not sell bots. As discussed, what

scalpers sell are the items with limited production or high-demand products. Scalpers

use this bots in order for them to purchase all the stock of a certain product available in

the market. They also use this bots to make it easier for them to complete the process

of checking out and to be able to purchase a certain item in bulk.

The intention of the scalpers is to purchase a certain item with high demand or

limited items and sell those items at a price twice or thrice, or even higher, of their retail

price. They intend to deprive a regular customer of obtaining those items at a regular

price. So that the regular customers are left with no choice but to purchase the items

before them, thus gaining more profit.

d.3.Computer-related Fraud

It further prohibits Computer-related Fraud. Computer related frauds are the

unauthorized input, alteration, or deletion of computer data or program or interference in

the functioning of a computer system, causing damage thereby with fraudulent intent. 74

72
R.A. No. 10175, S 4 (5) (i) (bb).
73
R.A. No. 10175, S 4 (5) (ii).
74
R.A. No. 10175, S 4 (b) (2).
 Similar to what was above-mentioned, this does not apply to scalping since there

is no unauthorized input, alteration, or deletion of computer data or program or

interference in the functioning of a computer system which would cause damages. As

discussed, what the scalpers do is they use bots to make it easier for them to check out

items, pay online, or be notified of the sale of specific items. Bots make their shopping

online faster than a regular customer. Through the use of bots, scalpers can also make

bulk purchases.

e. Consumer Protection and Bot Scalping: Assessing the Relevance of the

Philippine Consumer Act (RA 7394)

Republic Act No. 7394 is also known as the Consumer Act of the Philippines. It

enumerates prohibited acts that are intended to protect the interest of every consumer.

Thus, the researcher examined the applicability or non-applicability of the Consumer Act

of the Philippines to a person engaged in the act of scalping through the use of bots.

e.1. Deceptive Practice

An act or practice shall be deemed deceptive whenever the producer,

manufacturer, supplier or seller, through concealment, false representation or fraudulent

manipulation, induces a consumer to enter into a sales or lease transaction of any

75
consumer product or service. What the law prohibits is the concealment or false

representation committed by the manufacturer, supplier, or seller towards their

customers to enter into a sale or lease contract.

75
The Consumer Act of the Philippines (Consumer Act of the Philippines), Republic Act No. 7394, S
4 (b) (2).
 The deception or the false statement may pertain to the standard, quality, grade

style, or model of a certain product. The Supreme Court explained that a product is

defective when it does not offer the safety rightfully expected of it, taking relevant

circumstances to consider, including but not limited to, presentation of product, the use
76
and hazards reasonably expected of it, or the time it was put into circulation. A

product is not considered defective because another better quality product has been

placed in the market.77

What the law punishes is the act of the seller in concealing a material fact

pertaining to the product that it sells. If such fact is revealed to the consumer, the

consumer will not buy that product or will not enter into a contract of sale with the

offender. In a recent case, the Supreme Court ruled that the offender violated the

Consumer Act of the Philippines particularly the provisions on defective products and

deceptive sales when the offender, who is a registered dealer of BMW vehicles, sold a

defective car and represented a second-hand car as brand new to Spouses Bernardo. 78

In this case, the seller conceals that the BMW it is selling is a second hand and not

brand new. That is such fact is revealed to the Spouses Bernardo, said spouses will not

purchase said vehicle.

In scalping through the use of bots, scalpers do not induce a consumer to enter

into a sale or lease transaction. They do not conceal or falsely represent themselves,

before the regular customer, that they are the registered or authorized reseller of the

manufacturer. What the scalpers do is purchase all the available inventories in the

market through the use of bots, creating an artificial shortage. Customers are well
76
Autozentrum Alabang, Inc. v. Spouses Miamar A. Bernardo and Genaro F. Bernardo, Jr., et. al.,
G.R. No. 214122, June 8, 2016.
77
Id.
78
Id.
aware that they are scalpers. However, they are forced to purchase from scalpers

despite exorbitant price since there is no available stocks in the market.

e.2. Unfair or unconscionable sales act or practice

An unfair or unconscionable sales act or practice by a seller or supplier in

connection with a consumer transaction violates this Chapter whether it occurs before,

during or after the consumer transaction.79 An act or practice shall be deemed unfair or

unconscionable whenever the producer, manufacturer, distributor, supplier or seller, by

taking advantage of the consumer’s physical or mental infirmity, ignorance, illiteracy,

lack of time or the general conditions of the environment or surroundings, induces the

consumer to enter into a sales or lease transaction grossly inimical to the interests of

the consumer or grossly one-sided in favor of the producer, manufacturer, distributor,

supplier or seller.80

In determining whether an act or practice is unfair and unconscionable, the

Consumer Act of the Philippines provided for the circumstances which shall be

considered. One of which is when the consumer transaction was entered into, the price

grossly exceeded the price at which similar products or services were readily obtainable

in similar transaction by like consumers.81

An act or practice is unconscionable or unfair if the seller takes advantage of the

consumer’s physical or mental infirmity, ignorance, illiteracy, lack of time or the general

conditions of the environment or surroundings, induces the consumer to enter into a

sales or lease transaction grossly inimical to the interests of the consumer or grossly

one-sided in favor of the producer, manufacturer, distributor, supplier or seller. 82 And

79
R.A. No. 7394, art. 52.
80
Id.
81
R.A. No. 7394, art. 52 (b).
82
Id.
when the contract was entered into, through the act enumerated in the preceding

sentence, the price grossly exceeded the original price of the goods or services.83

Ignorance means lack of knowledge, understanding, or information about

something.84 While, illiteracy mean the lack of knowledge about a particular subject. 85

There is an unfair or unconscionable sale when the seller takes advantage of the lack of

knowledge of a consumer on a certain product. Thus, if the seller deceived the buyer,

claiming that he was selling iPhone 15 Pro Max, well in fact it is just an iPhone 14 Pro

Max, and the buyer has no knowledge about iPhones, the seller is engaged in unfair or

unconscionable sale.

In scalping through the use of bots, scalpers purchase all the inventory available in

the market, through the use of bots. They also use bots that are pre-filled with fake

accounts. Usually, consumers are well aware of the products that they are purchasing.

They are also aware that they are purchasing from scalpers.

For example, if the consumer purchases the latest graphic cards, the consumer is

well aware of the graphic cards that are available in the market. Also, those who

purchase products that are subject to scalping are the patrons of the said products.

Thus, this provision of the Consumer Act of the Philippines does not apply to scalping

through the use of bots.

The general condition of the environment or surroundings is the scenarios or

events that are happening around the buyer and the seller. For example, during the

COVID-19 pandemic, everyone was constrained in going out of their homes.

83
Id.
84
Meaning of Ignorance, available at
https://dictionary.cambridge.org/us/dictionary/english/ignorance (last accessed May 17, 2024).
85
Meaning of illiteracy, available at https://dictionary.cambridge.org/us/dictionary/english/illiteracy
(last accessed May 17, 2024).
Facemasks and face shields are required. Thus, facemasks and face shields were

subject to scalping. Malls or establishments will not let you in unless you are wearing

facemasks and face shields. Scalpers are selling facemasks and face shields twice or

thrice the original price.

In scalping through the use of bots, scalpers are taking advantage of the general

condition of the environment or the surroundings. Like for example, in game consoles

scalpers know that new editions of game consoles are not released yearly. PlayStation

5 was released 8 years after PlayStation 4 was released. Scalpers usually scalp

products which have limited production or are in-demand since they know that these

products would be easily sold out and they can sell it at exorbitant prices. Scalpers use

bots to purchase PlayStation 5 faster than the regular consumers.

However, scalpers do not induce consumers to enter into sales or lease

transactions. It is necessary that the seller, by taking advantage of the general

condition of the environment or surroundings, induces the consumer to purchase the

products. As discussed, what scalpers do is they use bots to purchase all the

inventories available in the market and deprived consumers of their right to choose

between goods or services available in the market.

f.Price Regulation and Bot Scalping: Examining the Relevance of the

Philippine Price Act (RA 7581)

R.A. No. 7581 is also known as the Price Act. It ensures that goods, such as the

basic necessities and prime commodities, are available at reasonable prices. It also

protects consumers against hoarding, profiteering, and cartels of the said goods. Thus,
the researcher examined the applicability or non-applicability of the Price Act to a

person engaged in the act of scalping through the use of bots of non-essential products.

It shall be unlawful for any person habitually engaged in the production,

manufacture, importation, storage, transport, distribution, sale or other methods of

disposition of goods to engage in profiteering, which is the sale or offering for sale of

any basic necessity or prime commodity at a price grossly in excess of its true worth. 86

There shall be prima facie evidence of profiteering whenever a basic necessity or prime

commodity being sold: (a) has no price tag; (b) is misrepresented as to its weight or

measurement; (c) is adulterated or diluted; or (d) whenever a person raises the price of

any basic necessity or prime commodity he sells or offers for sale to the general public

by more than ten percent (10%) of its price in the immediately preceding month:

Provided, That, in the case of agricultural crops, fresh fish, fresh marine products, and

other seasonal products covered by this Act and as determined by the implementing

agency, the prima facie provisions shall not apply.87

Hoarding is also prohibited under this act. It shall also be unlawful for any person

habitually engaged in the production, manufacture, importation, storage, transport,

distribution, sale or other methods of disposition of goods to engage in hoarding. 88

Hoarding means the undue accumulation by a person or combination of persons of any

basic commodity beyond his or their normal inventory levels or the unreasonable

limitation or refusal to dispose of, sell or distribute the stocks of any basic necessity of

prime commodity to the general public or the unjustified taking out of any basic

86
R.A. No. 7581 as amended, S 5 (2).
87
Id.
88
R.A. No. 7581 as amended, S 5 (1).
necessity or prime commodity from the channels of reproduction, trade, commerce and

industry.89

Based on the foregoing, a person or entity is engage in hoard if such person or

entity purchase goods in excess of his or their normal consumption or refusal to sell or

distribute such products, which are basic or prime commodities, or taking such products

from the market. Thus, scalpers through the use of bots of non-essential products does

not engage in hoarding. Scalpers use bots to purchase all the available inventories of

non-essential products in the market and sells them at exorbitant prices. In hoarding

and scalping, both person or entity purchase products in bulk or in excess of their

normal consumption. The difference between the two is that in scalping through the use

of bots, scalpers are reselling the products at exorbitant prices, while in hoarding, entity

or individuals refuses to sell the products in the market.

Basic necessities include rice; corn; bread; fresh, dried and canned fish and other

marine products, fresh pork, beef and poultry meal; fresh eggs; fresh and processed

milk; fresh vegetables; root crops; coffee; sugar; cooking oil; salt; laundry soap;

detergents; firewood; charcoal; candles; and drugs classified as essential by the

Department of Health.90 While Prime commodities include fresh fruits; flour; dried

processed and canned pork; beef and poultry meat; dairy products not falling under

basic necessities; noodles; onions; garlic; vinegar; patis; soy sauce; toilet soap;

fertilizer; pesticides; herbicides; poultry; swine and cattle feeds; veterinary products for

poultry, swine and cattle; paper; school supplies; nipa shingles; sawali; cement; clinker;

GI sheets; hollow blocks; plywood; plyboard; construction nails; batteries; electrical

89
Id.
90
R.A. No. 7581 as amended, S 3 (1).
supplies; light bulbs; steel wire; and all drugs not classified as essential drugs by the

Department of Health.91

In scalping through the use of bots, scalpers purchase all the available inventory in

the market, creating an artificial shortage, and then sell it at exorbitant prices. It

deprived consumers from exercising their right to choose from goods and services

available in the market. And since there is an artificial shortage, consumers are forced

to purchase before the scalpers are exorbitant prices.

The Price Act prohibits any person or entity from engaging in the act of hoarding,

profiteering, and cartel with respect to the supply, distribution, marketing, and pricing of

basic necessities and prime commodities especially during periods of calamity,

emergency, and other similar situations. However, this applies only to basic goods and

prime commodities, which are especially defined by the law. it cannot apply to a person

engaged in the practice of scalping through the use of bots of non-essential products

since these products do not fall under the definition of basic necessities and prime

commodities. The products subject of scalping are non-essential products, such as

limited-edition products, sneakers, game consoles, and computer parts or graphic

cards. Thus, these do not fall under the definition of basic and prime commodities and

thus, a person engaged in the practice of scalping cannot be prosecuted for violation of

the Price Act of the Philippines.

2. Bots Scalping: Legal Perspectives Across Borders

Scalping through the use of bots has been a widespread practice not only in the

Philippines, but also in other countries.

91
R.A. No. 7581 as amended, S 3 (8).
 In United States, Former President Barack Obama signed into law Better Online

Ticket Sale Act or BOTS Act. BOTS Act aims to prevent ticket brokers from buying large

numbers of event tickets and reselling them to interested customers at inflated prices. 92

The law prohibits a person from using computer software to purchase tickets online and

selling them at exorbitant prices.93 The law aimed to penalize any person or entity who

is trying to avoid security measures sets by authorized ticket sellers. 94 Any person or

entity found violating BOTS Act will be penalized by a fine up to $16, 000.

However, since ticket is not the only product that is subject to scalping, United

States filed a new bill which intent to curb scalping of in high-demand goods. Stopping

Grinch Bots Act was filed to stop scalpers from using Bots to quickly purchase items

that are in demand to be sold on for higher prices. 95 The bill was introduced on

December 13, 2023 and was referred to the Committee on Commerce, Science, and

Transportation.

Stopping Grinch Bots Act prohibits manipulative work arounds that allow bad

actors to use bots to circumvent control measures designed to protect real consumers. 96

It also makes it illegal to knowingly circumvent a security measure, access control

system, or other technological control or measure on an Internet website or online

service to maintain the integrity of posted online purchasing order rules for products or

92
Justice Department and FTC Announce First Enforcement Action for Violations of the Better
Online Ticket Sale Act, available at https://www.justice.gov/opa/pr/justice-department-and-ftc-announce-
first-enforcement-actions-violations-better-online-ticket (last accessed April 29, 2024).
93
Better Online Ticket Sale Act of 2016 (BOTs Act of 2016), Public Law 114-274, S2 (a).
94
BOTs Act of 2016, S2 (a) (1) (A).
95
Danielle Partis, US politicians unveil new bill to clamp down on scalping, available at https://-
www.gamesindustry.biz/us-politicians-unveil-new-bill-to-clamp-down-on-scalping (last accessed May 1,
20204).
96
Stopping Grinch Bots Act, H.R. 5263/S. 2957 (2023).
services, including toys, and would make it illegal to sell or offer to sell any product or

service obtained in this manner.97

Likewise, In Australia, specifically in Victoria98, New South Wales99, South

Australia100, and Western Australia101, reselling of tickets for a price 10% higher that the

retail price is prohibited. Any person found guilty of the offense will be fined.

Scalping through the use of bots is not prohibited in some parts of Australia.

Whether ticket bought using a bot is an offense under state or territory law depends on

the jurisdiction.102 However, in New South Wales it outlaws the use of bots-software that

allow ticket scalpers to buy lots of tickets before anyone else.103

In Canada, especially in Quebec, they enacted a law which makes it illegal for

unauthorized ticket resellers to sell tickets for more than the face value of the ticket. A

person found guilty of the law would be fined ranging from $1,000 to $2,000 for the first

offense and as much as $200,000 if found violating the said law repeatedly. 104 Likewise,

in Ontario, under Ticket Speculation Act reselling tickets above its face value is

prohibited. A person or entity found guilty shall, likewise subject to fine of $5,000 and

$50,000, respectively.105

97
Id.
98
Major Event Act 2009, Act Number 30,2009.
99
Major Event Act 2009 No 73.
100
An Act To Facilitate the Holding and Conducting of Major Events in South Australia; and for other
purposes, Major Events Act 2013-10.12.2018.
101
Major Event Act 2023.
102
Ellie Grounds, More than 500 People Involved in Campaign to Use Bots to Buy and Scalp Fred
Again.. Tickets, available at https://www.abc.net.au/news/2024-03-12/fred-again-tickets-snappe-d-up-by-
bots/103570120 (last accessed May 17, 2024).
103
Ticket Scalping and Gift Cards, Act no 52 of 2017.
104
Jean Henegan, Stringent Quebec ticket resale law goes into effect, available at -https://ww-
w.ticketnews.com/2012/06/stringent-quebec-ticket-resale-law-goes-into-effect/ (last accessed May 1,
2024).
105
Ticket Speculation Act of the Government of Ontario, Canada.
 In the Province of Ontario, Canada, they enacted a law that prohibits the use or

sell software, including automated ticket purchasing software, intended to circumvent

security measure, access control system, or any other control or measure that is used

to ensure an equitable ticket buying process. 106

Based on the foregoing, foreign countries try to combat the practice of a person

engaging in the act of scalping through the use of bots. In, U.S. legislature saw that

there was a need to expand the BOTs Act and to include other products that are subject

to scalping. The Stopping Grinch Bots Act is common-sense consumer protection

legislation that gives consumers who just want to buy a present a fair chance against

the professional resellers.107

3. Assessing Bot Scalping Regulation: Balancing State Authority, Contract

Integrity, and Individual Freedom

1. Non-impairment of Contracts

As discussed, the non-impairment clause, found in the constitution, prohibits the

state from enacting a law that would impair an existing contract. A subsequent law

would violate the non-impairment clause of the Constitution if the subsequent law

modifies, changes the term of the contract, imposes new conditions, or dispenses with

those that are already agreed upon by the parties. it also violates the non-impairment

clause of the Constitution if the law diminishes the efficacy of the contract entered into

by the parties.

Contracts are the law between the parties. Once the parties enter into the contract

it has the force and effect of law. Parties may provide any stipulation, clause, terms, and

106
Ticket Sale Act, 2017, S.O. 2017, c.33, Sched. 3.
107
Paul D. Tonko, Supra Note 11, at 2023.
condition in the contract provided that it does not violate the law, morals, good custom,

public order, or public policy. Thus, they are obliged to comply with the terms and

conditions they set forth in the said contract. And they are estopped from claiming that

they are not bound by the terms and conditions of their contract.

Under the Vested Right Doctrine, rights granted to the parties by the contract or

rights acquired by the parties are already vested and cannot be impaired by the

enactment of a new law. The Supreme Court explained that a vested right is one whose

existence, effectivity, and extent does not depend upon events foreign to the will of the

holder.108 The term expresses the concept of present fixed interest which in right reason

and natural justice should be protected against arbitrary State action, or an innately just

and imperative right which enlightened free society, sensitive to inherent and

irrefragable individual rights, cannot deny.109 Vested rights include not only legal or

equitable title to the enforcement of a demand, but also an exemption from new

obligations created after the right has vested.110

Thus, parties once entered into a contract, the rights granted to them under the

said contract are already vested. The state cannot enact a subsequent law that would

impair the said right without due process. However, as discussed, it is not absolute. It

can be impaired by the State through its valid exercise of police power. The most

significant decision on the contract clause, however, were those which emphasized the

superiority of police power over the sanctity of contracts. 111 And also the contract shall

not violate law, morals, good custom, public order, or public policy.

108
Republic of the Philippines v. Court of Appeals and Zenaida C. Robles, G.R. No. 92326.
109
Id.
110
Id.
111
Joaquin G. Bernas, 2009, The 1987 Constitution of the Republic of the Philippines: A
Commentary, (Manila:Rex Book Store) 455.
 2. Police Power of the State

Rights granted by law and contract are not absolute since they can be impaired by

the state. These are the fundamental power of the state, namely; power of eminent

domain, power of taxation, and Police power. The totality of governmental power is

contained in three great powers: police power, power of eminent domain, and power of

taxation.112

The police power of the State is a power coextensive with self-protection, and is

not inaptly termed the "law of overruling necessity. 113 The Supreme Court explained that

Police power is the plenary power vested in the legislature to make statutes and

ordinances to promote the health, morals, peace, education, good order or safety and

general welfare of the people.114 This power flows from the recognition that salus populi

est suprema lex, or the welfare of the people is the supreme law.115

Police power is said to be the far-reaching power of the state. Thus, the state can

deprive a person of their life, liberty, and property. However, this power is not absolute.

It must be exercised with due process of law. Thus, although Police power is far-

reaching in scope, it must be grounded in public interest and welfare. Otherwise, it is

unconstitutional and not valid exercise of police power of the state.

The Supreme Court explained that police power is so far-reaching in scope, that it

has become almost impossible to limit its sweep. 116 As it derives its existence from the

very existence of the State itself, it does not need to be expressed or defined in its

scope; it is said to be co-extensive with self-protection and survival, and as such it is the
112
Ibid 101.
113
Rubi et al. (manguianes) v. The Provincial Board of Mindoro, G.R. No. 14078.
114
Social Justice Society, et. al., v. Hon. Jose L. Atienza, Jr., in his capacity as Mayor of the City of
Manila, G.R. No. 156052, February 13, 2008.
115
Id.
116
Ichong, etc., et al. v. Hernandez, etc., and Sarmiento, 101 Phil. 1155, May 31, 1957.
most positive and active of all governmental processes, the most essential, insistent

and illimitable.117

As mentioned, the police power of the state is not absolute since it is subject to the

limitation of due process and equal protection. This limitation is found under the

Constitution. No person shall be deprived of life, liberty or property without due process

of law, nor any person be denied the equal protection of the laws. 118 This limitation is to

safeguard that the Government or the state will not abuse its power. Since absence of

any limitation, the state may abuse its power and enact law that would absolutely

deprive people from exercising its rights, which are granted by the constitution.

Due process of law means giving a party the opportunity to defend himself before

rendering judgment. It does not literally means giving the party a day in court or

opportunity to be heard since there is no violation of due process of law even there is no

hearing provided that the party was given the opportunity to explain or defend himself or

herself.

Equal protection clause, on the other hand, means that a law shall apply to all of

the same class. A law may apply only to a certain group of people provided that there is

a substantial distinction. The Supreme Court explained that a classification, to be valid,

must (1) rest on substantial distinctions, (2) be germane to the purpose of the law, (3)

not be limited to existing conditions only, and (4) apply equally to all members of the

same class.119

Thus, prohibiting or criminalizing scalping through the use of bots is a valid

exercise of the police power of the state. As discussed, although parties are bound by

117
Id.
118
Phil. Const. art. III, S 1(1).
119
Conrado L. Tiu, et. al., v. Court of Appeals, G.R. No. 127410, January 20, 1999.
the terms and conditions set forth in their contract, nonetheless, the state may regulate

said contract as a valid exercise of the police power of the state.

One of the rights of the consumers is the right to choose from goods 120 available in

the market. The purpose of criminalizing scalping through the use of bots is to provide

additional protection for consumers since they are deprived of their right to choose.

There is a substantial distinction since scalpers may be distinct from other sellers

because scalpers use bots or computer system to purchase products. The scalpers sell

the products twice or even thrice its original price. There is also a valid distinction since

the intent of the scalpers is to gain profit at the expense of the consumers. This intent

can be presumed from the conduct of the scalpers since they buy all the inventories

available at the market through the use of bots and resell them at exorbitant prices.

3. Freedom of Parties to Enter into Contract

The supreme Court explained that the freedom of contract is both constitutional

and statutory right.121 It is found under the non-impairment clause of the Constitution.

Thus, the parties may enter into any contract and may provide any stipulation therein

provided that it is not contrary to law, morals, good custom, public order, or public

policy.

As discussed, the state cannot enact a law that would impair the existence of a

contract, voluntarily entered into by the parties. However, this is subject to a limitation. A

contract may be impaired by a law, subsequently enact by the state, in the exercise of

its police power.

120
Consumer Rights 101: Know and exercise tour rights as a consumer, available at
https://www.dti.gov.ph/archives/news-archives/consumer-rights-101-know-and-exercise-your-rights-as-a-
consumer/ (last accessed April 24, 2024).
121
Rodolfo Morla v. Corazon Nisperos Belmonte, et. al., G.R. No. 171146, December 7, 2011.
 As discussed, the Supreme Court held that the freedom to contract is not absolute;

all contracts and all rights are subject to the police power of the State and not only may

regulations which affect them be established by the State, but all such regulations must

be subject to change from time to time, as the general well-being of the community may

require, or as the circumstances may change, or as experience may demonstrate the

necessity.122 Settled is the rule that the non-impairment clause of the Constitution must

yield to the loftier purposes targeted by the Government. 123 The right granted by this

provision must submit to the demands and necessities of the State’s power of

regulation.124

4. Strengthening Legal Measures Against Bot Scalping in the Philippines

Since the lack of specific legislation to cover Scalping in the Philippines, it is

necessary for the Philippines legislative to enact a law to further protect its consumers.

a. Basic Consumer Rights

Consumers are granted certain rights. These rights can be inferred from the

Constitution and special laws, like the Consumer Act. The Eight (8) Basic Consumer

Rights are the rights to Basic Needs, Safety, Information, Choice, Redress,

Representation, Consumer Education, and a Healthy Environment.125 However, such

rights are not exclusive since consumers are also entitled to any rights that the laws,

rules, regulations, and issuances may provide. Former DTI-Consumer Policy and

Advocacy Bureau (CPAB) Director Atty. M. Marcus N. Valdez II points out that, “The

122
Congressman Enrique T. Garcia v. Hon. Renato C. Corona, et al., G.R. No. 132451, December
17, 1999..
123
Id.
124
Id.
125
DTI releases Policy Advisory on Basic Consumer Rights, available at
https://ww-w.dti.gov.ph/archives/news-archives/policy-advisory-basic-consumer-rights/ (last accessed
April 26, 2024).
laws provided in the advisory for the protection and promotion of consumer rights are

not exclusive as other laws, rules, regulations, and issuances may also be sources of

consumer rights.126 As far as practicable, the Basic Consumer Rights should be referred

to or invoked in all matters related to consumer protection, including but not limited to

settlements, decisions, resolutions in mediation or adjudication of consumer

complaints.127

The right to basic Needs is the right of every consumer to have an access to basic

and essential goods and services. This includes clothes, shelter, health care, education,

public utilities, water and sanitation. The right to safety is the right of every consumer to

be protected from products that are hazardous to their health and life. This is the reason

why some goods are being prohibited by the state since they contain substances or

ingredients that are hazardous to the lives of the consumers.

Right to information is the right of every consumer to be informed of the goods

they are purchasing. That is the reason why the state implemented a law, the Consumer

Act of the Philippines, that mandates every consumer to provide labels on their

products, including the ingredients of every product. The right to representation is the

right of every consumer to be represented in the making and execution of the policy of

the government, as well as the development of products and services.

The right to redress is the right of every consumer to receive fair compensation for

their just claims. This includes damages or settlements that a consumer may receive as

a result of his valid claim. The right to a Healthy Environment is the right of the

126
Id.
127
Id.
consumers to live and work in an environment that is not s threat to the well-being of the

present as well as the future generations.

The right to choose is the right of every consumer to select from the goods and

services available in the market. This right can be exercised by the consumers if they

can select from a variety of products offered at the market at a fair and competitive

price. The price is considered fair and reasonable when the proposed price is fair to

both parties, considering the quality, delivery, and other factors. 128 This is the reason

why the state prohibits anti-competitive agreements between manufacturers since

consumers are deprived of their right to choose from goods and services available in

the market.

In scalping through the use of bots, as discussed, scalpers purchase all the

available inventories in the market and sell them at exorbitant prices. They deprived

consumers to exercise their right to choose from goods available in the market. Since

scalpers, through the use of bots, creates an artificial shortage, thus, consumers are left

with no choice but to purchase before them or not.

b. Ordinances

At present, there are existing ordinances prohibiting Ticket Scalping. The Local

Governments of Pasay City and Quezon City enacted Ordinance to prohibit ticket

scalping in their respective cities. Pasay City enacted Ordinance No. 192, S-1993.

While Quezon City enacted Ordinance No. SP-493, S-1997, as amended by SP-2744,

S-2018.

128
Method to determine Price Reasonableness, available at https://www.luc.edu/purchasing/pri-
ce_reasonableness.shtml (last accessed April 26, 2024).
 Based on Ordinance no. 192, S-1993 of Pasay City, scalping has been defined as

the practice of selling or re-selling of any admission, privilege, or gratuity tickets by any

unauthorized dealer or agent for the purpose or practice other than those explicitly

stated or printed on the tickets, either at a discount or premium. 129 Unauthorized dealer

or agent has been defined as any person other than those certified dealers or agents

thereof who could not provide or present any certification which is verifiable as to the

nature of their operations.130 It is prohibited for any person or entity to engage in

scalping activities within the jurisdiction of Pasay City.131 Violation of such shall be

penalized by: for first offense it is penalized by a fine of Five Thousand Pesos (Php.

5,000.00); second offense is penalized of a fine of Five Thousand Pesos (Php.

5,000.00) and imprisonment of not less than 30 days; third offense is penalized of a fine

of Five Thousand Pesos (Php. 5,000.00) and imprisonment of not less than six (6)

months.132

In Ordinance No. SP-493, S-1997, as amended by SP-2744, S-2018 by Quezon

City, Scalping has been defined as the act of selling or reselling, or attempted selling or

reselling, or act of soliciting or attempted soliciting of admission tickets at a price in

excess of the original price that is printed in the face thereof, in whatever form or

medium, outside the authorized official booth, outlet, or place duly designated for the

purpose, or from unauthorized websites or online sources, in connection with any

129
An Ordinance Prohibiting Scalping within the Jurisdiction of the City of Pasay, Pasay City
Ordinance No. 192, s-1993, S II.
130
Id.
131
Pasay City Ordinance No, 192, S-1993, S III.
132
Id.
entertainment or sporting event, similar undertakings or activities, or any event requiring

admission tickets.133

The ordinance prohibits any person from engaging in any and all kinds of Scalping

activities defined in Section 2 hereof, without the written permission of the owner,

operator, or manager of the property or venue where the entertainment or sporting

event is to be held or is being held, or of the event organizer. 134 It also prohibits the

selling or attempting to sell complimentary tickets regardless of amount or any form of

payment, in kind or in cash.135 Moreover, such prohibition shall equally apply to any

person or entity buying admission tickets from persons engaged in Scalping activities. 136

Further, it shall be unlawful for any person or entity to finance, manage, or operate

Scalping activities.137 The violation of such shall be penalized by a fine of Five Thousand

Pesos (Php. 5,000.00) or imprisonment of one (1) year, or both, at the discretion of the

court.138

These two ordinances apply only to the selling and buying of tickets. It does not

apply to scalping through the use of bots of other non-essential products that may be

subject to scalping. These two ordinances were enacted in 1990’s when tickets to

concerts and games where prevalent. But since, through time, tickets were not the only

product that was subject to scalping, and to protect the rights of the consumer, there is

a need for the state to enact a law that would criminalize the practice of a person

engaging in scalping through the use of bots of other non-essential products.

133
An Ordinance Amending Ordinance No. SP-493, S-1997, otherwise known as “Declaring
Unlawful the Selling and/or Buying of Admission Tickets Outside the Authorized Official Booth, Outlet or
Place Designated for the Purpose and providing penalties for violation thereof”, Ordinance No. SP-2744,
S-2018, S 2.
134
Id.
135
Id.
136
Id.
137
Id.
138
Id.
 Moreover, the state may regulate the scalping through the use of bots of non-

essential products since scalping through the use of bots, as discussed in the Chapter II

of this study, was used as a modus operandi by scammers to perpetuate their illegal

acts. Also, as discussed in Chapter II of this study, tickets and other non-essential

products are the same. Tickets are for limited capacity dependent of the place where

the concert shall be held, and the other non-essential products that subject also to

scalping are also limited in production. Like the PlayStation 5, they are produced by

batches.

The state shall never ignore the fact that scalping through the use of bots
prejudice the rights of our consumers. Scalping has evolved and thus become rampant.
Thus, it shall be prohibited since scalpers are engaged in fraudulent practices. The
practice of scalping through the use of bots is tantamount to fraudulent means of
making money. As discussed, every right must be practiced with due care. That no
other person shall be prejudiced by the practice of such right.