1) The document discusses whether marketing and selling discount coupons through the internet constitutes advertising under Philippine law.
2) It finds that coupons can be considered a form of advertising as they promote products and create purchasing incentives for consumers.
3) Electronic vouchers are similarly considered a form of advertising.
4) Therefore, marketing and selling discount coupons through the internet is deemed a form of advertising subject to the 30% foreign ownership limit under the Philippine Constitution.
1) The document discusses whether marketing and selling discount coupons through the internet constitutes advertising under Philippine law.
2) It finds that coupons can be considered a form of advertising as they promote products and create purchasing incentives for consumers.
3) Electronic vouchers are similarly considered a form of advertising.
4) Therefore, marketing and selling discount coupons through the internet is deemed a form of advertising subject to the 30% foreign ownership limit under the Philippine Constitution.
1) The document discusses whether marketing and selling discount coupons through the internet constitutes advertising under Philippine law.
2) It finds that coupons can be considered a form of advertising as they promote products and create purchasing incentives for consumers.
3) Electronic vouchers are similarly considered a form of advertising.
4) Therefore, marketing and selling discount coupons through the internet is deemed a form of advertising subject to the 30% foreign ownership limit under the Philippine Constitution.
1) The document discusses whether marketing and selling discount coupons through the internet constitutes advertising under Philippine law.
2) It finds that coupons can be considered a form of advertising as they promote products and create purchasing incentives for consumers.
3) Electronic vouchers are similarly considered a form of advertising.
4) Therefore, marketing and selling discount coupons through the internet is deemed a form of advertising subject to the 30% foreign ownership limit under the Philippine Constitution.
th 12 Floor, East Tower Philippine Stock Exchange Center I Exchange Road, Ortigas Center, Pasig City
Madam and Sirs:
This is in reply to your letter requesting an opinion on whether the marketing
and sale of discount coupons for goods and services through the internet constitutes advertising, and is .thus subject to tt)e thirty .percent (30%) maximum foreign equity limit in advertising entities as mandated by the 1987 Constitution.
It appears that:
1. Your client intends to acquire an existing domestic corporation
("corporation'') engaged in the operation of a voucher platform on the internet through which new customers are acquired for selected businesses in the leisure, catering and entertainment industry;
2. The corporation displays vouchers of its merchant' partners for a
certain number of days in its website and sells these to end-consumers who redeem the vouchers from the relevant merchant;
3. The merchant dictates the conditions and duration of the vouchers,
while the design of the voucher placement is at the corporation's discretion; and
4. The corporation sells these vouchers at the offered price, as agreed
with the merchant, and remits the necessary revenue to the merchant, . deducting the agreed remuneration (commission) to the Corporation. " .1 , Re: Le~~1y I'J..;a to Puno &Puno Law Offices and Sale of Discount Coupons . Page2of4
I The Blackwell E~cyclopedia of Management defines coupons as "x x x a sales promotion device which try to persuade buyers/customers to purchase. They may offer a discount on th~ first or subsequent purchase of a product/service, or they may need to be colle?ied in order to be redeemed against a future purchase or to receive gifts or cash."l I I
Article 4(a) of ~~PUbIiCAct Number 73942 defines an advertisem.ent as "the
prepared and through any form of mass medium, subsequently applied, disseminated or circulated advertising matter." Article 4(b) of the same law defines advertising as "the busi~ess of conceptualizing, presenting or making.available to the public, through any f~rm of mass media, fact, data, or information about the attributes, features, qu~lity or availability of consumer products, services or credit."
Coupons are. de~med as a way of selectively discounting prices to the most
3 price-sensitive customSrs. In the case of Home Shopping Network, Inc. vs. Coupco, Inc.", the United State~I District Court, S.D., New York, stated that: I "Coup~ns provide manufacturers with the .benefits of a 'te"lporary price reduction', which will cause or allow th~m to m.ove a potentially greater volume of product t~an they would have moved with a price cut. They 'empower' the consumer in a way that a simple sale doe.s not and thereby create a purchasing incentive.: Coupons, even when unredeemed, advertise products and their makers."
In the same else of Home Shopping Network, Inc., paperless electronic
couponing - otherw~s~ known as electronic vouchers - was considered to enhance certain of the attral:tiVe features of printout coupons while replacing the administrative costs o~ paper handling with the presumably lower cost of electronic data transfer. 5 I .
I Based on the fepregoingdiscussion, coupons, as well as electronic vouchers, for that matter, may b! considered as advertisements.
Now, moving t. the next issue: Does the marketing and sale of discount coupons for goods a~nservices through the internet constitute advertising, and is thus subject to the thl percent (30%) maximum foreign equity limit In advertising entities as mandated the 1987 Constitution? . . . . I 1 The Blackwell Encyclopedic Dictionary of Marketing~ The Blackwell Encyclopedia of Management, 200 Edition, (United Kingdom: Blackwell Publishing L~" 2005), s.v. ~Coupons".. . Z The Consumer Act of the PhilippInes. Approved 13 April 1992.
3 Jeffrey F. Rayport and Bernard JI.Jaworski, Introduction to e-commerce (Boston: McGraw-Hili Irwin Marketspaceu, 2005), 203. i 4 No. 95 av. 5048 (lBS), 27 Febtary 1998. 5 Ibid. ; ~Iy to Puno &Puno Law Offices Re: tI~ lind Sale of Discount Coupons " Page 3 of 4
Article 4(at) of Republic Act Number 73946 provides:
"'Mass media' refers to any means or methods
used to convey advertising messages to the public such as television, radio, magazines,. cinema, billboards, posters, streamers, .hand bills, leaflets, mails and the like."
In your letter, you informed us that (1) the subject corporation is engaged in the operation of the voucher platform on the internet, and (2) it is the voucher/coupon merchant that dictates the conditions and duration of the vouchers, while the design of the voucher placement is at the corporation's discretion.
To determine the extent of foreign participationi" the subject corporation, it
is necessary to ascertain whether the corporation is an advertising agency or a mass media entity. Thus:
"The function of advertising agencies is to serve
as agents or counselors of advertisers by writing, preparing, or producing the commercial messages or materials by advertisers in selling their goods and services, and by selecting and recommending the medium or media to be used as the vehicle for disseminating such messages to the public. Advertising. agencies do not actually disseminate the materials they prepare as they have to utilize or avail of the facilities of mass media, i.e., newspapers, radio, television, etc., for this purpose. Advertising agencies falling within this concept are not mass media, considering that they do not operate or control any medium of communication designed to reach or influence the masses, although the activities of such agencies, by their nature, are closely related to those. of mass media." .
"However, where the advertising agency actually
disseminates information, .or operates, controls or otherwise engages In the business of mass media, a. specific example of which is an outdoor advertising firm which sells billboard space to .advertisers, then such advertising agencies would fall within. the purview of the constitutlonallimitation.,,7
6 The Consumer Act of the Philippines, supra.
7 SEC-Cllrporate Legal Department Opinion. 2 September 1988. L~1y to Puno &. Puno Law Offices Re: ~L~and Sale of Discount Coupons . Page40f4
Thus, if the corporation is engaged in the operation of a voucher platform on
the internet with the purpose of increasing the sales of a particular prOduct or service, it, in effect, Clisseminatesinformation to the general public through the internet. Hence, it may be considered as a mass media entity. Consequently, the entity must be wholly owned by Filipino citizens, incompliance with the requirement of paragraph .1, Section 11, Article XVI of the 1987 Constitution8 and List A(1) of Executive Order Number 8589
On the other hand, if the corporation is merely involved in the design of the voucher placement, i.e., in writing, preparing, or producing the commercial messages or materials and selecting and recommending the medium or media to be used as the vehicle for disseminating such messages to the public, it must comply with the thirty percent (30%) maximum foreign equity limit requirement of Section Article XVI of the 1987 ConstitutionlO and List A (16) of Executive Order Number 11, 11 858
Please be reminded, however, that the foregoing opinion is rendered based
solely on the facts disclosed in the query and relevant solely to the particular issues raised therein and shall not be used in the nature of a standing rule binding upon the Commission in other cases, whether of similar or dissimilar circumstances.
By authority of the Commission:
~ General Counsel
8 Section 11, Article XVI, 1987 Constitution. "The ownership and management of mass media shall be limited to dtlzens of the P i I . es or rations coo eratives or clati wholl and . ana e b such citizens. x x x" (Emphasis supplied). . 9 Eighth Regular Foreign Investment Negative List. list A: Foreign Ownership is limited by mandate of the Constitution and specific laWs. No foreign equity. 1. Mass media, except recording (Art. XVI, Sec. 11 of the Constitution; Presidential Memorandum dated 04 May 1994). 10 section 11, Article XVI, 1987 Constitution. "x x x Only Filipino dtlzens or corporations or associations at least seventy per centum of the capital of which is owned bv such dtizens shall be allowed to engage in the adVertising Industry. x x x" (Emphasis supplied). 11 Eight Regular Foreign Investment Negative Ust. List A: Up to Thirty Percent (30%) Foreign Equity. 16. Advertising (Art XVI, Sec. 11 of the Constitution).
