Cagayan Valley Vs CA

9/8/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 179
218 SUPREME COURT REPORTS ANNOTATED

Cagayan Valley Enterprises, Inc. vs. Court of Appeals
*
G.R. No. 78413. November 8, 1989.
CAGAYAN VALLEY ENTERPRISES, INC., Represented

by its President, Rogelio Q. Lim, petitioner, vs. THE HON.
COURT OF APPEALS and LA TONDEÑA, INC.,
respondents.
Statutes; Interpretation of; The proposition that R.A. No. 623

as amended protects only the containers of soft drinks enumerated
by petitioner and those similar thereto is unwarranted; Rule of
ejusdem generis, not applicable in the case at bar; Reasons.—The
proposition that Republic Act No. 623, as amended protects only
the containers of the soft drinks enumerated by petitioner and
those similar thereto, is unwarranted and specious. The rule of
ejusdem generis cannot be applied in this case. To limit the
coverage of the law only to those enumerated or of the same kind
or class as those specifically mentioned will defeat the very
purpose of the law. Such rule of ejusdem generis is to be resorted
to only for the purpose of determining what the intent of the
legislature was in enacting the law. If that intent
________________
* SECOND DIVISION.
219
VOL. 179, NOVEMBER 8, 1989 219
clearly appears from other parts of the law, and such intent thus
clearly manifested is contrary to the result which would be
reached by the appreciation of the rule of ejusdem generis, the
latter must give way.
http://central.com.ph/sfsreader/session/00000165b96655adb302f004003600fb002c009e/t/?o=False 1/18
Same; Same; Same; Executive construction, entitled to great

weight and consideration; Reasons.—While executive construction
is not necessarily binding upon the courts, it is entitled to great
weight and consideration. The reason for this is that such
construction comes from the particular branch of government
called upon to implement the particular law involved.
Same; Same; Trademarks; Infringements; Damages; A person
entitled to the exclusive use of a registered mark or tradename may
recover damages in a civil action from any person who infringes
his rights.—While Republic Act No. 623, as amended, provides for
a criminal action in case of violation, a civil action for damages is
proper under Article 20 of the Civil Code which provides that
every person who, contrary to law, wilfully, or negligently causes
damage to another, shall indemnify the latter for the same. This
particular provision of the Civil Case was clearly meant to
complement all legal provisions which may have inadvertently
failed to provide for indemnification or reparation of damages
when proper or called for. In the Language of the Code
Commission “(t)he foregoing rule pervades the entire legal
system, and renders it impossible that a person who suffers
damage because another has violated some legal provisions,
should find himself without relief.” Moreover, under Section 23 of
Republic Act No. 166, as amended, a person entitled to the
exclusive use of a registered mark or trade-name may recover
damages in a civil action from any person who infringes his
rights. He may also, upon proper showing, be granted injunction.
Same; Same; Same; Corporations; When the corporation is the
mere alter ego or business conduit of a person, the law will regard
the corporation as an association of persons, or in the case of two
corporations, merge them into one.—Petitioner cannot avoid the
effect of the admission and/or acknowledgment made by Diego
Lim in the said case. While a corporation is an entity separate
and distinct from its stockholders and from other corporations
with which it may be connected, where the discreteness of its
personality is used to defeat public convenience, justify wrong,
protect fraud, or defend crime, the law will regard the corporation
as an association of persons, or in the case of two corporations,
merge them into one. When the corporation is the mere alter ego
or business conduit of a person, it may be disregarded.
220
Same; Same; Same; Same; Petitioner is a mere continuation

and successor of Cagayan Valley District; The corporation, in the
case at bar, has no separate and distinct personality from its
members; Reasons.—It is thus clear that herein petitioner is a
mere continuation and successor of Cagayan Valley Distillery. It
is likewise indubitable that the admission made in the former
case, as earlier explained, is binding on it as cogent proof that
even before the filing of this case it had actual knowledge that the
bottles in dispute were registered containers of LTI. As held in La
Campana Coffee Factory, Inc., et al. vs. Kaisahan Ng Mga
Manggagawa sa La Campana (KKM), et al., where the main
purpose in forming the corporation was to evade one’s subsidiary
liability for damages in a criminal case, the corporation may not
be heard to say that it has a personality separate and distinct
from its members, because to allow it to do so would be to sanction
the use of the fiction of corporate entity as a shield to further an
end subversive of justice.
Same; Same; Contempt; Double Jeopardy; An appeal from a
verdict of acquittal in a contempt proceeding does not constitute
civil contempt.—Anent the several motions of private respondent
LTI to have petitioner cited for contempt, we reject the argument
of petitioner that an appeal from a verdict of acquittal in a
contempt proceeding constitutes double jeopardy. A failure to do
something ordered by the court for the benefit of a party
constitutes civil contempt.
Same; Same; Same; Injunction; Writ of injunction directing
petitioner to desist from using the subject bottles was properly
issued by the Court; Rule of procedure to always strive to settle the
entire controversy in a single proceeding.—Section 3 of Republic
Act No. 623, as amended, creates a prima facie presumption
against Cagayan for its unlawful use of the bottles registered in
the name of LTI. Corollarily, the writ of injunction directing
petitioner to desist from using the subject bottles was properly
issued by the trial court. Hence, said writ could not be simply
disregarded by Cagayan without adducing proof sufficient to
overcome the aforesaid presumption. Also, based on the findings
of respondent court, and the records before us being sufficient for
arbitrament, without remanding the incident to the court a quo
petitioner can be adjudged guilty of contempt and imposed a
sanction in this appeal since it is a cherished rule of procedure for
this Court to always strive to settle the entire controversy in a
single proceeding. We so impose such penalty concordant with the
preservative principle and as demanded by the respect due the
orders, writs and processes of the courts of justice.
221
VOL. 179, NOVEMBER 8, 1989 221

PETITION for certiorari to review the decision of the Court

of Appeals. Campos, Jr., J.
The facts are stated in the opinion of the Court.

Efren M. Cacatian for petitioners.
San Jose, Enrique, Lacas, Santos and Borje for
private respondent.
REGALADO, J.:
This petition for review on certiorari seeks the nullification

of the decision of the Court of Appeals of December 5, 1986
in CAG.R. CV No. 06685 which reversed the decision of the
trial court, and its resolution dated May 5, 1987 denying
petitioner’s motion for reconsideration.
The following antecedent facts generative of the present
controversy are not in dispute.
Sometime in 1953, La Tondeña, Inc. (hereafter, LTI for
short) registered with the Philippine
1
Patent Office
pursuant to Republic Act No. 623 the 350 c.c. white flint
bottles it has been using for its gin popularly known as
“Ginebra San Miguel”. This registration
2
was subsequently
renewed on December 4, 1974.
On November 10, 1981, LTI filed Civil Case No. 2668 for
injunction and damages in the then Branch I, Court of
First Instance of Isabela against Cagayan Valley
Enterprises, Inc. (Cagayan, for brevity) for using the 350
c.c., white flint bottles with the mark “La Tondeña, Inc.”
and “Ginebra San Miguel” stamped or blown-in therein by
filling the same with Cagayan’s liquor product bearing the
label “Sonny Boy” for commercial sale and distribution,
without LTI’s written consent and in violation of Section 2
of Republic Act No. 623, as amended by Republic Act No.
5700. On the same date, LTI further filed an ex parte
petition for the issuance of a writ
3
of preliminary injunction
against the defendant therein. On November 16, 1981, the
court a quo issued a temporary restraining order against
Cagayan and its officers and employees from using the 350
c.c.
________________
1 An Act to Regulate the Use of Duly Stamped or Marked Bottles,

Boxes, Casks, Kegs, Barrels and Other Similar Containers.
2 Original Record, Civil Case No. 2668, 6-12.
3 Ibid., id., 1-14.
222

bottles with
4
the marks “La Tondeña” and “Ginebra San
Miguel.” 5
Cagayan, in its answer, alleged the following defenses:
1. LTI has no cause of action due to its failure to

comply with Section 21 of Republic Act No. 166
which requires the giving of notice that its aforesaid
marks are registered by displaying and printing the
words “Registered in the Phil. Patent Office” or
“Reg. Phil. Pat. Off.,” hence no suit, civil or
criminal, can be filed against Cagayan;
2. LTI is not entitled to any protection under Republic
Act No. 623, as amended by Republic Act No. 5700,
because its products, consisting of hard liquor, are
not among those contemplated therein. What is
protected under said law are beverages like Coca-
cola, Royal Tru-Orange, Lem-O-Lime and similar
beverages the bottles whereof bear the words “Reg.
Phil. Pat. Off.;”
3. No reservation of ownership on its bottles was
made by LTI in its sales invoices nor does it require
any deposit for the retention of said bottles; and
4 . There was no infringement of the goods or
products of LTI since Cagayan uses its own labels
and trade-mark on its product.
In its subsequent pleadings, Cagayan contended that the

bottles they are using are not the registered bottles of LTI
since the former was using the bottles marked with “La
Tondeña, Inc.” and “Ginebra San Miguel” but without the
words “property of” indicated in said bottles as stated in
the sworn statement attached to the certificate of
registration of LTI for said bottles.
On December 18, 1981, the lower court issued a writ of
preliminary injunction, upon the filing of a bond by LTI in
the sum of P50,000.00, enjoining Cagayan, its officers and6
agents from using the aforesaid registered bottles of LTI.
After a protracted trial, which entailed five (5) motions
for contempt filed by
7
LTI against Cagayan, the trial court
rendered judgment in favor of Cagayan, ruling that the
complaint does
________________
4 Ibid., id., 44.

5 Ibid., id., 45-53.
6 Ibid., id., 71-73.
7 Penned by Judge Efren N. Ambrosio.
223
VOL. 179, NOVEMBER 8, 1989 223

not state a cause of action and that Cagayan was not guilty
of contempt. Furthermore, it awarded damages in favor of
Cagayan.
LTI appealed to the Court of Appeals which, on
December 5, 1986 rendered a decision in favor of said
appellant, the dispositive portion whereof reads:
“WHEREFORE, the decision appealed from is hereby SET ASIDE

and judgment is rendered permanently enjoining the defendant,
its officers and agents from using the 350 c.c. white flint bottles
with the marks of ownership ‘La Tondeña, Inc.’ and ‘Ginebra San
Miguel’, blown-in or stamped on said bottles as containers for
defendant’s products.
“The writ of preliminary injunction issued by the trial court is
therefore made permanent.
“Defendant is ordered to pay the amounts of:
(1) P15,000.00 as nominal or temperate damages;

(2) P50,000.00 as exemplary damages;
(3) P10,000.00 as attorney’s fees; and
8
(4 ) Costs of suit.”
On December 23, 1986, Cagayan filed a motion for

reconsideration which was denied by the respondent court
in its resolution dated May 5, 1987, hence the present
petition, with the following assignment of errors:
“I. The Court of Appeals gravely erred in the decision

granting that ‘there is, therefore, no need for
plaintiff to display the words “Reg. Phil. Pat. Off.”
in order for it to succeed in bringing any injunction
suit against defendant for the illegal use of its
bottles. Rep. Act No. 623, as amended by Rep. Act
No. 5700 simply provides and requires that the
marks or names shall be stamped or marked on the
containers.’
“II. The Court of Appeals gravely erred in deciding that

‘neither is there a reason to distinguish between the
two (2) sets of marked bottles—those which contain
the marks ‘Property of La Tondeña, Inc., Ginebra
San Miguel,’ and those simply marked ‘La Tondeña,
Inc., Ginebra San Miguel’. By omitting the words
“property of”, plaintiff did not open itself to
violation of Republic Act No. 623, as amended, as
________________
8 Rollo, 45; Justice Jose C. Campos Jr., ponente, with Justice Venancio
D. Aldecoa, Jr. concurring and Justice Reynato S. Puno concurring in the
result.
224

having registered its marks or names it is protected

under the law.’
“III. The Honorable Court of Appeals gravely erred in
deciding that the words ‘La Tondeña, Inc. and
Ginebra San Miguel’ are sufficient notice to the
defendant which should have inquired from the
plaintiff or the Philippine Patent Office, if it was
lawful for it to re-use the empty bottles of the
plaintiff.
“IV. The Honorable Court of Appeals gravely erred in
deciding that defendant-appellee cannot claim good
faith from using the bottles of plaintiff with marks
‘La Tondeña, Inc.’ alone, short for the description
contained in the sworn statement of Mr. Carlos
Palanca, Jr., which was a requisite of its original
and renewal registrations.
“V. The Honorable Court of Appeals gravely erred in
accommodating the appeal on the dismissals of the
five (5) contempt charges.
“VI. The Honorable Court of Appeals gravely erred in
deciding that the award of damages in favor of the
defendant-appellee, petitioner herein, is not in
order. Instead it awarded nominal or temperate,
exemplary damages 9
and attorney’s fees without
proof of bad faith.
The pertinent provisions of Republic Act No. 623, as

amended by Republic Act No. 5700, provides:
“SECTION 1. Persons engaged or licensed to engage in the

manufacture, bottling, or selling of soda water, mineral or aerated
waters, cider, milk, cream or other lawful beverages in bottles,
boxes, casks, kegs, or barrels, and other similar containers, or in
the manufacturing, compressing or selling of gases such as
oxygen, acytelene, nitrogen, carbon dioxide ammonia, hydrogen,
chloride, helium, sulphur, dioxide, butane, propane, freon,
melthyl chloride or similar gases contained in steel cylinders,
tanks, flasks, accumulators or similar containers, with the name
or the names of their principals or products, or other marks of
ownership stamped or marked thereon, may register with the
Philippine Patent Office a description of the names or marks, and
the purpose for which the containers so marked and used by
them, under the same conditions, rules, and regulations, made
applicable by law or regulation to the issuance of trademarks.
“SEC. 2. It shall be unlawful for any person, without the
written consent of the manufacturer, bottler, or seller, who has
succesfully registered the marks of ownership in accordance with
the provisions of the next preceding section, to fill such bottles,
boxes, kegs, barrels, steel cylinders, tanks, flasks, accumulators or
other similar containers
________________
9 Rollo, 7-8, 13-14, 16, 18.
225
VOL. 179, NOVEMBER 8, 1989 225

so marked or stamped, for the purpose of sale, or to sell, disposed

of, buy or traffic in, or wantonly destroy the same, whether filled
or not, to use the same, for drinking vessels or glasses or drain
pipes, foundation pipes, for any other purpose than that
registered by the manufacturer, bottler or seller. Any violation of
this section shall be punished by a fine of not more than one
thousand pesos or imprisonment of not more than one year or
both.
“SEC. 3. The use by any person other than the registered
manufacturer, bottler or seller, without written permission of the
latter of any such bottle, cask, barrel, keg, box, steel cylinders,
tanks, flask, accumulators, or other similar containers, or the
possession thereof without written permission of the
manufacturer, by any junk dealer or dealer in casks, barrels,
kegs, boxes, steel cylinders, tanks, flasks, accumulators or other

similar containers, the same being duly marked or stamped and
registered as herein provided, shall give rise to a prima facie
presumption that such use or possession is unlawful.”
The above-quoted provisions grant protection to a qualified

manufacturer who successfully registered with the
Philippine Patent Office its duly stamped or marked
bottles, boxes, casks and other similar containers. The
mere use of registered bottles or containers without the
written consent of the manufacturer is prohibited, the only
exceptions being when they are used as containers 10
for
“sisi,” “bagoong,” “patis” and similar native products.
It is an admitted fact that herein petitioner Cagayan
buys from junk dealers and retailers bottles which bear the
marks or names “La Tondeña, Inc.” and “Ginebra San
Miguel” and uses them as containers for its own liquor
products. The contention of Cagayan that the
aforementioned bottles without the words “property of”
indicated thereon are not the registered bottles of LTI,
since they do not conform with the statement or description
in the supporting affidavits attached to the original
registration certificate and renewal, is untenable.
Republic Act No. 623 which governs the registration of
marked bottles and containers merely requires that the
bottles, in order to be eligible for registration, must be
stamped or marked with the names of the manufacturers
or the names of their principals or products, or other marks
of ownership. No drawings or labels
________________
10 Sec. 6, Republic Act No. 623, as amended.
226

are required but, instead, two photographs of the container,

duly signed by the applicant, showing clearly and legibly
the names and other marks of ownership sought to be
registered and a bottle showing the name or other mark or
ownership,11 irremovably stamped or marked, shall be
submitted. 12
The term “Name or Other Mark of Ownership” means
the name of the applicant or the name of his principal, or of
the product, or other mark of ownership. The second set of
bottles of LTI without the words “property of” substantially

complied with the requirements of Republic Act No. 623, as
amended, since they bear the name of the principal, La
Tondeña, Inc., and of its product, Ginebra San Miguel. The
omitted words “property of” are not of such vital
indispensability such that the omission thereof will remove
the bottles from the protection of the law. The owner of a
trade-mark or trade-name, and in this case the marked
containers, does not abandon it by13 making minor
modifications in the mark or name itself. With much more
reason will this be true where what is involved is the mere
omission of the words “property of” since even without said
words the ownership of the bottles is easily identifiable.
The words “La Tondeña. Inc.” and “Ginebra San Miguel”
stamped on the bottles, even without the words “property
of,” are sufficient notice to the public that those bottles so
marked are owned by LTI.
The claim of petitioner that hard liquor is not included
under the term “other lawful beverages” as provided in
Section 1 of Republic Act No. 623, as amended by Republic
Act No. 5700, is without merit. The title of the law itself,
which reads “ An Act to Regulate the Use of Duly Stamped
or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other
Similar Containers” clearly shows the legislative intent to
give protection to all marked bottles and containers of all
lawful beverages regardless of the
________________
11 Rules 128 and 129, Revised Rules of Practice Before the Philippine
Patent Office in Trademark Cases.
12 Rule 33, id., citing Sec. 1, Republic Act No. 623.
13 Drexel, Enterprises, Inc. vs. Richardson, (CA10 Kan) 312 F2d 525,
Beech-Nut Packing Co. vs. P. Lorillard Co. (DC NJ) 299 F 834, affd (CA3
NJ) 7 F2d 967, affd 273 US 629, 71 L. Ed 810, 47 S CT 481, as cited in 74
Am. Jur. 2d, 726.
227
VOL. 179, NOVEMBER 8, 1989 227

nature of their contents. The words “other lawful

beverages” is used in its general sense, referring to all
beverages not prohibited by law.14 Beverage is defined as a
liquor or liquid for drinking. Hard liquor, although
regulated, is not prohibited by law, hence it is within the
purview and coverage of Republic Act No. 623, as amended.
Republic Act No. 623, as amended, has for its purpose

the protection of the health of the general public and the
prevention of the spread of contagious diseases. It further
seeks to safeguard the property 15
rights of an important
sector of Philippine industry. As held by 16
this Court in
Destileria Ayala, Inc. vs. Tan Tay & Co., the purpose of
then Act 3070, was to afford a person a means of
identifying the containers he uses in the manufacture,
preservation, packing or sale of his products so that he may
secure their registration with the Bureau of Commerce and
Industry and thus prevent other persons from using them.
Said Act173070 was substantially reenacted as Republic Act
No. 623.
The proposition that Republic Act No. 623, as amended,
protects only the containers of the soft drinks enumerated
by petitioner and those similar thereto, is unwarranted and
specious. The rule of ejusdem generis cannot be applied in
this case. To limit the coverage of the law only to those
enumerated or of the same kind or class as those
specifically mentioned will defeat the very purpose of the
law. Such rule of ejusdem generis is to be resorted to only
for the purpose of determining what the intent of the
legislature was in enacting the law. If that intent clearly
appears from other parts of the law, and such intent thus
clearly manifested is contrary to the result which would be
reached by the appreciation
18
of the rule of ejusdem generis,
the latter must give way.
________________
14 Burnstein vs. U.S., CC. A. Cal., 55 F2d 599, 603; Black’s Law
Dictionary, Fourth Edition, 204.
15 Congressional Record, Vol. II, No. 69, 942; Exh. 6. Civil Case No.
2668, Folio of Exhibits, 3.
16 74 Phil. 301 (1943).
17 Explanatory Note, House Bill No. 1112, Congressional Record, 2733-
2734, Second Congress of the Republic, First Session, Vol. I, No. 80,
Session of May 18, 1950.
18 U.S. vs. Sto. Nino, 13 Phil. 141 (1909).
228

Moreover, the above conclusions are supported by the fact

that the Philippine Patent Office, which is the proper and
competent government agency vested with the authority to
enforce and implement Republic Act No. 623, registered the

bottles of respondent LTI as containers for gin and issued
in its name a certificate of registration with the following
findings:
“It appearing, upon due examination that the applicant is entitled

to have the said MARKS OR NAMES registered under R.A. No.
623, the said marks or names have been duly registered this day
in the PATENT
19
OFFICE under the said Act, for gin, Ginebra San
Miguel.
While executive construction is not necessarily binding

upon the courts, it is entitled to great weight and
consideration. The reason for this is that such construction
comes from the particular branch of government 20
called
upon to implement the particular law involved.
Just as impuissant is petitioner’s contention that
respondent court erred in holding that there is no need for
LTI to display the words “Reg. Phil. Pat. Off.” in order to
succeed in its injunction suit against Cagayan for the
illegal use of the bottles. To repeat, Republic Act No. 623
governs the registration of marked bottles and containers
and merely requires that the bottles and/or containers be
marked or stamped by the names of the manufacturer or
the names of their principals or products or other marks of
ownership. The owner, upon registration of its marked
bottles, is vested by law with an exclusive right to use the
same to the exclusion of others, except as a container for
native products. A violation of said right gives rise to a
cause of action against the violator or infringer.
While Republic Act No. 623, as amended, provides for a
criminal action in case of violation, a civil action for
damages is proper under Article 20 of the Civil Code which
provides that every person who, contrary to law, wilfully or
negligently causes damage to another, shall indemnify the
latter for the same. This particular provision of the Civil
Case was clearly meant to complement all legal provisions
which may have inadvertently
________________
19 Exh. B, Original Record, Civil Case No. 2668, 6.

20 Ramos vs. Court of Industrial Relations, 21 SCRA 1282 (1967).
229
VOL. 179, NOVEMBER 8, 1989 229

failed to provide for indemnification or reparation of

damages when proper or called for. In the language of the
Code Commission “(t)he foregoing rule pervades the entire
legal system, and renders it impossible that a person who
suffers damage because another has violated 21some legal
provisions, should find himself without relief.” Moreover,
under Section 23 of Republic Act No. 166, as amended, a
person entitled to the exclusive use of a registered mark or
trade-name may recover damages in a civil action from any
person who infringes his rights. He may also, upon proper
showing, be granted injunction.
It is true that the aforesaid law on trade-marks
provides:
“SEC. 21. Requirements of notice of registration of trade-mark.—

The registrant of a trade-mark, heretofore registered or registered
under the provisions of this Act, shall give notice that his mark is
registered by displaying with the same as used the words
‘Registered in the Philippines Patent Office’ or ‘Reg. Phil. Pat.
Off.’; and in any suit for infringement under this Act by a
registrant failing so to mark the goods bearing the registered
trade-mark, no damages shall be recovered under the provisions
of this Act, unless the defendant has actual notice of the
registration.”
Even assuming that said provision is applicable in this

case, the failure of LTI to make said marking will not bar
civil action against petitioner Cagayan. The aforesaid
requirement is not a condition sine qua non for filing of a
civil action against the infringer for other reliefs to which
the plaintiff may be entitled. The failure to give notice of
registration will not deprive the aggrieved party of a cause
of action against the infringer but, at the most, such failure
may bar recovery of damages but only under the provisions
of Republic Act No. 166.
However, in this case an award of damages to LTI is
ineluctably called for. Petitioner cannot claim good faith.
The record shows that it had actual knowledge that the
bottles with the blown-in marks “La Tondeña, Inc.” and
“Ginebra San Miguel” are duly registered. In Civil Case No.
102859 of the Court of First Instance of Manila, entitled
“La Tondeña, Inc. versus Diego Lim, doing business under
the name and style ‘Cagayan
________________
21 Report of the Code Commission on the Proposed Civil Code of the

Philippines (1948), 39.
230

Valley Distillery,’ ” a decision was rendered in favor of

plaintiff therein on the basis of the admission and/or
acknowledgment made by the defendant that the bottles
marked only with the words “La Tondeña, Inc.” 22
and
“Ginebra San Miguel” are registered bottles of LTI.
Petitioner cannot avoid the effect of the admission
and/or acknowledgment made by Diego Lim in the said
case. While a corporation is an entity separate and distinct
from its stockholders and from other corporations with
which it may be connected, where the discreteness of its
personality is used to defeat public convenience, justify
wrong, protect fraud, or defend crime, the law will regard
the corporation as an association of persons, or in the case
of two corporations, merge them into one. When the
corporation is the mere alter 23ego or business conduit of a
person, it may be disregarded.
Petitioner’s claim that it is separate and distinct from
the former Cagayan Valley Distillery is belied by the
evidence on record. The following facts warrant the
conclusion that petitioner, as a corporate entity, and
Cagayan Valley Distillery are one and the same, to wit: (1)
petitioner is being managed by Rogelio Lim, the son of
Diego Lim, the owner and manager of Cagayan 24
Valley
Distillery; (2) it is a family corporation; (3) it is an
admitted fact that before petitioner
25
was incorporated it was
under a single proprietorship; (4) petitioner is engaged in
the same business as Cagayan Valley Distillery, the
manufacture of wines and liquors; and (5) the factory of
petitioner is located in the same place as the factory of the
former Cagayan Valley Distillery.
It is thus clear that herein petitioner is a mere
continuation and successor of Cagayan Valley Distillery. It
is likewise indubitable that the admission made in the
former case, as earlier explained, is binding on it as cogent
proof that even before the filing of this case it had actual
knowledge that the bottles in dispute were registered
containers of LTI. As held in La Cam-
________________
22 Exh. F, F-2, Original Record, Civil Case No. 2668, 270-275.

23 Yutivo & Sons Hardware Company vs. Court of Tax Appeals, 1 SCRA
161 (1961).
24 Original Record, Civil Case No. 2668, TSN, Sept. 19, 1984. 3.
25 Ibid., id., TSN, Nov. 13, 1984, 120-121.
231
VOL. 179, NOVEMBER 8, 1989 231

pana Coffee Factory, Inc., et al. vs. Kaisahan 26

Ng Mga
Manggagawa sa La Campana (KKM), et al., where the
main purpose in forming the corporation was to evade one’s
subsidiary liability for damages in a criminal case, the
corporation may not be heard to say that it has a
personality separate and distinct from its members,
because to allow it to do so would be to sanction the use of
the fiction of corporate entity as a shield to further an end
subversive of justice.
Anent the several motions of private respondent LTI to
have petitioner cited for contempt, we reject the argument
of petitioner that an appeal from a verdict of acquittal in a
contempt proceeding constitutes double jeopardy. A failure
to do something ordered by the 27court for the benefit of a
party constitutes civil contempt. As we held in Converse
Rubber Corporation vs. Jacinto Rubber & Plastics Co., Inc.:
“x x x True it is that generally, contempt proceedings are

characterized as criminal in nature, but the more accurate
juridical concept is that contempt proceedings may actually be
either civil or criminal, even if the distinction between one and
the other may be so thin as to be almost imperceptible. But it does
exist in law. It is criminal when the purpose is to vindicate the
authority of the court and protect its outraged dignity. It is civil
when there is failure to do something ordered by a court to be
done for the benefit of a party. (3 Moran Rules of Court, pp. 343-
344, 1970 ed.; see also Perkins vs. Director of Prisons, 58 Phil.
272; Harden vs. Director of Prisons, 81 Phil. 741.) And with this
distinction in mind, the fact that the injunction in the instant case
is manifestly for the benefit of plaintiffs makes of the contempt
herein involved civil, not criminal. Accordingly, the conclusion is
inevitable that appellees have been virtually found by the trial
court guilty of civil contempt, not criminal contempt,
28
hence, the
rule on double jeopardy may not be invoked.”
The contempt involved in this case is civil and constructive

in nature, it having arisen from the act of Cagayan in
violating the writ of preliminary injunction of the lower
court which clearly defined the forbidden act, to wit:
________________
26 93 Phil. 160 (1953).

27 Mabale, et al. vs. Apalisok, et al., 88 SCRA 234 (1979).
28 97 SCRA 158 (1980).
232

“NOW THEREFORE, pending the resolution of this case by the

court, you are enjoined from using the 350 c.c. white flint bottles
with the marks ‘La Tondeña Inc.,’ and ‘Ginebra San Miguel’
blown-in or stamped29 into the bottles as containers for the
defendant’s products.”
On this incident, two considerations must be borne in

mind. Firstly, an injunction duly issued must be obeyed,
however erroneous the action of the court may be, until its 30
decision is overruled by itself or by a higher court.
Secondly, the American rule that the power to judge a
contempt rests exclusively with the court contemned does
not apply in this jurisdiction. The provision of the present
Section 4, Rule 71 of the Rules of Court as to where the
charge may be filed is permissive in nature and is merely
declaratory of the inherent power of courts to punish
contumacious conduct. Said rules do not extend to 31the
determination of the jurisdiction of Philippine courts. In
appropriate cases, therefore, this Court may, in the interest
of expedient justice, impose sanctions on contemners of the
lower courts.
Section 3 of Republic Act No. 623, as amended, creates a
prima facie presumption against Cagayan for its unlawful
use of the bottles registered in the name of LTI. Corollarily,
the writ of injunction directing petitioner to desist from
using the subject bottles was properly issued by the trial
court. Hence, said writ could not be simply disregarded by
Cagayan without adducing proof sufficient to overcome the
aforesaid presumption. Also, based on the findings of
respondent court, and the records before us being sufficient
for arbitrament, without remanding the incident to the
court a quo petitioner can be adjudged guilty of contempt
and imposed a sanction in this appeal since it is a
cherished rule of procedure for this Court to always strive
32
to settle the entire controversy in a single proceeding. We
so impose such penalty concordant with the preservative
principle and as demanded by the respect due the orders,

writs and
________________
29 Original Record, Civil Case No. 2668, 109.

30 Harden vs. Peña, et al., 87 Phil. 620 (1950).
31 People vs. De Luna, et al., 102 Phil. 968 (1958).
32 Alger Electric Inc. vs. Court of Appeals, et al., 135 SCRA 37 (1985);
Lianga Bay Logging Co., Inc., et al. vs. Court of Appeals, et al., 157 SCRA
357 (1988).
233
VOL. 179, NOVEMBER 8, 1989 233

Province of Camarines Norte vs. Province of Quezon
processes of the courts of justice.

WHEREFORE, judgment is hereby rendered DENYING
the petition in this case and AFFIRMING the decision of
respondent Court of Appeals. Petitioner is hereby declared
in contempt of court and ORDERED to pay a fine of One
Thousand Pesos (P1,000.00), with costs.
SO ORDERED.
Paras, Padilla and Sarmiento, JJ., concur.

Melencio-Herrera (Chairman), J., on leave.
Petition denied; decision affirmed.
Notes.—Construction of laws must be adopted which

would not diminish the people’s fundamental rights.
(Provincial Chapter of Laguna, Nationalista Party vs.
COMELEC, 122 SCRA 423).
First duty of courts is to apply the law. Interpretation is
to be resorted to only when application is impossible or
inadequate. (Phil. Global Communications, Inc. vs. Relova,
145 SCRA 385).
——o0o——
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9/8/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 179

218 SUPREME COURT REPORTS ANNOTATED

CAGAYAN VALLEY ENTERPRISES, INC., Represented

Statutes; Interpretation of; The proposition that R.A. No. 623

VOL. 179, NOVEMBER 8, 1989 219

Cagayan Valley Enterprises, Inc. vs. Court of Appeals

Same; Same; Same; Executive construction, entitled to great

220 SUPREME COURT REPORTS ANNOTATED

Cagayan Valley Enterprises, Inc. vs. Court of Appeals

Same; Same; Same; Same; Petitioner is a mere continuation

VOL. 179, NOVEMBER 8, 1989 221

PETITION for certiorari to review the decision of the Court

The facts are stated in the opinion of the Court.

This petition for review on certiorari seeks the nullification

1 An Act to Regulate the Use of Duly Stamped or Marked Bottles,

222 SUPREME COURT REPORTS ANNOTATED

1. LTI has no cause of action due to its failure to

In its subsequent pleadings, Cagayan contended that the

4 Ibid., id., 44.

VOL. 179, NOVEMBER 8, 1989 223

“WHEREFORE, the decision appealed from is hereby SET ASIDE

(1) P15,000.00 as nominal or temperate damages;

On December 23, 1986, Cagayan filed a motion for

“I. The Court of Appeals gravely erred in the decision

“II. The Court of Appeals gravely erred in deciding that

224 SUPREME COURT REPORTS ANNOTATED

having registered its marks or names it is protected

The pertinent provisions of Republic Act No. 623, as

“SECTION 1. Persons engaged or licensed to engage in the

9 Rollo, 7-8, 13-14, 16, 18.

VOL. 179, NOVEMBER 8, 1989 225

so marked or stamped, for the purpose of sale, or to sell, disposed

kegs, boxes, steel cylinders, tanks, flasks, accumulators or other

The above-quoted provisions grant protection to a qualified

10 Sec. 6, Republic Act No. 623, as amended.

226 SUPREME COURT REPORTS ANNOTATED

are required but, instead, two photographs of the container,

bottles of LTI without the words “property of” substantially

VOL. 179, NOVEMBER 8, 1989 227

nature of their contents. The words “other lawful

Republic Act No. 623, as amended, has for its purpose

228 SUPREME COURT REPORTS ANNOTATED

Moreover, the above conclusions are supported by the fact

enforce and implement Republic Act No. 623, registered the

“It appearing, upon due examination that the applicant is entitled

While executive construction is not necessarily binding

19 Exh. B, Original Record, Civil Case No. 2668, 6.

VOL. 179, NOVEMBER 8, 1989 229

failed to provide for indemnification or reparation of

“SEC. 21. Requirements of notice of registration of trade-mark.—

Even assuming that said provision is applicable in this

21 Report of the Code Commission on the Proposed Civil Code of the

230 SUPREME COURT REPORTS ANNOTATED

Valley Distillery,’ ” a decision was rendered in favor of

22 Exh. F, F-2, Original Record, Civil Case No. 2668, 270-275.

VOL. 179, NOVEMBER 8, 1989 231

pana Coffee Factory, Inc., et al. vs. Kaisahan 26

“x x x True it is that generally, contempt proceedings are

The contempt involved in this case is civil and constructive