G.R. No.

217781, June 20, 2018 Notwithstanding such tremendous goodwill already

earned by its mark, SMPFCI continues to invest
SAN MIGUEL PURE FOODS COMPANY, considerable resources to promote the FIESTA ham,
INC., Petitioner, v. FOODSPHERE, INC., Respondent. amounting to no less than P3,678,407.95.5

G.R. No. 217788, June 20, 2018 Sometime in 2006, however, Foodsphere introduced its
"PISTA" ham and aggressively promoted it in 2007,
FOODSPHERE, INC., Petitioner, v. SAN MIGUEL claiming the same to be the real premium ham. In 2008,
PURE FOODS COMPANY, INC., Respondent. SMPFCI launched its "Dapat ganito ka-espesyal"
campaign, utilizing the promotional material showing a
picture of a whole meat ham served on a plate with fresh
DECISION
fruits on the side. The ham is being sliced with a knife
and the other portion, held in place by a serving fork. But
PERALTA, J.: in the same year, Foodsphere launched its "Christmas
Ham with Taste" campaign featuring a similar picture.
Before the Court are the consolidated cases of G.R. No. Moreover, in 2009, Foodsphere launched its "Make
217781 and G.R. No. 217788. On the one hand, San Christmas even more special" campaign, directly
Miguel Pure Foods Company, Inc. (SMPFCI), in G.R. copying SMPFCI's "Dapat ganito ka-espesyal"
No. 217781, filed a Petition for Review campaign. Also in 2009, Foodsphere introduced its
on Certiorari under Rule 45 of the Rules of Court, paper ham bag which looked significantly similar to
questioning the Resolution1 dated April 8, 2015 of the SMPFCI's own paper ham bag and its trade dress and
Court of Appeals (CA), Former Fourteenth Division, in its use of the word "PISTA" in its packages were
CA-G.R. SP No. 131945, but only insofar as the same confusingly similar to SMPFCI's "FIESTA" mark.6
resolved to delete from the body of its Decision 2 dated
September 24, 2014 the award of exemplary damages. Thus, according to SMPFCI, the striking similarities
On the other hand, in G.R. No. 217788, Foodsphere, between the marks and products of Foodsphere with
Inc., via a Petition for Review on Certiorari under Rule those of SMPFCI warrant its claim of trademark
45 of the Rules of Court, seeks to reverse and set aside infringement on the ground of likelihood of confusion as
the same September 24, 2014 Decision and April 8, to origin, and being the owner of "FIESTA," it has the
2015 Resolution of the CA declaring it guilty of unfair right to prevent Foodsphere from the unauthorized use
competition and holding it liable for damages. of a deceptively similar mark. The word "PISTA" in
Foodsphere's mark means "fiesta," "feast," or "festival"
The antecedent facts are as follows: and connotes the same meaning or commercial
impression to the buying public of SMPFCI's "FIESTA"
The parties herein are both engaged in the business of trademark. Moreover, "FIESTA" and "PISTA" are
the manufacture, sale, and distribution of food products, similarly pronounced, have the same number of
with SMPFCI owning the trademark "PUREFOODS syllables, share common consonants and vowels, and
FIESTA HAM" while Foodsphere, Inc. products have the same general appearance in their respective
(Foodsphere) bear the "CDO" brand. On November 4, product packages. In addition, the "FIESTA" and
2010, SMPFCI filed a Complaint3 for trademark "PISTA" marks are used in the same product which are
infringement and unfair competition with prayer for distributed and marketed in the same channels of trade
preliminary injunction and temporary restraining order under similar conditions, and even placed in the same
against Foodsphere before the Bureau of Legal Affairs freezer and/or displayed in the same section of
(BLA) of the Intellectual Property Office (IPO) pursuant supermarkets. Foodsphere's use, therefore, of the
to Sections 155 and 168 of Republic Act (R.A.) No. "PISTA" mark will mislead the public into believing that
8293, otherwise known as the Intellectual Property its goods originated from, or are licensed or sponsored
Code (IP Code), for using, in commerce, a colorable by SMPFCI, or that Foodsphere is associated with
imitation of its registered trademark in connection with SMPFCI, or its affiliate. The use of the "PISTA"
the sale, offering for sale, and advertising of goods that trademark would not only result in likelihood of
are confusingly similar to that of its registered confusion, but in actual confusion.7
trademark.4
Apart from trademark infringement, SMPFCI further
In its complaint, SMPFCI alleged that its "FIESTA" ham, alleged that Foodsphere is likewise guilty of unfair
first introduced in 1980, has been sold in countless competition. This is because there is confusing similarity
supermarkets in the country with an average annual in the general appearance of the goods of the parties
sales of P10,791,537.25 and is, therefore, a popular and intent on the part of Foodsphere, to deceive the
fixture in dining tables during the Christmas season. Its public and defraud SMPFCL According to SMPFCI,
registered "FIESTA" mark has acquired goodwill to mean there is confusing similarity because the display panel of
sumptuous ham of great taste, superior quality, and food both products have a picture of a partly sliced ham
safety, and its trade dress "FIESTA", combined with a served on a plate of fruits, while the back panel features
figure of a partly sliced ham served on a plate with fruits other ham varieties offered, both "FIESTA" and "PISTA"
on the side had likewise earned goodwill. are printed in white bold stylized font, and the product
packaging for both "FIESTA" and "PISTA" consists of product as that of SMPFCI. As mentioned, the "PISTA"
box-typed paper bags made of cardboard materials with and "FIESTA" labels are substantially different in the
cut-out holes on the middle top portion for use as manner of presentation, carrying their respective house
handles and predominantly red in color with a marks. Moreover, its paper ham bags are labeled with
background design of Christmas balls, stars, snowflakes, their respective house marks and are given to
and ornate scroll. Moreover, Foodsphere's intent to consumers only after purchase, hence, they do not factor
deceive the public is seen from its continued use of the in when the choice of ham is being made. Also,
word "PISTA" for its ham products and its adoption of Foodsphere claims to have been using the red color for
packaging with a strong resemblance of SMPFCI's its boxes and it was SMPFCI, by its own admission, that
"FIESTA" ham packaging. For SMPFCI, this is switched colors from green to red in 2009 for its own
deliberately carried out for the purpose of capitalizing on ham bags.10
the valuable goodwill of its trademark and causing not
only confusion of goods but also confusion as to the On July 17, 2012, the BLA, through its Director, rendered
source of the ham product. Consequently, SMPFCI its Decision11 dismissing SMPFCI's complaint for lack of
claimed to have failed to realize income of at least merit. First, the BLA held that there could be no
P27,668,538.38 and P899,294.77 per month in trademark infringement because Foodsphere began
estimated actual damages representing foregone income using the "PISTA" mark in 2006 and even filed a
in sales. Thus, it is entitled to actual damages and trademark application therefor in the same year, while
attorney's fees.8 SMPFCI's application for trademark registration for
"FIESTA" was filed and approved only in 2007. SMPFCI,
For its part, Foodsphere denied the charges of thus, had no cause of action. Second, SMPFCI's
trademark infringement and countered that the marks complaint was filed beyond the four (4)-year prescriptive
"PISTA" and "PUREFOODS FIESTA HAM" are not period prescribed under the Rules and Regulation on
confusingly similar and are, in fact, visually and aurally Administrative Complaints for Violation of Law Involving
distinct from each other. This is because PISTA is Intellectual Property Rights. Third, the BLA found the
always used in conjunction with its house mark "CDO" testimonies and surveys adduced in evidence by
and that "PUREFOODS FIESTA HAM" bears the SMPFCI to be self-serving. Fourth, comparing the
housemark "PUREFOODS," rendering confusion competing marks would not lead to confusion, much less
impossible. Moreover, Foodsphere maintained that deception of the public. Finally, the BLA ruled that
SMPFCI does not have a monopoly on the mark SMPFCI failed to convincingly prove the presence of the
"FIESTA" for the IPO database shows that there are two elements of unfair competition.12
(2) other registrations for "FIESTA," namely "FIESTA
TROPICALE" and "HAPPY FIESTA." Also, there are On September 10, 2013, however, the Office of the
other products in supermarkets that bear the mark Director General partially granted SMPFCI's appeal,
"FIESTA" such as "ARO FIESTA HAM," "ROYAL affirming the BLA's ruling on the absence of trademark
FIESTA," and "PUREGOLD FIESTA HAM," but SMPFCI infringement but finding Foodsphere liable for unfair
has done nothing against those manufacturers, making it competition.13 The Director General held that one can
guilty of estoppel in pais, and is, therefore, estopped see the obvious differences in the marks of the parties.
from claiming that the use of other manufacturers of the SMPFCI's mark is a composite mark where its house
mark "FIESTA" will result in confusion and/or damage to mark, namely "PURE FOODS," is clearly indicated and
itself. Even assuming that the marks are confusingly is followed by the phrase "FIESTA HAM" written in
similar, Foodsphere asserted that it is SMPFCI who is stylized font whereas Foodsphere's mark is the word
guilty of infringement vis-a-vis its registered trademark "PISTA" written also in stylized font. Applying the
"HOLIDAY," a translation and word bearing the same 'Dominancy Test' and the 'Holistic Test' show that
meaning as "FIESTA." Foodsphere has been using its Foodsphere cannot be held liable for trademark
"HOLIDAY" trademark since 1970 and had registered infringement due to the fact that the marks are not
the same in 1986, while SMPFCI registered its "FIESTA" visually or aurally similar and that the glaring differences
trademark only in 2007. In fact, Foodsphere noted that it in the presentation of these marks will prevent any likely
has been using "PISTA" since 2006 which is earlier than confusion, mistake, or deception to the purchasing
SMPFCI's filing for registration of "FIESTA" in 2007. In public. Moreover, "PISTA" was duly registered in the
addition, Foodsphere asseverated that SMPFCI cannot IPO, strengthening the position that "PISTA" is not an
appropriate for itself images of traditional utensils and infringement of "PURE FOODS FIESTA HAM" for a
garnishing of ham in its advertisements. Confusion certificate of registration of a mark is prima
between the marks, moreover, is rendered impossible facie evidence of the validity of the registration, the
because the products are sold in booths manned by registrant's ownership of the mark, and of the registrant's
different "promodisers." Also, hams are expensive exclusive right to use the same.14 On the other hand, the
products and their purchasers are well-informed not only Director General found Foodsphere to be guilty of unfair
as to their features but also as to the manufacturers competition for it gave its "PISTA" ham the general
thereof.9 appearance that would likely influence purchasers to
believe that it is similar with SMPFCI's "FIESTA" ham.
Furthermore, Foodsphere similarly denied the allegation Moreover, its intention to deceive is inferred from the
that it is guilty of unfair competition or passing off its similarity of the goods as packed and offered for sale.
Thus, the Director General ordered Foodsphere to pay RATIOCINATIONS FOUND IN THE BODY OF ITS
nominal damages in the amount of P100,000.00 and DECISION.
attorney's fees in the amount of P300,000.00 and to Conversely, G.R. No. 217788, Foodsphere raised the
cease and desist from using the labels, signs, prints, following argument:
packages, wrappers, receptacles, and materials used in I.
committing unfair competition, as well as the seizure and
disposal thereof.15 THE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN EXCESS OF OR
Both SMPFCI and Foodsphere filed their appeals before AMOUNTING TO LACK OF JURISDICTION WHEN IT
the CA via Petitions for Review dated October 8, ISSUED THE ASSAILED DECISION AND
201316 and October 29, 2013,17 respectively. SMPFCI RESOLUTION BEING NOT IN ACCORDANCE WITH
sought a reconsideration of the Director General's LAW OR WITH APPLICABLE DECISIONS OF THE
finding that Foodsphere is not guilty of trademark HONORABLE COURT WHEN IT DECLARED THAT
infringement while Foodsphere faulted said Director FOODSPHERE WAS GUILTY OF UNFAIR
General for declaring it guilty of unfair competition. COMPETITION.
On March 6, 2014, the CA, Eleventh Division, denied In G.R. No. 217781, SMPFCI clarifies that it assails the
SMPFCI's petition and affirmed the ruling of the Director April 8, 2015 Resolution of the CA, not on its finding that
General on the absence of trademark infringement. Foodsphere was guilty of unfair competition, but only
According to the appellate court, Foodsphere was insofar as it deleted its award of exemplary damages in
merely exercising, in good faith, its right to use its duly its September 24, 2014 Decision. According to SMPFCI,
registered trademark "PISTA" in the lawful pursuit of its it was a mere mistake that the said Decision failed to
business.18 Thereafter, in a Decision dated September state the amount of exemplary damages and that its
24, 2014, the CA Fourteenth Division likewise denied dispositive portion failed to award said exemplary
Foodsphere's petition, affirming the Director General's damages, merely stating that "the petition is DENIED,
finding that Foodsphere was guilty of unfair competition. and the Decision x x x of the Director General is
The CA held that the elements thereof are present AFFIRMED."22 SMPFCI asserts that where there is a
herein. Consequently, it ordered Foodsphere to pay conflict between the dispositive portion and the body of
SMPFCI nominal and exemplary damages as well as the decision, the dispositive portion controls. But where
attorney' fees.19 In a Resolution dated April 8, 2015, the inevitable conclusion from the body of the decision is
however, the CA clarified its September 24, 2014 so clear as to show that there was a mistake in the
Decision and resolved to delete the award of exemplary dispositive portion, the body of the decision will
damages for SMPFCI never prayed for the same.20 prevail.23 Here, when the CA held that "as for exemplary
damages, the award thereof was warranted," it is beyond
In a Resolution21 dated June 13, 2016, the Court, in G.R. cavil that SMPFCI is entitled thereto.
No. 215475, denied SMPFCI's Petition for Review
on Certiorari for failure to sufficiently show that the CA, Moreover, SMPFCI maintains that the CA ruling that it
in its Decision and Resolution, dated March 6, 2014 and never prayed for exemplary damages in the
November 13, 2014, respectively, finding that proceedings, its prayer for damages being limited only to
Foodsphere is not liable for trademark infringement, and actual damages and attorney's fees, is utterly false for it
committed any reversible error in the challenged specifically prayed for the same in several pleadings it
decision and resolution as to warrant the exercise of the filed before the BLA and the Office of the Director
Court's discretionary appellate jurisdiction. The Court General. Even assuming that it indeed failed to pray for
also found that the issues raised by SMPFCI are factual exemplary damages, SMPFCI alleges that it was still
in nature. erroneous for the CA to delete the award of the same. It
is well settled that a court may grant relief to a party,
Meanwhile, on June 8, 2015, both SMPFCI and even if said party did not pray for it in his pleadings for a
Foodsphere filed the instant Petitions for Review prayer for "other remedies just and equitable under the
on Certiorari docketed as G.R. No. 217781 and 217788, premises" is broad enough to justify the extension of a
respectively. In G.R. No. 217781, SMPFCI invoked the remedy different from that requested. Thus, in view of
following argument: the foregoing, coupled with the factual circumstances of
the case leading to the conclusion that Foodsphere is
I. guilty of unfair competition, SMPFCI essentially prays
that the Court: (1) issue a permanent injunction against
THE HONORABLE COURT OF APPEALS ERRED IN Foodsphere to prevent it from infringing the rights of
RESOLVING THAT THE AWARD OF EXEMPLARY SMPFCI by seizing all products violative of SMPFCI's IP
DAMAGES BE DELETED FROM THE BODY OF ITS rights and by forfeiting all properties used in the
DECISION DATED 24 SEPTEMBER 2014 WHEN infringing acts; (2) order Foodsphere to pay SMPFCI the
SMPFCI'S ENTITLEMENT THERETO IS CLEARLY amount of P27,668,538.38, representing lost income of
SUPPORTED NOT ONLY BY PLEADINGS AND SMPFCI, P899,294.77 per month in estimated actual
EVIDENCE ON RECORD, BUT ALSO BY THE damages, or moderate or temperate damages; (3) order
HONORABLE COURT OF APPEALS' OWN Foodsphere to pay attorney's fees in the amount of
P300,000.00; and (4) order Foodsphere to pay A cursory perusal of the challenged September 24, 2014
exemplary damages in the amount of P300,000.00.24 Decision reveals that the mistake lies not in the fallo or
dispositive portion but in the body thereof, the pertinent
In G.R. No. 217788, Foodsphere denied the allegations portions of which provide:
of unfair competition, denying SMPFCI's claim that the Having been found guilty of unfair competition,
confusing similarity between the respective packaging of Foodsphere was correctly ordered to pay nominal
the parties' products began in 2009 when Foodsphere damages of P100,000.00. Under Article 2221 of the Civil
changed its packaging from a paper box to a paper ham Code, nominal damages are recoverable in order to
bag, significantly similar to SMPFCI's paper ham bag. vindicate or recognize the rights of the plaintiff which
According to Foodsphere, while the packages were both have been violated or invaded by the defendant. x x x
in the form of bags, their respective trademarks were
boldly printed thereon. Moreover, even prior to As for SMPFCI's claim for lost profit or unrealized
SMPFCI's use of the questioned ham bags in 2009, income of more than P27 Million, its failure to properly
Foodsphere had already been adopting the image of substantiate. the same left the Office of the Director
partly-sliced hams laced with fruits and red color on its General without any basis to award it.
packages.25 In addition, Foodsphere alleged that any
similarity in the general appearance of the packaging As for exemplary damages, the award thereof was
does not, by itself, constitute unfair competition. This is warranted on the strength of In-N-Out Burger, Inc. v.
because first, packaging is not the exclusive ownership Sehwani, for correction or example for public good, such
of SMPFCI which does not have a patent or trademark as the enhancement of the protection accorded to
protection therefor. Second, the mere fact of being the intellectual property and the prevention of similar acts of
first user does not bestow vested right to use the unfair competition. The award of attorney's fees must
packaging to the exclusion of everyone else. Third, the likewise be upheld as SMPFCI was compelled to engage
circumstance that the manufacturer has printed its name the services of counsel to protect its rights.28
all over the packaging negates fraudulent intent to palm As can be gleaned from above, the intention of the CA
off its goods as another's product. Fourth, SMPFCI was merely to affirm the findings of the Director General
cannot claim that it has exclusive right or monopoly to insofar as the award of damage was concerned. This
use the colors red and green in its packaging or the was shown in its statements such as "Foodsphere was
image of partly sliced hams. Fifth, similarity in the correctly ordered to pay nominal damages," "its failure to
packaging does not necessarily constitute "confusing" properly substantiate the same left the Office of the
similarity. Sixth, the circumstances under which the Director General without any basis to award it," "as for
competing products are sold negates the likelihood of exemplary damages, the award thereof was warranted,"
confusion for consumers are more discerning on the and "the award of attorney's fees must likewise be
Christmas ham they will purchase, which is not any upheld." This was also shown when the CA clearly
ordinary, low priced product. Seventh, SMPFCI failed to disposed as follows: "ACCORDINGLY, the petition is
prove likelihood of confusion or intent to deceive on the DENIED, and the Decision dated September 10, 2013 of
part of Foodsphere. Finally, Foodsphere maintained that the Office of the Director General, AFFIRMED."29 It can,
there was no basis for the CA to award nominal therefore, be derived, from the wording of the CA
damages and attorney's fees in view of the absence of Decision, that it merely intended to adopt the resolution
any violation of SMPFCI's right.26 of the Director General on the award of damages.
Consequently, since nowhere in the affirmed Decision
The petitions are devoid of merit. did the Director General award exemplary damages to
SMPFCI, for what was awarded was only nominal
With respect to G.R. No. 217781, the. Court finds no damages and attorney's fees, it follows then that the CA
reason to reverse the April 8, 2015 Resolution of the CA likewise did not intend on awarding the same to
insofar as it resolved to delete from the body of its SMPFCI. Thus, what controls herein is the fallo.
September 24, 2014 Decision the award of exemplary
damages. SMPFCI said so itself, when there is a conflict Besides, it bears stressing that SMPFCI failed to prove
between the dispositive portion or fallo of a decision and its entitlement to exemplary damages. Article 2233 of the
the opinion of the court contained in the text or body of Civil Code provides that exemplary damages cannot be
the judgment, the former prevails over the latter. This recovered as a matter of right; the court will decide
rule rests on the theory that the fallo is the final order, whether or not they should be adjudicated while Article
while the opinion in the body is merely a statement 2234 thereof provides that while the amount of the
ordering nothing. Thus, an order of execution is based exemplary damages need not be proven, the plaintiff
on the disposition, not on the body, of the must show that he is entitled to moral, temperate or
Decision.27 Contrary to SMPFCI's assertion, moreover, compensatory damages before the court may consider
the Court finds inapplicable the exception to the the question of whether or not exemplary damages
foregoing rule which states that the body of the decision should be awarded.
will prevail in instances where the inevitable conclusion
from the body of the decision is so clear as to show that Thus, the Court has held, time and again, that exemplary
there was a mistake in the dispositive portion. damages may be awarded for as long as the following
requisites are present: (1) they may be imposed, by way
of example, only in addition, among others, to likely to influence purchasers to believe that the goods
compensatory damages, only after the claimant's right to offered are those of a manufacturer or dealer, other than
them has been established, and cannot be recovered as the actual manufacturer or dealer, or who otherwise
a matter of right, their determination depending upon the clothes the goods with such appearance as shall deceive
amount of compensatory damages that may be awarded the public and defraud another of his legitimate trade, or
to the claimant; (2) the claimant must first establish his any subsequent vendor of such goods or any agent of
right to moral, temperate, liquidated or compensatory any vendor engaged in selling such goods with a like
damages; and (3) the act must be accompanied by bad purpose;
faith or done in a wanton, fraudulent, oppressive or
malevolent manner.30 (b) Any person who by any artifice, or device, or who
employs any other means calculated to induce the false
Here, SMPFCI particularly failed to prove its right to belief that such person is offering the services of another
moral, temperate, liquidated or compensatory damages. who has identified such services in the mind of the
In its complaint, SMPFCI prayed that Foodsphere be public; or
ordered to pay P27,668,538.38 representing income it
would have made if not for the infringement and (c) Any person who shall make any false statement in
P899,294.77 per month in estimated actual damages, the course of trade or who shall commit any other act
representing foregone income in sales for the continuous contrary to good faith of a nature calculated to discredit
use of the "PISTA" mark in connection with the selling, the goods, business or services of another.
offering for sale and distribution of its ham product during 168.4. The remedies provided by Sections 156, 157 and
the pendency of the case.31 But as the Director General 161 shall apply mutatis mutandis. (Sec. 29, R.A. No.
aptly found, SMPFCI neither adduced sufficient evidence 166a)
to prove its claim of foregone income or sales nor
presented evidence to show the profit or sales. Thus,.in Time and again, the Court has held that unfair
view of such failure to prove its right to compensatory competition consists of the passing off (or palming off) or
damages, as well as to moral and temperate damages, attempting to pass off upon the public of the goods or
the CA correctly resolved to delete from the body of its business of one person as the goods or business of
September 24, 2014 Decision the award of exemplary another with the end and probable effect of deceiving the
damages. public. Passing off (or palming off) takes place where the
defendant, by imitative devices on the general
As regards G.R. No. 217788, the Court likewise affirms appearance of the goods, misleads prospective
the ruling of the CA, which in turn, affirmed the findings purchasers into buying his merchandise under the
of the Director General. impression that they are buying that of his competitors.
In other words, the defendant gives his goods the
Section 168 of the IP Code provides that: general appearance of the goods of his competitor with
Section 168. Unfair Competition, Rights, Regulation and the intention of deceiving the public that the goods are
Remedies. - 168.1. A person who has identified in the those of his competitor.32 The "true test," therefore, of
mind of the public the goods he manufactures or deals unfair competition has thus been "whether the acts of the
in, his business or services from those of others, whether defendant have the intent of deceiving or are calculated
or not a registered mark is employed, has a property to deceive the ordinary buyer making his purchases
right in the goodwill of the said goods, business or under the ordinary conditions of the particular trade to
services so identified, which will be protected in the which the controversy relates."33
same manner as other property rights.
Thus, the essential elements of an action for unfair
168.2. Any person who shall employ deception or any competition are: (1) confusing similarity in the general
other means contrary to good faith by which he shall appearance of the goods; and (2) intent to deceive the
pass off the goods manufactured by him or in which he public and defraud a competitor. The confusing similarity
deals, or his business, or services for those of the one may or may not result from similarity in the marks, but
having established such goodwill, or who shall commit may result from other external factors in the packaging
any acts calculated to produce said result, shall be guilty or presentation of the goods. The intent to deceive and
of unfair competition, and shall be subject to an action defraud may be inferred from the similarity of the
therefor. appearance of the goods as offered for sale to the
public. Actual fraudulent intent need not be shown.34
168.3. In particular, and without in any way limiting the
scope of protection against unfair competition, the In the instant case, the Court finds no error with the
following shall. be deemed guilty of unfair competition: findings of the CA and Director General insofar as the
(a) Any person, who is selling his goods and gives them presence of the foregoing elements is concerned. First of
the general appearance of goods of another all, there exists a substantial and confusing similarity in
manufacturer or dealer, either as to the goods the packaging of Foodsphere's product with that of
themselves or in the wrapping of the packages in which SMPFCI, which, as the records reveal, was changed by
they are contained, or the devices or words thereon, or Foodsphere from a paper box to a paper ham bag that is
in any other feature of their appearance, which would be significantly similar to SMPFCI's paper ham bag. As duly
noted by the Director General and the CA, both
packages use paper ham bags as the container for the
hams, both paper ham bags use the red color as the
main colors, and both have the layout design appearing
on the bags consisting of a partly sliced ham and fruits
on the front and other ham varieties offered at the back.
Thus, Foodsphere's packaging in its entirety, and not
merely its "PISTA" mark thereon, renders the general
appearance thereof confusingly similar with the
packaging of SMPFCI's ham, that would likely influence
purchasers to believe that these products are similar, if
not the same, as those of SMPFCI.

Second of all, Foodsphere's intent to deceive the public,

to defraud its competitor, and to ride on the goodwill of
SMPFCI's products is evidenced by the fact that not only
did Foodsphere switch from its old box packaging to the
same paper ham bag packaging as that used by
SMPFCI, it also used the same layout design printed on
the same. As the Director General observed, why, of the
millions of terms and combinations of letters, designs,
and packaging available, Foodsphere had to choose
those so closely similar to SMPFCI's if there was no
intent to pass off upon the public the ham of SMPFCI as
its own with the end and probable effect of deceiving the
public.

At this juncture, it is worthy to note that unfair

competition is always a question of fact. There is no
inflexible rule that can be laid down as to what will
constitute the same, each case being, in the measure, a
law unto itself. Thus, the question to be determined is
whether or not, as a matter of fact, the name or mark
used by the defendant has previously come to indicate
and designate plaintiffs goods, or, to state it in another
way, whether defendant, as a matter of fact, is, by his
conduct, passing off defendant's goods as plaintiffs
goods or his business as plaintiffs business.35 As such,
the Court is of the opinion that the case records readily
supports the findings of fact made by the Director
General as to Foodsphere's commission of unfair
competition. Settled is the rule that factual findings of
administrative agencies are generally accorded respect
and even finality by this Court, if such findings are
supported by substantial evidence, as it is presumed that
these agencies have the knowledge and expertise over
matters under their jurisdiction,36 more so when these
findings are affirmed by the Court of Appeals.37

WHEREFORE, premises considered, the instant

petitions in G.R. Nos. 217781 and 217788 are DENIED.
The assailed Decision dated September 24, 2014 and
Resolution dated April 8, 2015 of the Court of Appeals in
CA-G.R. SP No. 131945 are hereby AFFIRMED.

SO ORDERED.
 applied for a search warrant with the then Court of First
Instance, Br. 23, Pasig, Rizal, then presided over by
Judge Rizalina Bonifacio Vera. On that same day Judge
Vera issued Search Warrant No. 2-81 authorizing the
search of the premises of UNIVERSAL in Pasig. In the
course of the search, some 1,200 basketballs and
volleyballs marked "Spalding" were seized and
confiscated by the NBI. Three (3) days later, on motion
of the NBI, Judge Vera issued another order, this time to
seal and padlock the molds, rubber mixer, boiler and
other instruments at UNIVERSAL's factory. All these
were used to manufacture the fake "Spalding" products,
but were simply too heavy to be removed from the
premises and brought under the actual physical custody
of the court. However, on 28 April 1981, on motion of
UNIVERSAL, Judge Vera ordered the lifting of the seal
and padlock on the machineries, prompting the People
of the Philippines, the NBI together with PRO LINE and
G.R. No. 118192 October 23, 1997 QUESTOR, to file with the Court of Appeals a joint
petition for certiorari and prohibition with preliminary
PRO LINE SPORTS CENTER, INC., and QUESTOR injunction (CA G.R. No. 12413) seeking the annulment of
CORPORATION, petitioners, the order of 28 April 1981. On 18 May 1981, the
vs. appellate court issued a temporary restraining order
COURT OF APPEALS, UNIVERSAL ATHLETICS enjoining Judge Vera from implementing her latest order.
INDUSTRIAL PRODUCTS, INC., and MONICO
SEHWANI, respondents. Meanwhile, on 26 February 1981, PRO LINE and
QUESTOR filed a criminal complaint for unfair
BELLOSILLO, J.: competition against respondent Monico Sehwani
together with Robert, Kisnu, Arjan and Sawtri, all
This case calls for revisit of the demesne of malicious surnamed Sehwani, and Arcadio del los Reyes before
prosecution and its implications. the Provincial Fiscal of Rizal (I. S. No. 81-2040). The
complaint was dropped on 24 June 1981 for the reason
This petition stemmed from a criminal case for unfair that it was doubtful whether QUESTOR had indeed
competition filed by Pro Line Sports Center, Inc. (PRO acquired the registration rights over the mark "Spalding"
LINE) and Questor Corporation (QUESTOR) against from A.G. Spalding Bros., Inc., and complainants failed
Monico Sehwani, president of Universal Athletics and to adduce an actual receipt for the sale of "Spalding"
Industrial Products, Inc. (UNIVERSAL). In that case balls by UNIVERSAL.3
Sehwani was exonerated. As a retaliatory move,
Sehwani and UNIVERSAL filed a civil case for damages On 9 July 1981 a petition for review seeking reversal of
against PRO LINE and QUESTOR for what they the dismissal of the complaint was filed with the Ministry
perceived as the wrongful and malicious filing of the of Justice. While this was pending, the Court of Appeals
criminal action for unfair competition against them. rendered judgment on 4 August 1981 in CA G.R. No.
12413 affirming the order of Judge Vera which lifted the
But first, the dramatis personae. By virtue of its merger seal and padlock on the machineries of UNVERSAL.
with A.G. Spalding Bros., Inc., on 31 December The People, NBI, PRO LINE and QUESTOR challenged
1971,1 petitioner QUESTOR, a US-based corporation, the decision of the appellate court before this Court in
became the owner of the trademark "Spalding" G.R. No. 57814. On 31 August 1981 we issued a
appearing in sporting goods, implements and temporary restraining order against the Court of
apparatuses. Co-petitioner PRO LINE, a domestic Appeals vis-a-vis the aforesaid decision.
corporation, is the exclusive distributor of "Spalding"
sports products in the Philippines.2 Respondent In connection with the criminal complaint for unfair
UNIVERSAL, on the other had, is a domestic corporation competition, the Minister of Justice issued on 10
engaged in the sale and manufacture of sporting goods September 1981 a Resolution overturning the earlier
while co-respondent Monico Sehwani is impleaded in his dismissal of the complaint and ordered the Provincial
capacity as president of the corporation. Fiscal of Rizal to file an Information for unfair competition
against Monico Sehwani. The Information was
On 11 February 1981, or sixteen years ago, Edwin Dy accordingly filed on 29 December 1981 with then Court
Buncio, General Manager of PRO LINE, sent a letter- of First Instance of Rizal, docketed as Crim. Case No.
complaint to the National Bureau of Investigation (NBI) 45284, and raffled to Br. 21 presided over by Judge
regarding the alleged manufacture of fake "Spalding" Gregorio Pineda.
balls by UNIVERSAL. On 23 February 1981 the NBI
Sehwani pleaded not guilty to the charge. But, while he Sehwani for unfair competition under Art. 189 of the
admitted to having manufactured "Spalding" basketballs Penal Code; and, (g) appealing the order of acquittal in
and volleyballs, he nevertheless stressed that this was Crim. Case No. 45284 directly to the Supreme Court with
only for the purpose of complying with the requirement of no other purpose than to delay the proceedings of the
trademark registration with the Philippine Patent Office. case and prolong the wrongful invasion of UNIVERSAL's
He cited Chapter 1, Rule 43 of the Rules of Practice on rights and interests.
Trademark Cases, which requires that the mark applied
for be used on applicant's goods for at least sixty (60) Defendants PRO LINE and QUESTOR denied all the
days prior to the filing of the trademark application and allegations in the complaint and filed a counterclaim for
that the applicant must show substantial investment in damages based mainly on the unauthorized and illegal
the use of the mark. He also disclosed that UNIVERSAL manufacture by UNIVERSAL of athletic balls bearing the
applied for registration with the Patent Office on 20 trademark "Spalding."
February 1981.
The trial court granted the claim of UNIVERSAL
After the prosecution rested its case, Sehwani filed a declaring that the series of acts complained of were
demurrer to evidence arguing that the act of selling the "instituted with improper, malicious, capricious motives
manufactured goods was an essential and constitutive and without sufficient justification." It ordered PRO LINE
element of the crime of unfair competition under Art. 189 and QUESTOR jointly and severally to pay UNIVERSAL
of the Revised Penal Code, and the prosecution was not and Sehwani P676,000.00 as actual and compensatory
able to prove that he sold the products. In its Order of 12 damages, P250,000.00 as moral damages, P250,000.00
January 1981 the trial court granted the demurrer and as exemplary damages 5 and P50,000.00 as attorney's
dismissed the charge against Sehwani. fees. The trial court at the same time dismissed the
counterclaim of PRO LINE and QUESTOR.
PRO LINE and QUESTOR impugned before us in G.R.
No. 93055 the dismissal of the criminal case. In our The Court of Appeals affirmed the decision of the lower
Resolution of 2 March 1983 we consolidated G.R. No. court but reduced the amount of moral damages to
63055 with G.R. No. 57814 earlier filed. On 20 April P150,000.00 and exemplary damages to P100,000.00.
1983 we dismissed the petition in G.R. No. 63055 finding
that the dismissal by the trial court of Crim. Case No. Two (2) issues are raised before us: (a) whether private
45284 was based on the merits of the case which respondents Sehwani and UNIVERSAL are entitled to
amounted to an acquittal of Sehwani. Considering that recover damages for the alleged wrongful recourse to
the issue raised in G.R. No. 58714 had already been court proceedings by petitioners PRO LINE and
rendered moot and academic by the dismissal of Crim. QUESTOR; and, (b) whether petitioners' counterclaim
Case No. 45284 and the fact that the petition in G.R. No. should be sustained.
63055 seeking a review of such dismissal had also been
denied, the Court likewise dismissed the petition in G.R.
No. 58714. The dismissal became final and executory PRO LINE and QUESTOR cannot be adjudged liable for
with the entry of judgment made on 10 August 1983. damages for the alleged unfounded suit. The
complainants were unable to prove two (2) essential
element of the crime of malicious prosecution, namely,
Thereafter, UNIVERSAL and Sehwani filed a civil case absence of probable cause and legal malice on the part
for damages with the Regional Trial Court of of petitioners.
Pasig4 charging that PRO LINE and QUESTOR
maliciously and without legal basis committed the
following acts to their damage and prejudice: (a) UNIVERSAL failed to show that the filing of Crim. Case
procuring the issuance by the Pasig trial court of Search No. 45284 was bereft of probable cause. Probable cause
Warrant No. 2-81 authorizing the NBI to raid the is the existence of such facts and circumstances as
premises of UNIVERSAL; (b) procuring an order from would excite the belief in a reasonable mind, acting on
the same court authorizing the sealing and padlocking of the facts within the knowledge of the prosecutor, that the
UNIVERSAL's machineries and equipment resulting in person charged was guilty of the crime for which he was
the paralyzation and virtual closure of its operations: (c) prosecuted.6 In the case before us, then Minister of
securing a temporary restraining order from the Court of Justice Ricardo C. Puno found probable cause wen he
Appeals to prevent the implementation of the trial court's reversed the Provincial Fiscal who initially dismissed the
order of 28 April 1981 which authorized the lifting of the complaint and directed him instead to file the
seal and padlock on the subject machineries and corresponding Information for unfair competition against
equipment to allow UNIVERSAL to resume operations; private respondents herein.7 The relevant portions of the
(d) securing a temporary restraining order from the High directive are quoted hereunder:
Tribunal against the Court of Appeals and charging the
latter with grave abuse of discretion for holding that the The intent on the part of Universal Sports to deceive the
order of 28 April 1981 was judiciously issued, thus public and to defraud a competitor by the use of the
prolonging the continued closure of UNIVERSAL's trademark "Spalding" on basketballs and volleyballs
business; (e) initiating the criminal prosecution of Monico seems apparent. As President of Universal and as Vice
President of the Association of Sporting Goods
Manufacturers, Monico Sehwani should have known of resulted in the closure and padlocking of UNIVERSAL's
the prior registration of the trademark "Spalding" on factory and the cessation of its business operations,
basketballs and volleyballs when he filed the application these were unavoidable consequences of petitioners'
for registration of the same trademark on February 20, valid and lawful exercise of their right. One who makes
1981, in behalf of Universal, with the Philippine Patent use of his own legal right does no injury. Qui jure suo
Office. He was even notified by the Patent Office through utitur nullum damnum facit. If damage results from a
counsel on March 9, 1981, that "Spalding" was duly person's exercising his legal rights, it is damnum absque
registered with said office in connection with sporting injuria. 10
goods, implements and apparatus by A.G. Spalding &
Bros., Inc. of the U.S.A. Admittedly, UNIVERSAL incurred expenses and other
costs in defending itself from the accusation. But, as
That Universal has been selling these allegedly Chief Justice Fernando would put it, "the expenses and
misbranded "Spalding" balls has been controverted by annoyance of litigation form part of the social burden of
the firms allegedly selling the goods. However, there is living in a society which seeks to attain social control
sufficient proof that Universal manufactured balls with through law." 11 Thus we see no cogent reason for the
the trademark "Spalding" as admitted by Monico himself award of damages, exorbitant as it may seem, in favor of
and as shown by the goods confiscated by virtue of the UNIVERSAL. To do so would be to arbitrarily impose a
search warrant. penalty on petitioners' right to litigate.

Jurisprudence abounds to the effect that either a seller The criminal complaint for unfair competition, including
or a manufacturer of imitation goods may be liable for all other legal remedies incidental thereto, was initiated
violation of Section 29 of Rep. Act No. 166 (Alexander v. by petitioners in their honest belief that the charge was
Sy Bok, 97 Phil. 57). This is substantially the same rules meritorious. For indeed it was. The law brands business
obtaining in statutes and judicial construction since 1903 practices which are unfair, unjust or deceitful not only as
when Act No. 666 was approved (Finlay Fleming vs. Ong contrary to public policy but also as inimical to private
Tan Chuan, 26 Phil. 579) . . . .8 interests. In the instant case, we find quite aberrant
Sehwani's reason for the manufacture of 1,200
The existence of probable cause for unfair competition "Spalding" balls, i.e., the pending application for
by UNIVERSAL is derivable from the facts and trademark registration UNIVERSAL with the Patent
circumstances of the case. The affidavit of Graciano Office, when viewed in the light of his admission that the
Lacanaria, a former employee of UNIVERSAL, attesting application for registration with the Patent Office was
to the illegal sale and manufacture of "Spalding " balls filed on 20 February 1981, a good nine (9) days after the
and seized "Spalding" products and instruments from goods were confiscated by the NBI. This apparently was
UNIVERSAL's factory was sufficient  prima an afterthought but nonetheless too late a remedy. Be
facie evidence to warrant the prosecution of private that as it may, what is essential for registrability is proof
respondents. That a corporation other than the certified of actual use in commerce for at least sixty (60) days
owner of the trademark is engaged in the unauthorized and not the capability to manufacture and distribute
manufacture of products bearing the same trademark samples of the product to clients.
engenders a reasonable belief that a criminal offense for
unfair competition is being committed. Arguably, respondents' act may constitute unfair
competition even if the element of selling has not been
Petitioners PRO LINE and QUESTOR could not have proved. To hold that the act of selling is an indispensable
been moved by legal malice in instituting the criminal element of the crime of unfair competition is illogical
complaint for unfair competition which led to the filing of because if the law punishes the seller of imitation goods,
the Information against Sehwani. Malice is an then with more reason should the law penalize the
inexcusable intent to injure, oppress, vex, annoy or manufacturer. In U.S. v. Manuel, 12 the Court ruled that
humiliate. We cannot conclude that petitioners were the test of unfair competition is whether certain goods
impelled solely by a desire to inflict needless and have been intentionally clothed with an appearance
unjustified vexation and injury on UNIVERSAL's which is likely to deceive the ordinary purchasers
business interests. A resort to judicial processes is exercising ordinary care. In this case, it was observed by
not per se evidence of ill will upon which a claim for the Minister of Justice that the manufacture of the
damages may be based. A contrary rule would "Spalding" balls was obviously done to deceive would-be
discourage peaceful recourse to the courts of justice and buyers. The projected sale would have pushed through
induce resort to methods less than legal, and perhaps were it not for the timely seizure of the goods made by
even violent.9 the NBI. That there was intent to sell or distribute the
product to the public cannot also be disputed given the
number of goods manufactured and the nature of the
We are more disposed, under the circumstances, to hold
machinery and other equipment installed in the factory.
that PRO LINE as the authorized agent of QUESTOR
exercised sound judgment in taking the necessary legal
steps to safeguard the interest of its principal with We nonetheless affirm the dismissal of petitioners'
respect to the trademark in question. If the process counterclaim for damages. A counterclaim partakes of
the nature of a complaint and/or a cause of action SO ORDERED.
against the plaintiffs. 13 It is in itself a distinct and
independent cause of action, so that when properly
stated as such, the defendant becomes, in respect to the
matter stated by him, an actor, and there are two
simultaneous actions pending between the same parties,
where each is at the same time both a plaintiff and
defendant. 14 A counterclaim stands on the same footing
and is to be tested by the same rules, as if it were an
independent action. 15

Petitioners' counterclaim for damages based on the

illegal and unauthorized manufacture of "Spalding" balls
certainly constitutes an independent cause of action
which can be the subject of a separate complaint for
damages against UNIVERSAL. However, this separate
civil action cannot anymore be pursued as it is already
barred by res judicata, the judgment in the criminal case
(against Sehwani) involving both the criminal and civil
aspects of the case for unfair competition. 16 To recall,
petitioners PRO LINE and QUESTOR, upon whose
initiative the criminal action for unfair competition against
respondent UNIVERSAL was filed, did not institute a
separate civil action for damages nor reserve their right
to do so. Thus the civil aspect for damages was deemed
instituted in the criminal case. No better manifestation of
the intent of petitioners to recover damages in the
criminal case can be expressed than their active
participation in the prosecution of the civil aspect of the
criminal case through the intervention of their private
prosecutor. Obviously, such intervention could only be
for the purpose of recovering damages or indemnity
because the offended party is not entitled to represent
the People of the Philippines in the prosecution of a
public offense. 17 Section 16, Rule 110, of the Rules of
Court requires that the intervention of the offended party
in the criminal action can be made only if he has not
waived the civil action nor expressly reserved his right to
institute it separately. 18 In an acquittal on the ground that
an essential element of the crime was not proved, it is
fundamental that the accuse cannot be held criminally
nor civilly liable for the offense. Although Art. 28 of the
New Civil Code 19 authorizes the filing of a civil action
separate and distinct from the criminal proceedings, the
right of petitioners to institute the same is not unfettered.
Civil liability arising from the crime is deemed instituted
and determined in the criminal proceedings where the
offended party did not waive nor reserve his right to
institute it separately. 20 This is why we now hold that the
final judgment rendered therein constitutes a bar to the
present counterclaim for damages based upon the same
cause. 21

WHEREFORE, the petition is partly GRANTED. The

decision of respondent Court of Appeals is MODIFIED
by deleting the award in favor of private respondents
UNIVERSAL and Monico Sehwani of actual, moral and
exemplary damages as well as attorney's fees.

The dismissal of petitioners' counterclaim is AFFIRMED.

No pronouncement as to costs.
 On June 2, 1997, respondent applied with the IPO for
the registration of its trademark "IN-N-OUT Burger &
Arrow Design" and servicemark "IN-N-OUT." In the
course of its application, respondent discovered that
petitioner Sehwani, Inc. had obtained Trademark
Registration No. 56666 for the mark "IN N OUT" (THE
INSIDE OF THE LETTER "O" FORMED LIKE A STAR)
on December 17, 1993 without its
authority.6 Respondent thus demanded that petitioner
Sehwani, Inc. desist from claiming ownership of the mark
"IN-N-OUT" and to voluntarily cancel its Trademark
Registration No. 56666. Petitioner Sehwani, Inc.
however refused to accede to the demand and even
entered into a Licensing Agreement granting its co-
petitioner Benita's Frites, Inc. license to use for a period
of five years the trademark "IN-N-OUT BURGER" in its
restaurant in Pasig City.7 Hence, respondent filed a
complaint for violation of intellectual property rights.

In their answer with counterclaim, petitioners alleged that

respondent lack the legal capacity to sue because it was
not doing business in the Philippines and that it has no
[G.R. NO. 171053 : October 15, 2007] cause of action because its mark is not registered or
used in the Philippines. Petitioner Sehwani, Inc. also
SEHWANI, INCORPORATED and/or BENITA'S claimed that as the registered owner of the "IN-N-OUT"
FRITES, INC., Petitioner, v. IN-N-OUT BURGER, mark, it enjoys the presumption that the same was
INC., Respondent. validly acquired and that it has the exclusive right to use
the mark. Moreover, petitioners argued that other than
DECISION the bare allegation of fraud in the registration of the
mark, respondent failed to show the existence of any of
the grounds for cancellation thereof under Section 151 of
YNARES-SANTIAGO, J.: Republic Act (R.A.) No. 8293, otherwise known as The
Intellectual Property Code of the Philippines.8
This Petition for Review assails the Decision1 of the
Court of Appeals in CA-G.R. SP No. 88004 dated On December 22, 2003, Bureau Director Estrellita
October 21, 2005, which affirmed the December 7, 2004 Beltran-Abelardo rendered Decision No. 2003-02 finding
Order2 of Director General Emma C. Francisco of the that respondent has the legal capacity to sue and that it
Intellectual Property Office (IPO), in Appeal No. 14-2004- is the owner of the internationally well-known
0004 finding that petitioners' appeal was filed out of time, trademarks; however, she held that petitioners are not
as well as the Resolution3 dated January 12, 2006 guilty of unfair competition, thus:
denying the motion for reconsideration.
With the foregoing disquisition, Certificate of Registration
Respondent IN-N-OUT Burger, Inc., a foreign No. 56666 dated 17 December 1993 for the mark "IN-N-
corporation organized under the laws of California, OUT (the inside of the letter "O" formed like a star)
U.S.A., and not doing business in the Philippines, filed issued in favor of Sehwani, Incorporated is hereby
before the Bureau of Legal Affairs of the IPO (BLA-IPO), CANCELLED. Consequently, Respondents Sehwani,
an administrative complaint against petitioners Sehwani, Inc. and Benita's Frites are hereby ordered to
Inc. and Benita's Frites, Inc. for violation of intellectual permanently cease and desist from using the mark "IN-
property rights, attorney's fees and damages with prayer N-OUT" and "IN-N-OUT BURGER LOGO" on its goods
for the issuance of a restraining order or writ of and in its business. With regard to mark "Double-
preliminary injunction.4 Double", considering that as earlier discussed, the mark
has been approved by this Office for publication and that
Respondent alleged that it is the owner of the tradename as shown by the evidence, Complainant is the owner of
"IN-N-OUT" and trademarks "IN-N-OUT," "IN-N-OUT the said mark, Respondents are also ordered to
Burger & Arrow Design" and "IN-N-OUT Burger Logo," permanently cease and desist from using the mark
which are used in its business since 1948 up to the Double-Double. NO COSTS.
present. These tradename and trademarks were
registered in the United States as well as in other parts SO ORDERED.9
of the world.5
Petitioners filed a motion for reconsideration 10 insisting
that respondent has no legal capacity to sue, that no
ground for cancellation was duly proven, and that the believed in good faith that Resolution No. 2004-18 dated
action is barred by laches; while respondent moved for October 28, 2004, denying the motion for
partial reconsideration11 assailing the finding that reconsideration, was received only on November 3,
petitioners are not guilty of unfair competition. Both, 2004, thus, they have until November 18, 2004 within
however, were denied in Resolution No. 2004-18 dated which to file an appeal memorandum with the Office of
October 28, 200412 and Resolution No. 2005-05 dated the Director General. They claim that they should not be
April 25, 2005,13 respectively. prejudiced by their counsel's mistake in computing the
period to appeal; besides, the same is understandable
On separate dates, the parties appealed to the Office of and excusable as their counsel is a solo practitioner with
the Director General which rendered an Order dated only a handful of non-legal staff assisting him. They also
December 7, 2004,14 in Appeal No. 14-2004-0004, reiterate their position that respondent has no legal
dismissing petitioners' appeal for being filed out of time, capacity to sue, that no ground for cancellation was duly
thus: proven, and that the complaint is barred by laches, if not,
by prescription.19
WHEREFORE, premises considered, the MOTION TO
ADMIT COPY OF DECISION NO. 2003-02 is hereby The petition has no merit.
granted. The instant appeal, however, is hereby
DISMISSED for having been filed out of time.15 The Court has invariably ruled that perfection of an
appeal within the statutory or reglementary period is not
Aggrieved, petitioners filed a petition before the Court of only mandatory but also jurisdictional; failure to do so
Appeals which was dismissed for lack of merit. It held renders the questioned decision/final order final and
that the right to appeal is not a natural right or a part of executory, and deprives the appellate court of jurisdiction
due process, but a procedural remedy of statutory origin, to alter the judgment or final order, much less to
hence, its requirements must be strictly complied with. entertain the appeal.20 True, this rule had been relaxed
The appeal being filed out of time, the December 22, but only in highly meritorious cases to prevent a grave
2003 Decision and the October 28, 2004 Orders of injustice from being done.21 Such does not obtain in this
Bureau Director Beltran-Abelardo are now final and case.
executory.16
Director General Francisco, as affirmed by the Court of
Meanwhile, respondent filed a Manifestation with the Appeals, correctly held:
Court of Appeals that on December 23, 2005, Director
General Adrian S. Cristobal, Jr. had rendered a Decision [T]hat the appeal must be dismissed outright. Section 2
in Appeal 10-05-01 finding petitioners guilty of unfair of the Uniform Rules on Appeal (Office Order no. 12, s.
competition.17 2002) states that:

Petitioners' motion for reconsideration was denied; Section 2. Appeal to the Director General. - The
hence, the instant petition raising the following issues: decisions or final orders of the Bureau Director shall
become final and executory thirty (30) days after receipt
THE COURT OF APPEALS COMMITTED GRAVE of a copy thereof by the appellant or appellants unless,
ERROR IN UPHOLDING THE IPO DIRECTOR within the same period, a motion for reconsideration is
GENERAL'S DISMISSAL OF APPEAL NO. 14-2004- filed with the Bureau Director or an appeal to the Director
0004 ON A MERE TECHNICALITY. General has been perfected; Provided, that only one (1)
motion for reconsideration of the decision or order of the
Bureau Director shall be allowed, and, in case the
SUBSTANTIAL JUSTICE WOULD BE BETTER
motion for reconsideration is denied, the appellant or
SERVED IF THE COURT OF APPEALS AND THE IPO
appellants has/have the balance of the period prescribed
DIRECTOR GENERAL ENTERTAINED PETITIONERS
above within which to file the appeal.
APPEAL AS THE BUREAU OF LEGAL AFFAIR'S
DECISION AND RESOLUTION (1) CANCELING
PETITIONER SEHWANI'S CERTIFICATE OF Considering that the Respondent-Appellants received a
REGISTRATION FOR THE MARK "IN-N-OUT," AND (2) copy of the appealed Decision on 15 January 2004 and
ORDERING PETITIONERS TO PERMANENTLY filed their MOTION FOR RECONSIDERATION on 30
CEASE AND DESIST FROM USING THE SUBJECT January 2004, said parties had a balance of 15 days
MARK ON ITS GOODS AND BUSINESS ARE from their receipt of the Resolution denying said motion
CONTRARY TO LAW AND/OR NOT SUPPORTED BY within which to file the APPEAL MEMORANDUM. Per
EVIDENCE.18 records of the Bureau of Legal Affairs, the Respondents-
Appellants received a copy of the Resolution on 29
October 2004. Hence the deadline for the filing of the
Petitioners contend that the Court of Appeals erred when
APPEAL MEMORANDUM was on 13 November 2004.
it dismissed the petition on mere technicality which
Since said date fell on a Saturday, the appeal should
resulted in a miscarriage of justice and deprivation of
have been filed on the ensuing working day, that is, 15
intellectual property rights. They claim that their counsel
November 2004.
On this score, Section 5(c) of the Uniform Rules on not it is licensed to do business in the Philippines under
Appeal provides: existing laws.

Section 5. Action on the Appeal Memorandum - The Section 3 thereof provides:

Director General shall:
SECTION 3. International Conventions and Reciprocity. -
xxx Any person who is a national or who is domiciled or has
a real and effective industrial establishment in a country
c) Dismiss the appeal for being patently without which is a party to any convention, treaty or agreement
merit, provided that the dismissal shall be outright if the relating to intellectual property rights or the repression of
appeal is not filed within the prescribed period or for unfair competition, to which the Philippines is also a
failure of the appellant to pay the required fee within the party, or extends reciprocal rights to nationals of the
period of appeal.22 (Underscoring supplied)cralawlibrary Philippines by law, shall be entitled to benefits to the
extent necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition to the
Petitioners' allegation that they honestly believed that
rights to which any owner of an intellectual property right
they received Resolution No. 2004-18 dated October 28,
is otherwise entitled by this Act.
2004 on November 3, 2004 and not on October 29,
2004, as what appears on the records of the BLA-IPO, is
self-serving and unbelievable. The inadvertent Respondent anchors its causes of action under Articles
computation of the period for one to file a pleading is 6bis and 8 of The Convention of Paris for the Protection of
inexcusable, and has become an all too familiar and Industrial Property, otherwise known as the Paris
ready excuse on the part of lawyers remiss in their Convention, wherein both the United States and the
bounden duty to comply with the mandatory periods.23 Philippines are signatories.26 The Articles read:

This Court has always reminded the members of the Article 6bis
legal profession that every case they handle deserves
full and undivided attention, diligence, skill and (1) The countries of the Union undertake, ex officio if
competence, regardless of its importance.24 A lawyer has their legislation so permits, or at the request of an
the responsibility of monitoring and keeping track of the interested party, to refuse or to cancel the registration,
period of time left to file pleadings and to see to it that and to prohibit the use, of a trademark which constitutes
said pleadings are filed before the lapse of the period. If a reproduction, an imitation, or a translation, liable to
he fails to do so, his client is bound by his conduct, create confusion, of a mark considered by the competent
negligence and mistakes.25 This responsibility is imposed authority of the country of registration or use to be well
on all lawyers notwithstanding the presence or absence known in that country as being already the mark of a
of staff assisting them in the discharge thereof. person entitled to the benefits of this Convention and
used for identical or similar goods. These provisions
Thus, as correctly held by the Court of Appeals, shall also apply when the essential part of the mark
petitioners' belated filing of an appeal memorandum constitutes a reproduction of any such well-known mark
rendered the December 22, 2003 Decision and the or an imitation liable to create confusion therewith.
October 28, 2004 Order of Bureau Director Beltran-
Abelardo final and executory. x x x x.

At this point, the Court could very well write finis to this Article 8
petition. However, in disposing of the instant case, we
shall resolve the principal issues raised by petitioners. A tradename shall be protected in all countries of the
Union without the obligation of filing or registration
Contrary to petitioners' argument, respondent has the whether or not it forms part of a trademark.
legal capacity to sue for the protection of its trademarks,
albeit it is not doing business in the Philippines. Section Article 6bis which governs the protection of well-known
160 in relation to Section 3 of R.A. No. 8293, provides: trademarks, is a self-executing provision and does not
require legislative enactment to give it effect in the
SECTION 160. Right of Foreign Corporation to Sue in member country. It may be applied directly by the
Trademark or Service Mark Enforcement Action. - Any tribunals and officials of each member country by the
foreign national or juridical person who meets the mere publication or proclamation of the Convention, after
requirements of Section 3 of this Act and does not its ratification according to the public law of each state
engage in business in the Philippines may bring a civil or and the order for its execution. The essential
administrative action hereunder for opposition, requirement under this Article is that the trademark to be
cancellation, infringement, unfair competition, or false protected must be "well-known" in the country where
designation of origin and false description, whether or protection is sought. The power to determine whether a
trademark is well-known lies in the "competent authority
of the country of registration or use." This competent Burger and Arrow Design" is an internationally well
authority would be either the registering authority if it has known mark.
the power to decide this, or the courts of the country in
question if the issue comes before a court.27 In the aforementioned case, we are inclined to favor the
declaration of the mark "IN-N-OUT" as an internationally
The question of whether or not respondent's trademarks well-known mark on the basis of "registrations in various
are considered "well-known" is factual in nature, countries around the world and its comprehensive
involving as it does the appreciation of evidence advertisements therein."
adduced before the BLA-IPO. The settled rule is that the
factual findings of quasi-judicial agencies, like the IPO, The Ongpin Memorandum dated 25 October 1983 which
which have acquired expertise because their jurisdiction was the basis for the decision in the previous inter partes
is confined to specific matters, are generally accorded case and which set the criteria for determining whether a
not only respect, but, at times, even finality if such mark is well known, takes into consideration the extent of
findings are supported by substantial evidence.28 registration of a mark. Similarly, the implementing rules
of Republic Act 8293, specifically Section (e) Rule 102
Director Beltran-Abelardo found that: Criteria for determining whether a mark is well known,
also takes into account the extent to which the mark has
Arguing mainly that it is the owner of an internationally been registered in the world in determining whether a
well-known mark, complainant presented its United mark is well known.
States trademark registrations, namely: United States
Trademark Registration No. 1,514,689 for the mark "IN- Likewise, as shown by the records of the instant case,
N-OUT Burger and Arrow Design" under class 25 dated Complainant submitted evidence consisting of articles
November 29, 1988 for the shirts (Exhibit "L"); United about "IN-N-OUT Burger" appearing in magazines,
States Trademark Registration No. 1,528,456 for the newspapers and print-out of what appears to be printed
mark "IN-N-OUT Burger and Arrow Design" under Class representations of its internet website (www.innout.com)
29, 30, 32 and 42 dated March 7, 1989 for milk and (Exhibits "CCC" to "QQQ"), as well as object evidence
french-fried potatoes for consumption on or off the consisting of videotapes of famous celebrities
premises, for hamburger sandwiches, cheeseburger mentioning IN-N-OUT burgers in the course of their
sandwiches, hot coffee and milkshakes for consumption interviews (Exhibits "EEEE" and "FFFF") showing a
on or off the premises, lemonade and softdrinks for tremendous following among celebrities.
consumption on and off the premises, restaurant
services respectively (Exhibit "M"); US Trademark The quality image and reputation acquired by the
Registration No. 1,101,638 for the mark "IN-N-OUT" complainant's IN-N-OUT mark is unmistakable. With this,
under Class No. 30 dated September 5, 1978 for complainant's mark have met other criteria set in the
cheeseburgers, hamburgers, hot coffee and milkshake Implementing Rules of Republic Act 8293, namely, 'a'
for consumption on or off premises (Exhibit "N"); US and 'd' of Rule 102, to wit:
Trademark Registration No. 1,085,163 "IN-N-OUT"
under Class 42 dated February 7, 1978 for Restaurant "Rule 102:
Services and carry-out restaurant services (Exhibit "Q").
For its mark "Double-Double" it submitted Certificates of
Registration of said mark in several countries (Exhibits (a) the duration, extent and geographical area of any use
"MM" and submarkings). of the mark, in particular, the duration, extent and
geographical area of any promotion of the mark,
including publicity and the presentation at fairs or
xxx exhibitions, of the goods and/or services to which the
mark applies;
Moreover, complainant also cites our decision in Inter
Pares Case No. 14-1998-00045 dated 12 September xxx
2000, an opposition case involving the mark "IN-N-OUT"
between IN-N-OUT Burger (herein complainant) and
Nestor SJ Bonjales where we ruled: (d) the quality image or reputation acquired by the mark"

"And last but not the lease, the herein Opposer was able Hence, on the basis of evidence presented consisting of
to prove substantially that its mark "IN-N-OUT Burger worldwide registration of mark "IN-N-OUT" almost all of
and Arrow Design" is an internationally well known mark which were issued earlier than the respondent's date of
as evidenced by its trademark registrations around the filing of its application and the subsequent registration of
world and its comprehensive advertisements therein." the mark "IN-N-OUT" in this Office, as well as the
advertisements therein by the complainant, this Office
hereby affirms its earlier declaration that indeed, the
The nub of complainant's reasoning is that the mark "IN-N-OUT BURGER LOGO" is an internally well-
Intellectual Property Office as a competent authority had known mark.29
declared in previous inter partes case that "IN-N-OUT
We find the foregoing findings and conclusions of confusingly similar mark for their hamburger wrappers
Director Beltran-Abelardo fully substantiated by the and french-fries receptacles, thereby effectively
evidence on record and in accord with law. misrepresenting the source of the goods and services.30

The fact that respondent's marks are neither registered Finally, petitioner's contention that respondent is
nor used in the Philippines is of no moment. The scope precluded from asserting its claim by laches, if not by
of protection initially afforded by Article 6bis of the Paris prescription, lacks basis. Section 151(b) of R.A. No.
Convention has been expanded in the 1999 Joint 8293 specifically provides that a petition to cancel the
Recommendation Concerning Provisions on the registration of a mark which is registered contrary to the
Protection of Well-Known Marks, wherein the World provisions thereof, or which is used to misrepresent the
Intellectual Property Organization (WIPO) General source of the goods or services, may be filed at any
Assembly and the Paris Union agreed to a nonbinding time. Moreover, laches may not prevail against a specific
recommendation that a well-known mark should be provision of law, since equity, which has been defined as
protected in a country even if the mark is neither 'justice outside legality' is applied in the absence of and
registered nor used in that country. Part I, Article 2(3) not against statutory law or rules of procedure.31 Aside
thereof provides: from the specific provisions of R.A. No. 8293, the Paris
Convention and the WIPO Joint Recommendation have
(3) [Factors Which Shall Not Be Required] (a) A Member the force and effect of law, for under Section 2, Article II
State shall not require, as a condition for determining of the Constitution, the Philippines adopts the generally
whether a mark is a well-known mark: accepted principles of international law as part of the law
of the land. To rule otherwise would be to defeat the
equitable consideration that no one other than the owner
(i) that the mark has been used in, or that the mark has
of the well-known mark shall reap the fruits of an
been registered or that an application for registration of
honestly established goodwill.
the mark has been filed in or in respect of, the Member
State;
WHEREFORE, the petition is DENIED. The Decision
and Resolution of the Court of Appeals in CA-G.R. SP
(ii) that the mark is well known in, or that the mark has
No. 88004, dated October 21, 2005 and January 16,
been registered or that an application for registration of
2006, affirming the December 7, 2004 Order of Director
the mark has been filed in or in respect of, any
General Emma C. Francisco, in Appeal No. 14-2004-
jurisdiction other than the Member State; or
0004, and denying the motion for reconsideration,
respectively, are AFFIRMED.
(iii) that the mark is well known by the public at large in
the Member State. (Underscoring supplied)cralawlibrary
SO ORDERED.
Moreover, petitioners' claim that no ground exists for the
cancellation of their registration lacks merit. Section
151(b) of RA 8293 provides:

SECTION 151. Cancellation. - 151.1. A petition to cancel

a registration of a mark under this Act may be filed with
the Bureau of Legal Affairs by any person who believes
that he is or will be damaged by the registration of a
mark under this Act as follows:

xxx

(b) At any time, if the registered mark becomes the

generic name for the goods or services, or a portion
thereof, for which it is registered, or has been
abandoned, or its registration was obtained fraudulently
or contrary to the provisions of this Act, or if the
registered mark is being used by, or with the permission
of, the registrant so as to misrepresent the source of the
goods or services on or in connection with which the
mark is used. x x x.ςηαñrοblεš  Î½Î¹r†υαl  lαω
lιbrαrÿ

The evidence on record shows that not only did the

petitioners use the IN-N-OUT Burger trademark for the
name of their restaurant, but they also used identical or
 aggressive marketing and promotion. Petitioner claimed
that the use of PAPERONE in respondent's corporate
name without its prior consent and authority was done in
bad faith and designed to unfairly ride on its good name
and to take advantage of its goodwill. It was calculated to
mislead the public into believing that respondent's
business and/or products were manufactured, licensed
or sponsored by petitioner. It was also alleged that
respondent had presumptive, if not actual knowledge, of
petitioner's rights to the trademark PAPER ONE, even
prior to respondent's application for registration of its
corporate name before the Securities and Exchange
Commission (SEC).[7]

Respondent, on its part, averred that it had no obligation

to secure prior consent or authority from petitioner to
adopt and use its corporate name. The Department of
Trade and Industry (DTI) and the SEC had allowed it to
use Paperone, Inc., thereby negating any violation on
petitioner's alleged prior rights. Respondent was
registered with the SEC, having been organized and
existing since March 30, 2001. Its business name was
likewise registered with the DTI. Respondent also denied
any awareness of the existence of petitioner and/or the
registration of PAPER ONE, as the latter is a foreign
corporation not doing business in the Philippines. While
the business of respondent dealt with paper conversion
such as manufacture of table napkins, notebooks and
intermediate/collegiate writing pads, it did not use its
corporate name PAPERONE on any of its products.
G.R. Nos. 213365-66, December 10, 2018 ] Further, its products had been widely sold in the
Philippines even before petitioner could claim any
ASIA PACIFIC RESOURCES INTERNATIONAL business transaction in the country. The public could not
HOLDINGS, LTD., PETITIONER, VS. PAPERONE, have possibly been deceived into believing that any
INC., RESPONDENT. relation or sponsorship existed between the parties,
considering these circumstances.[8]
DECISION
GESMUNDO, J.: In its decision,[9] the Bureau of Legal Affairs (BLA)
Before the Court is a Petition for Review on Director, Intellectual Property Office, found respondent
Certiorari[1] under Rule 45 of the Rules of Court, assailing liable £or unfair competition. It ordered respondent to
the November 28, 2013 Decision[2] and the July 9, 2014 cease and desist from using PAPERONE in its corporate
Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP name, and to pay petitioner P300,000.00, as temperate
Nos. 122288 and 122535. The CA reversed and set damages; P200,000.00, as exemplary damages; and
aside the November 10, 2011 Decision[4] of the P100,000.00, as attorney's fees. It ruled that petitioner
Intellectual Property Office (IPO) Director General, was the first to use PAPER ONE in 1999 which had
finding Paperone, Inc. (respondent) liable for unfair become a symbol of goodwill of its paper business.
competition. Respondent's use of PAPERONE in its corporate name
was to benefit from the established goodwill of petitioner.
The Facts There was, however, no trademark infringement since
PAPER ONE was registered in the Philippines only in
The dispute in this case arose from a complaint for unfair 2003.[10]
competition, trademark infringement, and damages filed
against respondent by Asia Pacific Resources On appeal to the IPO Director General, the BLA decision
International Holdings, Ltd. (petitioner). was affirmed with modification insofar as the increase in
the award of attorney's fees to P300,000.00.[11]
Petitioner is engaged in the production, marketing, and
sale of pulp and premium wood free paper.[5] It alleged The CA Ruling
that it is the owner of a well-known trademark, PAPER
ONE, with Certificate of Registration No. 4-1999-01957 Both parties appealed to the CA. Petitioner maintained
issued on September 5, 2003.[6] The said trademark that it was entitled to actual damages amounting to
enjoyed legal protection in different countries worldwide P46,032,569.72 due to unfair competition employed by
and enjoyed goodwill and high reputation because of respondent. Respondent claimed that it was not liable for
unfair competition. (a) Any person, who is selling his goods and gives them
the general appearance of goods of another
In its decision, the CA reversed and set aside the IPO manufacturer or dealer, either as to the goods
Director General's decision. It held that there was no themselves or in the wrapping of the packages in which
confusing similarity in the general appearance of the they are contained, or the devices or words thereon, or
goods of both parties. Petitioner failed to establish in any other feature of their appearance, which would be
through substantial evidence that respondent intended to likely to influence purchasers to believe that the goods
deceive the public or to defraud petitioner. Thus, the offered are those of a manufacturer or dealer, other than
essential elements of unfair competition were not the actual manufacturer or dealer, or who, otherwise,
present.[12] clothes the goods with such appearance as shall deceive
the public and defraud another of his legitimate trade, or
ISSUES any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like
In the petition before us, petitioner raises various issues purpose.
for our resolution. However, given the facts of this case, The essential elements of an action for unfair
we find that the only issues to be resolved are: competition are: (1) confusing similarity in the general
I. appearance of the goods, and (2) intent to deceive the
public and defraud a competitor.[14] Unfair competition is
WHETHER RESPONDENT IS LIABLE FOR UNFAIR always a question of fact.[15] At this point, it bears to
COMPETITION, and stress that findings of fact of the highly technical agency
- the IPO - which has the expertise in this field, should
II. have been given great weight by the Court of Appeals. [16]

WHETHER PETITIONER IS ENTITLED TO ACTUAL a) Confusing similarity

DAMAGES.
OUR RULING As to the first element, the confusing similarity may or
may not result from similarity in the marks, but may
The core of the controversy is the adoption of result from other external factors in the packaging or
"PAPERONE" in the trade name of respondent, which presentation of the goods.[17] Likelihood of confusion of
petitioner claims it has prior right to, since it was the first goods or business is a relative concept, to be
to use it as its trademark for its paper products. determined only according to peculiar circumstances of
Petitioner claims that respondent committed unfair each case.[18]
competition by adopting PAPERONE in its trade name. It
is noteworthy that the issue of trademark infringement is The marks under scrutiny in this case are hereby
not the subject of the appeal before us. reproduced for easy reference:

The relevant provisions of the Intellectual Property Petitioner's:

Code[13] provide:
SECTION 168. Unfair Competition, Rights, Regulation (See image p. 6)
and Remedies. -
Respondent's:
168.1. A person who has identified in the mind of the
public the goods he manufactures or deals in, his (See image p. 6)
business or services from those of others, whether or not
a registered mark is employed, has a property right in It can easily be observed that both have the same
the goodwill of the said goods, business or services so spelling and are pronounced the same. Although
identified, which will be protected in the same manner as respondent has a different logo, it was always used
other property rights. together with its trade name. It bears to emphasize that,
initially, respondent's trade name had separate words
168.2. Any person who shall employ deception or any that read "Paper One, Inc." under its original Articles of
other means contrary to good faith by which he shall Incorporation. This was later on revised to make it one
pass off the goods manufactured by him or in which he word, and now reads "Paperone, Inc."[19]
deals, or his business, or services for those of the one
having established such goodwill, or who shall commit At first glance, respondent may be correct that there
any acts calculated to produce said result, shall be guilty would be no confusion as to the presentation or
of unfair competition, and shall be subject to an action packaging of its products since it is not using its
therefor. corporate name as a trademark of its goods/products.
There is an apparent dissimilarity of presentation of the
168.3. In particular, and without in any way limiting the trademark PAPER ONE and the trade name and logo of
scope of protection against unfair competition, the Paperone, Inc. Nevertheless, a careful scrutiny of the
following shall be deemed guilty of unfair competition: mark shows that the use of PAPERONE by respondent
would likely cause confusion or deceive the ordinary
purchaser, exercising ordinary care, into believing that buyers, best prove the actual use of a mark in trade and
the goods bearing the mark are products of one and the commerce during a certain period of time.
same enterprise.
x x x x
Relative to the issue on confusion of marks and trade
names, jurisprudence has noted two types of Verily, the protection of trademarks as intellectual
confusion, viz.: (1) confusion of goods (product property is intended not only to preserve the goodwill
confusion), where the ordinarily prudent purchaser would and reputation of the business established on the goods
be induced to purchase one product in the belief that he bearing the mark through actual use over a period of
was purchasing the other; and (2) confusion of business time, but also to safeguard the public as consumers
(source or origin confusion), where, although the goods against confusion on these goods. On this matter of
of the parties are different, the product, the mark of particular concern, administrative agencies, such as
which registration is applied for by one party, is such as the IPO, by reason of their special knowledge and
might reasonably be assumed to originate with the expertise over matters falling under their
registrant of an earlier product; and the public would then jurisdiction, are in a better position to pass judgment
be deceived either into that belief or into the belief that thereon. Thus, their findings of fact in that regard are
there is some connection between the two parties, generally accorded great respect, if not finality by
though inexistent.[20] Thus, while there is confusion of the courts, as long as they are supported by
goods when the products are competing, confusion of substantial evidence, even if such evidence might
business exists when the products are non-competing not be overwhelming or even p1reponderant. It is not
but related enough to produce confusion of affiliation. [21] th1e task of the appellate court to weigh once more
the evidence submitted before the administrative
This case falls under the second type of confusion. body and to substitute its own judgment for that of
Although we see a noticeable difference on how the the administrative agency in respect to sufficiency of
trade name of respondent is being used in its products evidence.[24] (Emphasis supplied)
as compared to the trademark of petitioner, there could The BLA Director found, as affirmed by the IPO Director
likely be confusion as to the origin of the products. Thus, General, that it was petitioner who has priority rights over
a consumer might conclude that PAPER ONE products PAPER ONE, thus:
are manufactured by or are products of Paperone, Inc. One essential factor that has led this Office to tilt the
Additionally, although respondent claims that its products scales of justice in favor of Complainant is the latter's
are not the same as petitioner's, the goods of the parties establishment of prior use of the word PaperOne for
are obviously related as they are both kinds of paper paper products in the Philippines. Records will show that
products. there was prior use and adoption by Complainant of the
word "PaperOne." PaperOne was filed for trademark
The BLA Director aptly ruled that "[t]o permit respondent registration on 22 March 1999 (Exhibit "D", Complainant)
to continue using the same or identical Paperone in its in the name of Complainant Asia Pacific Resources
corporate name although not [used] as label for its paper International Holdings, Ltd. and matured into registration
products, but the same line of business, that of on 10 February 2003. Respondent's corporate or trade
manufacturing goods such as PAPER PRODUCTS, name is Paper One, Inc. which existed and was duly
therefore their coexistence would result in confusion as registered with the Securities and Exchange
to source of goods and diversion of sales to [r]espondent Commission on 31 March 2001 (Exhibit "11",
knowing that purchasers are getting products from Respondent). If anyone files a suit and can prove priority
[petitioner] APRIL with the use of the corporate name of adoption, he can assert his right to the exclusive use
Paper One, Inc. or Paperone, Inc. by herein of a corporate name with freedom from infringement by
[r]espondent."[22] similarity (Philips Export B.V. et al. vs. CA, G.R. No.
96161). Respondent was incorporated in March 2001 by
The matter of prior right over PAPERONE, again, is a virtue of SEC registration No. A200104788 (Exhibit "11",
matter of factual determination; therefore, we give Complainant) and was registered two (2) years
credence to the findings of the IPO, who has the thereafter as business name with the Department of
expertise in this matter, being supported by substantial Trade and Industry under DTI Business Name
evidence. The Court has consistently recognized the Registration No. 00068456 (Exhibit "13", Respondent).
specialized functions of the administrative agencies - in Complainant Asia Pacific Resources International
this case, the IPO. Berris Agricultural Co., Inc. v. Holdings, Ltd., APRIL for brevity, presented evidence of
Abyadang[23] states, thus: its use of the label PaperOne on paper products in the
The determination of priority of use of a mark is a Philippines earlier than the date of its trademark
question of fact. Adoption of the mark alone does not application in 1999 when its marketing and promotion
suffice. One may make advertisements, issue circulars, agent JND International Corporation ("JND" for brevity)
distribute price lists on certain goods, but these alone will licensed one of its clients, National Paper Products &
not inure to the claim of ownership of the mark until the Printing Corporation ("NAPPCO" for brevity) to import,
goods bearing the mark are sold to the public in the sell and distribute Complainant's APRIL paper products
market. Accordingly, receipts, sales invoices, and in 1998 (par. 3, Exhibit "AA", Complainant). To support
testimonies of witnesses as customers, or orders of this declaration are documents evidencing transactions
of NAPPCO with Complainant APRIL with the earliest November 28, 2013 Decision and the July 9, 2014
documented transaction on 22 January 1999 (Exhibit Resolution of the: Court of Appeals in CA G.R. SP Nos.
"G", Complainant) bearing [I]nvoice [N]o. LCA9812133. 122288 and 122535 are REVERSED and SET ASIDE.
Accordingly, the November 10, 2011 Decision of the
[The] fact of earlier use was not disputed by the Intellectual Property Office Director General finding
Respondent. In point of fact, Respondent already respondent liable for unfair competition is
knew of Complainant's APRIL existence prior to hereby REINSTATED.
Respondent's incorporation as Paper One, Inc. in
2001. Most of the incorporators of National Paper SO ORDERED.
Products & Printing Corporation or NAPPCO for
brevity (Exhibits "H" and "H-A" to "H-H",
Complainant) which in late 1990s transacted with
Complainant APRIL through Invoice No. LCA9812133
dated 22 January 1999, the earliest invoice noted
(Exhibit "G", Complainant) are likewise
incorporators of Paper One, Inc. (Exhibit "11",
Respondent) namely Tan Tian Siong, Chong Ping
Tat, Thelma J. Uy, Conchita Francisco, Sy Siong
Sun, to name a few. Also, NAPPCO, through
Complainant's marketing and promotion agent JND
International Corporation, or JND for brevity (Exhibit
"AA", Complainant) expressed interest in a letter
dated 19 January 2000 to work with JND and APRIL,
as its exclusive distributor and we quote "to become
your exclusive distributor of 'Paper One' Multi
Purpose Copy Paper" (Exhibit "AA-1-d",
Complainant). Worth mentioning at this point is the
jurisprudence pronounced in the case of Converse
Rubber Corporation vs. Universal Rubber Products, Inc.
and Tiburcio S. Evalle (G.R. No. L-27906, Jan. 18, 1987)
where the court said:
Knowing therefore that the word "CONVERSE" belongs
to and is being used by petitioner, and is in fact the
dominant word in petitioner's corporate name,
respondent has no right to appropriate the same for use
on its products which are similar to those being produced
by petitioner.[25] (Emphasis supplied)
b) intent to deceive the public and defraud a
competitor

The element of intent to deceive and to defraud may be

inferred from the similarity of the appearance of the
goods[26] as offered for sale to the public.[27] Contrary to
the ruling of the CA, actual fraudulent intent need not be
shown.[28] Factual circumstances were established
showing that respondent adopted PAPERONE in its
trade name even with the prior knowledge of the
existence of PAPER ONE as a trademark of petitioner.
As in all other cases of colorable imitations, the
unanswered riddle is why, of the millions of terms and
combinations of letters available, respondent had to
choose those so closely similar to another's trademark if
there was no intent to take advantage of the goodwill
generated by the other mark.[29]

With regard to the issue on damages, we likewise agree

with the IPO that the actual damages prayed for cannot
be granted because petitioner has not presented
sufficient evidence to prove the amount claimed and the
basis to measure actual damages.

WHEREFORE, the petition is GRANTED. The

 Petitioner Philippine Packing Corporation (Philpack) is a
domestic corporation duly organized under the laws of
the Philippines. On April 11, 1969, Del Monte granted
Philpack the right to manufacture, distribute and sell in
the Philippines various agricultural products, including
catsup, under the Del Monte trademark and logo.

On October 27,1965, Del Monte authorized Philpack to

register with the Philippine Patent Office the Del Monte
catsup bottle configuration, for which it was granted
Certificate of Trademark Registration No. SR-913 by the
Philippine Patent Office under the Supplemental
Register. 1 On November 20, 1972, Del Monte also
obtained two registration certificates for its trademark
"DEL MONTE" and its logo. 2

Respondent Sunshine Sauce Manufacturing Industries

was issued a Certificate of Registration by the Bureau of
Domestic Trade on April 17,1980, to engage in the
manufacture, packing, distribution and sale of various
kinds of sauce, identified by the logo Sunshine Fruit
Catsup.3

This logo was registered in the Supplemental Register

on September 20, 1983. 4

The product itself was contained in various kinds of

bottles, including the Del Monte bottle, which the private
respondent bought from the junk shops for recycling.

Having received reports that the private respondent was

using its exclusively designed bottles and a logo
confusingly similar to Del Monte's, Philpack warned it to
desist from doing so on pain of legal action. Thereafter,
claiming that the demand had been ignored, Philpack
and Del Monte filed a complaint against the private
respondent for infringement of trademark and unfair
G.R. No. L-78325               January 25, 1990 competition, with a prayer for damages and the issuance
of a writ of preliminary injunction. 5
DEL MONTE CORPORATION and PHILIPPINE
PACKING CORPORATION, petitioners, In its answer, Sunshine alleged that it had long ceased
vs. to use the Del Monte bottle and that its logo was
COURT OF APPEALS and SUNSHINE SAUCE substantially different from the Del Monte logo and would
MANUFACTURING INDUSTRIES, respondents. not confuse the buying public to the detriment of the
petitioners. 6
CRUZ, J.:
After trial, the Regional Trial Court of Makati dismissed
The petitioners are questioning the decision of the the complaint. It held that there were substantial
respondent court upholding the dismissal by the trial differences between the logos or trademarks of the
court of their complaint against the private respondent parties; that the defendant had ceased using the
for infringement of trademark and unfair competition. petitioners' bottles; and that in any case the defendant
became the owner of the said bottles upon its purchase
Petitioner Del Monte Corporation is a foreign company thereof from the junk yards. Furthermore, the
organized under the laws of the United States and not complainants had failed to establish the defendant's
engaged in business in the Philippines. Both the malice or bad faith, which was an essential element of
Philippines and the United States are signatories to the infringement of trademark or unfair competition. 7
Convention of Paris of September 27, 1965, which
grants to the nationals of the parties rights and This decision was affirmed in toto by the respondent
advantages which their own nationals enjoy for the court, which is now faulted in this petition
repression of acts of infringement and unfair competition. for certiorari under Rule 45 of the Rules of Court.
Section 22 of R.A. No. 166, otherwise known as the (b) Any person who by any artifice, or device, or who
Trademark Law, provides in part as follows: employs ally other means calculated to induce the false
belief that such person is offering the services of another
Sec. 22. Infringement, what constitutes. — Any person who has identified such services in the mind of the
who shall use, without the consent of the registrant, any public; or
reproduction, counterfeit, copy or colorable imitation of
any registered mark or trade-name in connection with (c) Any person who shall make any false statement in
the sale, offering for sale, or advertising of any goods, the course of trade or who shall commit any other act
business or services on or in connection with which such contrary to good faith of a nature calculated to discredit
use is likely to cause confusion or mistake or to deceive the goods, business or services of another.
purchasers or others as to the source or origin of such
goods or services or identity of such business; or To arrive at a proper resolution of this case, it is
reproduce, counterfeit copy or colorably imitate any such important to bear in mind the following distinctions
mark or trade name and apply such reproduction, between infringement of trademark and unfair
counterfeit copy or colorable imitation to labels, signs, competition.
prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in (1) Infringement of trademark is the unauthorized use of
connection with such goods, business or services, shall a trademark, whereas unfair competition is the passing
be liable to a civil action by the registrant for any or all of off of one's goods as those of another.
the remedies herein provided.
(2) In infringement of trademark fraudulent intent is
Sec. 29 of the same law states as follows: unnecessary whereas in unfair competition fraudulent
intent is essential.
Sec. 29.  Unfair competition, rights and remedies. — A
person who has identified in the mind of the public the (3) In infringement of trademark the prior registration of
goods he manufactures or deals in, his business or the trademark is a prerequisite to the action, whereas in
services from those of others, whether or not a mark or unfair competition registration is not necessary. 8
tradename is employed, has a property right in the
goodwill of the said goods, business or services so
identified, which will be protected in the same manner as In the challenged decision, the respondent court cited
other property rights. Such a person shall have the the following test laid down by this Court in a number of
remedies provided in section twenty- three, Chapter V cases:
hereof.
In determining whether two trademarks are confusingly
Any person who shall employ deception or any other similar, the two marks in their entirety as they appear in
means contrary to good faith by which he shall pass off the respective labels must be considered in relation to
the goods manufactured by him or in which he deals, or the goods to which they are attached; the discerning eye
his business, or services for those of the one having of the observer must focus not only on the predorninant
established such goodwill, or who shall commit any acts words but also on the other features appearing on both
calculated to produce said result, shall be guilty of unfair labels. 9
competition, and shall be subject to an action therefor.
and applying the same, held that there was no colorable
In particular, and without in any way limiting the scope of imitation of the petitioners' trademark and logo by the
unfair competition, the following shall be deemed guilty private respondent. The respondent court agreed with
of unfair competition: the findings of the trial court that:

(a) Any person, who in selling his goods shall give them In order to resolve the said issue, the Court now
the general appearance of goods of another attempts to make a comparison of the two products, to
manufacturer or dealer, either as to the goods wit:
themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or 1. As to the shape of label or make:
in any other feature of their appearance, which would
likely influence purchasers to believe that the goods Del Monte: Semi-rectangular with a crown or tomato
offered are those of a manufacturer or dealer other than shape design on top of the rectangle.
the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive Sunshine: Regular rectangle.
the public and defraud another of his legitimate trade, or
any subsequent vendor of such goods or any agent of
2. As to brand printed on label:
any vendor engaged in selling such goods with a like
purpose;
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup. to be confused by similar labels even if they do have
minute differences. The male shopper is worse as he
3. As to the words or lettering on label or mark: usually does not bother about such distinctions.

Del Monte: Clearly indicated words packed by Sysu The question is not whether the two articles are
International, Inc., Q.C., Philippines. distinguishable by their label when set side by side but
whether the general confusion made by the article upon
the eye of the casual purchaser who is unsuspicious and
Sunshine: Sunshine fruit catsup is clearly indicated
off his guard, is such as to likely result in his confounding
"made in the Philippines by Sunshine Sauce
it with the original. 11 As observed in several cases, the
Manufacturing Industries" No. 1 Del Monte Avenue,
general impression of the ordinary purchaser, buying
Malabon, Metro Manila.
under the normally prevalent conditions in trade and
giving the attention such purchasers usually give in
4. As to color of logo: buying that class of goods is the touchstone. 12

Del Monte: Combination of yellow and dark red, with It has been held that in making purchases, the consumer
words "Del Monte Quality" in white. must depend upon his recollection of the appearance of
the product which he intends to purchase. 13 The buyer
Sunshine: White, light green and light red, with words having in mind the mark/label of the respondent must
"Sunshine Brand" in yellow. rely upon his memory of the petitioner's mark. 14 Unlike
the judge who has ample time to minutely examine the
5. As to shape of logo: labels in question in the comfort of his sala, the ordinary
shopper does not enjoy the same opportunity.
Del Monte: In the shape of a tomato.
A number of courts have held that to determine whether
Sunshine: Entirely different in shape. a trademark has been infringed, we must consider the
mark as a whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a totality, not
6. As to label below the cap:
usually to any part of it. 15 The court therefore should be
guided by its first impression, 16 for a buyer acts quickly
Del Monte: Seal covering the cap down to the neck of and is governed by a casual glance, the value of which
the bottle, with picture of tomatoes with words "made may be dissipated as soon as the court assumes to
from real tomatoes." analyze carefully the respective features of the mark. 17

Sunshine: There is a label below the cap which says It has also been held that it is not the function of the
"Sunshine Brand." court in cases of infringement and unfair competition to
educate purchasers but rather to take their carelessness
7. As to the color of the products: for granted, and to be ever conscious of the fact that
marks need not be identical. A confusing similarity will
Del Monte: Darker red. justify the intervention of equity. 18 The judge must also
be aware of the fact that usually a defendant in cases of
Sunshine: Lighter than Del Monte. infringement does not normally copy but makes only
colorable changes. 19 Well has it been said that the most
successful form of copying is to employ enough points of
While the Court does recognize these distinctions, it similarity to confuse the public with enough points of
does not agree with the conclusion that there was no difference to confuse the courts. 20
infringement or unfair competition. It seems to us that the
lower courts have been so pre-occupied with the details
that they have not seen the total picture. We also note that the respondent court failed to take into
consideration several factors which should have affected
its conclusion, to wit: age, training and education of the
It has been correctly held that side-by-side comparison is usual purchaser, the nature and cost of the article,
not the final test of similarity. 10 Such comparison whether the article is bought for immediate consumption
requires a careful scrutiny to determine in what points and also the conditions under which it is usually
the labels of the products differ, as was done by the trial purchased . 21 Among these, what essentially determines
judge. The ordinary buyer does not usually make such the attitude of the purchaser, specifically his inclination to
scrutiny nor does he usually have the time to do so. The be cautious, is the cost of the goods. To be sure, a
average shopper is usually in a hurry and does not person who buys a box of candies will not exercise as
inspect every product on the shelf as if he were browsing much care as one who buys an expensive watch. As a
in a library. Where the housewife has to return home as general rule, an ordinary buyer does not exercise as
soon as possible to her baby or the working woman has much prudence in buying an article for which he pays a
to make quick purchases during her off hours, she is apt few centavos as he does in purchasing a more valuable
thing. 22 Expensive and valuable items are normally Registration in the Principal Register is constructive
bought only after deliberate, comparative and analytical notice of the registrant's claim of ownership, while
investigation. But mass products, low priced articles in registration in the Supplemental Register is merely proof
wide use, and matters of everyday purchase requiring of actual use of the trademark and notice that the
frequent replacement are bought by the casual registrant has used or appropriated it. It is not subject to
consumer without great care. 23 In this latter category is opposition although it may be cancelled after the
catsup. issuance. Corollarily, registration in the Principal
Register is a basis for an action for infringement while
At that, even if the labels were analyzed together it is not registration in the Supplemental Register is not.
difficult to see that the Sunshine label is a colorable
imitation of the Del Monte trademark. The predominant (3) In applications for registration in the Principal
colors used in the Del Monte label are green and red- Register, publication of the application is necessary. This
orange, the same with Sunshine. The word "catsup" in is not so in applications for registrations in the
both bottles is printed in white and the style of the Supplemental Register.
print/letter is the same. Although the logo of Sunshine is
not a tomato, the figure nevertheless approximates that It can be inferred from the foregoing that although Del
of a tomato. Monte has actual use of the bottle's configuration, the
petitioners cannot claim exclusive use thereof because it
As previously stated, the person who infringes a trade has not been registered in the Principal Register.
mark does not normally copy out but only makes However, we find that Sunshine, despite the many
colorable changes, employing enough points of similarity choices available to it and notwithstanding that the
to confuse the public with enough points of differences to caution "Del Monte Corporation, Not to be Refilled" was
confuse the courts. What is undeniable is the fact that embossed on the bottle, still opted to use the petitioners'
when a manufacturer prepares to package his product, bottle to market a product which Philpack also produces.
he has before him a boundless choice of words, This clearly shows the private respondent's bad faith and
phrases, colors and symbols sufficient to distinguish his its intention to capitalize on the latter's reputation and
product from the others. When as in this case, Sunshine goodwill and pass off its own product as that of Del
chose, without a reasonable explanation, to use the Monte.
same colors and letters as those used by Del Monte
though the field of its selection was so broad, the The Court observes that the reasons given by the
inevitable conclusion is that it was done deliberately to respondent court in resolving the case in favor of
deceive .24 Sunshine are untenable. First, it declared that the
registration of the Sunshine label belied the company's
It has been aptly observed that the ultimate ratio in malicious intent to imitate petitioner's product. Second, it
cases of grave doubt is the rule that as between a held that the Sunshine label was not improper because
newcomer who by the confusion has nothing to lose and the Bureau of Patent presumably considered other
everything to gain and one who by honest dealing has trademarks before approving it. Third, it cited the case
already achieved favor with the public, any doubt should of Shell Co. v. Insular Petroleum, 27 where this Court
be resolved against the newcomer inasmuch as the field declared that selling oil in containers of another with
from which he can select a desirable trademark to markings erased, without intent to deceive, was not
indicate the origin of his product is obviously a large unfair competition.
one. 25
Regarding the fact of registration, it is to be noted that
Coming now to the second issue, we find that the private the Sunshine label was registered not in the Principal
respondent is not guilty of infringement for having used Register but only in the Supplemental Register where
the Del Monte bottle. The reason is that the configuration the presumption of the validity of the trademark, the
of the said bottle was merely registered in the registrant's ownership of the mark and his right to its
Supplemental Register. In the case of Lorenzana v. exclusive use are all absent.
Macagba, 26 we declared that:
Anent the assumption that the Bureau of Patent had
(1) Registration in the Principal Register gives rise to a considered other existing patents, it is reiterated that
presumption of the validity of the registration, the since registration was only in the Supplemental Register,
registrant's ownership of the mark and his right to the this did not vest the registrant with the exclusive right to
exclusive use thereof. There is no such presumption in use the label nor did it give rise to the presumption of the
the registration in the Supplemental Register. validity of the registration.

(2) Registration in the Principal Register is limited to the On the argument that no unfair competition was
actual owner of the trademark and proceedings therein committed, the Shell Case is not on all fours with the
on the issue of ownership which may be contested case at bar because:
through opposition or interference proceedings or, after
registration, in a petition for cancellation.
(1) In Shell, the absence of intent to deceive was The complaining party, upon proper showing may also
supported by the fact that the respondent therein, before be granted injunction.1âwphi1
marketing its product, totally obliterated and erased the
brands/mark of the different companies stenciled on the Fortunately for the petitioners, they may still find some
containers thereof, except for a single isolated small comfort in Art. 2222 of the Civil Code, which
transaction. The respondent in the present case made provides:
no similar effort.
Art. 2222. The court may award nominal damages in
(2) In Shell, what was involved was a single isolated every obligation arising from any source enumerated in
transaction. Of the many drums used, there was only Art. 1157, or in every case where any property right has
one container where the Shell label was not erased, been invaded.
while in the case at hand, the respondent admitted that it
made use of several Del Monte bottles and without Accordingly, the Court can only award to the petitioners,
obliterating the embossed warning. as it hereby does award, nominal damages in the
amount of Pl,000.00.
(3) In Shell, the product of respondent was sold to
dealers, not to ultimate consumers. As a general rule, WHEREFORE, the petition is GRANTED. The decision
dealers are well acquainted with the manufacturer from of the Court of Appeals dated December 24, 1986 and
whom they make their purchases and since they are the Resolution dated April 27,1987, are REVERSED and
more experienced, they cannot be so easily deceived SET ASIDE and a new judgment is hereby rendered:
like the inexperienced public. There may well be
similarities and imitations which deceive all, but generally
the interests of the dealers are not regarded with the (1) Canceling the private respondent's Certificate of
same solicitude as are the interests of the ordinary Register No. SR-6310 and permanently enjoining the
consumer. For it is the form in which the wares come to private respondent from using a label similar to that of
the final buyer that is of significance. 28 the petitioners.

As Sunshine's label is an infringement of the Del Monte's (2) Prohibiting the private respondent from using the
trademark, law and equity call for the cancellation of the empty bottles of the petitioners as containers for its own
private respondent's registration and withdrawal of all its products.
products bearing the questioned label from the market.
With regard to the use of Del Monte's bottle, the same (3) Ordering the private respondent to pay the petitioners
constitutes unfair competition; hence, the respondent nominal damages in the amount of Pl,000.00, and the
should be permanently enjoined from the use of such costs of the suit.
bottles.
SO ORDERED.
The court must rule, however, that the damage prayed
for cannot be granted because the petitioner has not
presented evidence to prove the amount thereof. Section
23 of R.A. No. 166 provides:

Sec. 23. Actions and damages and injunction for

infringement. — Any 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, and the measure of the damages suffered
shall be either the reasonable profit which the
complaining party would have made, had the defendant
not infringed his said rights or the profit which the
defendant actually made out of the infringement, or in
the event such measure of damages cannot be readily
ascertained with reasonable certainty the court may
award as damages reasonable percentage based upon
the amount of gross sales of the defendant or the value
of the services in connection with which the mark or
trade name was used in the infringement of the rights of
the complaining party. In cases where actual intent to
mislead the public or to defraud the complaining party
shall be shown, in the discretion of the court, the
damages may be doubled.
 respondents, of hoarding empty Coke bottles in bad faith
to discredit its business and to sabotage its operation in
Bicolandia.

BACKGROUND

The facts, as culled from the records, are summarized

below.

On July 2, 2001, Coca-Cola applied for a search warrant

against Pepsi for hoarding Coke empty bottles in Pepsi's
yard in Concepcion Grande, Naga City, an act allegedly
penalized as unfair competition under the IP Code.
Coca-Cola claimed that the bottles must be confiscated
to preclude their illegal use, destruction or concealment
by the respondents.1 In support of the application, Coca-
Cola submitted the sworn statements of three witnesses:
Naga plant representative Arnel John Ponce said he was
informed that one of their plant security guards had
gained access into the Pepsi compound and had seen
empty Coke bottles; acting plant security officer Ylano A.
Regaspi said he investigated reports that Pepsi was
hoarding large quantities of Coke bottles by requesting
their security guard to enter the Pepsi plant and he was
informed by the security guard that Pepsi hoarded
several Coke bottles; security guard Edwin Lirio stated
that he entered Pepsi's yard on July 2, 2001 at 4 p.m.
and saw empty Coke bottles inside Pepsi shells or
cases.2

Municipal Trial Court (MTC) Executive Judge Julian C.

Ocampo of Naga City, after taking the joint deposition of
the witnesses, issued Search Warrant No. 2001-013 to
seize 2,500 Litro and 3,000 eight and 12 ounces empty
Coke bottles at Pepsi's Naga yard for violation of Section
168.3 (c) of the IP Code.4 The local police seized and
brought to the MTC's custody 2,464 Litro and 4,036 eight
and 12 ounces empty Coke bottles, 205 Pepsi shells for
Litro, and 168 Pepsi shells for smaller (eight and 12
G.R. No. 154491             November 14, 2008 ounces) empty Coke bottles, and later filed with the
Office of the City Prosecutor of Naga a complaint against
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga two Pepsi officers for violation of Section 168.3 (c) in
Plant, petitioner, relation to Section 170 of the IP Code.5 The named
vs. respondents, also the respondents in this petition, were
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO Pepsi regional sales manager Danilo E.
E. GALICIA, a.k.a. "DANNY GALICIA", respondents. Galicia (Galicia) and its Naga general manager Quintin
J. Gomez, Jr. (Gomez).
DECISION
In their counter-affidavits, Galicia and Gomez claimed
that the bottles came from various Pepsi retailers and
BRION, J.:
wholesalers who included them in their return to make
up for shortages of empty Pepsi bottles; they had no way
Is the hoarding of a competitor's product containers of ascertaining beforehand the return of empty Coke
punishable as unfair competition under the Intellectual bottles as they simply received what had been delivered;
Property Code (IP Code, Republic Act No. 8293) that the presence of the bottles in their yard was not
would entitle the aggrieved party to a search warrant intentional nor deliberate; Ponce and Regaspi's
against the hoarder? This is the issue we grapple with in statements are hearsay as they had no personal
this petition for review on certiorari involving two rival knowledge of the alleged crime; there is no mention in
multinational softdrink giants; petitioner Coca-Cola the IP Code of the crime of possession of empty bottles;
Bottlers, Phils., Inc. (Coca-Cola) accuses Pepsi Cola and that the ambiguity of the law, which has a penal
Products Phils., Inc. (Pepsi), represented by the nature, must be construed strictly against the State and
liberally in their favor. Pepsi security guards Eduardo E. though, found no grave abuse of discretion on the part of
Miral and Rene Acebuche executed a joint affidavit the issuing MTC judge.8 Thus,
stating that per their logbook, Lirio did not visit or enter
the plant premises in the afternoon of July 2, 2001. Accordingly, as prayed for, Search Warrant No. 2001-02
issued by the Honorable Judge Julian C. Ocampo III on
The respondents also filed motions for the return of their July 2, 2001 is ANNULLED and SET ASIDE. The Orders
shells and to quash the search warrant. They contended issued by the Pairing Judge of Br. 1, MTCC of Naga City
that no probable cause existed to justify the issuance of dated September 19, 2001 and November 14, 2001 are
the search warrant; the facts charged do not constitute also declared VOID and SET ASIDE. The City
an offense; and their Naga plant was in urgent need of Prosecutor of Naga City and SPO1 Ernesto Paredes are
the shells. directed to return to the Petitioner the properties seized
by virtue of Search Warrant No. 2001-02. No costs.
Coca-Cola opposed the motions as the shells were part
of the evidence of the crime, arguing that Pepsi used the SO ORDERED.9
shells in hoarding the bottles. It insisted that the
issuance of warrant was based on probable cause for In a motion for reconsideration, which the RTC denied
unfair competition under the IP Code, and that the on July 12, 2002, the petitioner stressed that the
respondents violated R.A. 623, the law regulating the decision of the RTC was contradictory because it
use of stamped or marked bottles, boxes, and other absolved Judge Ocampo of grave abuse of discretion in
similar containers. issuing the search warrant, but at the same time nullified
the issued warrant. The MTC should have dismissed the
THE MTC RULINGS petition when it found out that Judge Ocampo did not
commit any grave abuse of discretion.
On September 19, 2001, the MTC issued the first
assailed order6 denying the twin motions. It explained Bypassing the Court of Appeals, the petitioner asks us
there was an exhaustive examination of the applicant through this petition for review on certiorari under Rule
and its witnesses through searching questions and that 45 of the Rules of Court to reverse the decision of the
the Pepsi shells are prima facie evidence that the bottles RTC. Essentially, the petition raises questions against
were placed there by the respondents. the RTC's nullification of the warrant when it found no
grave abuse of discretion committed by the issuing
In their motion for reconsideration, the respondents judge.
argued for the quashal of the warrant as the MTC did not
conduct a probing and exhaustive examination; the THE PETITION and
applicant and its witnesses had no personal knowledge THE PARTIES' POSITIONS
of facts surrounding the hoarding; the court failed to
order the return of the "borrowed" shells; there was no In its petition, the petitioner insists the RTC should have
crime involved; the warrant was issued based on dismissed the respondents' petition for certiorari
hearsay evidence; and the seizure of the shells was because it found no grave abuse of discretion by the
illegal because they were not included in the warrant. MTC in issuing the search warrant. The petitioner further
argues that the IP Code was enacted into law to remedy
On November 14, 2001, the MTC denied the motion for various forms of unfair competition accompanying
reconsideration in the second assailed order,7 explaining globalization as well as to replace the inutile provision of
that the issue of whether there was unfair competition unfair competition under Article 189 of the Revised Penal
can only be resolved during trial. Code. Section 168.3(c) of the IP Code does not limit the
scope of protection on the particular acts enumerated as
The respondents responded by filing a petition for it expands the meaning of unfair competition to include
certiorari under Rule 65 of the Revised Rules of Court "other acts contrary to good faith of a nature calculated
before the Regional Trial Court (RTC) of Naga City on to discredit the goods, business or services of another."
the ground that the subject search warrant was issued The inherent element of unfair competition is fraud or
without probable cause and that the empty shells were deceit, and that hoarding of large quantities of a
neither mentioned in the warrant nor the objects of the competitor's empty bottles is necessarily characterized
perceived crime. by bad faith. It claims that its Bicol bottling operation was
prejudiced by the respondents' hoarding and destruction
of its empty bottles.
THE RTC RULINGS

The petitioner also argues that the quashal of the search

On May 8, 2002, the RTC voided the warrant for lack of
warrant was improper because it complied with all the
probable cause and the non-commission of the crime of
essential requisites of a valid warrant. The empty bottles
unfair competition, even as it implied that other laws may
were concealed in Pepsi shells to prevent discovery
have been violated by the respondents. The RTC,
while they were systematically being destroyed to
hamper the petitioner's bottling operation and to
undermine the capability of its bottling operations in the place to be searched and the things to be seized
Bicol. which may be anywhere in the Philippines.

The respondents counter-argue that although Judge Section 5. Examination of complainant; record. - The
Ocampo conducted his own examination, he gravely judge must, before issuing the warrant, personally
erred and abused his discretion when he ignored the rule examine in the form of searching questions and
on the need of sufficient evidence to establish probable answers, in writing and under oath, the complainant
cause; satisfactory and convincing evidence is essential and the witnesses he may produce on facts personally
to hold them guilty of unfair competition; the hoarding of known to them and attach to the record their sworn
empty Coke bottles did not cause actual or probable statements together with the affidavits submitted.
deception and confusion on the part of the general
public; the alleged criminal acts do not show conduct Section 6. Issuance and form of search warrant. - If the
aimed at deceiving the public; there was no attempt to judge is satisfied of the existence of facts upon which the
use the empty bottles or pass them off as the application is based or that there is probable cause to
respondents' goods. believe that they exist, he shall issue the warrant, which
must be substantially in the form prescribed by these
The respondents also argue that the IP Code does not Rules. [Emphasis supplied]
criminalize bottle hoarding, as the acts penalized must
always involve fraud and deceit. The hoarding does not To paraphrase this rule, a search warrant may be
make them liable for unfair competition as there was no issued only if there is probable cause in connection with
deception or fraud on the end-users. a specific offense alleged in an application based on the
personal knowledge of the applicant and his or her
THE ISSUE witnesses. This is the substantive requirement in the
issuance of a search warrant. Procedurally, the
Based on the parties' positions, the basic issue determination of probable cause is a personal task of the
submitted to us for resolution is whether the Naga MTC judge before whom the application for search warrant is
was correct in issuing Search Warrant No. 2001-01 for filed, as he has to examine under oath or affirmation the
the seizure of the empty Coke bottles from Pepsi's yard applicant and his or her witnesses in the form of
for probable violation of Section 168.3 (c) of the IP Code. "searching questions and answers" in writing and under
This basic issue involves two sub-issues, namely, the oath. The warrant, if issued, must particularly describe
substantive issue of whether the application for search the place to be searched and the things to be seized.
warrant effectively charged an offense, i.e., a violation of
Section 168.3 (c) of the IP Code; and the procedural We paraphrase these requirements to stress that they
issue of whether the MTC observed the procedures have substantive and procedural aspects. Apparently,
required by the Rules of Court in the issuance of search the RTC recognized this dual nature of the requirements
warrants. and, hence, treated them separately; it approved of the
way the MTC handled the procedural aspects of the
OUR RULING issuance of the search warrant but found its action on
the substantive aspect wanting. It therefore resolved to
nullify the warrant, without however expressly declaring
We resolve to deny the petition for lack of merit.
that the MTC gravely abused its discretion when it
issued the warrant applied for. The RTC's error,
We clarify at the outset that while we agree with the RTC however, is in the form rather than the substance of the
decision, our agreement is more in the result than in the decision as the nullification of the issued warrant for the
reasons that supported it. The decision is correct in reason the RTC gave was equivalent to the declaration
nullifying the search warrant because it was issued on that grave abuse of discretion was committed. In fact, we
an invalid substantive basis - the acts imputed on the so rule as the discussions below will show.
respondents do not violate Section 168.3 (c) of the IP
Code. For this reason, we deny the present petition.
Jurisprudence teaches us that probable cause, as a
condition for the issuance of a search warrant, is such
The issuance of a search warrant10 against a personal reasons supported by facts and circumstances as will
property11 is governed by Rule 126 of the Revised Rules warrant a cautious man in the belief that his action and
of Court whose relevant sections state: the means taken in prosecuting it are legally just and
proper. Probable cause requires facts and
Section 4. Requisites for issuing search warrant. - A circumstances that would lead a reasonably prudent
search warrant shall not issue except upon probable man to believe that an offense has been committed and
cause in connection with one specific offense to be the objects sought in connection with that offense are in
determined personally by the judge after examination the place to be searched.12 Implicit in this statement is
under oath or affirmation of the complainant and the the recognition that an underlying offense must, in the
witnesses he may produce, and particularly describing first place, exist. In other words, the acts alleged, taken
together, must constitute an offense and that these acts
are imputable to an offender in relation with whom a 168.4. The remedies provided by Sections 156, 157 and
search warrant is applied for. 161 shall apply mutatis mutandis. (Sec. 29,R.A. No.
166a)
In the context of the present case, the question is
whether the act charged - alleged to be hoarding of The petitioner theorizes that the above section does not
empty Coke bottles - constitutes an offense under limit the scope of protection on the particular acts
Section 168.3 (c) of the IP Code. Section 168 in its enumerated as it expands the meaning of unfair
entirety states: competition to include "other acts contrary to good faith
of a nature calculated to discredit the goods, business or
SECTION 168. Unfair Competition, Rights, Regulation services of another." Allegedly, the respondents'
and Remedies. - hoarding of Coca Cola empty bottles is one such act.

168.1. A person who has identified in the mind of the We do not agree with the petitioner's expansive
public the goods he manufactures or deals in, his interpretation of Section 168.3 (c).
business or services from those of others, whether or not
a registered mark is employed, has a property right in "Unfair competition," previously defined in Philippine
the goodwill of the said goods, business or services so jurisprudence in relation with R.A. No. 166 and Articles
identified, which will be protected in the same manner as 188 and 189 of the Revised Penal Code, is now covered
other property rights. by Section 168 of the IP Code as this Code has
expressly repealed R.A. No. 165 and R.A. No. 166, and
168.2. Any person who shall employ deception or any Articles 188 and 189 of the Revised Penal Code.
other means contrary to good faith by which he shall
pass off the goods manufactured by him or in which he Articles 168.1 and 168.2, as quoted above, provide the
deals, or his business, or services for those of the one concept and general rule on the definition of unfair
having established such goodwill, or who shall commit competition. The law does not thereby cover every unfair
any acts calculated to produce said result, shall be guilty act committed in the course of business; it covers only
of unfair competition, and shall be subject to an action acts characterized by "deception or any other means
therefor. contrary to good faith" in the passing off of goods and
services as those of another who has established
168.3. In particular, and without in any way limiting the goodwill in relation with these goods or services, or any
scope of protection against unfair competition, the other act calculated to produce the same result.
following shall be deemed guilty of unfair competition:
What unfair competition is, is further particularized under
(a) Any person, who is selling his goods and gives them Section 168.3 when it provides specifics of what unfair
the general appearance of goods of another competition is "without in any way limiting the scope of
manufacturer or dealer, either as to the goods protection against unfair competition." Part of these
themselves or in the wrapping of the packages in which particulars is provided under Section 168.3(c) which
they are contained, or the devices or words thereon, or provides the general "catch-all" phrase that the petitioner
in any other feature of their appearance, which would be cites. Under this phrase, a person shall be guilty of unfair
likely to influence purchasers to believe that the goods competition "who shall commit any other act contrary to
offered are those of a manufacturer or dealer, other than good faith of a nature calculated to discredit the goods,
the actual manufacturer or dealer, or who otherwise business or services of another."
clothes the goods with such appearance as shall deceive
the public and defraud another of his legitimate trade, or From jurisprudence, unfair competition has been defined
any subsequent vendor of such goods or any agent of as the passing off (or palming off) or attempting to pass
any vendor engaged in selling such goods with a like off upon the public the goods or business of one person
purpose; as the goods or business of another with the end and
probable effect of deceiving the public. It formulated the
(b) Any person who by any artifice, or device, or who "true test" of unfair competition: whether the acts of
employs any other means calculated to induce the false defendant are such as are calculated to deceive the
belief that such person is offering the services of another ordinary buyer making his purchases under the ordinary
who has identified such services in the mind of the conditions which prevail in the particular trade to which
public; or the controversy relates.13 One of the essential requisites
in an action to restrain unfair competition is proof of
fraud; the intent to deceive must be shown before the
(c) Any person who shall make any false statement in
right to recover can exist.14 The advent of the IP Code
the course of trade or who shall commit any other act
has not significantly changed these rulings as they are
contrary to good faith of a nature calculated to discredit
fully in accord with what Section 168 of the Code in its
the goods, business or services of another.
entirety provides. Deception, passing off and fraud upon
the public are still the key elements that must be present
for unfair competition to exist.
The act alleged to violate the petitioner's rights under Given the IP Code's specific focus, a first test that should
Section 168.3 (c) is hoarding which we gather to be the be made when a question arises on whether a matter is
collection of the petitioner's empty bottles so that they covered by the Code is to ask if it refers to an intellectual
can be withdrawn from circulation and thus impede the property as defined in the Code. If it does not, then
circulation of the petitioner's bottled products. This, coverage by the Code may be negated.
according to the petitioner, is an act contrary to good
faith - a conclusion that, if true, is indeed an unfair act on A second test, if a disputed matter does not expressly
the part of the respondents. The critical question, refer to an intellectual property right as defined above, is
however, is not the intrinsic unfairness of the act of whether it falls under the general "unfair competition"
hoarding; what is critical for purposes of Section 168.3 concept and definition under Sections 168.1 and 168.2
(c) is to determine if the hoarding, as charged, "is of a of the Code. The question then is whether there is
nature calculated to discredit the goods, business or "deception" or any other similar act in "passing off" of
services" of the petitioner. goods or services to be those of another who enjoys
established goodwill.
We hold that it is not. Hoarding as defined by the
petitioner is not even an act within the contemplation of Separately from these tests is the application of the
the IP Code. principles of statutory construction giving particular
attention, not so much to the focus of the IP Code
The petitioner's cited basis is a provision of the IP Code, generally, but to the terms of Section 168 in particular.
a set of rules that refer to a very specific subject - Under the principle of "noscitur a sociis," when a
intellectual property. Aside from the IP Code's actual particular word or phrase is ambiguous in itself or is
substantive contents (which relate specifically to patents, equally susceptible of various meanings, its correct
licensing, trademarks, trade names, service marks, construction may be made clear and specific by
copyrights, and the protection and infringement of the considering the company of words in which it is found or
intellectual properties that these protective measures with which it is associated.15
embody), the coverage and intent of the Code is
expressly reflected in its "Declaration of State Policy" As basis for this interpretative analysis, we note
which states: that Section 168.1 speaks of a person who has earned
goodwill with respect to his goods and services and who
Section 2. Declaration of State Policy. - The State is entitled to protection under the Code, with or without a
recognizes that an effective intellectual and industrial registered mark. Section 168.2, as previously
property system is vital to the development of domestic discussed, refers to the general definition of unfair
and creative activity, facilitates transfer of technology, competition. Section 168.3, on the other hand, refers to
attracts foreign investments, and ensures market access the specific instances of unfair competition, with Section
for our products. It shall protect and secure the exclusive 168.1 referring to the sale of goods given the
rights of scientists, inventors, artists and other gifted appearance of the goods of another; Section 168.2, to
citizens to their intellectual property and creations, the inducement of belief that his or her goods or services
particularly when beneficial to the people, for such are that of another who has earned goodwill; while the
periods as provided in this Act. disputed Section 168.3 being a "catch all" clause whose
coverage the parties now dispute.
The use of intellectual property bears a social function.
To this end, the State shall promote the diffusion of Under all the above approaches, we conclude that the
knowledge and information for the promotion of national "hoarding" - as defined and charged by the petitioner -
development and progress and the common good. does not fall within the coverage of the IP Code and of
Section 168 in particular. It does not relate to any patent,
It is also the policy of the State to streamline trademark, trade name or service mark that the
administrative procedures of registering patents, respondents have invaded, intruded into or used without
trademarks and copyright, to liberalize the registration on proper authority from the petitioner. Nor are the
the transfer of technology, and to enhance the respondents alleged to be fraudulently "passing off" their
enforcement of intellectual property rights in the products or services as those of the petitioner. The
Philippines. (n) respondents are not also alleged to be undertaking any
representation or misrepresentation that would confuse
or tend to confuse the goods of the petitioner with those
"Intellectual property rights" have furthermore been
of the respondents, or vice versa. What in fact the
defined under Section 4 of the Code to consist of: a)
petitioner alleges is an act foreign to the Code, to the
Copyright and Related Rights; b) Trademarks and
concepts it embodies and to the acts it regulates; as
Service Marks; c) Geographic Indications; d)
alleged, hoarding inflicts unfairness by seeking to limit
IndustrialDesigns; e) Patents; f) Layout-Designs
the opposition's sales by depriving it of the bottles it can
(Topographies) of Integrated Circuits; and g)Protection
use for these sales.
of Undisclosed Information.
In this light, hoarding for purposes of destruction is lack of probable cause to support the disputed search
closer to what another law - R.A. No. 623 - covers, to wit: warrant at once becomes apparent.

SECTION 1. Persons engaged or licensed to engage in Where, as in this case, the imputed acts do not violate
the manufacture, bottling or selling of soda water, the cited offense, the ruling of this Court penned by Mr.
mineral or aerated waters, cider, milk, cream, or other Justice Bellosillo is particularly instructive:
lawful beverages in bottles, boxes, casks, kegs, or
barrels, and other similar containers, with their names or In the issuance of search warrants, the Rules of Court
the names of their principals or products, or other marks requires a finding of probable cause in connection
of ownership stamped or marked thereon, may register with one specific offense to be determined personally by
with the Philippine Patent Office a description of the the judge after examination of the complainant and the
names or are used by them, under the same conditions, witnesses he may produce, and particularly describing
rules, and regulations, made applicable by law or the place to be searched and the things to be seized.
regulation to the issuance of trademarks. Hence, since there is no crime to speak of, the
search warrant does not even begin to fulfill these
SECTION 2. It shall be unlawful for any person, without stringent requirements and is therefore defective on
the written consent of the manufacturer, bottler or seller its face. The nullity of the warrant renders moot and
who has successfully registered the marks of ownership academic the other issues raised in petitioners' Motion to
in accordance with the provisions of the next preceding Quash and Motion for Reconsideration. Since the
section, to fill such bottles, boxes, kegs, barrels, or assailed search warrant is null and void, all property
other similar containers so marked or stamped, for seized by virtue thereof should be returned to petitioners
the purpose of sale, or to sell, dispose of, buy, or in accordance with established jurisprudence.16
traffic in, or wantonly destroy the same, whether
filled or not, or to use the same for drinking vessels Based on the foregoing, we conclude that the RTC
or glasses or for any other purpose than that correctly ruled that the petitioner's search warrant should
registered by the manufacturer, bottler or seller. Any properly be quashed for the petitioner's failure to show
violation of this section shall be punished by a fine or not that the acts imputed to the respondents do not violate
more than one hundred pesos or imprisonment of not the cited offense. There could not have been any
more than thirty days or both. probable cause to support the issuance of a search
warrant because no crime in the first place was
As its coverage is defined under Section 1, the Act effectively charged. This conclusion renders
appears to be a measure that may overlap or be affected unnecessary any further discussion on whether the
by the provisions of Part II of the IP Code on "The Law search warrant application properly alleged that the
on Trademarks, Service Marks and Trade Names." What imputed act of holding Coke empties was in fact a
is certain is that the IP Code has not expressly repealed "hoarding" in bad faith aimed to prejudice the petitioner's
this Act. The Act appears, too, to have specific reference operations, or whether the MTC duly complied with the
to a special type of registrants - the manufacturers, procedural requirements for the issuance of a search
bottlers or sellers of soda water, mineral or aerated warrant under Rule 126 of the Rules of Court.
waters, cider, milk, cream, or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar WHEREFORE, we hereby DENY the petition for lack of
containers - who are given special protection with merit. Accordingly, we confirm that Search Warrant No.
respect to the containers they use. In this sense, it is in 2001-01, issued by the Municipal Trial Court, Branch 1,
fact a law of specific coverage and application, Naga City, is NULL and VOID. Costs against the
compared with the general terms and application of the petitioner.
IP Code. Thus, under its Section 2, it speaks specifically
of unlawful use of containers and even of the SO ORDERED.
unlawfulness of their wanton destruction - a matter that
escapes the IP Code's generalities unless linked with the
concepts of "deception" and "passing off" as discussed
above.

Unfortunately, the Act is not the law in issue in the

present case and one that the parties did not consider at
all in the search warrant application. The petitioner in
fact could not have cited it in its search warrant
application since the "one specific offense" that the law
allows and which the petitioner used was Section 168.3
(c). If it serves any purpose at all in our discussions, it is
to show that the underlying factual situation of the
present case is in fact covered by another law, not by the
IP Code that the petitioner cites. Viewed in this light, the
 CO., INC. AND HON. PEDRO C.
NAVARRO, respondents.

GUERRERO, J.:

This petition for review concerns a "subpoena duces

tecum which was issued by the trial court against the
treasurer of the herein petitioner, the propriety of which
was upheld by the defunct Court of Appeals (now
Intermediate Appellate Court).

The facts of this case as stated in the decision of the

then Court of Appeals are as follows:

Records disclose that the two respondent corporations

herein sued the present petitioner before the Court of
First Instance of Rizal for unfair competition with
damages and attorney's fees. In due time herein
petitioner, who was the defendant in that court suit,
answered the complaint and joined issues with the
plaintiffs therein, forthwith respondent Judge, to whom
that lawsuit was assigned, proceeded with the trial
thereof.

After they have presented about nine witnesses and

various pieces of documentary evidence, herein private
respondents made a request to the respondent Judge to
issue a subpoena duces tecum against the treasurer of
herein petitioner. Acting favorably on that request, said
respondent Judge issued a subpoena duces tecum on
February 13, 1968, directing the treasurer of the present
petitioner to bring with him to the lower court on
February 26, 1968 and March 8, 1968 at 2:30 p.m. "all
sales invoices, sales books and ledgers wherein are
recorded the sales of Plymouth Star Player rubber shoes
from the time the corporation started manufacturing and
selling said shoes up to the present.

On March 4, 1968, petitioner filed a motion in the court

below praying that the subpoena duces tecum dated
February 13, 1968 be quashed on the grounds that: (1)
the said subpoena is both Unreasonable and oppressive
as the books and documents caned for are numerous
and voluminous; (2) there is no good cause shown for
the issuance thereof; and (3) the books and documents
are not relevant to the case pending below. The private
respondents herein opposed that motion of the
petitioner. Acting on the said motion and on the
opposition thereto, respondent Judge issued the first
controverted order on May 6, 1968, denying the motion
to quash the subpoena duces tecum.

On May 15, 1968, herein petitioner filed in the court a

quo a motion for reconsideration seeking the said court
G.R. No. L-30266 June 29, 1984 to reconsider its order denying the motion to quash the
subpoena duces tecum. This, too, was opposed by the
UNIVERSAL RUBBER PRODUCTS, INC., petitioner, private respondents. Acting on this motion, as well as on
vs. the opposition thereto, respondent Judge. issued the
HON. COURT OF APPEALS, CONVERSE RUBBER second controverted order on June 28, 1968, denying
CORPORARION, EDWARDSON MANUFACTURING the motion for reconsideration.
Consequently, on August 6, 1968, petitioner Universal corporation started manufacturing and selling shoes (that
Rubber Products, Inc. filed its present petition for is from April 1, 1963) up to the present; and (2) the
certiorari with preliminary injunction, alleging that in so relevancy of the books subject to the controverted
denying its motion to quash the subpoena duces subpoena duces tecum cannot be seriously denied,
tecum and its subsequent motion for reconsideration, because if and when herein respondent corporations are
respondent Judge acted with grave abuse of discretion ultimately adjudged to be entitled to recover
amounting to an excess of jurisdiction.1 compensatory damages from the petitioner, there would
be no factual basis for the amount of such damages
Pending the resolution of the appealed case, the Court unless those books and documents are laid open for the
of Appeals issued on September 25, 1968 a temporary court's scrutiny.
restraining order directing the respondent Judge of the
trial court to refrain from implementing his order dated On the other hand, petitioner submits a contrary opinion
May 6, 1968 in Civil Case No. 9686. 2 and insists that the question of liability of petitioner
should be determined first before discovery by means of
On November 12, 1968, the respondent Court rendered a subpoena duces tecum is allowed: that respondent
its decision denying the petition for certiorari filed by Converse is a foreign corporation not licensed to do
petitioner for lack of merit. The dispositive portion of the business in the Philippines and that Edwardson is merely
said decision reads: 3 its licensee that respondent Converse has no goodwill to
speak of and that it has no registrable right over its own
names; that the questioned subpoena duces
WHEREFORE, for lack of merit, the present petition for
tecum issued by respondent judge was merely a
certiorari with preliminary injunction is hereby denied and
"Fishing Bill."
the temporary restraining order issued by this Court on
September 25, 1968 is now lifted, with costs against the
petitioner. In the meantime, while this present petition remains
pending before this Court, petitioner manifested on April
2, 1977 5 that their establishment was totally burned
SO ORDERED.
together with all the records which is sought to be
produced in court by the questioned "subpoena duces
Petitioner argues three errors to support his petition, to tecum" on May 3, 1970. In effect, it renders the present
wit: 4 petition moot and academic. However, the legal
principles arising from the issues deserve Our discussion
I and resolution.

The respondent court erred when it found the fact of the As a general rule, on obtaining an injunction for
petition and its annexes as not demonstrating clear infringement of a trademark, complainant is entitled to an
abuse of discretion by respondent Judge. accounting and recovery of defendant's profits on the
goods sold under that mark, as incident to, and a part of,
II his property right, and this rule applies in cases of unfair
competition. In such case, the infringer or unfair trader is
The respondent court erred when it refused to sustain required in equity to account for and yield up his gains
the contention of petitioner that the issuance by the on a principle analogous to that which charges as trustee
respondent judge of the subpoena duces tecum was an with the profits acquired by the wrongful use of the
arbitrary exercise of judicial power. property of the cestuique trust, and defendant's profits
are regarded as an equitable measure of the
compensation plaintiff should receive for the past harm
III
suffered by him. 6

The respondent court erred when it did not consider the

Well-settled is Our jurisprudence that, in order to entitle a
subpoena duces tecum issued by the respondent judge
party to the issuance of a "subpoena  duces tecum ", it
as a fishing bill when it refused to order its quashal.
must appear, by clear and unequivocal proof, that the
book or document sought to be produced contains
The issues summarized, We are called upon to answer evidence relevant and material to the issue before the
whether the issuance of the "subpoena duces tecum" is court, and that the precise book, paper or document
proper in a suit for unfair competition. containing such evidence has been so designated or
described that it may be identified. 7 A "subpoena duces
Private respondent claims the affirmative because (1) tecum once issued by the court may be quashed upon
the subpoena duces tecum in question specifically motion if the issuance thereof is unreasonable and
designates the books and documents that should be oppressive or the relevancy of the books, documents or
produced in court and they are 4 sales invoices, sales things does not appear, or if the persons in whose behalf
books and ledgers where are recorded the sales of the subpoena is issued fails to advance the reasonable
Plymouth Star Player Rubber Shoes from the time the cost of production thereof. 8
In the instant case, in determining whether the books "injunction and damages". 10 Injunction, for the purpose
subject to the subpoena duces tecum are relevant and of enjoining the unlawful competitor from proceeding
reasonable in relation to the complaint of private further with the unlawful competition, and damages, in
respondent for unfair competition, We have to examine order to allow the aggrieved party to recover the damage
Republic Act No. 166,' which provides: he has suffered by virtue of the said unlawful
competition. Hence, the election of the complainant
CHAPTER V.—Rights and Remedies (private respondent herein) for the accounting of
petitioner's (defendant below) gross sales as damages
per R.A. 166, appears most relevant. For Us, to
xxx xxx xxx
determine the amount of damages allowable after the
final determination of the unfair labor case would not
Sec. 23. Actions, and damages and injunction for only render nugatory the rights of complainant under
infringement. — Any person entitled to the exclusive use Sec. 23 of R.A. 166, but would be a repetitious process
of a registered mark or trade name may recover causing only unnecessary delay.
damages in a civil action from any person who infringes
his rights and the measure of the damages suffered
The sufficiency in the description of the books sought to
shag be either the reasonable profit which the
be produced in court by the questioned "subpoena
complaining party would have made, had the defendant
duces tecum is not disputed in this case, hence, We hold
not infringed his said rights, or the profit which the
that the same has passed the test of sufficient
defendant actually made out of the infringment
description.
management, or in the event such measure of damages
cannot be readily ascertained with reasonable certainty,
their the court may award as damages a reasonable Petitioner also assails that private respondent is a
percentage based upon the amount of gross sales of the foreign corporation not licensed to do business in the
defendant of the value of the services in connection with Philippines and that respondent Edwardson is merely its
which the mark or trade name was used in the licensee; that respondent Converse has no goodwill to
infringement of the rights of the complaining party. In speak of and that it has no registrable right over its own
cases where actual intent to mislead the public or to name. We have already answered this issue squarely in
defraud the complaining party shall be shown in the Our decision of the case of Converse Rubber
discretion of the court, the damages may be doubled. Corporation vs. Jacinto Rubber & Plastic Co.,
Inc., 11 where We explained:
The complaining party, upon proper showing may also
be granted injunction. The disability of a foreign corporation from suing in the
Philippines is limited to suits to enforce any legal of
contract rights arising from, or growing out, of any
In recovering the loss suffered by the aggrieved party
business which it has transacted in the Philippine Islands
due to unfair competition," Sec. 23 of R.A. 166 grants
... On the other hand, where the purpose of the suit is "to
the complainant three options within which to ascertain
protect its reputation, its corporate name, its goodwill,
the amount of damages recoverable, either (1) the
whenever that reputation, corporate name or goodwill
reasonable profit which the complaining party would
have, through the natural development of its trade,
have made, had the defendant not infringed his said
established themselves", an unlicensed foreign
rights; or (2) the profit which the defendant actually made
corporation may sue in the Philippines. So interpreted by
out of the infringement; or (3) the court may award as
the Supreme Court, it is clear that Section 29 of the
damages a reasonable percentage based upon the
Corporation Law does not disqualify plaintiff-appellee
amount of gross sales of the defendant of the value of
Converse Rubber, which does not have a branch office
the services in connection with which the mark or
in any part of the Philippines and is not "doing business"
tradename was issued in the infringement of the rights of
in the Philippines, from filing and prosecuting this action
the complaining party.
for unfair competition.
In giving life to this remedial statute, We must uphold the
As We said earlier, the establishment of the petitioner
order of the court a quo  denying the motion. of the
burned down together with all the records sought to be
petitioner to quash the "subpoena
produced by the questioned "subpoena duces tecum,"
duces tecum" previously issued against the petitioner. In
hence this case has become moot and academic. We
a suit for unfair competition, it is only through the
have no recourse but to dismiss the same.
issuance of the questioned "subpoena duces tecum  "
that the complaining party is afforded his full rights of
redress. WHEREFORE, the instant petition is DISMISSED for
becoming moot and academic. No costs.
The argument that the petitioner should first be found
guilty unfair competition before an accounting for SO ORDERED.
purposes of ascertaining the amount of damages
recoverable can proceed, stands without merit.. The
complaint for unfair competition is basically a suit for
 SOLID TRIANGLE SALES CORPORATION and
ROBERT SITCHON, petitioners,
vs.
THE SHERIFF OF RTC QC, Branch 93; SANLY
CORPORATION, ERA RADIO AND ELECTRICAL
SUPPLY, LWT CO., INCORPORATED; ROD CASTRO,
VICTOR TUPAZ and the PEOPLE OF THE
PHILIPPINES, respondents.

KAPUNAN, J.:

The petition at bar stems from two cases, Search

Warrant Case No. Q-3324 (99) before Branch 93 of the
Quezon City Regional Trial Court (RTC), and Civil Case
No. Q-93-37206 for damages and injunctions before
Branch 91 of the same court.

The facts are set forth in the Decision of the Court of

Appeals dated July 6, 1999:

x x x on January 28, 1999, Judge Apolinario D. Bruselas,

Jr., Presiding Judge of RTC, Branch 93, Quezon City,
upon application of the Economic Intelligence and
Investigation Bureau (EIIB), issued Search Warrant No.
3324 (99) against Sanly Corporation (Sanly),
respondent, for violation of Section 168 of R.A. No. 8293
(unfair competition).

By virtue of Search Warrant No. 3324 (99), EIIB agents

seized 451 boxes of Mitsubishi photographic color paper
from respondent Sanly. . .

Forthwith, Solid Triangle, through Robert Sitchon, its

Marketing and Communication Manager, filed with the
Office of the City Prosecutor, Quezon City, an affidavit
complaint for unfair competition against the members of
the Board of Sanly and LWT Co., Inc. (LWT), docketed
as I.S. No. 1-99-2870.

Sitchon alleged that ERA Radio and Electrical Supply

(ERA), owned and operated by LWT, is in conspiracy
with Sanly in selling and/or distributing Mitsubishi brand
photo paper to the damage and prejudice of Solid
Triangle, [which claims to be the sole and exclusive
distributor thereof, pursuant to an agreement with the
Mitsubishi Corporation].

On February 4, 1999, petitioner Solid Triangle filed with

Judge Bruselas' sala an urgent ex parte motion for the
transfer of custody of the seized Mitsubishi photo color
paper stored in the office of EIIB.

On February 8, 1999, respondents Sanly, LWT and ERA

moved to quash the search warrant which was denied by
Judge Bruselas in an order dated March 5, 1999.

The said respondents filed a motion for reconsideration

which was granted by Judge Bruselas in the first
G.R. No. 144309            November 23, 2001 assailed order of March 18, 1999. Respondent Judge
held that there is doubt whether the act complained of SO ORDERED.1
(unfair competition) is criminal in nature.
Alleging grave abuse of discretion, petitioners
Petitioner Solid Triangle filed a motion for questioned before the Court of Appeals the orders of
reconsideration contending that the quashal of the Branch 93 of the Quezon City RTC granting private
search warrant is not proper considering the pendency of respondents' motion for reconsideration and denying that
the preliminary investigation in I.S. No. 1-99-2870 for of petitioners', as well as the order dated April 20, 1999
unfair competition wherein the seized items will be used directing petitioners to, among other things, show cause
as evidence. why they should not be held in contempt. Petitioners also
assailed the order of the Quezon City RTC, Branch 91
On March 26, 1999, Judge Bruselas issued the second denying their application for a writ of attachment. Upon
assailed order denying Solid Triangle's motion for the filing of the petition on April 26, 1999, the Court of
reconsideration. Appeals issued a temporary restraining order to prevent
Judge Bruselas from implementing the Order dated April
20, 1999.
On March 29, 1999, petitioner Solid Triangle filed with
Branch 91 of the same Court, presided by Judge Lita S.
Tolentino-Genilo, Civil Case No. Q-99-37206 for On July 6, 1999, the Court of Appeals rendered
damages and injunction with prayer for writs of judgment initially granting certiorari. It held that the
preliminary injunction and attachment. Impleaded as quashing of the warrant deprived the prosecution of vital
defendants were Sanly, LWT and ERA. evidence to determine probable cause.

On March 30, 1999, the defendants filed their opposition Admittedly, the City Prosecutor of Quezon City has filed
to the application for the issuance of writs of injunction a complaint for unfair competition against private
and attachment. respondents and that the undergoing preliminary
investigation is in progress. In the said proceedings, the
prosecution inevitably will present the seized items to
On March 31, 1999, Judge Genilo denied petitioner's
establish a prima facie case of unfair competition against
application for a preliminary attachment on the ground
private respondents.
that the application is not supported with an affidavit by
the applicant, through its authorized officer, who
personally knows the facts. Considering that Judge Bruselas quashed the search
warrant, he practically deprived the prosecution of its
evidence so vital in establishing the existence of
Meanwhile, on April 20, 1999, Judge Bruselas issued the
probable cause.
third assailed order, the dispositive portion of which
reads:
Petitioners' reliance on Vlasons Enterprises Corporation
vs. Court of Appeals [155 SCRA 186 (1987).] is in order.
WHEREFORE, the foregoing premises considered, the
Thus:
court directs

The proceeding for the seizure of property in virtue of a

1) EIIB, Mr. Robert Sitchon and Solid Triangle Sales
search warrant does not end with the actual taking of the
Corporation to divulge and report to the court the exact
property by the proper officers and its delivery, usually
location of the warehouse where the goods subject of
constructive, to the court. The order for the issuance of
this proceeding are presently kept within seventy-two
the warrant is not a final one and cannot constitute res
hours from receipt hereof;
judicata (Cruz vs. Dinglasan, 83 Phil. 333). Such an
order does not ascertain and adjudicate the permanent
2) Mr. Robert Sitchon and Solid Triangle Sales status or character of the seized property. By its very
Corporation to appear and show cause why they should nature, it is provisional, interlocutory (Marcelo vs. de
not be held in contempt of court for failure to obey a Guzman, 114 SCRA 657). It is merely the first step in the
lawful order of the court at a hearing for the purpose on process to determine the character and title of the
12 May 1999 at 8:30 o'clock in the morning; property. That determination is done in the criminal
action involving the crime or crimes in connection with
3) The Deputy Sheriff of this Court to take custody of the which the search warrant was issued. Hence, such a
seized goods and cause their delivery to the person from criminal action should be prosecuted, or commenced if
whom the goods were seized without further lost [sic] of not yet instituted, and prosecuted. The outcome of the
time; criminal action will dictate the disposition of the seized
property.2
Let a copy of this order be served by personal service
upon Mr. Robert Sitchon and Solid Triangle Sales The appellate court further ruled that the affidavit of
Corporation. Serve copies also to EIIB and the merits is not necessary for the order of preliminary
respondents Rod Castro and Sanly Corporation. attachment to issue considering that the petition itself is
under oath:
The denial was based on the ground that the application agency agreement with the manufacturer. And, this is
is not supported by an affidavit of the applicant precisely what Sanly states as its commercial status.
corporation, through its authorized officer, who
personally knows the facts. Records show that Sanly sold its photographic paper
purchased from Hongkong without altering its
We cannot go along with respondent judge's theory. appearance. It is distributed in the same Mitsubishi box
In Consul vs. Consul [17 SCRA 667 (1996)], the with its logo and distinguishing marks as marketed in
Supreme Court held: Japan. The same brown paper with the Mitsubishi seal is
wrapped around its products. Copies of the importation
Affidavit of merits has a known purpose: Courts and documents and the certification on imports issued by the
parties should not require the machinery of justice to Philippine government recognized Societe' Generale' d'
grind anew, if the prospects of a different conclusion Surveillance (SGS) were appended to the motion to
cannot be reasonably reached should relief from quash search warrant.
judgment be granted. We look back at the facts here.
The petition for relief is verified by petitioner himself. The Thus, on factual basis, the real dispute is actually
merits of petitioner's case are apparent in the recitals of between Solid Triangle and the manufacturer Mitsubishi.
the petition. Said petition is under oath. That oath, we If Solid Triangle feels aggrieved, it should sue Mitsubishi
believe, elevates the petition to the same category as a for damages, if at all for breach of its distributorship. But
separate affidavit. To require defendant to append an that is between them.
affidavit of merits to his verified petition to the
circumstances, is to compel him to do the unnecessary. Certainly, there is here no probable cause to justify the
Therefore, the defect pointed by the court below is one issuance of a search warrant based on a criminal action
of forms, not of substance. Result: Absence of a for "unfair competition."
separate affidavit is of de minimis importance.3
Therefore, since there is no probable cause for unfair
Upon motion by respondents, however, the Court of competition in this case, then the quashal of the search
Appeals reversed itself. In its "Amendatory Decision," the warrant by respondent Judge Bruselas is valid. This
appellate court held that there was no probable cause for being the case, there is merit in the motion for
the issuance of the search warrant. Accordingly, the reconsideration.
evidence obtained by virtue of said warrant was
inadmissible in the preliminary investigation. In ascertaining the legality of a search warrant and the
validity of the search and seizure conducted by the EIIB
x x x Under Sections 168 and 170 of R.A. 8293 (the agents by virtue of the warrant, it is essential that a crime
Intellectual Property Code), there is unfair competition if has been committed or is being committed and that the
the alleged offender has given to his goods the general things seized are fruits of the crime or the means by
appearance of the goods of another manufacturer or which it is committed.
dealer and sells or passes them off as goods of that
manufacturer or dealer in order to deceive or defraud the The validity of a search and seizure is of constitutional
general public or the legitimate trader. Also, if he makes dimensions. The right to privacy and the sanctity of a
false statements in the course of trade to discredit the person's house, papers and effects against
goods, business, or services of another. unreasonable searches and seizures are not only
ancient. They are also zealously protected.
Undisputedly, the seized goods from Sanly are genuine
and not mere imitations. This is admitted by petitioners in xxx           xxx           xxx
their application for a search warrant and supporting
affidavits, Annexes "A" to "D", inclusive, in their April 27,
1999 Submission of Annexes to this Court. It bears Solid Triangle contends that the quashal of the search
stressing that there is no showing or allegation that warrant deprived it of its right to prove a prima facie case
Sanly has presented, sold, or passed off its photographic of unfair competition in the preliminary investigation. We
paper as goods which come from Solid Triangle. There initially agreed with it.
is no attempt on its part to deceive.
While Solid Triangle has the right to present every single
Both Sanly and Solid Triangle sell genuine Mitsubishi piece of evidence it can gather and muster, however, it
products. Solid Triangle acquires its goods from Japan has no right to prove its case through the use of illegally
on the basis of its exclusive distributorship with seized evidence secured in derogation of a
Mitsubishi Corporation. While Sanly buys its goods from constitutionally guaranteed right.
Hongkong, claiming it is a parallel importer, not an unfair
competitor. As defined, a parallel importer is one which The constitutional provision that any evidence obtained
imports, distributes, and sells genuine products in the in violation of the provision against unreasonable
market, independently of an exclusive distributorship or searches and seizures "shall be inadmissible for any
purpose in any proceeding" finds application here. The
goods seized without probable cause are fruits of the GROUND THAT THERE IS NO JUSTIFICATION FOR
poisonous tree and cannot be used for the purpose of IT BECAUSE THE QUESTIONS PERTINENT
proving unfair competition during preliminary THERETO ARE NOT BEFORE THE COURT OF
investigation proceedings. APPEALS BUT BEFORE THE TRIAL COURT.

The case of Vlasons Enterprises Corporation vs. Court IV.

of Appeals does not apply since it involved a different set
of facts and issues. PETITIONERS CANNOT BE HELD LIABLE FOR
CONTEMPT IN NOT RETURNING THE GOODS
On the contrary, it is the case of People vs. Court of SUBJECT OF THE SEARCH WARRANT
Appeals [216 SCRA 101 (1992)] that governs, where the NOTWITHSTANDING THE REFUSAL OF THE COURT
Supreme Court ruled that with the quashal of the search OF APPEALS TO RULE ON THIS POINT FURTHER
warrant, the seized goods could not be used as evidence WHICH IS A GRIEVOUS ERROR TO THE PREJUDICE
for any purpose, in any proceeding.4 OF THE PETITIONERS.6

As regards the preliminary attachment, the appellate Petitioners contend that the Constitution does not
court found that there was no ground for the issuance of authorize the judge to reverse himself and quash the
the writ because: warrant, "especially after goods had been seized
pursuant to the search warrant, and the prosecution is
x x x Sanly does not deny that it sells Mitsubishi poised to push forward with the goods as evidence." 7 In
photographic color paper. But there is no showing that it finding that doubt exists that a crime has been
attempts to depart from country, defraud Solid Triangle committed, it is argued that the judge "trench[ed] upon
or the buying public, conceal or dispose of unjustly the prerogative and duty of the city prosecutor."8
detained personal property, or commit any of the acts
provided in Rule 57 of the 1997 Rules of Civil Procedure The contention has no merit.
as grounds for the issuance of a writ of preliminary
attachment.5 It is undisputed that only judges have the power to issue
search warrants.9 This function is exclusively judicial.
Petitioners moved for reconsideration but the same was Article III of the Constitution unequivocally states:
denied by the Court of Appeals in its Resolution dated
August 4, 2000. SECTION 2. The right of the people to be secure in their
persons, houses, papers, and effects against
In assailing the Amendatory Decision of the Court of unreasonable searches and seizures of whatever nature
Appeals, petitioners argue that: and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon
I. probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and
THE JUDGE WHO ISSUED A SEARCH WARRANT
particularly describing the place to be searched and the
THAT HAS ALREADY BEEN IMPLEMENTED CANNOT
persons or things to be seized. [Emphasis supplied.]
QUASH THE WARRANT ANYMORE, AT LEAST
WITHOUT WAITING FOR THE FINDINGS OF THE
CITY PROSECUTOR WHO HAS THE EXCLUSIVE Inherent in the courts' power to issue search warrants is
JURISDICTION TO DETERMINE PROBABLE CAUSE. the power to quash warrants already issued. In this
connection, this Court has ruled that the motion to quash
should be filed in the court that issued the warrant unless
II.
a criminal case has already been instituted in another
court, in which case, the motion should be filed with the
IN THE PARALLEL IMPORTATION EFFECTED BY latter.10 The ruling has since been incorporated in Rule
THE RESPONDENTS WITH DECEIT AND BAD FAITH, 126 of the Revised Rules of Criminal Procedure:
THERE EXISTS PROBABLE CAUSE THAT THE
CRIME OF UNFAIR COMPETITION UNDER THE
SECTION 14. Motion to quash a search warrant or to
INTELLECTUAL PROPERTY CODE HAS BEEN
suppress evidence; where to file. — A motion to quash a
COMMITTED BY THE RESPONDENTS.
search warrant and/or to suppress evidence obtained
thereby may be filed in and acted upon only by the court
III. where the action has been instituted. If no criminal action
has been instituted, the motion may be filed in and
PETITIONERS' APPLICATION FOR A WRIT OF resolved by the court that issued the search warrant.
ATTACHMENT CANNOT BE DENIED ON THE However, if such court failed to resolve the motion and a
GROUND THAT AN AFFIDAVIT OF MERITS IS NOT criminal case is subsequently filed in another court, the
APPENDED TO THE COMPLAINT, AS THE COURT OF motion shall be resolved by the latter court.
APPEALS HAS ALREADY RULED, AND ON THE
In the determination of probable cause, the court must (b) Judges of the Municipal Trial Courts and Municipal
necessarily resolve whether or not an offense exists to Circuit Trial Courts;
justify the issuance or quashal of the search warrant.
Prior to the revision of December 1, 2000, Rule 126 of (c) National and Regional state prosecutors; and
the Rules of Court provided:
(d) Such other officers as may be authorized by law.
SECTION 3. Requisites for issuing search warrant. — A
search warrant shall not issue but upon probable cause Their authority to conduct preliminary investigations shall
in connection with one specific offense to be determined include all crimes cognizable by the proper court in their
personally by the judge after examination under oath or respective territorial jurisdictions.15
affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be
searched and the things to be seized [Emphasis The determination of probable cause during a
supplied.]11 preliminary investigation has been described as an
executive function.16
Note that probable cause is defined as:
The proceedings for the issuance/quashal of a search
warrant before a court on the one hand, and the
. . .the existence of such facts and circumstances which preliminary investigation before an authorized officer on
could lead a reasonably discreet and prudent man to the other, are proceedings entirely independent of each
believe that an offense has been committed and that the other. One is not bound by the other's finding as regards
item(s), article(s) or object(s) sought in connection with the existence of a crime. The purpose of each
said offense or subject to seizure and destruction by law proceeding differs from the other. The first is to
is in the place to be searched.12 determine whether a warrant should issue or be
quashed, and the second, whether an information should
In Kenneth Roy Savage/K Angelin Export Trading vs. be filed in court.
Taypin,13 the Court was confronted with a search warrant
that was issued purportedly in connection with unfair When the court, in determining probable cause for
competition involving design patents. The Court held that issuing or quashing a search warrant, finds that no
the alleged crime is not punishable under Article 189 of offense has been committed, it does not interfere with or
the Revised Penal Code, and accordingly, quashed the encroach upon the proceedings in the preliminary
search warrant issued for the non-existent crime. investigation. The court does not oblige the investigating
officer not to file an information for the court's ruling that
In the issuance of search warrants, the Rules of Court no crime exists is only for purposes of issuing or
requires a finding of probable cause in connection quashing the warrant. This does not, as petitioners
with one specific offense to be determined personally by would like to believe, constitute a usurpation of the
the judge after examination of the complainant and the executive function. Indeed, to shirk from this duty would
witnesses he may produce, and particularly describing amount to an abdication of a constitutional obligation.
the place to be searched and the things to be seized.
Hence, since there is no crime to speak of, the search The effect of the quashal of the warrant on the ground
warrant does not even begin to fulfill these stringent that no offense has been committed is to render the
requirements and is therefore defective on its face. x x x. evidence obtained by virtue of the warrant "inadmissible
for any purpose in any proceeding," including the
A preliminary investigation, by definition, also requires a preliminary investigation. Article III of the Constitution
finding by the authorized officer of the commission of a provides:
crime. Previous to the 2000 revision, Section 1 of Rule
112 of the Rules of Court defined a preliminary SECTION 3. (1) . . .
investigation as "an inquiry or proceeding to determine
whether there is sufficient ground to engender a well-
founded belief that a crime cognizable by the Regional (2) Any evidence obtained in violation of this or the
Trial Court has been committed and the respondent is preceding section [Section 2] shall be inadmissible for
probably guilty thereof, and should be held for trial.''14 any purpose in any proceeding.

Section 2 of the same Rule enumerates who may It may be true that, as a result of the quashal of the
conduct preliminary investigations: warrant, the private complainant is deprived of vital
evidence to establish his case, but such is the inevitable
consequence.
SECTION 2. Officers authorized to conduct preliminary
investigations. — The following may conduct preliminary
investigations: Nevertheless, the inadmissibility of the evidence
obtained through an illegal warrant does not necessarily
render the preliminary investigation academic. The
(a) Provincial or city fiscals and their assistants; preliminary investigation and the filing of the information
may still proceed if, because of other (admissible) of unfair competition, and shall be subject to an action
evidence, there exists "sufficient ground to engender a therefor.
well-founded belief that a crime has been committed and
the respondent is probably guilty thereof, and should be 168.3 In particular, and without in any way limiting the
held for trial." The finding by the court that no crime scope of protection against unfair competition, the
exists does not preclude the authorized officer following shall be deemed guilty of unfair competition:
conducting the preliminary investigation from making his
own determination that a crime has been committed and (a) Any person, who is selling his goods and gives them
that probable cause exists for purposes of filing the the general appearance of goods of another
information. manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in which
Petitioners also argue that Section 14, Rule 126 of the they are contained, or the devices or words thereon, or
Revised Rules of Criminal Procedure, supra, while in any other feature of their appearance, which would be
intended "to resolve conflicts of responsibility between likely to influence purchasers to believe that the goods
courts," "does not expressly cover the situation where offered are those of a manufacturer or dealer, other than
the criminal complaint is pending with the prosecutor." In the actual manufacturer or dealer, or who otherwise
such a case, petitioners submit, the public prosecutor clothes the goods with such appearance as shall deceive
should be allowed to resolve the question of whether or the public and defraud another of his legitimate trade, or
not probable cause exists.17 any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a lie
The Court finds this interpretation too contrived. Section purpose;
14, Rule 126 precisely covers situations like the one at
bar. Section 14 expressly provides that a motion to (b) Any person who by any artifice, or device, or who
quash a search warrant and/or to suppress evidence employs any other means calculated to induce the false
obtained thereby may be filed in and acted upon only by belief that such person is offering the service of another
the court where the action has been instituted. Under the who has identified such services in the mind of the
same section, the court which issued the search warrant public; or
may be prevented from resolving a motion to quash or
suppress evidence only when a criminal case is (c) Any person who shall make any false statement in
subsequently filed in another court, in which case, the the course of trade or who shall commit any other act
motion is to be resolved by the latter court. It is therefore contrary to good faith of a nature calculated to discredit
puerile to argue that the court that issued the warrant the goods, business or services of another.
cannot entertain motions to suppress evidence while a
preliminary investigation is ongoing. Such erroneous
interpretation would place a person whose property has 168.4 The remedies provided by Sections 156, 157 and
been seized by virtue of an invalid warrant without a 161 shall apply mutatis mutandis.
remedy while the goods procured by virtue thereof are
subject of a preliminary investigation The same law, in Section 170, provides the penalty for
violation of Section 168:
We now turn to the question of whether the facts, as
presented before the trial court, constitute an offense. SECTION 170. Penalties. — Independent of the civil and
administrative sanctions imposed by law, a criminal
Private respondents are alleged to have committed penalty of imprisonment from two (2) years to five (5)
unfair competition in violation of Section 168 of the years and a fine ranging from Fifty thousand pesos
Intellectual Property Code, which states: (50,000) to Two hundred thousand pesos (200,000),
shall be imposed on any person who is found guilty of
committing any of the acts mentioned in Section 155,
SECTION 168. Unfair Competition, Rights, Regulation Section 168 and Subsection 169.1.
and Remedies. — 168.1 A person who has identified in
the mind of the public goods he manufactures or deals
in, his business or services from those of others, whether Petitioners submit that "the importation of even genuine
or not a registered mark is employed, has a property goods can constitute a crime under the Intellectual
right in the goodwill of the said goods, business or Property Code so long as fraud or deceit is present." The
services so identified, which will be protected in the intent to deceive in this case, according to petitioners, is
same manner as other property rights. "patent" "from the following undisputed facts":

168.2 Any person who shall employ deception or any (a) Before marketing its product, the respondents totally
other means contrary to good faith by which he shall obliterated and erased the Emulsion Number and Type
pass off the goods manufactured by him or in which he that was printed on the box/carton of the product
deals, or his business, or services for those of the one because of which the source of the goods can no longer
having established such goodwill, or who shall commit be traced.
any acts calculated to produce said result, shall be guilty
(b) Respondents even covered the boxes with "made it appear that they were duly authorized to sell or
newspapers to conceal true identity. distribute Mitsubishi Photo Paper in the Philippines."
Assuming that this act constitutes a crime, there is no
(c) Being also engaged in the sale of photo equipments proof to establish such an allegation.
[sic] and having had the occasion of participating in the
same exhibit with petitioner Solid Triangle several times We agree with petitioners, however, that the Court of
already, respondents certainly knew that petitioner Solid Appeals went beyond the issues when it ruled that there
Triangle is the sole and exclusive importer and were no grounds for the issuance of an order of
distributor of Mitsubishi Photo Paper. preliminary attachment. The only issue raised with
respect to the preliminary attachment was whether the
(d) Two agents of the EIIB were also able to confirm application for the writ should have been denied because
from a salesgirl of respondents that substantial quantity the same was not supported by an affidavit of the
of stocks of Mitsubishi Photo Paper are available at applicant corporation, through its authorized officer, who
respondents' store and that the products are genuine, as personally knows the facts. Whether there are sufficient
they are duly authorized to sell and distribute it to grounds to justify the order is a matter best left to the trial
interested customers. court, which apparently has yet to hear the matter. Thus,
we sustain the Court of Appeals' original decision
holding that an affidavit of merit is not necessary since
(e) No better proof of unfair competition is the seizure of
the petition is verified by an authorized officer who
the goods, 451 boxes of Mitsubishi photographic color
personally knows the facts.
paper.18

Similarly premature is whether petitioners' failure to

Petitioners further expound:
return the goods to respondents constituted indirect
contempt. The assailed order dated April 20, 1999 was a
47. We may categorize the acts of the respondents as "show cause" order. Before any hearing on the order
"underground sales and marketing" of genuine goods, could be held, petitioners promptly filed a petition for
undermining the property rights of petitioner Solid certiorari. Clearly, the trial court had yet to rule on the
Triangle. The Court of Appeals itself recognized the matter, and for this Court now to hold petitioners' act
rights of a dealer. The acts of the respondents were contemptuous would preempt said court.
made to appropriate unjustly the goodwill of petitioner
Solid Triangle, and goodwill is protected by the law on
WHEREFORE, the petition is GRANTED IN PART. The
unfair competition.
Amendatory Decision of the Court of Appeals dated
March 31, 2000, as well as its Resolution dated August
48. Petitioner Solid Triangle has established a trade or 4, 2000, is AFFIRMED insofar as it holds that (1) the
business in which it had acquired goodwill and reputation Quezon City Regional Trial Court, Branch 93, has the
that will be protected, and so, to permit respondents to power to determine the existence of a crime in quashing
continue importing and distributing Mitsubishi Photo a search warrant and, (2) the evidence does not support
Paper, would be to countenance the unlawful a finding that the crime of unfair competition has been
appropriation of the benefit of a goodwill which petitioner committed by respondents; and REVERSED insofar as it
Solid Triangle has acquired and permit the respondent to holds that (1) there are no grounds to warrant the
grab the reputation or goodwill of the business of issuance of a writ of preliminary attachment and (2)
another. petitioners are guilty of contempt. The case is remanded
for further proceedings to the courts of origin, namely,
49. . . petitioners have a valid cause to complain against Branch 91 of RTC, Quezon City for resolution of the
respondents for the criminal violation of the Intellectual application for a writ of attachment, and Branch 93 of the
Property Law when the latter made it appear that they same court for resolution of the application to cite
were duly authorized to sell or distribute Mitsubishi Photo petitioners for contempt.
Paper in the Philippines, when in truth and in fact they
were not, and when they were hiding their importation Petitioners are ordered to return to respondent Sanly
from the petitioners by such acts as removing the Corporation the 451 boxes of Mitsubishi photographic
Emulsion Number and Type and covering the boxes with color paper seized by virtue of Search Warrant No. 3324
old newspapers.19 (99) issued by the Quezon City Regional Trial Court,
Branch 93.
We disagree with petitioners and find that the evidence
presented before the trial court does not prove unfair SO ORDERED.
competition under Section 168 of the Intellectual
Property Code. Sanly Corporation did not pass off the
subject goods as that of another. Indeed, it admits that
the goods are genuine Mitsubishi photographic paper,
which it purchased from a supplier in Hong
Kong.20 Petitioners also allege that private respondents
G.R. No. 161823             March 22, 2007

SONY COMPUTER ENTERTAINMENT,

INC., Petitioner,
vs.
SUPERGREEN, INCORPORATED, Respondent.

DECISION

QUISUMBING, J.:

This petition for review seeks to reverse the

Decision1 dated June 30, 2003 of the Court of Appeals in
CA-G.R. SP No. 67612 and the Resolution2 dated
January 16, 2004, denying reconsideration. The Court of
Appeals had denied the petition for certiorari assailing
the trial court’s quashal of the search warrant.

The case stemmed from the complaint filed with the

National Bureau of Investigation (NBI) by petitioner Sony
Computer Entertainment, Inc., against respondent
Supergreen, Incorporated. The NBI found that
respondent engaged in the reproduction and distribution
of counterfeit "PlayStation" game software, consoles and
accessories in violation of Sony Computer’s intellectual
property rights. Thus, NBI applied with the Regional Trial
Court (RTC) of Manila, Branch 1 for warrants to search
respondent’s premises in Parañaque City and Cavite. On
April 24, 2001, the RTC of Manila issued Search
Warrants Nos. 01-1986 to 01-1988 covering
respondent’s premises at Trece-Tanza Road, Purok 7,
Barangay de Ocampo, Trece Martires City, Cavite, and
Search Warrants Nos. 01-1989 to 01-1991 covering
respondent’s premises at Room 302, 3rd Floor Chateau
de Baie Condominium, 149 Roxas Boulevard corner
Airport Road, Parañaque City. The NBI simultaneously
served the search warrants on the subject premises and
seized a replicating machine and several units of
counterfeit "PlayStation" consoles, joy pads, housing,
labels and game software.

On June 11, 2001, respondent filed a motion to quash

Search Warrants Nos. 01-1986 to 01-1988 and/or
release of seized properties on the ground that the III
search warrant failed to particularly describe the
properties to be seized. The trial court denied the motion WHETHER OR NOT THE OFFENSES INVOLVED IN
for lack of merit. THE SUBJECT SEARCH WARRANTS ARE
"CONTINUING CRIMES" WHICH MAY BE VALIDLY
On August 4, 2001, respondent filed another motion to TRIED IN ANOTHER JURISDICTION WHERE THE
quash, this time, questioning the propriety of the venue. OFFENSE WAS PARTLY COMMITTED.7
Petitioner opposed the motion on the ground that it
violated the omnibus motion rule wherein all objections In sum, we are asked to resolve whether the quashal of
not included shall be deemed waived. In an Order3 dated Search Warrants Nos. 01-1986 to 01-1988 was valid.
October 5, 2001, the trial court affirmed the validity of
Search Warrants Nos. 01-1989 to 01-1991 covering Citing Malaloan v. Court of Appeals,8 where this Court clarified
respondent’s premises in Parañaque City, but quashed that a search warrant application is only a special criminal
Search Warrants Nos. 01-1986 to 01-1988 covering process and not a criminal action, petitioner contends that the
respondent’s premises in Cavite. The trial court held that rule on venue for search warrant application is not
lack of jurisdiction is an exception to the omnibus motion jurisdictional. Hence, failure to raise the objection waived it.
rule and may be raised at any stage of the proceedings. Moreover, petitioner maintains that applying for search
The dispositive portion of the order read, warrants in different courts increases the possibility of leakage
and contradictory outcomes that could defeat the
purpose for which the warrants were issued.
Accordingly, Search Warrants Nos. 01-1986, 01-1987
and 01-1988 are hereby ordered quashed and set aside.
Petitioner further asserts that even granting that the rules
on search warrant applications are jurisdictional, the
The National Bureau of Investigation and/or any other
application filed either in the courts of the National
person in actual custody of the goods seized pursuant
Capital Region or Fourth Judicial Region is still proper
thereto are hereby directed to return the same to the
because the crime was continuing and committed in both
respondents.
Parañaque City and Cavite.
SO ORDERED.4
Respondent counters that Section 2 is explicit on where
applications should be filed and provided the territorial
Petitioner elevated the matter to the Court of Appeals, limitations on search warrants. Respondent claims
which dismissed the petition for certiorari. The appellate that Malaloan is no longer applicable jurisprudence with
court ruled that under Section 2,5 Rule 126 of the Rules the promulgation of the 2000 Rules of Criminal
of Court, the RTC of Manila had no jurisdiction to issue a Procedure. Even granting that petitioner has compelling
search warrant enforceable in Cavite, and that lack of reasons, respondent maintains that petitioner cannot file
jurisdiction was not deemed waived. Petitioner moved for the application with the RTC of Manila because Cavite
reconsideration but the same was denied. The Court of belongs to another judicial region. Respondent also
Appeals disposed, as follows: argues that the doctrine on continuing crime is applicable
only to the institution of a criminal action, not to search
WHEREFORE, the instant Petition is hereby denied and warrant applications which is governed by Rule 126, and
accordingly DISMISSED. in this case Section 2.

SO ORDERED.6 To start, we cautioned that our pronouncement

in Malaloan  should be read into the Judiciary
Petitioner now comes before us raising the following Reorganization Act of 19809 conferring on the regional
issues: trial courts and their judges a territorial jurisdiction,
regional in scope. Both the main decision and the
I dissent in Malaloan recognized this.

WHETHER OR NOT VENUE IN SEARCH WARRANT Now, in the present case, respondent’s premises in
APPLICATIONS INVOLVES TERRITORIAL Cavite, within the Fourth Judicial Region, is definitely
JURISDICTION. beyond the territorial jurisdiction of the RTC of Manila, in
the National Capital Region. Thus, the RTC of Manila
does not have the authority to issue a search warrant for
II offenses committed in Cavite. Hence, petitioner’s
reliance in Malaloan is misplaced. Malaloan  involved a
WHETHER OR NOT THE CORRECTNESS OF VENUE court in the same judicial region where the crime was
IN AN APPLICATION FOR SEARCH WARRANT IS committed. The instant case involves a court in another region.
DEEMED WAIVED IF NOT RAISED BY THE Any other interpretation re-defining territorial jurisdiction would
RESPONDENT IN ITS MOTION TO QUASH. amount to judicial legislation.10
Nonetheless, we agree with petitioner that this case involves a Respondent’s imitation of the general appearance of
transitory or continuing offense of unfair competition under petitioner’s goods was done allegedly in Cavite. It sold
Section 168 of Republic Act No. 8293,11 which provides, the goods allegedly in Mandaluyong City, Metro Manila.
The alleged acts would constitute a transitory or
SEC. 168. Unfair Competition, Rights, Regulation and continuing offense. Thus, clearly, under Section 2 (b) of
Remedies. – … Rule 126, Section 168 of Rep. Act No. 8293 and Article
189 (1) of the Revised Penal Code, petitioner may apply
168.2. Any person who shall employ deception or any other for a search warrant in any court where any element of
means contrary to good faith by which he shall pass off the the alleged offense was committed, including any of the
goods manufactured by him or in which he deals, or his courts within the National Capital Region (Metro
business, or services for those of the one having established
Manila).13
such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and
shall be subject to an action therefor. WHEREFORE, the petition is GRANTED. The Decision
dated June 30, 2003 and the Resolution dated January
168.3. In particular, and without in any way limiting the scope 16, 2004 of the Court of Appeals in CA-G.R. SP No.
of protection against unfair competition, the following shall be 67612 are SET ASIDE. The Order dated October 5,
deemed guilty of unfair competition: 2001 of the Regional Trial Court of Manila, Branch 1,
is PARTLY MODIFIED. Search Warrants Nos. 01-1986
(a) Any person, who is selling his goods and gives them to 01-1988 are hereby declared valid.
the general appearance of goods of another
manufacturer or dealer, either as to the goods SO ORDERED.
themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or G.R. Nos. L-27425 & L-30505 April 28, 1980
in any other feature of their appearance, which would be
likely to influence purchasers to believe that the goods
CONVERSE RUBBER CORPORATION and
offered are those of a manufacturer or dealer, other than
EDWARDSON MANUFACTURING
the actual manufacturer or dealer, or who otherwise
CORPORATION, plaintiffs-appellants,
clothes the goods with such appearance as shall deceive
vs.
the public and defraud another of his legitimate trade, or
JACINTO RUBBER & PLASTICS CO., INC., and ACE
any subsequent vendor of such goods or any agent of
RUBBER & PLASTICS CORPORATION, defendants-
any vendor engaged in selling such goods with a like
appellants.
purpose;
BARREDO, J.:
(b) Any person who by any artifice, or device, or who
employs any other means calculated to induce the false
belief that such person is offering the services of another Direct appeal in G.R. No. L-27425 by both plaintiffs and
who has identified such services in the mind of the defendants from the decision of the Court of First
public; or Instance of Rizal in its Civil Case No. 9380, a case
alleged unfair competition, the dispositive part of which
(c) Any person who shall make any false statement in the
reads:
course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods, Upon the foregoing, judgment is hereby rendered:
business or services of another.
1. Permanently restraining the defendants, their agents,
Pertinent too is Article 189 (1) of the Revised Penal Code that employees and other persons acting in their behalf from
enumerates the elements of unfair competition, to wit: manufacturing and selling in the Philippines rubber
shoes having the same or confusingly similar
(a) That the offender gives his goods the general appearance appearance as plaintiff Converse Rubber's Converse
of the goods of another manufacturer or dealer; Chuck Taylor All Star' rubber shoes, particularly from
manufacturing and selling in the Philippines rubber
(b) That the general appearance is shown in the (1) goods Shoes with (a) ankle patch with a five-pointed blue star
themselves, or in the (2) wrapping of their packages, or in the against a white background, (b) red and blue bands, (c)
(3) device or words therein, or in (4) any other feature of their white toe patch with raised diamond shaped areas, and
appearance;
(d) brown sole of the same or similar design as the sole
of "Converse Chuck Taylor All Star" rubber-soled canvas
(c) That the offender offers to sell or sells those goods or gives footwear;
other persons a chance or opportunity to do the same with a
like purpose; and
2. Ordering defendant Jacinto Rubber & Plastics
(d) That there is actual intent to deceive the public or defraud a Company, Inc. to change the design and appearance of
competitor.12 "Custombuilt" shoes in accordance with the sketch
submitted by defendant Jacinto Rubber to plaintiff
Converse Rubber on October 3, 1964 and to desist from Challenger", and "Custombuilt Jayson's". Its trademark
using a star both as a symbol and as a word; "Custombuilt Jayson's" was registered by the Philippines
Patent Office on November 29, 1957. The gross sales
3. Ordering defendant Jacinto Rubber & Plastics from 1962 to 1965 of "Custombuilt" shoes total
Company, Inc. to pay plaintiffs the sum of P160,000.00 P16,474,103.76."Custombuilt" is retailed at P11.00.
as compensatory damages for the years 1962 to 1965
plus 5% of the gross sales of "Custombuilt" shoes from In 1963, plaintiff Converse and defendant Jacinto
1966 until defendant Jacinto Rubber & Plastics entered into protracted negotiations for a licensing
Company, Inc. stop selling "Custombuilt" shoes of the agreement whereby defendant Jacinto would be the
present design and appearance; exclusive license of plaintiff Converse in the Philippines
for the manufacture and sale of "Chuck Taylor" shoes
4. Ordering defendants jointly and severally to pay but with the right to continue manufacturing and selling
plaintiffs P10,000.00 as attorney's fees. its own products. One of the points taken up by parties
was the design and general appearance of "Custombuilt"
shoes. Plaintiff Converse insisted on the condition that
SO ORDERED. (Pages 228-229, Record on Appeal.)
defendant Jacinto change the design of "Custombuilt"
shoes so as to give "Custombuilt" a general appearance
plaintiffs praying for a bigger amount of damages and different from "Chuck Taylor." After an extensive
defendants asking that the decision be declared null and discussion, defendant Jacinto gave into to the demand of
void for lack of jurisdiction, or, alternatively, that the plaintiff Converse; it submitted to plaintiff Converse for
same be reversed completely by dismissing the the latter's approval a sketch of a new design for
complaint; and another direct appeal, in G. R. No. L- "Custombuilt". This design was accepted by plaintiff
30505 by above defendant Jacinto Rubber & Plastics Converse. Defendant Jacinto Rubber then proposed that
Co., Inc. and, a new party, Philippine Marketing and the licensing agreement be made in favor of its affiliates,
Management Corporation from the same trial court's defendant Ace Rubber. On January 22, 1965, defendant
order in the same main civil case finding them in Ace Rubber signed the licensing agreement while
contempt of court "in disregarding the permanent defendant Jacinto Rubber and Arturo Jacinto signed the
injunction" contained in the appealed decision. guarantee agreement to secure the performance by
defendant Ace Rubber of its obligations under the
RE G. R. NO L-27425 licensing agreement. Both documents, it should be
noted, contained the following covenants:
Being comprehensive and well prepared, We consider it
sufficient to quote the following portions of the impugned 9. (a) Ace acknowledges that Converse is the exclusive
decision as basis for the resolution of the conflicting owner of the said Converse - names and design, as
appeals aforementioned: used in connection with the manufacture, advertising and
sale of footwear: that Converse has the exclusive right to
This is an action for unfair competition. Plaintiff Converse use said Converse names in such connection throughout
Rubber Corporation, (is) an American Corporation, the world. subject to the terms of this Agreement; and
manufacturer (of) canvas rubber shoes under the trade that neither Ace nor any person acting by, through or
name "Converse Chuck Taylor All Star"; in the under Ace will, at anytime, question or dispute said
Philippines, it has an exclusive licensee, plaintiff ownership or the exclusive rights of Converse with
Edwardson Manufacturing Corporation, for the respect thereto
manufacture and sale in the Philippines of its product.
Plaintiff Converse is the owner of trademarks and patent, (b) Nothing herein shall be deemed to constitute a
registered with United States Patent Office, covering the warranty by Converse as to the non-existence of
words. "All Star", the representation and design of a five- infringements of Converse-names in the Republic of the
pointed star, and the design of the sole. The trademark Philippines. The term "infringement"as used in this
"Chuck Taylor" was registered by plaintiff Converse with Agreement shall include practices which give rise to a
the Philippines Patent Office on March 3, 1966. Since cause of action for damages or to injunctive relief under
1946, "Chuck Taylor" is being sold in the Philippines. It Sections 23 and 29 of R. A. No. 166 of the Republic of
has been used exclusively by Philippine basketball the Philippines or any other applicable law of said
teams competing in international competitions. It is also Republic. During the term thereof, Ace at its expense
popular among players in various basketball leagues, shall diligently investigate all infringements of the use of
like the MICAA and the NCAA, because of its high said Converse-names, whether or not such
quality and attractive style. "Chuck Taylor" currently infringements violate laws pertaining to the registration of
retails at P46.00 per pair. trademarks or trade names, and shall notify Converse
promptly as to any infringements of said Converse
Defendant Jacinto Rubber & Plastics Company, Inc., a names within said territory, and shall at its expense use
local corporation, likewise, manufactures and sells its best efforts to prevent such infringements by an
canvas rubber shoes. It sells its product under the trade reasonable means, including the prosecution of litigation
names "Custombuilt Viscount", "Custombuilt where necessary or advisable. Any award for damages
which Ace may recover in such litigation shall accrue to "Custombuilt" being prior to the registration in the
the benefit of, and shall be owned and retained by Ace. Philippines of plaintiff Converse Rubber's trademark
"Chuck Taylor", plaintiffs have no cause of action. It
14. Ace shall not,during the term hereof, manufacture or appears that defendant started to manufacture and sell
sell footwear which would, by reason of its appearance "Custombuilt" of its present design and with its present
and/or design, be likely, or tend, to be confused by the appearance in 1962. On the other hand, as earlier
public with any of the Converse-named products to be mentioned, "Chuck Taylor" started to be sold in the
manufactured and sold hereunder, or shall in any Philippines in 1946 and has been enjoying a reputation
manner, infringe Converse designs. If at any time and for quality among basketball players in the Philippines.
from time to time the manufacture of footwear under
Converse-names for sale hereunder does not fully utilize The Court sees no difficulty in finding that the competing
Ace's production capacity, Ace shalt on Converse's products are Identical in appearance except for the trade
order, within the limits of such surplus capacity, names. The respective designs, the shapes and the
manufacture footwear of kinds and in amounts specified color of the ankle patch, the bands, the toe patch and the
by Converse, at a price no higher than the lowest price sole of the two products are exactly the same. At a
at which similar footwear has been sold to customer of distance of a few meters, it is impossible to distinguish
Ace during the period of one (1) year immediately Custombuilt' from "Chuck Taylor". The casual buyer is
preceding the date of such order, and upon no less thus liable to mistake one for the other. Only by a close-
favorable discounts and terms of sale than similar examination and by paying attention to the trade names
footwear is customarily offered by Ace to its most will the ordinary buyer be able to tell that the product is
favored customer, payable in United States funds, if the either "Custombuilt" or "Chuck Taylor", as the case may
earned royalty hereunder is then so payable, otherwise be. Even so, he will most likely think that the competing
in Republic of the Philippines funds. products, because they are strikingly Identical in design
and appearance are manufactured by one and the same
20. It being the mutual intention of the parties that manufacturer. Clearly, this case satisfied the test of
Converse's exclusive property interests in the Converse- unfair competition. Priority in registration in the
names shall at all times be protected to the full extent of Philippines of a trademark is not material in an action for
the law, Ace agrees that it will execute all amendments unfair competition as distinguished from an action for
to this Agreement which may be proposed from time to infringement of trademark. The basis of an action for
time by Converse for the purpose of fully protecting said unfair competition is confusing and misleading similarity
interests. in general appearance, not similarity of trademarks.

However, the licensing agreement did not materialize, The Court is not impressed by defendants' good faith in
because Hermogenes Jacinto refused to sign the claiming that they have the right to continue
guarantee. manufacturing "Custombuilt" of Identical design and
appearance as "Chuck Taylor". While it is true that the
licensing agreement between plaintiff Converse and
Plaintiff Converse and plaintiff Edwardson then executed
defendant did not materialize, the execution of the
licensing agreement, making plaintiff Edwardson the
documents by the defendants constitute an admission on
exclusive Philippine licensee for the manufacture and
the part of plaintiff Converse Rubber's property right in
sale of "Chuck Taylor." On June 18, 1966, plaintiffs sent
design and appearance of "Chuck Taylor". The
a written demand to defendants to stop manufacturing
covenants, quoted above, show that defendants
and selling "Custombuilt" shoes of Identical appearance
acknowledged that plaintiff Converse Rubber "is the
as "Chuck Taylor". Defendants did not reply to plaintiffs'
exclusive owner of the said Converse-names and
letter. Hence, this suit.
design." Defendants further covenanted not to
"manufacture or sell footwear which would by reason of
Plaintiffs contend that "Custombuilt" shoes are Identical its appearance and/or design, be likely, or tend, to be
in design and General appearance to "Chuck Taylor" confused by the public with any of the Converse-named
and, claiming prior Identification of "Chuck Taylor" in the products ... or shall, in any manner, infringe Converse
mind of the buying public in the Philippines, they contend designs". That defendants are fully aware that
that defendants are guilty of unfair competition by selling "Custombuilt" is Identical in design and appearance to
"Custombuilt" of the design and with the general "Chuck Taylor" has conclusively been admitted by them
appearance of "Chuck Taylor". The design and in their correspondence with plaintiff Converse leading to
appearance of both products, as shown by the samples the submission by defendants to plaintiff Converse of a
and photographs of both products, are not disputed. sketch of a new design that should give "Custombuilt" an
Defendants insist that (a) there is no similarity in design appearance different from that of "Chuck Taylor".
and general appearance between "Custombuilt" and
"Chuck Taylor", pointing out that "Custombuilt" is readily
Aside from the written admission of defendants, the facts
Identifiable by the tradename "Custombuilt" appearing
clearly indicate that defendants copied the design of
on the ankle patch, the heel patch, and on the sole. It is
"Chuck Taylor" with intent to gain "Chuck Taylor", as has
also vigorously contended by defendants that the
been noted earlier, was ahead ot Custombuilt' in the
registration of defendant Jacinto Rubber's trademark
Philippines market and has been enjoining a high OF UNFAIR COMPETITION WHEN DEFENDANT
reputation for quality and style. Even defendants' own JACINTO RUBBER & PLASTICS CO., INC.,
exhibits leave no room for doubt that defendants copied MANUFACTURED AND SOLD RUBBER-SOLED
the design and appearance of "Chuck Taylor" for the CANVASS SHOES UNDER ITS REGISTERED TRADE
purpose of cashing in on the reputation of "Chuck MARK "CUSTOMBUILT".
Taylor". The samples of defendants' product show,
indeed, as announced by defendants' counsel the III
"metamorphosis" of defendants' product. In the
beginning, the design of defendants' product was entirely THE COURT A QUO ERRED IN ADJUDICATING IN
different from its present design and the design of FAVOR OF THE PLAINTIFF THE SUM OF P160,000.00
"Chuck Taylor". It was only in 1962, or 16 years after AS COMPENSATORY DAMAGES AND P10,000.00 AS
"Chuck Taylor" has been in the market, that defendants ATTORNEY'S FEES. (Pp. A & B, Brief for Defendants-
adopted the present design of "Custombuilt". It is also Appellants.)
noteworthy that "Custombuilt" sells at P35 less than
"Chuck Taylor"; thus the casual buyer is led to believe
that he is buying the same product at a lower price. Not We have carefully gone over the records and reviewed
surprisingly, the volume of sales of "Custombuilt" the evidence to satisfy Ourselves of the similarity of the
increased from 35% to 75% of defendants' total sales shoes manufactured and sold by plaintiffs with those
after they incorporated in their product the design and sold by defendants, and We find the conclusions of the
appearance of "Chuck Taylor". trial court to be correct in all respects. In fact, in their
brief, defendants do not contest at all the findings of the
trial court insofar as material Identity between the two
It is thus clear that defendants are guilty of unfair kinds of shoes in question is concerned. We have
competition by giving "Custombuilt" the same general Ourselves examined the exhibits in detail, particularly,
appearance as "Chuck Taylor". It is equally clear that the comparative pictures and other representations if the
defendants in so doing are guilty of bad faith. There shoes in question, and We do not hesitate in holding that
remains for the Court to consider the damages that he plaintiffs complaint of unfair competition is amply
defendants should be liable for to plaintiffs. Plaintiffs justified.
claim compensatory damages equivalent to 30% of the
gross sales of "Custombuilt" and attorney's fees in the
amount of P25,000.00. By defendants' own evidence, From said examination, We find the shoes manufactured
the gross sales of "Custombuilt" from 1962, the year by defendants to contain, as found by the trial court,
defendants adopted the present design of their product, practically all the features of those of the plaintiff
to 1965 total P16,474,103.76. If the Court should grant Converse Rubber Corporation and manufactured, sold or
plaintiffs' prayer for compensatory damages equivalent marketed by plaintiff Edwardson Manufacturing
to 30% of defendants' gross sales, the compensatory Corporation, except for heir respective brands, of course.
damages would amount to P4,942,231.13. Considering We fully agree with the trial court that "the respective
the amount of gross sales of "Custombuilt", an award to designs, shapes, the colors of the ankle patches, the
plaintiffs for 30% of defendants' annual gross sales bands, the toe patch and the soles of the two products
would seriously ripple, if not bankrupt, defendant are exactly the same ... (such that) at a distance of a few
companies. The Court is aware that defendants' meters, it is impossible to distinguish "Custombuilt" from
investment is substantial and that defendants support a "Chuck Taylor". These elements are more than sufficient
substantial number of employees and laborers. This to serve as basis for a charge of unfair competition. Even
being so, the Court is of the opinion that plaintiffs are if not all the details just mentioned were Identical, with
entitled to only one (1) per cent of annual gross sales of the general appearances alone of the two products, any
"Custombuilt" shoes of current design. As for attorney s ordinary, or even perhaps even a not too perceptive and
fees, the Court is of the opinion that, P10,000.00 is discriminating customer could be deceived, and,
reasonable. (Pages 217-228, Record on Appeal.) therefore, Custombuilt could easily be passed off for
Chuck Taylor. Jurisprudence supports the view that
under such circumstances, the imitator must be held
Defendants-appellants have assigned the following liable. In R. F. & J. Alexander & Co. Ltd. et al. vs. Ang et
alleged errors: al., 97 Phil. 157, at p. 160, this Court held:

I By "purchasers" and "public" likely to be deceived by the

appearance of the goods, the statute means the
THE COURT A QUO ERRED IN ASSUMING "ordinary purchaser". And although this Court apparently
JURISDICTION OVER THE COMPLAINT OF shifted its position a bit in  Dy Buncio vs. Tan Tiao
PLAINTIFFS-APPELLEES. Bok, 42 Phil. 190, by referring to simulations likely to
mislead "the ordinarily intelligent buyer", it turned to the
II general accepted doctrine in E. Spinner & Co. vs. Neuss
Hesslein, 54 Phil. 224, where it spoke of "the casual
THE COURT A QUO ERRED IN ARRIVING AT THE purchasers" "who knows the goods only by name."
CONCLUSION THAT THE DEFENDANTS ARE GUILTY
It stands to reason that when the law speaks of any vendor engaged in selling such goods with a like
purchasers' it generally refers to ordinary or average purpose;
purchasers.
(b) Any person who by any artifice, or device, or who
... in cases of unfair competition, while the requisite employs any other means calculated to induce the false
degree of resemblance or similarity between the names, belief that such person is offering the services of another
brands, or other indicia is not capable of exact definition, who has Identified such services in the mind of the
it may be stated generally that the similarity must be public; or
such, but need only be such, as is likely to mislead
purchasers of ordinary caution and prudence; or in other (c) Any person who shall make any false statement in
words, the ordinary buyer, into the belief that the goods the course of trade or who shall commit any other act
or wares are those, or that the name or business is that, contrary to good faith of a nature calculated to discredit
of another producer or tradesman. It is not necessary in the goods, business or services of another.
either case that the resemblance be sufficient to deceive
experts, dealers, or other persons specially familiar with It is the theory of defendants-appellants, however, that
the trademark or goods involved. Nor is it material that a plaintiffs-appellees have failed to establish a case of
critical inspection and comparison would disclose unfair competition because "inasmuch as the former
differences, or that persons seeing the trademarks or (Converse Chuck Taylor) was not sold in the local
articles side by side would not be deceived (52 Am. Jur. markets from 1949 to 1967, no competition, fair or unfair,
pp. 600-601). (Brief for Plaintiffs as Appellees, pp. 28-29, could have been offered to it by the latter product
p. 71, Record.) (Custombuilt Challenger) during the said period." While
the argument, it may be conceded, makes sense as a
Indeed, the very text of the law on unfair competition in proposition in practical logic, as indeed, it served as a
this country is clear enough. It is found in Chapter VI of legal defense in jurisprudence in the past, the modern
Republic Act 166 reading thus: view, as contended by plaintiffs "represents a tendency
to mold, and even to expand; legal remedies in this field
SEC. 29. Unfair competition, rights and remedies. - A to conform to ethical practices." (Brief of Plaintiffs as
person who has Identified in the mind of the public the Appellees, pp. 16-17.) As a matter of fact, in Ang vs.
goods he manufactures or deals in, his business or Toribio, 74 Phil. 129, this Court aptly pointed out:
services from those of others, whether or not a mark or
trade name is employed, has a property right in the ... As trade has developed and commercial changes
goodwill of the said goods, business or services so have come about, the law of unfair competition has
Identified, which will be protected in the same manner as expanded to keep pace with the times and the elements
other property rights. Such a person shall have the of strict competition in itself has ceased to be the
remedies provided in section twenty-three, Chapter V determining factor. The owner of a trademark or trade-
hereof. name has property right in which he is entitled to
protection, since there is damage to him from confusion
Any person who shall employ deception or any other of reputation or goodwill in the mind of the public as well
means contrary to good faith by which he shall pass off as from confusion of goods. The modern trend is to give
the goods manufactured by him or in which he deals, or emphasis to the unfairness of the acts and to classify
his business, or services of those of the one having and treat the issue as fraud.
established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair Additionally, We quote with approval counsel's
competition, and shall be subject to an action therefor. contention thus:

In particular, and without in any way limiting the scope of In no uncertain terms, the statute on unfair competition
unfair competition, the following shall be deemed guilty extends protection to the goodwill of a manufacturer or
of unfair competition: dealer. It attaches no fetish to the word "competition". In
plain language it declares that a "person who has
(a) Any person, who in selling his goods shall give them Identified in the public the goods he manufactures or
the general appearance of goods of another deals in, his business or services from those of others,
manufacturer or dealer, either as to the goods whether or not a right in the goodwill of the said goods,
themselves or in the wrapping of the packages in which business or services so Identified, which will be
they are contained, or the devices or words thereon, or protected in the same manner as other property rights."
in any other feature of their appearance, which would be It denominates as "unfair competition" "any acts"
likely to influence purchasers to believe that the goods calculated to result in the passing off of other goods "for
offered are those of a manufacturer or dealer other than those of the one having established such goodwill."
the actual manufacturer or dealer, or who otherwise Singularly absent is a requirement that the goodwill
clothes the goods with such appearance as shall deceive sought to be protected in an action for unfair competition
the public and defraud another of his legitimate trade, or must have been established in an actual competitive
any subsequent vendor of such goods or any agent of situation. Nor does the law require that the deception or
other means contrary to good faith or any acts calculated actions in the local courts, except on compliance with
to pass off other goods for those of one who has elaborate requirements, must not be unduly extended or
established a goodwill must have been committed in an improperly applied (at page 75). In Commissioner of
actual competitive situation. Internal Revenue v. United States Lines Company, this
Court did not hold that an unlicensed foreign corporation
To read such conditions, as defendants-appellants seek may not sue in the Philippines. The Court simply held
to do, in the plain prescription of the law is to re- that a foreign shipping company, represented by a local
construct it. Indeed, good-will established in other than a agent, is doing business in the Philippines so as to
competitive milieu is no less a property right that subject it to the "operation of our revenue and tax."
deserves protection from unjust appropriation or injury.
This, to us, is precisely the clear sense of the law when it Western Equipment and Supply Co. v. Reyes, 51 Phil.
declares without equivocation that a "person who has 115, made clear that the disability of a foreign
Identified in the mind of the public the goods he corporation from suing in the Philippines is limited to
manufactures or deals in, his business or services from suits "to enforce any legal or contract rights arising from,
those of others, has a property right in the goodwill of the or growing out, of any business which it has transacted
said goods, business or services so Identified, which will in thePhilippine Islands." ... On the other hand, where
be protected in the same manner as other property the purpose of a suit is "to protect its reputation, its
rights." corporate name, its goodwill, whenever that reputation,
corporate name or goodwill have, through the natural
Plaintiffs-appellees have a established goodwill. This development of its trade, established themselves," an
goodwill, the trial court found, defendants-appellants unlicensed foreign corporation may sue in the
have pirated in clear bad faith to their unjust enrichment. Philippines (at page 128). So interpreted by the Supreme
It is strange that defendants-appellants now say that Court, it is clear that Section 69 of the Corporation Law
they should be spared from the penalty of the law, does not disqualify plaintiff-appellee Converse Rubber,
because they were not really in competition with which does not have a branch office in any part of the
plaintiffs-appellees. (Pp. 21-22, Id.) Philippines and is not "doing business" in the Philippines
(Record on Appeal, pp. 190-191), from filing and
prosecuting this action for unfair competition.
In a desperate attempt to escape liability, in their first
assigned error, defendants-appellants assail the
jurisdiction of the trial court, contending that inasmuch as The futility of the error assigned by defendants-
Converse Rubber Corporation is a non-resident appellants becomes more evident in light of the explicit
corporation, it has no legal right to sue in the courts of provision of Section 21 (a) of Republic Act No. 166, as
the Philippines, citing Marshall-Wells Co. vs. Elser & amended, that a foreign corporation, whether or not
C., 46 Phil. 70 and Commissioner of Internal Revenue licensed to transact business in the Philippines may
vs. United States Lines Co., G. R. No. L-16850, May 30, bring an action for unfair competition provided the
1962 (5 SCRA 175) and, furthermore, that plaintiff country of which it "is a citizen, or in which it is domiciled,
Edwardson Manufacturing Corporation, although "a by treaty, convention or law, grants a similar privilege to
domestic corporation, is nothing but a licensee of juristic persons in the Philippines." The Convention of
Converse Rubber Corporation in the local Paris for the Protection of Industrial Property, to which
manufacturing, advertisement, sale and distribution of the Philippines adheres, provides, on a reciprocal basis
the rubber-soled footwear", hence, it is equally without that citizens of a union member may file an action for
such personality. (p. 18, Brief of Defendants-Appellants). unfair competition and infringement of trademarks,
patents, etc. (610. G. 8010) in and of the union
members. The United States of America, of which
We are not impressed. The easy and, We hold to be
Converse Rubber is a citizen, is also a signatory to this
correct, refutation of defendants' position is stated
Convention. Section 1126 (b) and (h) of Public Law 489
adequately and understandably in plaintiffs' brief as
of the United States of America allows corporations
appellees as follows:
organized under the laws of the Philippines to file an
action for unfair competition in the United States of
The disability under Section 69 of the Corporation Law of America, whether or not it is licensed to do business in
an unlicensed foreign corporation refers to transacting the United States. (Annex "H" of Partial Stipulation of
business in the Philippines and maintaining a "suit for Facts, Record on Appeal, p. 192).
the recovery of any debt, claim, or demand whatever"
arising from its transacting business in the Philippines. In
As regards the other plaintiff-appellee, Edwardson
Marshall-Wells, this Court precisely rejected a reading of
Manufacturing Corporation, it is indisputable that it has a
Section 69 of the Corporation Law as "would give it a
direct interest in the success of this action: as exclusive
literal meaning", i.e., "No foreign corporation shall be
licensee of Converse Rubber in the manufacture and
permitted by itself or assignee any suit for the recovery
sale of "Chuck Taylor" shoes in the Philippines, naturally
of any deed, claim, or demand unless it shall have the
it would be directly affected by the continued
license prescribed by Section 68 of the Law." "The effect
manufacture and sale by defendants-appellants of shoes
of the statute," declared this Court, "preventing foreign
that are confusingly Identical in appearance and design
corporations from doing business and from bringing
with "Chuck Taylor." (Brief of Plaintiffs as Appellees, pp. plaintiffs are entitled for that period. Perhaps, as His
11-14.) Honor pessimistically argued, defendants would suffer
crippling of their business. But it is quite clear from the
As can be seen, what is actually the only controversial circumstances surrounding their act of deliberately
matter in this case is that which refers to the assessment passing off the rubber shoes produced by them for those
ot damages by the trial court, which both plaintiffs and over which plaintiffs had priorly established goodwill, that
defendants consider erroneous, defendants maintaining, defendants had tremendously increased their volume of
of course, that it is excessive, even baseless, while, on business and profits in the imitated shoes and have
the other hand, plaintiffs posit that it is far short from precisely incurred, strictly speaking, the liability of the
what the law and the relevant circumstances require. damages to be paid by them be doubled, per the last
sentence of Section 23.
Under Section 29 of the Republic Act 166, aforequoted,
it will be observed that the first paragraph thereof refers We are of the considered opinion that the trial court was
to the property rights in goodwill of a "person who has overly liberal to the defendants-appellants. The
Identified in the mind of the public goods he P160,000.00 awarded by His Honor as compensatory
manufactures or deals in, his business or offices from damages for the years 1962 to 1965 are utterly
those of others, whether or not a mark or trade name is inadequate. Even the 5% of the gross sales of
employed", while the second paragraph speaks of "any "Custombuilt" shoes from 1966 until its injunction is fully
person who shall employ deception or any other means obeyed are short of what the law contemplates in cases
contrary to good faith by which he shall pass off the of this nature. We hold that considering that the gross
goods manufactured by him ... for those of the one sales of defendants-appellants increased to
having established such goodwill." This second P16,474,103.76, (as admitted in defendants-appellants'
paragraph, which may be read together with the first own brief, p. 2), only 75% of which, plaintiffs-appellants
paragraph, makes the deceiver or imitator "guilty of generously assert corresponded to Custombuilt sales, it
unfair competition and shall be subjected to an action would be but fair and just to award plaintiffs-appellants
therefore", meaning what the first paragraph refers to as 15% of such 75% as compensatory damages from 1962
the "remedies provided in Section twenty-three, Chapter up to the finality of this decision. In other words, 75% of
V" of the Act. It is implicit in the decision of the trial court P16,474,103.76 would be P12,355,577.82 and 15% of
and the briefs of the parties that everyone here this last amount would be P1,853,336.67, which should
concerned has acted on the basis of the assumptions be awarded to plaintiffs-appellants for the whole period
just stated. already stated, without any interest, without prejudice to
plaintiffs-appellants seeking by motion in the trial court in
this same case any further damage should defendants-
Now, Section 23 reads:
appellants continue to disobey the injunction herein
affirmed after the finality of this decision.
Actions, and damages and injunction for infringement. -
Any person entitled to the exclusive use of a registered
We feel that this award is reasonable. It is not farfetched
mark or trade name may recover damages in a civil
to assume that the net profit of the imitator which, after
action from any person who infringes his rights, and the
all is what the law contemplates as basis for damages if
measure of the damages suffered shall be either the
it were only actually ascertainable, in the manufacture of
reasonable profit which the complaining party would
rubber shoes should not be less than 20 to 25% of the
have made, had the defendant not infringed his said
gross sales. Regrettably, neither of the parties presented
rights, or the profit which the defendant actually made
positive evidence in this respect, and the Court is left to
out of the infringement, or in the event such measure of
use as basis its own projection in the light of usual
damages cannot be readily ascertained with reasonable
business practices. We could, to be sure, return this
certainty, then the court may award as damages a
case to the lower court for further evidence on this point,
reasonable percentage based upon the amount of gross
but, inasmuch as this litigation started way back about
sales of the defendant of the value of the services in
fourteen years ago and it would take more years before
connection with which the mark or trade name was used
any final disposition is made hereof should take the
in the infringement of the rights of the complaining party.
course, We are convinced that the above straight
In cases where actual intent to mislead the public or to
computation, without any penalty of interest, is in
defraud the complaining party shall be shown, in the
accordance with the spirit of the law governing this case.
discretion of the court, the damages may be doubled.

In re G. R. No. L-30505
The complaining party, upon proper showing, may also
be granted injunction.
The subject matter of this appeal is the order of the trial
court, incident to its main decision We have just
In the light of the foregoing provision, We find difficulty in
reviewed above, dismissing "for lack 6f jurisdiction the
seeing the basis of the trial court for reducing the 30%,
contempt charge filed by plaintiffs against defendant
claimed by plaintiffs, of the gross earnings of defendants
Jacinto Rubber & Plastics Co. Inc., Ace Rubber &
from the sale of Custombuilt from 1962 to merely 1% as
the measure of compensatory damages to which
Plastics Corporation; Philippine & Management above-mentioned case of Cia. General de Tabacos, the
Corporation and their respective corporate officers. Court held:

Importantly, it is necessary to immediately clear up the The applicant contends here: First, that the injunction is
minds of appellees in regard to some aspects of the indefinite and uncertain to such an extent that a person
argument on double jeopardy discussed by their of ordinary intelligence would be unable to comply with it
distinguished counsel in his preliminary argument in his and still protect his acknowledged rights; second, that
brief (pp. 9-13). It is contended therein that inasmuch as the injunction is void for the reason that the judgment of
the denial orders of August 23, 1967, December 29, the court on which it 's based is not responsive to the
1967 and January 24, 1968 have the character of pleadings or to the evidence in the case and has nothing
acquittals, contempt proceedings being criminal in in the record to support it; third, that the court erred in
nature, this appeal subjects appellees to double assuming jurisdiction and fining defendant after an
jeopardy. Such contention misses, however, the appeal had been taken from the judgment of the court
important consideration that the said denial orders, were, and the perpetual injunction issued thereon. There are
as explained by His Honor himself in his last two orders, other objections that need no particular discussion.
based on the assumption that he had lost jurisdiction
over the incident by virtue of the earlier perfection of the Discussing these questions generally it may be admitted,
appeals of both parties from the decision on the merits. as we stated in our decision in the main case (G. R No.
10251, ante p. 485) that, while the complaint set forth an
It is thus the effect of this assumption, revealed later by action on a trade-name and for unfair competition,
the trial judge, on the first order of August 23, 1967 that accepting the plaintiff's interpretation of it, the trial court
needs clarificatory disquisition, considering that the said based its judgment on the violation of a trade-mark,
first order was exclusively based on "the interests of although the complaint contained no allegation with
justice" and "lack of merit" and made no reference at all respect to a trade-mark and no issue was joined on that
to jurisdiction. If indeed the trial court had lost subject by the pleadings and no evidence was
jurisdiction, it would be clear that said order could have introduced on the trial with respect thereto. There Aas
no legal standing, and the argument of double jeopardy however, some evidence in the case with respect to the
would have no basis. plaintiff's ownership of the trade-name "Isabela," for the
violation of which the plaintiff was suing, and there was
But after mature deliberation, and in the light of Cia some evidence which might support an action of unfair
General de Tabacos de Filipinas vs. Alhambra Cigar & competition, if such an action could be sustained under
Cigarette Manufacturing Co., 33 Phil. 503, cited by the statute. Therefore, although the judgment of the trial
appellant's counsel in his brief, We are convinced that court was based on the violation of a trade-mark, there
the trial court in the case at bar had jurisdiction to was some evidence to sustain the judgment if it had
entertain and decide the motion for contempt in question. been founded on a violation of the trade-name or on
Indeed, the enforcement of either final or preliminary- unfair competition. The judgment, as we have already
made-final injunctions in decisions of trial courts are found in the main case, was erroneous and was
immediately executory. The reason for this rule lies in reversed for that reason; but having some evidence to
the nature itself of the remedy. If a preliminary injunction, sustain it, it was not void and the injunction issued in that
especially one issued after a hearing is enforceable action was one which the court had power to issue.
immediately to protect the rights of the one asking for it, Although the judgment was clearly erroneous and
independently of the pendency of the main action, there without basis in law, it was, nevertheless a judgment of a
is no reason why when that preliminary injunction is court of competent jurisdiction which had authority to
made final after further and fuller hearing the merits of render that particular judgment and to issue a permanent
the plaintiff's cause of action, its enforceability should injunction thereon.
lesser, force. The same must be true with stronger basis
in the case of a permanent injunction issued as part ot xxx xxx xxx
the judgment. The aim is to stop the act complained of
immediately because the court has found it necessary to ... The question is not was the judgment correct on the
serve the interests of justice involved in the litigation law and the facts, but was it a valid judgment? If so, and
already resolve by it after hearing and reception of the if the injunction issued thereon was definite and certain
evidence of both parties. and was within the subject matter of the judgment, the
defendant was bound to obey it, however erroneous it
As a matter ot fact, it is quite obvious that an action for may have been. (Pp. 505-506, 506, 33 Phil.)
unfair competition with prayer for an injunction partakes
of the nature of an action for injunction within the It is interesting to note that while the trial court was of the
contemplation of Section 4 of Rule 39, and this cited opinion that it had lost jurisdiction over the motion for
provision states explicitly that "unless otherwise ordered contempt, upon insistence of the plaintiffs, in its order of
by the court, a judgment in an action for injunction - shall January 24, 1968, it made the following findings of fact:
not be stayed after its rendition and before an appeal is
taken or during the pendency of an appeal." In the
It is not controverted on December 14, 1966, the buys the "Custombuilt Rubber" shoes from defendant
Philippine Marketing and Management sold to Virginia Jacinto Rubber which it resells to the general public. It is
Ventures 12 pairs of "Custombuilt" rubber shoes bearing noteworthy, however, that this particular witness made
an Identical design and general appearance as that several admissions in the course of his testimony which
prohibited in the injunction. It is likewise not controverted shed light on the question at issue. Thus, he admitted
that subsequent to December 14, 1966 the sale of the that prior to the formal organization of the Philippine
said rubber shoes was advertised by Philippine Marketing and Management Corporation in January
Marketing and Management Corporation in several 1966 he was the sales manager of defendant Jacinto
metropolitan newspapers even during the pendency of Rubber; that after the organization of the said
the contempt proceedings. corporation, he was informed that defendant Jacinto
Rubber would discontinue its sales operations and
The only issue of fact is whether or not in selling and instead give the exclusive distribution of the shoes to the
advertising the sale of the prescribed shoes the Philippine Marketing and Management Corporation; and
Philippine Marketing and Management Corporation that he was then offered the position of sales manager of
conspired with the defendants, particularly defendant Philippine Marketing and Management because of his
Jacinto Rubber, or acted as its agent, employee or in extensive experience in the distribution of "Custombuilt"
any other capacity with knowledge of the issuance of the rubber shoes. Also, he testified that the subscribed
said permanent injunction. On this point, the evidence of capital stock of the Philippine Marketing and
the plaintiffs shows that Hermogenes Jacinto, Arturo Management Corporation is only P100,000.00 out of
Jacinto, Fernando Jacinto and Milagros J. Jose which P25,000.00 has been paid whereas its average
constitute the majority of the board of directors of the monthly purchases of "Custombuilt" rubber shoes is
Philippine Marketing and Management Corporation; that between P300,000.00 to P400,000.00 or between
Hermogenes Jacinto is the president, Arturo Jacinto is P4,000,000.00 to P5,000,000.00 annually. Such huge
the vice-president, and Fernando Jacinto and Milagros J. purchases Philippine Marketing and Management
Jose are directors, of defendant Jacinto Rubber; that Corporation is able to make, in spite of its meager
Milagros J. Jose is the treasurer of the Philippine capital, because defendant Jacinto Rubber allows it to
Marketing and Management Corporation; and that buy on credit.
Ramon V. Tupas, corporate secretary of the Philippine
Marketing and Management Corporation, actively Considering the substantial Identity of the responsible
assisted by Atty. Juan T. David, counsel of record of the corporate officers of the defendant Jacinto Rubber and
defendants, in defending the defendants in this case. It the Philippine Marketing and Management Corporation,
also appears from the different advertisements published the huge volume of alleged purchases of "Custombuilt"
in the metropolitan papers that Philippine Marketing and shoes by the Philippine Marketing and Management
Management Corporation is the exclusive distributor of Corporation compared to its paid in capital, and the
the questioned "Custombuilt" rubber shoes. Moreover, cessation of the sales operations of defendant Jacinto
during the trial of this case on the merits the defendants Rubber after the organization of the former, the Court is
admitted that the Philippine Marketing and Management convinced beyond reasonable doubt that the Philippine
Corporation is a sister corporation of defendant Jacinto Marketing and Management Corporation is the selling
Rubber, both corporations having Identical stockholders, arm or branch of defendant Jacinto Rubber and that both
and Hermogenes Jacinto and Fernando Jacinto are corporations are controlled by substantially the same
stockholders and incorporators of the Philippine persons, the Jacinto family. The contention of the
Marketing and Management Corporation. Philippine Marketing and Management Corporation that
it sold the 12 pairs of "Custombuilt" shoes on December
On the other hand, the defendants, particularly 14, 1966 without knowledge of the issuance of the
defendant Jacinto Rubber, presented no evidence to injunction is belied by its conduct of continuing the sale
disprove its intra-corporate relationship with the and the advertisement of said shoes even during the
Philippine Marketing and Management Corporation. pendency of the contempt proceedings. This conduct
Instead it presented, over the objection of the plaintiffs, clearly reveals the wilfulness and contumacy with which
the affidavit of its executive vice-president, Geronimo it had disregarded the injunction. Besides, it is inherently
Jacinto, who affirmed that defendant Jacinto Rubber had improbable that defendant Jacinto Rubber and Atty.
no knowledge of, or participation in, the acts complained Ramon B. Tupas did not inform the Philippine Marketing
of in the motion to declare them in contempt of Court and and Management Corporation of the issuance of the
that it has not in any way violated any order of this Court. injunction, a fact which undoubtedly has a material
On its part, the Philippine Marketing and Management adverse effect on its business.
Corporation presented as a witness its general manager,
Aniceto Tan, who testified that the Philippine Marketing Upon the foregoing, the Court is convinced that
and Management Corporation is not an agent or sister defendants and Philippine Marketing and Management
corporation of defendant Jacinto Rubber; that he came Corporation are guilty of contempt of court in
to know of the pendency of this case and the issuance of disregarding the permanent injunction issued by this
the permanent injunction only on December 19, 1966 Court in its decision on the merits of the main case.
when served with a copy of plaintiffs' motion; and that However, for the reasons stated in the Order of
the Philippine Marketing and Management Corporation December 29, 1967, the Court maintains that it has lost
jurisdiction over the case. (Pp. 115-120, Record on WHEREFORE, judgment is hereby rendered - in G. R.
Appeal.) No. L-27425 - affirming the decision of the trial court with
the modification of the amount of the damages awarded
Stated differently, since the trial court had jurisdiction to to plaintiffs in the manner hereinabove indicated; and in
take cognizance of the motion, its findings of facts G.R. No. L-30505 - the three orders of dismissal of the
should as a rule bind the parties, and, in this connection, trial court of the contempt charges against appellees are
appellees do not seriously challenge said findings. And all hereby reversed, and on the basis of the factual
since We are holding that the trial court had jurisdiction, findings made by said court in its last order of January
the above findings may be determinative of the factual 24, 1968, appellees are hereby declared in contempt of
issues among the parties herein. We are thus faced with court and the records of the contempt proceedings (G.
the following situations: R. No. L-30505) are ordered returned to the trial court for
further proceedings in line with the above opinion,
namely for the imposition of the proper penalty, its
The first order of dismissal of August 23, 1967, albeit
decision being incomplete in that respect. Costs against
issued with jurisdiction, was incomplete because it
appellees in G. R. No. L-27425, no costs in G. R. No. L-
contained no statements of facts and law on which it was
30505. These decisions may be executed separately.
based in violation of the pertinent constitutional precept.
It could not stand as it was.

The second of December 29, 1967 was still incomplete,

with the added flaw that his Honor declared himself
therein as having lost jurisdiction.

On other hand, while the third order of January 24, 1968

filled the ommissions of the first two orders, it, however,
the reiterated the erroneous ruling of the second order
regarding lost of jurisdiction of the court over the
incident.

Combining the three orders, it can be seen that the result

is that the trial court found from the evidence that its
injunction had been violated, but it erroneously
considered itself devoid of authority to impose the
appropriate penalty, for want of jurisdiction. Upon these
premises, We hold that the factual findings of the trial
court in its third order may well stand as basis tor the
imposition of the proper penalty.

To be sure, appellees are almost in the right track in

contending that the first denial order of the trial court G.R. No. 202423               January 28, 2013
found them not guilty. What they have overlooked
however is that such a finding cannot be equated with an CHESTER UYCO, WINSTON UYCHIYONG, and
acquittal in a criminal case that bars a subsequent CHERRY C. UYCO-ONG, Petitioners,
jeopardy. True it is that generally, contempt proceedings vs.
are characterized as criminal in nature, but the more VICENTE LO, Respondent.
accurate juridical concept is that contempt proceedings
may actually be either civil or criminal, even if the
RESOLUTION
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 BRION, J.:
the court and protect its outraged dignity. It is civil when
there is failure to do something ordered by a court to be We resolve the motion for reconsideration1 dated
done for the benefit of a party. (3 Moran, Rules of Court, October 22, 2012 filed by petitioners Chester Uyco,
pp. 343-344, 1970 ed; see also Perkins vs. Director of Winston Uychiyong and Cherry C. Uyco-Ong to set aside
Prisons, 58 Phil. 272; Harden vs. Director of Prisons, 81 the Resolution2 dated September 12, 2012 of this Court,
Phil. 741.) And with this distinction in mind, the fact that which affirmed the decision3 dated March 9, 2012 and
the injunction in the instant case is manifestly for the the resolution4 dated June 21, 2012 of the Court of
benefit of plaintiffs makes of the contempt herein Appeals (CA) in CA-G.R. SP No. 111964. The CA
involved civil, not criminal. Accordingly, the conclusion is affirmed the resolution5 dated September 1, 2008 of the
inevitable that appellees have been virtually found by the Department of Justice (DOJ). Both the CA and the DOJ
trial court guilty of civil contempt, not criminal contempt, found probable cause to charge the petitioners with false
hence the rule on double jeopardy may not be invoked. designation of origin, in violation of Section 169.1, in
relation with Section 170, of Republic Act No. (RA) 8293, In a separate Answer, Chua admitted that he had dealt
otherwise known as the "Intellectual Property Code of with Wintrade for several years and had sold its
the Philippines."6 products. He had not been aware that Wintrade had lost
the authority to manufacture, distribute, and deal with
The disputed marks in this case are the "HIPOLITO & products containing the subject marks, and he was never
SEA HORSE & TRIANGULAR DEVICE," "FAMA," and informed of Wintrade’s loss of authority. Thus, he could
other related marks, service marks and trade names of have not been part of any conspiracy.
Casa Hipolito S.A. Portugal appearing in kerosene
burners. Respondent Vicente Lo and Philippine Burners After the preliminary investigation, the Chief State
Manufacturing Corporation (PBMC) filed a complaint Prosecutor found probable cause to indict the petitioners
against the officers of Wintrade Industrial for violation of Section 169.1, in relation with Section
SalesCorporation (Wintrade), including petitioners 170, of RA 8293. This law punishes any person who
Chester Uyco, Winston Uychiyong and Cherry Uyco- uses in commerce any false designation of origin which
Ong, and of National Hardware, including Mario Sy is likely to cause confusion or mistake as to the origin of
Chua, for violation of Section 169.1, in relation to Section the product. The law seeks to protect the public; thus,
170, of RA 8293. even if Lo does not have the legal capacity to sue, the
State can still prosecute the petitioners to prevent
Lo claimed in his complaint that Gasirel-Industria de damage and prejudice to the public.
Comercio e Componentes para Gass, Lda. (Gasirel), the
owner of the disputed marks, executed a deed of On appeal, the DOJ issued a resolution affirming the
assignment transferring these marks in his favor, to be finding of probable case. It gave credence to Lo’s
used in all countries except for those in Europe and assertion that he is the proper assignee of the subject
America.7 In a test buy, Lo purchased from National marks. More importantly, it took note of the petitioners’
Hardware kerosene burners with the subject marks and admission that they used the words "Made in Portugal"
the designations "Made in Portugal" and "Original when in fact, these products were made in the
Portugal" in the wrappers. These products were Philippines. Had they intended to refer to the source of
manufactured by Wintrade. Lo claimed that as the the design or the history of the manufacture, they should
assignee for the trademarks, he had not authorized have explicitly said so in their packaging. It then
Wintrade to use these marks, nor had Casa Hipolito S.A. concluded that the petitioners’ defenses would be better
Portugal. While a prior authority was given to Wintrade’s ventilated during the trial and that the admissions of the
predecessor-in-interest, Wonder Project & Development petitioners make up a sufficient basis for probable cause.
Corporation (Wonder), Casa Hipolito S.A. Portugal had
already revoked this authority through a letter of The CA found no grave abuse of discretion on the part of
cancellation dated May 31, 1993.8 The kerosene burners the DOJ and affirmed the DOJ’s ruling.
manufactured by Wintrade have caused confusion,
mistake and deception on the part of the buying public. When the petitioners filed their petition before us, we
Lo stated that the real and genuine burners are those denied the petition for failure to sufficiently show any
manufactured by its agent, PBMC. reversible error in the assailed judgment to warrant the
exercise of the Court’s discretionary power.
In their Answer, the petitioners stated that they are the
officers of Wintrade which owns the subject trademarks We find no reversible error on the part of the CA and the
and their variants. To prove this assertion, they DOJ to merit reconsideration. The petitioners reiterate
submitted as evidence the certificates of registration with their argument that the products bought during the test
the Intellectual Property Office. They alleged that buy bearing the trademarks in question were not
Gasirel, not Lo, was the real party-in-interest. They manufactured by, or in any way connected with, the
allegedly derived their authority to use the marks from petitioners and/or Wintrade. They also allege that the
Casa Hipolito S.A. Portugal through Wonder, their words "Made in Portugal" and "Original Portugal" refer to
predecessor-in-interest. Moreover, PBMC had already the origin of the design and not to the origin of the
ceased to be a corporation and, thus, the licensing goods.
agreement between PBMC and Lo could not be given
effect, particularly because the agreement was not
notarized and did not contain the provisions required by The petitioners again try to convince the Court that they
Section 87 of RA 8293. The petitioners pointed out that have not manufactured the products bearing the marks
Lo failed to sufficiently prove that the burners bought "Made in Portugal" and "Original Portugal" that were
from National Hardware were those that they bought during the test buy. However, their own
manufactured. But at the same time, they also argued admission and the statement given by Chua bear
that the marks "Made in Portugal" and "Original considerable weight.
Portugal" are merely descriptive and refer to the source
of the design and the history of manufacture. The admission in the petitioners’ Joint Affidavit is not in
any way hypothetical, as they would have us believe.
They narrate incidents that have happened. They refer to
Wintrade’s former association with Casa Hipolito S.A.
Portugal; to their decision to produce the burners in the charge the petitioners with false designation of origin.
Philippines; to their use of the disputed marks; and to The fact that the evidence did not come from Lo, but had
their justification for their use. It reads as follows: been given by the petitioners, is of no significance.

24. As earlier mentioned, the predecessor-in-interest of The argument that the words "Made in Portugal" and
Wintrade was the former exclusive licensee of Casa "Original Portugal" refer to the origin of the design and
Hipolito SA of Portugal since the 1970’s, and that not to the origin of the goods does not negate the finding
Wintrade purchased all the rights on the said trademarks of probable cause; at the same time, it is an argument
prior to the closure of said company. Indeed, the burners that the petitioners are not barred by this Resolution from
sold by Wintrade used to be imported from Portugal, but raising as a defense during the hearing of the case.
Wintrade later on discovered the possibility of obtaining
these burners from other sources or of manufacturing WHEREFORE, premises considered, we hereby DENY
the same in the Philippines. the motion for reconsideration for lack of merit.

Wintrade’s decision to procure these burners from SO ORDERED.

sources other than Portugal is certainly its management
prerogative. The presence of the words "made in
Portugal" and "original Portugal" on the wrappings of the
burners and on the burners themselves which are
manufactured by Wintrade is an allusion to the fact that
the origin of the design of said burners can be traced
back to Casa Hipolito SA of Portugal, and that the history
of the manufacture of said burners are rooted in
Portugal. These words were not intended to deceive or
cause mistake and confusion in the minds of the buying
public.9

Chua, the owner of National Hardware — the place

where the test buy was conducted — admits that
Wintrade has been furnishing it with kerosene burners
with the markings "Made in Portugal" for the past 20
years, to wit:

5. I hereby manifests (sic) that I had been dealing with

Wintrade Industrial Sales Corporation (WINTRADE for
brevity) for around 20 years now by buying products
from it. I am not however aware that WINTRADE was no
longer authorized to deal, distribute or sell kerosene
burner bearing the mark HIPOLITO and SEA HORSE
Device, with markings "Made in Portugal" on the wrapper
as I was never informed of such by WINTRADE nor was
ever made aware of any notices posted in the
newspapers informing me of such fact. Had I been
informed, I would have surely stopped dealing with G.R. No. 197482
WINTRADE.101âwphi1
FORIETRANS MANUFACTURING CORP., AGERICO
Thus, the evidence shows that petitioners, who are CALAQUIAN and ALVIN MONTERO, Petitioners
officers of Wintrade, placed the words "Made in vs
Portugal" and "Original Portugal" with the disputed DAVIDOFF ET. CIE SA & JAPAN TOBACCCO, INC.
marks knowing fully well — because of their previous (represented by SYCIP SALAZAR HERNANDEZ &
dealings with the Portuguese company — that these GATMAITAN LAW OFFICE thru ATTY. RONALD
were the marks used in the products of Casa Hipolito MARK LLENO), Respondents
S.A. Portugal. More importantly, the products that
Wintrade sold were admittedly produced in the DECISION
Philippines, with no authority from Casa Hipolito S.A.
Portugal. The law on trademarks and trade names JARDELEZA, J.:
precisely precludes a person from profiting from the
business reputation built by another and from deceiving This is a Petition for Review on Certiorari1 assailing the
the public as to the origins of products. These facts March 31, 2011 Decision2 and July 5, 2011
support the consistent findings of the State Prosecutor, Resolution3 of the Court of Appeals (CA) in CA-G.R. SP
the DOJ and the CA that probable cause exists to No. 94587.4 The CA reversed and set aside the February
10, 20065 and March 27, 20066 Resolutions of the The RTC granted the applications. In the same afternoon
Secretary of Justice which found no probable cause to of August 4, 2004, PSI Nathaniel Villegas (PSI Villegas)
charge petitioners for the crimes of infringement and and PSI Eric Maniego (PSI Maniego) implemented SW
false designation of origin. Nos. 044 and 046, while PSI De Mesa implemented SW
Nos. 045 and 047. During their separate raids, the CIDG
I teams seized several boxes containing raw tobacco,
cigarettes, cigarette packs, and cigarette reams bearing
the name DAGETA and DAGETA International. They
Davidoff Et. Cie SA (Davidoff) and Japan Tobacco, Inc.
also secured machineries, receptacles, other
(JTI) [collectively, respondents] are non-resident foreign
paraphernalia, sales invoices and official receipts.
corporations organized and existing under the laws of
Petitioner Agerico Calaquian, president of FMC, was
Switzerland and Japan, respectively.7 They are
allegedly apprehended at the premises along with four
represented in the Philippines by law firm SyCip Salazar
Chinese nationals.14
Hernandez & Gatmaitan (SyCip Law Firm). It is
authorized under a special power of attorney to maintain
and prosecute legal actions against any manufacturers, With the seized items as evidence, three separate
local importers and/or distributors, dealers or retailers of Complaint-Affidavits were filed before the Office of the
counterfeit products bearing Davidoff s and JTI' s Provincial Prosecutor of San Fernando, Pampanga
trademarks or any products infringing their charging FMC and its employees· with violation of
trademarks.8 Respondents also retained Business Republic Act No. 8293, or the Intellectual Property Code
Profiles, Inc. (BPI) as their private investigator in the of the Philippines (IP Code).17 The charges are as
Philippines.9 follows:

Meanwhile, petitioner Forietrans Manufacturing 1. LS. No. OCPSF-04-H-204718 (Davidoff infringement

Corporation (FMC) is a domestic corporation with case) - Infringement under Section 155 in relation to
principal address at Lots 5 and 7, Angeles Industrial Section 170 of the IP Code for the illegal manufacture of
Park, Special Economic Zone, Barangay Calibutbut, cigarettes bearing the DA GET A label, with packaging
Bacolor, Pampanga.10 very similar to the packaging of Davidoff's products and
the script "DAGETA" on the packs being deceivingly or
confusingly similar to the registered mark "DAVIDOFF."19
BPI reported to respondents that "there were counterfeit
Davidoff and JTI products, or products bearing colorable
imitation of Davidoff and JTI products, or which are 2. LS. No. OCPSF-04-H-2048 (False Designation of
confusingly or deceivingly similar to Davidoff and JTI Origin) - False Designation of Origin under Section 169
registered trademarks, being manufactured and stored" in relation to Section 170 of the IP Code for the illegal
in FMC' s warehouses.11 SyCip Law Firm then sought manufacture and/or storage of cigarettes bearing the
the assistance of the Criminal Investigation and "DA GET A" label with an indication that such cigarettes
Detection Group (CIDG) of the Philippine National Police were "MADE IN GERMANY" though they were actually
in securing warrants to search the warehouses. Upon processed, manufactured and packaged in FMC's office
investigation, the CIDG confirmed the report of BPI. On in Bacolor, Pampanga.20
August 4, 2004, PSI Joel L. De Mesa (PSI De Mesa) of
the CIDG filed four separate applications for search 3. LS. No. OCPSF-04-H-2226 (JTI infringement case)-
warrant before the Regional Trial Court (RTC) of San Infringement under Section 155 in relation to Section 170
Fernando, Pampanga. The applications were docketed of the IP Code for illegally manufacturing cigarettes
as Search Warrant (SW) Case Nos. 044, 045, 046, and which are deceivingly or confusingly similar to, or almost
047 and raffled to Branch 42 presided by Judge Pedro the same as, the registered marks of JTI, which are the
M. Sunga, Jr. (Judge Sunga).12 "MILD SEVEN" and "MILD SEVEN LIGHTS"
trademarks.21
In the applications, PSI De Mesa alleged that "he had
been informed, concluded upon investigation, and Calaquian denied the charges against him and FMC. He
believed that [FMC] and/or its proprietors, directors, countered that during the August 4, 2004 raid, the CIDG
officers, employees, and/or occupants of its premises did not find counterfeit cigarettes within FMC's premises
stored counterfeit cigarettes" bearing: (a) the name as nobody was there at the time. He claimed that what
"DAGETA the CIDG found were boxes of genuine Dageta and
Dageta International cigarettes imported from Germany
International" purported to be made in Germany; and (b) for re-export to Taiwan and China. Calaquian asserted
the name "DAG ET A" which was confusingly similar to that FMC is an eco-zone export enterprise registered
the Davidoff trademark, a product of Imperial Tobacco, with the Philippine Economic Zone Authority (PEZA),
Inc. Thus, he asked the RTC to issue search warrants and is duly authorized by the National Tobacco
authorizing any peace officer to take possession of the Administration to purchase, import and export tobacco.
subject articles and bring them before the court.13 FMC would not have passed PEZA's strict rules and
close monitoring if it had engaged in trademark
infringement. Calaquian also denies that the CIDG made would have arrested them then and there; but as it was,
arrests on the occasion of the raid.22 no arrest was apparently made. Secretary Gonzalez also
agreed with Prosecutor Macabulos' observation that Mild
In a Joint Resolution23 dated September 12, 2005, Seven and Mild Seven Lights cigarettes were never
Second Assistant Provincial Prosecutor Otto B. mentioned among the items seized in the Joint Affidavit
Macabulos (Prosecutor Macabulos) dismissed the of Arrest/Seizure.29
criminal complaints. Prosecutor Macabulos found the
affidavit of Jimmy Trocio (Trocio ), the informant/witness Respondents moved for reconsideration. This, however,
presented by PSI De Mesa in his application for search was denied with finality by Secretary Gonzalez in his
warrants, clearly insufficient to show probable cause to Resolution dated March 27, 2006. Respondents elevated
search FMC's premises for fake JTI or Davidoff the case to the CA via a petition for certiorari.30
products. Trocio did not even testify that FMC is
manufacturing fake Dageta cigarettes. The CIDG also The CA reversed the resolutions of Secretary Gonzalez.
did not find Dageta cigarettes during the raid, much less It adjudged that Secretary Gonzalez acted with grave
fake JTI or Davidoff products. This should have been abuse of discretion in affirming Prosecutor Macabulos'
reason enough to quash the warrant.24 Further, finding that no probable cause exists against FMC.
Prosecutor Macabulos held that there is no confusing
similarity between the Dageta and Davidoff brands. The CA explained that Secretary Gonzalez assumed the
Thus, he found the complaints for the Davidoff function of the trial judge of calibrating the evidence on
infringement and False Designation of Origin to be record when he ruled that:
without menit.25
a. The seizure of Mild Seven and Mild Seven Lights
Prosecutor Macabulos also expressed disbelief over the during the raid did not happen as the arresting officer
allegation that Mild Seven and Mild Seven Lights were failed to state in their Joint Affidavit that they seized the
seized at FMC' s premises. He averred that the Joint said cigarettes and if it were true that they seized these
Affidavit of Arrest/Seizure dated August 6, 2004 never cigarettes, the raiding team would have arrested Mr.
mentioned those cigarettes as among the items seized. Calaquian and four Chinese nationals present during the
Furthermore, there was no proof that FMC manufactured raid; and
fake Mild Seven cigarettes.26 Hence, he also dismissed
the JTI infringement case.
b. The seizure of Dageta and Dageta International
cigarettes does not prove that FMC violated the
Respondents thereafter filed a Petition for Review before provisions on infringement of trademark and false
then Secretary of Justice Raul M. Gonzalez (Secretary designation of origin under the IP Code.31
Gonzalez).
According to the CA, the foregoing involve evidentiary
In his Resolution dated February 10, 2006, Secretary matters which can be better resolved in the course of the
Gonzalez affirmed the ruling of Prosecutor Macabulos. trial, and Secretary Gonzalez was not in a competent
He opined that the seizure of Dageta and Dageta position to pass judgment on substantive
International cigarettes from FMC's premises does not matters.32 Petitioners filed a partial motion for
prove the commission of trademark infringement and reconsideration, but this was denied by the CA. Hence,
false designation of origin. It cannot be said that there is this petition.
confusing similarity between Davidoff cigarettes, and
Dageta and Dageta International cigarettes. The
difference in their names alone belies the alleged Petitioners fault the CA for interfering with the valid
confusing similarity.27 exercise by Prosecutor Macabulos and Secretary
Gonzalez of the executive power to determine the
existence or non-existence of probable cause in a
Secretary Gonzalez also affirmed the dismissal of the preliminary investigation.33 Heavily relying on the Joint
charge of false designation of origin. He ruled that Resolution issued by Prosecutor Macabulos, they allege
respondents failed to establish the falsity of the claim that respondents did not present any proof to show
indicated in the labels of Dageta and Dageta probable cause to indict them for the crimes of
International cigarettes that they were made in infringement and false designation of origin.34 They
Germany.28 contend that Secretary Gonzalez affirmed the Joint
Resolution and dismissed the criminal complaints based
In addition, Secretary Gonzalez declared that the alleged on insufficiency of evidence since there was no proof
discovery and seizure of Mild Seven and Mild Seven that FMC manufactured counterfeit Davidoff or Mild
Lights in FMC's premises during the August 4 and 5, Seven cigarettes. Petitioners also insist that no court can
2004 raids did not actually happen. He agreed with order the prosecution of a person against whom the
Calaquian that if indeed the officers and employees of prosecutor does not find sufficient evidence to support at
FMC were found manufacturing or assisting or least aprimafacie  case.35
supervising the manufacture of Mild Seven and Mild
Seven Lights during the raids, surely the raiding team
In their Comment, respondents counter that the petition probable cause, clearly constitutes grave error and
should be dismissed for failure to show any special and warrants judicial intervention and correction.43
important reason for this Court to exercise its power of
review. They claim that the petition is a mere rehash of Here, we find that Secretary Gonzalez committed grave
FMC's arguments before the CA.36 In any case, abuse of discretion when he disregarded evidence on
respondents aver that the CA correctly reversed the record and sustained the Joint Resolution of Prosecutor
Resolutions of Secretary Gonzalez. Secretary Gonzalez Macabulos dismissing the criminal complaints against
acted without or in excess of jurisdiction and with grave petitioners.
abuse of discretion when he completely disregarded the
evidence attached to the criminal complaints and A
wrongfully assumed the function of a trial judge in
passing upon factual or evidentiary matters which are
best decided after a full-blown trial on the merits.37 Preliminarily, we find that Secretary Gonzalez should
have set aside the Joint Resolution on the ground that
Prosecutor Macabulos did not undertake to determine
We are now asked to resolve whether the CA erred in the existence or non-existence of probable cause for
ruling that Secretary Gonzalez committed grave abuse of the purpose of filing a criminal case.  Nowhere in the
discretion in finding no probable cause to charge Joint Resolution is it stated that the criminal complaints
petitioners with trademark infringement and false were dismissed on account of lack of probable cause for
designation of origin. the filing of a case against petitioners. Instead,
Prosecutor Macabulos attacked Judge Sunga's finding of
II probable cause for the issuance of search warrants in
SW Nos. 044, 045, 046, 047 and 048. The pertinent
We deny the petition. portions of the Joint Resolution read:

Probable cause, for purposes of filing a criminal acti01i, As can be seen supra, Trocio's affidavit was clearly
is defined as such facts as are sufficient to engender a insufficient to show probable cause to search FMC's
well-founded belief that a crime has been committed and premises and look for fake JTI or [Davidoff] products.
that respondent is probably guilty thereof.38 It does not
require an inquiry into whether there is sufficient Xxx
evidence to procure conviction. Only prima
facie  evidence is required or that which is, on its face, It would seem that reason had taken leave of the
good and sufficient to establish a given fact, or the group senses. The undeniable fact, standing out like a sore
or chain of facts constituting the party's claim or defense; thumb, is that the applicants never presented a single
and which, if not rebutted or contradicted, will remain shred of proof to show probable cause for the issuance
sufficient.39 of a search warrant. It would have been laughable if not
for the fact that persons were arrested and detained and
The task of determining probable cause is lodged with properties were confiscated. As can be seen, what
the public prosecutor and ultimately, the Secretary of began as a search for fake JTI and [Davidoff] products
Justice. Under the doctrine of separation of powers, changed into a search for fake Dageta International
courts have no right to directly decide matters over which cigarettes, then shifted to a sea[r]ch for fake Dageta
full discretionary authority has been delegated to the cigarettes confusingly similar to Davidoff and finally
Executive Branch of the Government. Thus, we have shifted to fake mislabeled Dageta cigarettes. One can
generally adopted a policy of non-interference with the only wonder why the applications were granted without a
executive determination of probable cause.40 Where, shred of proof showing probable cause. The exception
however, there is a clear case of grave abuse of against unreasonable searches and seizures became
discretion, courts are allowed to reverse the Secretary of the very weapon to commit abuses that the provision
Justice's findings and conclusions on matters of was designed to prevent.44 (Emphasis supplied.)
probable cause.41
The determination of probable cause by the judge
By grave abuse of discretion is meant such capricious .should not be confused with the determination of
and whimsical exercise of judgment as is equivalent to probable cause by the prosecutor. The first is made by
lack of jurisdiction. The abuse of discretion is grave the judge to ascertain whether a warrant of arrest should
where the power is exercised in an arbitrary or despotic be issued against the accused, or for purposes of this
manner by reason of passion or personal hostility and case, whether a search warrant should be issued. The
must be so patent and gross as to amount to an evasion second is made by the prosecutor during preliminary
of positive duty or to a virtual refusal to perform the duty investigation to determine whether a criminal case
enjoined by or to act at all in contemplation of the law.42 should be filed in court. The prosecutor has no power or
authority to review the determination of probable cause
In Unilever Philippines, Inc. v. Tan, we have ruled that by the judge, just as the latter does not act as the
the dismissal of the complaint by the Secretary of appellate court of the former.45 Here, as correctly argued
Justice, despite ample evidence to support a finding of by respondents, Prosecutor Macabulos focused on the
evidence submitted before Judge Sunga to support the Octagonal designed pack Octagonal designed pack ·
issuance of search warrants.46 He lost sight of the fact
that as a prosecutor, he should evaluate only the Black and red covering Black and red covering
evidence presented before him during the preliminary
investigation. With his preconceived notion of the Silver coloring of the tear Silver coloring of the tear
invalidity of the search warrants in mind, tape and printing tape and printing
"Made in Germany by "Made m Germany under
Prosecutor Macabulos appeared to have completely Reemtsman under license of DAGETA &
ignored the evidence presented by respondents during license of Davidoff & CIE Tobacco LT"
preliminary investigation. SA, Geneva"
Manufacturing Code Manufacturing Code
The records show that a prima facie case for trademark
imprinted on the base of imprinted on the base of the
infringement and false designation of origin exists
the pack pack
against petitioners.1âwphi1 Section 155 of the IP Code
enumerates the instances when infringement is Writing at the back says: Writing at the back says:
committed, viz.: "These carefully selected "These specifically selected
tobaccos have been tobaccos have been
Sec. 155. Remedies; Infringement. - Any person who skillfully blended to professionally blended to
shall, without the consent of the owner of the registered assure your pleasure" ensure highest quality" with
mark: with the signature of Zino Chinese letters underneath
Davidoff the name Dageta
15 5 .1. Use in commerce any reproduction, counterfeit,
copy, or colorable imitation of a registered mark or the Both Prosecutor Macabulos and Secretary Gonzalez
same container or a dominant feature thereof in disregarded the foregoing evidence of respondents and
connection with the sale, offering for sale, distribution, confined their resolutions on the finding that there is an
advertising of any goods or services including other obvious difference between the names "Davidoff' and
preparatory steps necessary to carry out the sale of any "Dageta." Petitioners likewise rely on this finding and did
goods or services on or in connection with which such not bother to refute or explain the alleged similarities in
use is likely to cause confusion, or to cause mistake, or the packaging of Davidoff and Dageta cigarettes. While
to deceive; or we agree that no confusion is created insofar as the
names "Davidoff' and "Dageta" are concerned, we
155.2. Reproduce, counterfeit, copy or colorably imitate cannot say the same with respect to the cigarettes'
a registered mark or a dominant feature thereof and packaging. Indeed there might be differences when the
apply such reproduction, counterfeit, copy or colorable two are compared. We have, in previous cases, noted
imitation to labels, signs, prints, packages, wrappers, that defendants in cases of infringement do not normally
receptacles or advertisements intended to be used in copy but only make colorable changes. The most
commerce upon or in connection with the sale, offering successful form of copying is to employ enough points of
for sale, distribution, or advertising of goods or services similarity to confuse the public, with enough points of
on or in connection with which such use is likely to cause difference to confuse the courts.49
confusion, or to cause mistake, or to deceive, shall be
liable in a civil action for infringement by the registrant for Similarly, in their Complaint-Affidavit in the JTI
the remedies hereinafter set forth: Provided, That the infringement case, respondents aver that JTI is the
infringement takes place at the moment any of the acts registered owner of the Mild Seven and Mild
stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of
Seven Lights trademarks; and that FMC manufactures
goods or services using the infringing material.
cigarettes deceivingly or confusingly similar to, or almost
the same as, the registered marks of JTJ. They asserted
The essential element of infringement is that the that FMC is not authorized to manufacture, pack,
infringing mark is likely to cause confusion.47 In this distribute or otherwise deal in products using JTI' s
case, the complaint-affidavit for the Davidoff trademarks. Respondents also submitted authentic Mild
infringement case alleged confusing similarity between Seven and Mild Seven Lights cigarettes and samples of
the cigarette packs of the authentic Davidoff cigarette the cigarettes taken from FMC's premises.50
and the sample Dageta cigarette pack seized during the
search of FMC's premises.  Respondents submitted
When Secretary Gonzalez dismissed respondents'
samples of the Davidoff and Dageta cigarette packs
complaint, he made a factual  determination that no Mild
during the preliminary investigation. They noted the
Seven and Mild Seven Lights were actually seized from
following similarities:48
FMC's premises. He cited Prosecutor Macabulos'
observation that the Joint Affidavit of Arrest/Seizure
Davidoff (Exhibit 1) Dageta (Exhibit 2) dated August 6, 2004 never mentioned the foregoing
cigarettes as among the items seized. The CA, on the
other hand, reversed the dismissal of the complaint and 169 .1. Any person who, on or in connection with any
declared that the issue of whether or not there was an goods or services, or any container for goods, uses in
actual seizure of Mild Seven and Mild Seven Lights commerce any word, term, name, symbol, or device, or
during the raid is evidentiary in character. any combination thereof, or any false designation of
origin, false or misleading description of fact, or false or
We concur with the CA. The validity and merits of a misleading representation of fact, which:
party's defense or accusation, as well as the
admissibility of testimonies and evidence, are better (a) Is likely to cause confusion, or to cause mistake, or to
ventilated during trial proper than at the preliminary deceive as to the affiliation, connection, or association of
investigation level.51 Further, the presence or absence of such person with another person, or as to the origin,
the elements of the crime is evidentiary in nature and a sponsorship, or approval of his or her goods, services, or
matter of defense that may be passed upon only after a commercial activities by another person; or
full-blown trial on the merits.52
(b) In commercial advertising or promotion,
In Metropolitan Bank & Trust Co. v. Gonzales, 53 we ruled misrepresents the nature, characteristics, qualities, or
that: geographic origin of his or her or another person's
goods, services, or commercial activities, shall be liable
x x x [T]he abuse of discretion is patent in the act of the to a civil action for damages and injunction provided in
Secretary of Justice holding that the contractual Sections 156 and 157 of this Act by any person who
relationship forged by the parties was a simple loan, for believes that he or she is or is likely to be damaged by
in so doing, the Secretary of Justice assumed the such act.
function of the trial judge of calibrating the evidence on
record, done only after a full-blown trial on the merits. xxx
The fact of existence or non-existence of a trust receipt
transaction is evidentiary in nature, the veracity of which Respondents alleged in their Complaint-Affidavit that
can best be passed upon after trial on the merits, for it is petitioners illegally manufactured and/or stored
virtually impossible to ascertain the real nature of the cigarettes bearing the "DAGETA" label with an indication
transaction involved based solely on the self-serving that these cigarettes were made in Germany even if they
allegations contained in the opposing parties' pleadings. were actually processed, manufactured and packed in
Clearly, the Secretary of Justice is not in a competent the premises of FMC. To support their claim,
position to pass judgment on substantive matters. The respondents submitted samples and attached a copy of
bases of a part[ie]'s accusation and defenses are better the receipt/inventory of the items seized during the
ventilated at the trial proper than at the preliminary August 4, 2004 raid. These included cigarettes bearing
investigation.54 (Emphasis supplied.) the infringing DAGETA trademark and various
machineries, receptacles, boxes and other paraphernalia
In this case, Secretary Gonzalez found no probable used in the manufacturing and packing of the infringing
cause against petitioners for infringement of the JTI products.55
trademarks based on his conclusion that no fake Mild
Seven and Mild Seven Lights were seized from FMC's Petitioners, for their part, disputed respondents' claim
premises during the raid. He already passed upon as and maintained that the items seized from their
authentic and credible the Joint Affidavit of warehouse were genuine Dageta and Dageta
Arrest/Seizure presented by petitioners which did not list International cigarettes imported from Germany. In
Mild Seven and Mild Seven Lights cigarettes as among dismissing the charge,
those items seized during the raid. In so doing, Secretary
Gonzalez assumed the function of a trial judge, Secretary Gonzalez ruled that respondents failed to
determining and weighing the evidence submitted by the establish the falsity of the claim indicated in the
parties. cigarettes' labels that they were made in Gennany
without providing the factual or legal basis for his
Meanwhile, the Complaint-Affidavit in the JTI conclusion. He also brushed aside the allegations that
infringement case shows that, more likely than not, (1) machines intended for manufacturing cigarettes and
petitioners have committed the offense charged. FMC, (2) cigarettes' bearing the label "Made in Germany" were
alleged to be without authority to deal with JTI products, found and seized from FMC's warehouse in the
is claimed to have been manufacturing cigarettes that Philippines. To our mind, however, these circumstances
have almost the same appearance as JTI' s Mild Seven are enough to excite the belief that indeed petitioners
and Mild Seven Lights cigarettes. were manufacturing cigarettes in their warehouse here in
the Philippines but misrepresenting the cigarettes' origin
As to the crime of False Designation of Origin, Section to be Germany. The CA, therefore, did not err in
169 of the IP Code provides: reversing the Resolution of the Secretary of Justice.

Sec. 169. False Designations of Origin; False

Description or Representation. -
In fine, we see no compelling reason to disturb the ruling
of the CA finding probable cause against petitioners for
trademark infringement and false designation of origin.

WHEREFORE, the petition is DENIED for lack of merit.

The Decision dated March 31, 2011 and Resolution
dated July 5, 2011 of the Court of Appeals in CA-G.R.
SP No. 94587 are AFFIRMED. The Provincial
Prosecutor of Pampanga is thus DIRECTED to file
Informations against petitioners for violations of:

(a) Section 155 (Infringement), in relation to Section 170

of the IP Code in LS. No. OCPSF-04-H-2047;

(b) Section 169 (False Designation of Origin), in relation

to Section 170 of the IP Code in LS. No. OCPSF-04-H-
2048; and

(c) Section 155 (Infringment), in relation to Section 170

of the IP Code in LS. No. OCPSF-04-H-2226.

SO ORDERED.

G.R. No. L-37494 March 30, 1982

MANUEL SY Y LIM, petitioner,
vs.
HON. COURT OF APPEALS, HON. EDUARDO P. 188, No. 2 of the Revised Penal Code and to file the
CAGUIOA, as Judge of the CFI of Bulacan, HON. same within five (5) days from today. 3
PEDRO D. OPIANA as Provincial Fiscal of Bulacan,
ATTYS. DAKILA CASTRO and CRISTINO CARREON, The respondent Fiscal filed the information as ordered
as Counsel for SEA COMMERCIAL COMPANY, by the trial court, alleging as follows:
INC., respondents.
That in or about or during the period from June, 1970 to
DE CASTRO, J.:p October, 1970, in the municipality of Valenzuela,
province of Bulacan, Philippines, and within the
Petition for certiorari seeking the review of the decision jurisdiction of this Honorable Court, the said accused
of the Court of Appeals 1 sustaining the order of the Manuel Sy y Lim, in infringement of trademark and for
Court of First instance of Bulacan denying the motion to the purpose of deceiving or defrauding the Sea
quash filed by petitioner to an information for violation of Commercial Company, Incorporated, a domestic
Article 188, paragraph 2 of the Revised Penal Code, corporation duly organized under the laws of and doing
business in the Philippines, of its legitimate trade and/or
It appears that petitioner was charged with violation of the public in general, did then and there wilfully,
Article 189, paragraph 1, of the Revised Penal Code in unlawfully and feloniously sell and/or offer for sale hand
an information quoted as follows: pumps of inferior quality and labeled JETMATIC
DRAGON HAND PUMP at a lower price, accused
knowing fully well that the mark JETMATIC DRAGON
That in or about during the period from June, 1970 to
HAND PUMP has been fraudulently used in the said
October, 1970, in the municipality of Valenzuela,
hand pumps, thereby giving them the general
province of Bulacan, Philippines and within the
appearance of the old and/or being offered for sale are
jurisdiction of this Honorable Court, the said accused
those of the Sea Commercial Company, Incorporated,
Manuel Sy y Lim, in unfair competition and for the
when in fact they are not to the damage and prejudice of
purpose of deceiving or defrauding the Sea Commercial
the said Sea Commercial Company, Incorporated and
Company, Incorporated, a domestic corporation duly
the general public. 4
organized under the laws of the Philippines, of its
legitimate trade or the public in general did then and
there wilfully, unlawfully and feloniously sell or offer for To the above information, petitioner filed a motion to
sale hand pumps of inferior quality and labeled quash alleging that it did not conform to the prescribed
JETMATIC DRAGON HAND PUMP and at a lower price form; that the Court had no jurisdiction over the case
and giving them the general appearance of the because no preliminary investigation was conducted,
JETMATIC DRAGON hand pumps of the Sea thereby depriving accused of due process; and that the
Commercial Company, Incorporated, as to the outside new information would place accused in double
appearance, including, among others, the color, the jeopardy. 5 As already stated, this motion was denied.
embossed words PAT No. 463490 on the spout the
embossed word MODEL chamber assembly, the In the instant case, petitioner makes the following
embossed words JETMATIC DRAGON HAND PUMP on assignment of errors:
the lateral surface of the cylinder assembly and many
other parts both as to the design and the materials used I
which induced the public to believe that the JETMATIC
DRAGON HAND pumps offered are those of the Sea THE HONORABLE COURT OF APPEALS ERRED IN
Commercial Company, Incorporated, to the damage and HOLDING THAT PETITIONER IS NOT PLACED IN
prejudice of the said Sea Commercial Company, DOUBLE JEOPARDY BY HIS PROSECUTION UNDER
Incorporated and the general public. 2 THE SECOND INFORMATION IN QUESTION.

After trial, the trial court rendered judgment the II

dispositive portion of which reads:
THE HONORABLE COURT OF APPEALS ERRED IN
WHEREFORE, the prosecution having failed to prove HOLDING THAT PETITIONER COULD BE VALIDLY
that the accused gave his goods the general appearance ARRAIGNED AND TRIED UNDER THE SECOND
of the goods of another manufacturer or dealer, this INFORMATION WITHOUT A PRELIMINARY
Court finds him not guilty of the same and acquits him of INVESTIGATION HAVING BEEN PREVIOUSLY
the charge of violating Article 189, paragraph 1 of the CONDUCTED THEREON BY THE FISCAL, AS
Revised Penal Code. However, the Court finds that the INSISTED UPON.
evidence submitted in this case, show prima facie that
the accused has violated Article 188, No, 2, of the
Revised Penal Code and the Court, therefore, orders the III
Fiscal to prepare the corresponding information charging
the accused Manuel Sy y Lim with violation of Article THE HONORABLE COURT OF APPEALS ERRED IN
DENYING PETITIONER'S PLEA FOR certiorari AND
mandamus TOWARD QUASHING THE SECOND a good cause to detain him in custody, but the court
INFORMATION IN QUESTION. 6 must commit him to answer for the proper offense, and
may also require the witnesses to give bail for their
1. It is the contention of petitioner that by the filing of the appearance at the trial.
second information, he would be placed in double
jeopardy because under the first information, he could In the opinion of the trial court, the first information did
have been convicted of the offense charged in the not properly charge the offense of infringement of
second information. Since he was acquitted under the trademark, for what was expressly charged was unfair
first information, to charge him again for the same competition. In proceeding in accordance with the above
offense as aforestated would according to petitioner, quoted provisions of the Rules of Court, the trial court
constitute double jeopardy. evidently felt it can not properly convict the accused of
infringement of trademark, although it found evidence
Petitioner supports this contention by pointing out that sufficient to justify filing the proper information for said
the only difference between the two informations, in so offense. But, undoubtedly, the court found it not proper
far as the charge of infringement of trademark is to acquit the accused of said offense. Hence there can
concerned, is that in the first information, there is no be no double jeopardy as to the offense charged in the
allegation that the trademark is registered while in the second information on the ground of a prior acquittal for
second information, the allegation is made that the the same offense.
trademark is registered. He contends, however, that
registration is not an element of the crime as defined in It is, therefore, absolutely correct to hold that there is on
Article 188, par. 2, of the Revised Penal Code. The the basis of the facts as stated above, no double
absence of allegation of registration of the trademark is, jeopardy even on the premise that "registration" is not an
therefore, no impediment to his conviction for essential element of the offense charged in the second
infringement of trademark under the first information information as contended by petitioner. It becomes more
which, in all other respects, alleged what would so if registration is a necessary element as submitted by
constitute the aforesaid offense. Although by express the Solicitor General with whom We are inclined to
designation of the offense, what was charged therein is agree, although an express ruling on the matter need no
unfair competition, it is the allegation of the information longer be made for not being material nor decisive.
that determines what offense is being actually charged.
Upon a slightly different theory, petitioner would, likewise
In advancing the above propositions, petitioner would invoke his right against double jeopardy. Thus he cites
treat the two offenses of infringement of trademark and the case of U.S. vs. Lim Suco 7 which hold that after
unfair competition as separate and distinct, not as one conviction for a crime which has various incidents
necessarily included in, or including, the other. Upon this included in it, he cannot be a second time tried for one of
premise, it cannot be successfully contended that what those incidents without being twice put in jeopardy. He
happened with respect to the offense of infringement of also cites another case 8 for the proposition that the
trademark, assuming it was also charged in the first charge in the second information for an act already
information as a separate offense, is, by no manner of alleged in the first information which flowed from an
reasoning, one of acquittal for said offense. The trial identical or a single criminal intent, in this case the single
court precisely found sufficient evidence with which to criminal act of unfair competition, should not be divided
indict him for said offense and accordingly ordered the into separate crimes, as would happen if a separate
filing of a more proper information, proceeding in crime of infringement of trademark is to be prosecuted
accordance with Section 13 paragraph 2, of Rule 110 again, More specifically, he cites the case of a charge for
and Section 12, of Rule 119 of the Rules of Court, which illegal importation of explosives as not allowing a
are quoted: subsequent prosecution for illegal possession of the
same explosives. 9 This holds true, according to
If it appears at any time before judgment that a mistake petitioner, if the description of the offense is merely
has been made in charging the proper offense the court changed in the second information but which would not
may dismiss the original complaint or information and make for any substantial difference between the
order the filing of a new one charging the proper offense, description in the first information and that in the second
provided the defendant would not be placed thereby in information. citing Chief Justice Moran. 10
double jeopardy, and may also require the witnesses to
give bail for their appearance at the trial. What makes the ruling cited by petitioner not applicable
to the present is that in the cases cited, acquittal was for
SEC. 12. When mistake has been made in charging the the offense specifically charged without the trial court
proper offense. — When it appears at any time after trial expressly finding that for the other offense also charged
has begun and before judgment is taken, that a mistake but not expressly so by the statutory designation of the
has been made in charging the proper offense, and the offense, evidence exists to justify his being held to
defendant cannot be convicted of the offense charged, answer for such offense, in accordance with Section 12,
nor of any other offense necessarily included therein, the Rule 119 of the Rules of Court, as the trial court in the
defendant must not be discharged, if there appears to be instant case very explicitly did. It is this circumstance
that, clearly and undisputably would prevent double Separate Opinions
jeopardy to attach, for there is neither acquittal nor
conviction, not even dismissal of the case, which might AQUINO, J.,  dissenting:
result in double jeopardy arising to ban the proceedings
contemplated in the aforecited provisions of the Rules of Judge Eduardo P. Caguioa acquitted Manuel Sy of unfair
Court. competition but ordered him prosecuted for selling water
pumps with an limitation trademark.
From what has been said above, the applicability of
Section 13, paragraph 2 of Rule 110, in relation to The factual background is as follows:
Section 12, Rule 119, to the case at bar is clear. It is
justified by petitioner's own theory that the offense of
infringement as charged in the second information was Sea Commercial Co., Inc., a domestic corporation, has a
also sufficiently included in the first information as a duly registered trademark for water pumps known
separate offense. But with respect thereto, the trial court as Jetmatic. At the same time, it is the local distributor of
made no decision, either of acquittal or conviction. It felt the water pumps manufactured by Kawamoto Pump
that under the information as so worded, conviction was Manufacturing Co., Ltd. of Nagoya, Japan under the
not legally possible obviously for not sufficiently trademark Dragon which is duly registered with the
informing the accused of the nature and cause of the Philippine Patent Office.
accusation against him, which is one of his constitutional
rights, although factually, the assessment of the Sea Commercial Co., Inc. sells water pumps under the
evidence by the court tended towards justifying trademark Jetmatic Dragon,  a combination of its
conviction. Verily, the situation fits into what is trademark and the trademark of its Japanese principal.
contemplated by the provisions of the Rules of Court
already referred to, which do not call for a new or At the instance of Sea Commercial Co., Inc., agents of
separate preliminary investigation, which petitioner the National Bureau of Investigation raided Manuel Sy's
contends is indispensable, to which the Solicitor General warehouse at 380 Gapan Street, Tondo, Manila and
expressed agreement. seized 274 water pumps. Sy admitted ownership of the
pumps and his sales of that merchandise.
What evidently led the Solicitor General to give his
conformity to the stand taken by petitioner as to the Sy also admitted that he imported hand pumps or water
necessity of a new preliminary investigation is his belief pumps from King Brothers Corporation of Taiwan which
that "judgment has already been rendered acquitting the were manufactured by Mun Lung Iron Manufacturing. In
accused", while the Rules of Court cited speaks of appearance, the Taiwan water pumps and the Japanese
"before judgment." But as already intimated, as to the water pumps were very similar. Judge Caguioa found:
offense of infringement of trademark, which petitioner
himself contends was also charged in the first The similarities consist in the color, which is green with
information, the Court rendered no judgment yet, either gold marks, embossed words and figures 'PAT NO.
for acquittal or for conviction, as it appeared to the trial 463490' appearing on the spouts of the pumps, the
judge that the accused cannot properly be convicted for embossed word 'Model Dragon Hand Pump' on both
said offense, even if conviction was warranted by the sides of the chamber assembly, the embossed words
evidence, a mistake having been made, as he read the
information, and with reason, in charging the proper
Jetmatic Dragon Hand Pump' on the lateral surface of
offense.
the cylinder assembly, the three-day assemblies,
cylinder assembly, the valve.
However, if petitioner insists on another preliminary
investigation, the same may be granted by way of
It will be noted, however, that outside of the color, the
"reinvestigation", the Solicitor General who actually
similarities referring to the embossed words, numbers
represents also the prosecution having expressed
and figures appearing on the various parts of the pumps,
conformity to the holding of one, Let it not be said that
are words and figures which are moulded into the pumps
We are not mindful of the rule that all doubts should be
and could have only been placed there through a would
resolved in favor of the accused, a rule which itself
with that kind of embossed words and figures at the time
should be liberally construed in his favor.
of casting.
WHEREFORE, as recommended by the Solicitor
It is obvious, therefore, that these similarities, outside of
General, the decision appealed from is modified as to
the color, could only have been placed by the
give petitioner the right of preliminary investigation
manufacturer of the pumps himself.
before he is arraigned and tried under the second
information for violation of Article 188, paragraph 2, of
the Revised Penal Code. No costs. Judge Caguioa concluded that because the prosecution
had not proven that Sy was the manufacturer of the
limitation pumps or that he was the one responsible for
SO ORDERED.
giving to the limitation pumps the same appearance as
the water pumps of Sea Commercial Co., Inc., he could It is manifest that the information for unfair competition
not be held liable for unfair competition under article follows substantially the wording or phraseology used in
189(1) of the Revised Penal Code. article 189(1).

However, Judge Caguioa held that since Sy was aware On the other hand, the crime of selling goods with a
that the limitation pumps bear the registered trademark substitute or limitation trademark defined in article 188(2)
of Sea Commercial Co., Inc. and that they are not the is committed by a person who shall sell articles of
same as the hand pumps described in the brochures of commerce, or offer the same for sale, knowing that the
King Brothers Corporation, Sy should be prosecuted for trademark has been fraudulent used in such
the crime of substituting trademarks under article 188(2) goods because the trademark of another manufacturer
of the Revised Penal Code. or dealer, or a colorable limitation thereof, has been
substituted on such goods for the trademark of the real
Hence, Judge Caguioa ordered Provincial Fiscal (now manufacturer or dealer.
CFI Judge) Pedro D. Ofiana to file the corresponding
information against Sy. In compliance with that directive, In the second information, it was alleged that Sy "in
Fiscal Ofiana in an information dated June 1, 1972 infringement of trademark and for the purpose of
charged Sy with selling hand pumps with the knowledge deceiving or defrauding the Sea Commercial Co., Inc. ...,
that the trademark "Jetmatic Dragon Hand Pump" had of its legitimate trade and/or the public in general, did
been fraudulently used on them to the damage and then and there wilfully ... sell and/or offer for sale hand
prejudice of Sea Commercial Co., Inc. The crime of pumps of inferior quality and labeled Jetmatic Dragon
unfair competition and selling goods with an limitation Hand Pump at a lower price, accused knowing fully well
trademark imputed to Sy belong to the category of that the trademark Jetmatic Dragon Hand Pump has
crimes against public interest which are divided into (1) been fraudulently used in the said hand pumps, thereby
forgeries, (2) other falsities and (3) frauds. giving them the general appearance of the registered
Jetmatic Dragon Hand Pump being sold and/or being
The crimes regarded as frauds are classified into (a) offered for sale are those of the Sea Commercial Co.,
machinations, monopolies and combinations and (b) Inc., when in fact they are not, to the damage and
frauds in commerce and industry, Unfair competition and prejudice" of the said company and the general public.
sale of goods with a substitute trademark are frauds in
commerce and industry. The second information uses the wording or phraseology
of paragraph 2 of article 188. It should be stressed that
Under paragraph 1 of article 189, the crime of unfair in the first information Sy was charged with having sold
competition is committed by "any person who, in unfair hand pumps to which he had given the same
competition and for the purpose of deceiving appearance as the hand pumps sold by Sea Commercial
or defrauding another of his legitimate trade  or the public Co., Inc.
in general, shall sell his goods giving them the general
appearance of goods of another manufacturer or dealer, The evidence shows that he did not manufacture said
either as to the goods themselves, or in the wrapping of hand pumps. Therefore, he could not have given them
the packages in which they are contained, or the device the appearance of the hand pumps of Sea Commercial
or words thereon  or in any other feature of their Co., Inc. since the embossed features of the said hand
appearance which would be likely to induce the public to pumps were placed there during the original casting by
believe that the goods offered are those of a the manufacturer thereof. Sy could not have perpetrated
manufacturer or dealer other than the actual that fraud because he was not the manufacturer. He was
manufacturer or dealer. a mere seller of the hand pumps.

In the information for unfair competition filed against Sy, But if he was a mere seller, it would not follow that he
it was alleged that he, "in unfair competition  and for the was not criminally liable for selling those hand pumps.
purpose of deceiving or defrauding the Sea The seller of goods with an limitation trademark is
Commercial Co., Inc. ... of its legitimate trade or the punished under paragraph 2 of article 188. That explains
public in general did then and there wilfully ... sell or offer why Judge Caguioa ordered Sy's prosecution under that
for sale hand pumps of inferior quality and labeled statutory provision.
Jetmatic Dragon Hand Pump and at a lower price
and giving them the general appearance of the Jetmatic Consequently, Sy's arraignment and trial for the offense
Dragon hand pumps of the Sea Commercial Co., Inc., as of unfair competition  did not place him in jeopardy of
to the outside appearance, including, among others, the being convicted of the crime of selling hand pumps with
color, the embossed words ... and many other parts both an limitation trademark and his instant prosecution for
as to the design and the materials used which induced the latter offense, a different offense, does not place him
the public to believe that the Jetmatic Dragon Hand in double jeopardy.
Pumps offered are those of the Sea Commercial Co.,
Inc., to the damage and prejudice of the said" company I am also of the opinion that Sy's trial for unfair
and the general public." competition in Criminal Case No. 0290-V amounted to a
preliminary investigation of Sy by a Judge of the Court of 1. Any person who shall substitute the trade name or
First Instance for the offense of selling goods with an trademark of some other manufacturer or dealer or a
limitation or substitute trademark within the meaning of colorable limitation thereof, for the tradename or
Section 13, Rule 112 of the Rules of Court. trademark of the real manufacturer or dealer upon any
article of commerce and shall sell the same;
Hence, he is not entitled to another preliminary
investigation for that offense to be conducted by the 2. Any person who shall sell such articles of commerce
fiscal. If another preliminary investigation is to be given or offer the same for sale, knowing that the trade name
to Sy by the fiscal by requiring the filing of the affidavits or trademark has been fraudulently used on such goods
of the complainant and Sy and their witnesses, as as described in the proceeding subdivision.
provided in Republic Act No. 5180 and Presidential
Decrees Nos. 77 and 911, then the same facts alleged in The first information alleges, among others, that the
the first preliminary investigation and during the trial of defendant, "for the purpose of deceiving or defrauding
the unfair competition case would brought out. the Sea Commercial Company, Inc. (complainant), of its
legitimate trade or the public in general, did then and
That proceeding would be a repetitious and useless there willfully, unlawfully  and feloniously sell or offer for
ceremony. The purpose of the preliminary investigation sale hand pumps of inferior quality and labeled
is to avoid hasty and malicious prosecution. We cannot JETMATIC DRAGON HAND PUMP ... which induced the
say that Judge Caguioas order for the prosecution of Sy public to believe that the JETMATIC DRAGON HAND
for the crime of selling hand pumps with an limitation PUMP offered are those of the Sea Commercial
trademark is a hasty and malicious prosecution. That Company, Inc., to the damage and prejudice of the Sea
order is based on the evidence adduced during the trial Commercial Company, Inc., and the general public."
of Sy where he was duly heard. That evidence will be
used against him in the second case. There is no question that "Jetmatic Dragon Hand Pump"
is a trademark. The said information alleges all the
However, in fairness to Sy, the second case should be elements of the crime as defined in paragraph 2 of
tried not by Judge Caguioa but by any of his colleagues Article 188 of the Revised Penal Code. More specifically,
in the Malolos branch of the lower court. the allegations that the defendant had the purpose of
"deceiving the complainant or the public"; that the act of
ERICTA, J.,  dissenting: selling or offering for sale the said hand pumps were
done "wilfully, unlawfully and feloniously"; and that the
unlawful act "induced the public to believe that the
I believe that giving the petitioner another preliminary
JETMATIC DRAGON HAND PUMP offered are those of
investigation and another trial under the second
the complainant" to the "damage and prejudice of the
information is unnecessary.
complainant and general public," sufficiently convey that
the defendant sold his hand pumps "knowing that the
The first information clearly charges two offenses, trademark has been fraudulently used on such goods"
namely, the offense of unfair competition penalized which is the gist of the offense as defined in paragraph 2
under Article 189, paragraph 1, and the offense of of article 188 of the Code,
substituting and altering a trademark penalized under
Article 188, paragraph 2, both of the Revised Penal
It is the allegation in the information, not the designation
Code. That the first information charges unfair
of the offense by the fiscal, that determines the nature of
competition leaves no room for doubt. Aside from the
the offense. The designation of the offense by the fiscal
clear allegations in the information, the fiscal seemed to
is only his conclusion, which, if erroneous, maybe
have designated the offense as a violation of Article 189,
corrected by the court. Even if the fiscal fails to
paragraph 1 of the Code. What seems to be debatable is
designate the nature of the offense, the court, after trial,
whether or not the same information also sufficiently
may convict the defendant of the offense charged in the
charges the offense of substituting and altering
information and proven during the trial.
trademarks penalized under Article 188, paragraph 2 of
the Code.
I do not share the view of the Solicitor General that an
allegation in the information that the trademark in
I am of the firm belief that the first information sufficiently
question is registered is necessary. Registration is not
informs the accused of the offense of substituting and
an element of the offense as defined by the statute. An
altering trademarks penalized under Article 188,
information is sufficient if it alleges the elements of the
paragraph 2, of the Code. Paragraphs 1 and 2 of said
offense defined in the statute. Whether or not proof
article, read as follows:
during the trial of registration of the trademark is
necessary for conviction is a question which We are not
The penalty of prision correccional in its minimum period now caned upon to resolve. At any rate, the trial court
or a fine ranging from P 500 to P 2,000, or both, shall be already pronounced in the dispositive portion of the
imposed upon: decision that there is prima facie evidence "that the
accused has violated Article 188, paragraph 2 of the
Revised Penal Code." Such prima facie evidence may
already include proof of registration of the trademark.
The complainant could not have been using his
trademark for quite sometime without having registered
the same in accordance with law.

The first information is quashable for duplicity of

charges. But having failed to object, the defendant
(petitioner herein) may be convicted of the offenses, or
of any one of them, charged in the information and
proven during the trial.

In actual practice, when a defendant is accused of two or

more separate and distinct offenses in one and the same
information without objection and all the offenses
charged are proven, the trial court renders a joint
decision on the two or more offenses charged. But there
is no law prohibiting the trial judge from rendering a
decision for one of the offenses in a separate decision,
then rendering at a later time another decision for the
other offense or offenses.

In the instant case, the trial court had already rendered a

judgment acquitting the defendant (petitioner) of one of
the offenses charged, namely, that of unfair competition
penalized under article 189 paragraph 1 of the Code. But
it has not yet rendered a judgment of conviction or
acquittal with respect to the other offense of substituting
and altering trademarks penalized under Article 188,
paragraph 2 of the Code, although it has found prima
facie evidence of the same. Neither has the trial court
dismissed the first information.

So I suggest the following: 1) the trial court should be

directed to render a decision on the charge of violation of
the offense of substituting and altering trademarks
penalized under Article 188, paragraph 2 of the Code, as
charged in the information; 2) the second information
may be admitted by the trial court under Rule 110,
Section 13, 1st paragraph, of the Rules of Court, as an
amendment of the first information, the amendment
being only on a matter of form; and 3) to avoid undue
prejudice or undue surprise, the trial court may allow the
reopening of the case with respect to the charge of
violating Article 188, paragraph 2 of the Code so that the
defendant may present any additional evidence which he
may deem necessary for his defense.

Giving the petitioner the right of another preliminary

investigation and requiring that another trial be
conducted amount to a ruling by the Court that the first
information, which charges the same offense charged in
the second information, is already "terminated." (Rule
117 Section 9, Rules of Court). Since the termination is
without the express consent of the accused, the second
information subjects him to double jeopardy.

 
 Civil Case No. Q-00-41446 for unfair competition
pending with the same branch; and also in view of the
G.R. Nos. 160054-55             July 21, 2004 pendency of a petition for review filed with the Secretary
of Justice assailing the Chief State Prosecutor’s
resolution finding probable cause to charge petitioner
MANOLO P. SAMSON, petitioner,
with unfair competition. In an Order dated August 9,
vs.
2002, the trial court denied the motion to suspend
HON. REYNALDO B. DAWAY, in his capacity as
arraignment and other proceedings.
Presiding Judge, Regional Trial Court of Quezon
City, Branch 90, PEOPLE OF THE PHILIPPINES and
CATERPILLAR, INC., respondents. On August 20, 2002, petitioner filed a twin motion to
quash the informations and motion for reconsideration of
the order denying motion to suspend, this time
DECISION
challenging the jurisdiction of the trial court over the
offense charged. He contended that since under Section
YNARES-SANTIAGO, J.:
170 of R.A. No. 8293, the penalty4 of imprisonment for
unfair competition does not exceed six years, the offense
Assailed in this petition for certiorari is the March 26, is cognizable by the Municipal Trial Courts and not by
2003 Order1 of the Regional Trial Court of Quezon City, the Regional Trial Court, per R.A. No. 7691.
Branch 90, which denied petitioner’s – (1) motion to
quash the information; and (2) motion for reconsideration
In its assailed March 26, 2003 Order, the trial court
of the August 9, 2002 Order denying his motion to
denied petitioner’s twin motions.6 A motion for
suspend the arraignment and other proceedings in
reconsideration thereof was likewise denied on August 5,
Criminal Case Nos. Q-02-108043-44. Petitioner also
2003.
questioned its August 5, 2003 Order2 which denied his
motion for reconsideration.
Hence, the instant petition alleging that respondent
Judge gravely abused its discretion in issuing the
The undisputed facts show that on March 7, 2002, two
assailed orders.
informations for unfair competition under Section 168.3
(a), in relation to Section 170, of the Intellectual Property
Code (Republic Act No. 8293), similarly worded save for The issues posed for resolution are – (1) Which court
the dates and places of commission, were filed against has jurisdiction over criminal and civil cases for violation
petitioner Manolo P. Samson, the registered owner of of intellectual property rights? (2) Did the respondent
ITTI Shoes. The accusatory portion of said informations Judge gravely abuse his discretion in refusing to
read: suspend the arraignment and other proceedings in
Criminal Case Nos. Q-02-108043-44 on the ground of –
(a) the existence of a prejudicial question; and (b) the
That on or about the first week of November 1999 and
pendency of a petition for review with the Secretary of
sometime prior or subsequent thereto, in Quezon City,
Justice on the finding of probable cause for unfair
Philippines, and within the jurisdiction of this Honorable
competition?
Court, above-named accused, owner/proprietor of ITTI
Shoes/Mano Shoes Manufactuirng Corporation located
at Robinson’s Galleria, EDSA corner Ortigas Avenue, Under Section 170 of R.A. No. 8293, which took effect
Quezon City, did then and there willfully, unlawfully and on January 1, 1998, the criminal penalty for infringement
feloniously distribute, sell and/or offer for sale of registered marks, unfair competition, false designation
CATERPILLAR products such as footwear, garments, of origin and false description or representation, is
clothing, bags, accessories and paraphernalia which are imprisonment from 2 to 5 years and a fine ranging from
closely identical to and/or colorable imitations of the Fifty Thousand Pesos to Two Hundred Thousand Pesos,
authentic Caterpillar products and likewise using to wit:
trademarks, symbols and/or designs as would cause
confusion, mistake or deception on the part of the buying SEC. 170. Penalties. – Independent of the civil and
public to the damage and prejudice of CATERPILLAR, administrative sanctions imposed by law, a criminal
INC., the prior adopter, user and owner of the following penalty of imprisonment from two (2) years to five (5)
internationally: "CATERPILLAR", "CAT", years and a fine ranging from Fifty thousand pesos
"CATERPILLAR & DESIGN", "CAT AND DESIGN", (P50,000.00) to Two hundred thousand pesos
"WALKING MACHINES" and "TRACK-TYPE TRACTOR (P200,000.00), shall be imposed on any person who is
& DESIGN." found guilty of committing any of the acts mentioned in
Section 155 [Infringement], Section 168 [Unfair
CONTRARY TO LAW.3 Competition] and Section 169.1 [False Designation of
Origin and False Description or Representation].
On April 19, 2002, petitioner filed a motion to suspend
arraignment and other proceedings in view of the Corollarily, Section 163 of the same Code states that
existence of an alleged prejudicial question involved in actions (including criminal and civil) under Sections 150,
155, 164, 166, 167, 168 and 169 shall be brought before
the proper courts with appropriate jurisdiction under In the case at bar, R.A. No. 8293 and R.A. No. 166 are
existing laws, thus – special laws8 conferring jurisdiction over violations of
intellectual property rights to the Regional Trial Court.
SEC. 163. Jurisdiction of Court. – All actions under They should therefore prevail over R.A. No. 7691, which
Sections 150, 155, 164 and 166 to 169 shall be brought is a general law.9 Hence, jurisdiction over the instant
before the proper courts with appropriate jurisdiction criminal case for unfair competition is properly lodged
under existing laws. (Emphasis supplied) with the Regional Trial Court even if the penalty therefor
is imprisonment of less than 6 years, or from 2 to 5 years
and a fine ranging from P50,000.00 to P200,000.00.
The existing law referred to in the foregoing provision is
Section 27 of R.A. No. 166 (The Trademark Law) which
provides that jurisdiction over cases for infringement of In fact, to implement and ensure the speedy disposition
registered marks, unfair competition, false designation of of cases involving violations of intellectual property rights
origin and false description or representation, is lodged under R.A. No. 8293, the Court issued A.M. No. 02-1-11-
with the Court of First Instance (now Regional Trial SC dated February 19, 2002 designating certain
Court) – Regional Trial Courts as Intellectual Property Courts. On
June 17, 2003, the Court further issued a Resolution
consolidating jurisdiction to hear and decide Intellectual
SEC. 27. Jurisdiction of Court of First Instance. – All
Property Code and Securities and Exchange
actions under this Chapter [V – Infringement] and
Commission cases in specific Regional Trial Courts
Chapters VI [Unfair Competition] and VII [False
designated as Special Commercial Courts.
Designation of Origin and False Description or
Representation], hereof shall be brought before the
Court of First Instance. The case of Mirpuri v. Court of Appeals,10 invoked by
petitioner finds no application in the present case.
Nowhere in Mirpuri did we state that Section 27 of R.A.
We find no merit in the claim of petitioner that R.A. No.
No. 166 was repealed by R.A. No. 8293. Neither did we
166 was expressly repealed by R.A. No. 8293. The
make a categorical ruling therein that jurisdiction over
repealing clause of R.A. No. 8293, reads –
cases for violation of intellectual property rights is lodged
with the Municipal Trial Courts. The passing remark
SEC. 239. Repeals. – 239.1. All Acts and parts of in Mirpuri on the repeal of R.A. No. 166 by R.A. No.
Acts inconsistent herewith, more particularly Republic 8293 was merely a backgrounder to the enactment of
Act No. 165, as amended; Republic Act No. 166, as the present Intellectual Property Code and cannot thus
amended; and Articles 188 and 189 of the Revised be construed as a jurisdictional pronouncement in cases
Penal Code; Presidential Decree No. 49, including for violation of intellectual property rights.
Presidential Decree No. 285, as amended, are hereby
repealed. (Emphasis added)
Anent the second issue, petitioner failed to substantiate
his claim that there was a prejudicial question. In his
Notably, the aforequoted clause did not expressly repeal petition, he prayed for the reversal of the March 26, 2003
R.A. No. 166 in its entirety, otherwise, it would not have order which sustained the denial of his motion to
used the phrases "parts of Acts" and "inconsistent suspend arraignment and other proceedings in Criminal
herewith;" and it would have simply stated "Republic Act Case Nos. Q-02-108043-44. For unknown reasons,
No. 165, as amended; Republic Act No. 166, as however, he made no discussion in support of said
amended; and Articles 188 and 189 of the Revised prayer in his petition and reply to comment. Neither did
Penal Code; Presidential Decree No. 49, including he attach a copy of the complaint in Civil Case No. Q-00-
Presidential Decree No. 285, as amended are hereby 41446 nor quote the pertinent portion thereof to prove
repealed." It would have removed all doubts that said the existence of a prejudicial question.
specific laws had been rendered without force and effect.
The use of the phrases "parts of Acts" and "inconsistent
At any rate, there is no prejudicial question if the civil and
herewith" only means that the repeal pertains only to
the criminal action can, according to law, proceed
provisions which are repugnant or not susceptible of
independently of each other.11 Under Rule 111, Section
harmonization with R.A. No. 8293.6 Section 27 of R.A.
3 of the Revised Rules on Criminal Procedure, in the
No. 166, however, is consistent and in harmony with
cases provided in Articles 32, 33, 34 and 2176 of the
Section 163 of R.A. No. 8293. Had R.A. No. 8293
Civil Code, the independent civil action may be brought
intended to vest jurisdiction over violations of intellectual
by the offended party. It shall proceed independently of
property rights with the Metropolitan Trial Courts, it
the criminal action and shall require only a
would have expressly stated so under Section 163
preponderance of evidence.
thereof.

In the case at bar, the common element in the acts

Moreover, the settled rule in statutory construction is that
constituting unfair competition under Section 168 of R.A.
in case of conflict between a general law and a special
No. 8293 is fraud.12 Pursuant to Article 33 of the Civil
law, the latter must prevail. Jurisdiction conferred by a
Code, in cases of defamation, fraud, and physical
special law to Regional Trial Courts must prevail over
injuries, a civil action for damages, entirely separate and
that granted by a general law to Municipal Trial Courts.7
distinct from the criminal action, may be brought by the It shall be filed in seven (7) clearly legible copies
injured party. Hence, Civil Case No. Q-00-41446, which together with proof of service thereof on the respondent
as admitted13 by private respondent also relate to unfair with the original copy intended for the court indicated as
competition, is an independent civil action under Article such by the petitioner, and shall be accompanied by a
33 of the Civil Code. As such, it will not operate as a clearly legible duplicate original or certified true
prejudicial question that will justify the suspension of the copy of the judgment, order, resolution, or ruling
criminal cases at bar. subject thereof, such material portions of the record
as are referred to therein, and other documents
Section 11 (c), Rule 116 of the Revised Rules on relevant or pertinent thereto.
Criminal Procedure provides –
xxxxxxxxx
SEC. 11. Suspension of arraignment. – Upon motion by
the proper party, the arraignment shall be suspended in The failure of the petitioner to comply with any of the
the following cases – foregoing requirements shall be sufficient ground
for the dismissal of the petition. (Emphasis added)
xxxxxxxxx
WHEREFORE, in view of all the foregoing, the petition is
(c) A petition for review of the resolution of the dismissed.
prosecutor is pending at either the Department of
Justice, or the Office of the President; Provided, that the SO ORDERED.
period of suspension shall not exceed sixty (60) days
counted from the filing of the petition with the reviewing
office.

While the pendency of a petition for review is a ground

for suspension of the arraignment, the aforecited
provision limits the deferment of the arraignment to a
period of 60 days reckoned from the filing of the petition
with the reviewing office. It follows, therefore, that after
the expiration of said period, the trial court is bound to
arraign the accused or to deny the motion to defer
arraignment.

In the instant case, petitioner failed to establish that

respondent Judge abused his discretion in denying his
motion to suspend. His pleadings and annexes
submitted before the Court do not show the date of filing
of the petition for review with the Secretary of
Justice.14 Moreover, the Order dated August 9, 2002
denying his motion to suspend was not appended to the
petition. He thus failed to discharge the burden of
proving that he was entitled to a suspension of his
arraignment and that the questioned orders are contrary
to Section 11 (c), Rule 116 of the Revised Rules on
Criminal Procedure. Indeed, the age-old but familiar rule
is that he who alleges must prove his allegations.

In sum, the dismissal of the petition is proper considering

that petitioner has not established that the trial court
committed grave abuse of discretion. So also, his failure
to attach documents relevant to his allegations warrants
the dismissal of the petition, pursuant to Section 3, Rule
46 of the Rules of Civil Procedure, which states:

SEC. 3. Contents and filing of petition; effect of non-

compliance with requirements. — The petition shall
contain the full names and actual addresses of all the
petitioners and respondents, a concise statement of the
matters involved, the factual background of the case,
and the grounds relied upon for the relief prayed for.
 the production, sale and distribution of SHELLANE
LPGs. It is the only corporation in the Philippines
authorized to allow refillers and distributors to refill, use,
sell and distribute SHELLANE LPG containers and
products.7

On 3 April 2003, National Bureau of Investigation (NBI)

agent Ritche N. Oblanca (Oblanca) filed two applications
for search warrant with the RTC, Branch 17, Cavite City,
against petitioners and other occupants of the
MASAGANA compound located at Governor’s Drive,
G.R. No. 168306              June 19, 2007 Barangay Lapidario, Trece Martires, Cavite City, for
alleged violation of Section 155, in relation to Section
WILLIAM C. YAO, SR., LUISA C. YAO, RICHARD C. 170 of Republic Act No. 8293, otherwise known as "The
YAO, WILLIAM C. YAO JR., and ROGER C. Intellectual Property Code of the Philippines."8 The two
YAO, petitioners, applications for search warrant uniformly alleged that per
vs. information, belief, and personal verification of Oblanca,
THE PEOPLE OF THE PHILIPPINES, PETRON the petitioners are actually producing, selling, offering for
CORPORATION and PILIPINAS SHELL PETROLEUM sale and/or distributing LPG products using steel
CORP., and its Principal, SHELL INT’L PETROLEUM cylinders owned by, and bearing the tradenames,
CO. LTD., respondents. trademarks, and devices of Petron and Pilipinas Shell,
without authority and in violation of the rights of the said
DECISION entities.

CHICO-NAZARIO, J.: In his two separate affidavits9 attached to the two

applications for search warrant, Oblanca alleged:
In this Petition for Review on Certiorari1 under Rule 45 of
the Rules of Court, petitioners William C. Yao, Sr., Luisa 1. [That] on 11 February 2003, the National Bureau of
C. Yao, Richard C. Yao, William C. Yao, Jr., and Roger Investigation ("NBI") received a letter-complaint from
C. Yao pray for the reversal of the Decision dated 30 Atty. Bienvenido I. Somera Jr. of Villaraza and
September 2004,2 and Resolution dated 1 June 2005, of Angangco, on behalf of among others, [Petron
the Court of Appeals in CA G.R. SP No. Corporation (PETRON)] and Pilipinas Shell Petroleum
79256,3 affirming the two Orders, both dated 5 June Corporation (PSPC), the authorized representative of
2003, of the Regional Trial Court (RTC), Branch 17, Shell International Petroleum Company Limited ("Shell
Cavite City, relative to Search Warrants No. 2-2003 and International"), requesting assistance in the investigation
No. 3-2003.4 In the said Orders, the RTC denied the and, if warranted, apprehension and prosecution of
petitioners’ Motion to Quash Search Warrant5 and certain persons and/or establishments suspected of
Motion for the Return of the Motor Compressor and violating the intellectual property rights [of PETRON] and
Liquified Petroleum Gas (LPG) Refilling Machine.6 of PSPC and Shell International.

The following are the facts: 2. [That] on the basis of the letter-complaint, I, together
with Agent Angelo Zarzoso, was assigned as the NBI
agent on the case.
Petitioners are incorporators and officers of MASAGANA
GAS CORPORATION (MASAGANA), an entity engaged
in the refilling, sale and distribution of LPG products. 3. [That] prior to conducting the investigation on the
Private respondents Petron Corporation (Petron) and reported illegal activities, he reviewed the certificates of
Pilipinas Shell Petroleum Corporation (Pilipinas Shell) trademark registrations issued in favor of [PETRON],
are two of the largest bulk suppliers and producers of PSPC and Shell International as well as other
LPG in the Philippines. Their LPG products are sold documents and other evidence obtained by the
under the marks "GASUL" and "SHELLANE," investigative agency authorized by [PETRON], PSPC
respectively. Petron is the registered owner in the and Shell International to investigate and cause the
Philippines of the trademarks GASUL and GASUL investigation of persons and establishments violating the
cylinders used for its LPG products. It is the sole entity in rights of [PETRON], PSPC and Shell International,
the Philippines authorized to allow refillers and represented by Mr. Bernabe C. Alajar. Certified copies of
distributors to refill, use, sell, and distribute GASUL LPG the foregoing trademark registrations are attached
containers, products and its trademarks. Pilipinas Shell, hereto as Annexes "A" to ":E".
on the other hand, is the authorized user in the
Philippines of the tradename, trademarks, symbols, or 4. [That] among the establishments alleged to be
designs of its principal, Shell International Petroleum unlawfully refilling and unlawfully selling and distributing
Company Limited (Shell International), including the [Gasul LPG and] Shellane products is Masagana Gas
marks SHELLANE and SHELL device in connection with Corporation ("MASAGANA"). Based on Securities and
Exchange Commission Records, MASAGANA has its 8. [That] on 27 February 2003, I conducted another test-
principal office address at 9775 Kamagong Street, San buy accompanied by Mr. Bernabe C. Alajar. x x x After
Antonio Village, Makati, Metro Manila. The incorporators choosing the cylinders, we were issued an order slip
and directors of MASAGANA are William C. Yao, Sr., which we presented to the cashier. Upon payment, Cash
Luisa C. Yao, Richard C. Yao, William C. Yao, Jr., and Invoice No. 56398 was issued covering the cost of both
Roger C. Yao. x x x. GASUL and SHELLANE LPG cylinders and their
contents. x x x Both cylinders were refilled in our
5. I confirmed that MASAGANA is not authorized to use presence and no valve seals were placed on the
[PETRON and] Shellane LPG cylinders and its cylinders.
trademarks and tradenames or to be refillers or
distributors of [PETRON and] Shellane LPG’s. Copies of the photographs of the delivery trucks, LPG
cylinders and registration papers were also attached to
6. I went to MASAGANA’s refilling station located at the aforementioned affidavits.10
Governor’s Drive, Barangay Lapidario, Trece Martires
City (sic), Cavite to investigate its activities. I confirmed Bernabe C. Alajar (Alajar), owner of Able Research and
that MASAGANA is indeed engaged in the unauthorized Consulting Services Inc., was hired by Petron and
refilling, sale and/or distribution of [Gasul and] Shellane Pilipinas Shell to assist them in carrying out their Brand
LPG cylinders. I found out that MASAGANA delivery Protection Program. Alajar accompanied Oblanca during
trucks with Plate Nos. UMN-971, PEZ-612, WTE-527, the surveillance of and test-buys at the refilling plant of
XAM-970 and WFC-603 coming in and out of the refilling MASAGANA. He also executed two separate affidavits
plant located at the aforementioned address contained corroborating the statements of Oblanca. These were
multi-brand LPG cylinders including [Gasul and] annexed to the two applications for search warrant.11
Shellane. x x x.
After conducting the preliminary examination on Oblanca
7. [That] on 13 February 2003, I conducted a test-buy and Alajar, and upon reviewing their sworn affidavits and
accompanied by Mr. Bernabe C. Alajar. After asking the other attached documents, Judge Melchor Q.C. Sadang
purpose of our visit, MASAGANA’s guard allowed us to (Judge Sadang), Presiding Judge of the RTC, Branch
enter the MASAGANA refilling plant to purchase GASUL 17, Cavite City, found probable cause and
and SHELLANE LPGs. x x x. We were issued an order correspondingly issued Search Warrants No. 2-2003 and
slip which we presented to the cashier’s office located No. 3-2003.12 The search warrants commanded any
near the refilling station. After paying the amount x x x peace officer to make an immediate search of the
covering the cost of the cylinders and their contents, they MASAGANA compound and to seize the following items:
were issued Cash Invoice No. 56210 dated February 13,
2003. We were, thereafter, assisted by the plant Under Search Warrant No. 2-2003:
attendant in choosing empty GASUL and SHELLANE 11
kg. cylinders, x x x were brought to the refilling station a. Empty/filled LPG cylinder tanks/containers, bearing
[and filled in their presence.] I noticed that no valve seals the tradename "SHELLANE", "SHELL" (Device) of
were placed on the cylinders. Pilipinas Shell Petroleum Corporation and the
trademarks and other devices owned by Shell
[That] while inside the refilling plant doing the test-buy, I International Petroleum Company, Ltd.;
noticed that stockpiles of multi-branded cylinders
including GASUL and SHELLANE cylinders were stored b. Machinery and/or equipment being used or intended
near the refilling station. I also noticed that the total land to be used for the purpose of illegally refilling LPG
area of the refilling plant is about 7,000 to 10,000 square cylinders belonging to Pilipinas Shell Petroleum
meters. At the corner right side of the compound Corporation bearing the latter’s tradename as well as the
immediately upon entering the gate is a covered area marks belonging to Shell International Petroleum
where the maintenance of the cylinders is taking place. Company, Ltd., enumerated hereunder:
Located at the back right corner of the compound are
two storage tanks while at the left side also at the corner
portion is another storage tank. Several meters and 1. Bulk/Bullet LPG storage tanks;
fronting the said storage tank is where the refilling station
and the office are located. It is also in this storage tank 2. Compressor/s (for pneumatic refilling system);
where the elevated blue water tank depicting
MASAGANA CORP. is located. About eleven (11) 3. LPG hydraulic pump/s;
refilling pumps and stock piles of multi-branded cylinders
including Shellane and GASUL are stored in the refilling 4. LPG refilling heads/hoses and appurtenances or LPG
station. At the left side of the entrance gate is the guard filling assembly;
house with small door for the pedestrians and at the right
is a blue steel gate used for incoming and outgoing
5. LPG pipeline gate valve or ball valve and handles and
vehicles.
levers;
6. LPG weighing scales; and MASAGANA, the following articles described in Search
Warrant No. 2-2003 were seized:
7. Seals simulating the shell trademark.
a. Thirty-eight (38) filled 11 kg. LPG cylinders, bearing
c. Sales invoices, ledgers, journals, official receipts, the tradename of Pilipinas Shell Petroleum Corporation
purchase orders, and all other books of accounts, and the trademarks and other devices owned by Shell
inventories and documents pertaining to the production, International Petroleum Company, Ltd.;
sale and/or distribution of the aforesaid goods/products.
b. Thirty-nine (39) empty 11 kg. LPG cylinders, bearing
d. Delivery truck bearing Plate Nos. WTE-527, XAM-970 the tradename of Pilipinas Shell Petroleum Corporation
and WFC-603, hauling trucks, and/or other delivery and the trademarks and other devices owned by Shell
trucks or vehicles or conveyances being used or International Petroleum Company, Ltd.;
intended to be used for the purpose of selling and/or
distributing the above-mentioned counterfeit products. c. Eight (8) filled 50 kg. LPG cylinders, bearing the
tradename of Pilipinas Shell Petroleum Corporation and
Under Search Warrant No. 3-2003: the trademarks and other devices owned by Shell
International Petroleum Company, Ltd.;
a. Empty/filled LPG cylinder tanks/containers, bearing
Petron Corporation’s (Petron) tradename and its d. Three (3) empty 50 kg. LPG cylinders, bearing the
tradename "GASUL" and other devices owned and/or tradename of Pilipinas Shell Petroleum Corporation and
used exclusively by Petron; the trademarks and other devices owned by Shell
International Petroleum Company, Ltd.;
b. Machinery and/or equipment being used or intended
to be used for the purpose of illegally refilling LPG e. One (1) set of motor compressor for filling system.
cylinders belonging to Petron enumerated hereunder;
Pursuant to Search Warrant No. 3-2003, the following
1. Bulk/Bullet LPG storage tanks; articles were also seized:

2. Compressor/s (for pneumatic filling system); a. Six (6) filled 11 kg. LPG cylinders without seal,
bearing Petron’s tradename and its trademark "GASUL"
and other devices owned and/or used exclusively by
3. LPG hydraulic pump/s;
Petron;
4. LPG filling heads/hoses and appurtenances or LPG
b. Sixty-three (63) empty 11 kg. LPG cylinders, bearing
filling assembly;
Petron’s tradename and its trademark "GASUL" and
other devices owned and/or used exclusively by Petron;
5. LPG pipeline gate valve or ball valve and handles
levers;
c. Seven (7) tampered 11 kg. LPG cylinders, bearing
Petron’s tradename and its trademark "GASUL" and
6. LPG weighing scales; and other devices owned and/or used exclusively by Petron;

7. Seals bearing the Petron mark; d. Five (5) tampered 50 kg. LPG cylinders, bearing
Petron’s tradename and its trademark "GASUL" and
c. Sales invoices, ledgers, journals, official receipts, other devices owned and/or used exclusively by Petron
purchase orders, and all other books of accounts, with tampered "GASUL" logo;
inventories and documents pertaining to the production,
sale and/or distribution of the aforesaid goods/products; e. One (1) set of motor compressor for filling system; and
and
f. One (1) set of LPG refilling machine.
d. Delivery trucks bearing Plate Nos. UMN-971, PEZ-612
and WFC-603, hauling trucks, and/or other delivery
On 22 April 2003, petitioners filed with the RTC a Motion
trucks or vehicles or conveyances being used for the
to Quash Search Warrants No. 2-2003 and No. 3-
purpose of selling and/or distributing the above-
200314 on the following grounds:
mentioned counterfeit products.

1. There is no probable cause for the issuance of the

Upon the issuance of the said search warrants, Oblanca
search warrant and the conditions for the issuance of a
and several NBI operatives immediately proceeded to
search warrant were not complied with;
the MASAGANA compound and served the search
warrants on petitioners.13 After searching the premises of
2. Applicant NBI Agent Ritchie N. Oblanca and his machine, the RTC resolved that MASAGANA cannot be
witness Bernabe C. Alajar do not have any authority to considered a third party claimant whose rights were
apply for a search warrant. Furthermore, they committed violated as a result of the seizure since the evidence
perjury when they alleged in their sworn statements that disclosed that petitioners are stockholders of
they conducted a test-buy on two occasions; MASAGANA and that they conduct their business
through the same juridical entity. It maintained that to
3. The place to be searched was not specified in the rule otherwise would result in the misapplication and
Search Warrant as the place has an area of 10,000 debasement of the veil of corporate fiction. It also stated
square meters (one hectare) more or less, for which that the veil of corporate fiction cannot be used as a
reason the place to be searched must be indicated with refuge from liability.
particularity;
Further, the RTC ratiocinated that ownership by another
4. The search warrant is characterized as a general person or entity of the seized items is not a ground to
warrant as the items to be seized as mentioned in the order its return; that in seizures pursuant to a search
search warrant are being used in the conduct of the warrant, what is important is that the seized items were
lawful business of respondents and the same are not used or intended to be used as means of committing the
being used in refilling Shellane and Gasul LPGs. offense complained of; that by its very nature, the
properties sought to be returned in the instant case
appear to be related to and intended for the illegal
On 30 April 2003, MASAGANA, as third party claimant,
activity for which the search warrants were applied for;
filed with the RTC a Motion for the Return of Motor
and that the items seized are instruments of an offense.
Compressor and LPG Refilling Machine.15 It claimed that
it is the owner of the said motor compressor and LPG
refilling machine; that these items were used in the Petitioners filed Motions for Reconsideration of the
operation of its legitimate business; and that their seizure assailed Orders,17 but these were denied by the RTC in
will jeopardize its business interests. its Order dated 21 July 2003 for lack of compelling
reasons.18
On 5 June 2003, the RTC issued two Orders, one of
which denied the petitioners’ Motion to Quash Search Subsequently, petitioners appealed the two Orders of the
Warrants No. 2-2003 and No. 3-2003, and the other one RTC to the Court of Appeals via a special civil action for
also denied the Motion for the Return of Motor certiorari under Rule 65 of the Rules of Court.19 On 30
Compressor and LPG Refilling Machine of MASAGANA, September 2004, the Court of Appeals promulgated its
for lack of merit.16 Decision affirming the Orders of the RTC. 20 It adopted in
essence the bases and reasons of the RTC in its two
Orders. The decretal portion thereof reads:
With respect to the Order denying the petitioners’ motion
to quash Search Warrants No. 2-2003 and No. 3-2003,
the RTC held that based on the testimonies of Oblanca Based on the foregoing, this Court finds no reason to
and Alajar, as well as the documentary evidence disturb the assailed Orders of the respondent judge.
consisting of receipts, photographs, intellectual property Grave abuse of discretion has not been proven to exist
and corporate registration papers, there is probable in this case.
cause to believe that petitioners are engaged in the
business of refilling or using cylinders which bear the WHEREFORE, the petition is hereby DISMISSED for
trademarks or devices of Petron and Pilipinas Shell in lack of merit. The assailed orders both dated June 5,
the place sought to be searched and that such activity is 2003 are hereby AFFIRMED.
probably in violation of Section 155 in relation to Section
170 of Republic Act No. 8293. Petitioners filed a Motion for Reconsideration 21 of the
Decision of the Court of Appeals, but this was denied in
It also ruled that Oblanca and Alajar had personal its Resolution dated 1 June 2005 for lack of merit.22
knowledge of the acts complained of since they were the
ones who monitored the activities of and conducted test- Petitioners filed the instant petition on the following
buys on MASAGANA; that the search warrants in grounds:
question are not general warrants because the
compound searched are solely used and occupied by I.
MASAGANA, and as such, there was no need to
particularize the areas within the compound that would
be searched; and that the items to be seized in the THE HONORABLE COURT OF APPEALS ERRED IN
subject search warrants were sufficiently described with RULING THAT THE PRESIDING JUDGE OF RTC
particularity as the same was limited to cylinder tanks CAVITE CITY HAD SUFFICIENT BASIS IN
bearing the trademarks GASUL and SHELLANE. DECLARING THE EXISTENCE OF PROBABLE
CAUSE;
As regards the Order denying the motion of MASAGANA
for the return of its motor compressor and LPG refilling II.
THE HONORABLE COURT OF APPEALS ERRED IN questions on the distinguishing marks of SHELLANE and
RULING THAT NBI AGENT (RITCHIE OBLANCA) CAN GASUL; that the findings of the Brand Protection
APPLY FOR THE SEARCH WARRANTS Committee of Pilipinas Shell were not submitted nor
NOTHWITHSTANDING HIS LACK OF AUTHORITY; presented to the RTC; that although Judge Sadang
examined Oblanca and Alajar, the former did not ask
III. exhaustive questions; and that the questions Judge
Sadang asked were merely rehash of the contents of the
affidavits of Oblanca and Alajar.25
THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE REQUIREMENT OF GIVING A
PARTICULAR DESCRIPTION OF THE PLACE TO BE These contentions are devoid of merit.
SEARCHED WAS COMPLIED WITH;
Article III, Section 2, of the present Constitution states
IV. the requirements before a search warrant may be validly
issued, to wit:
THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE APPLICATIONS AND THE Section 2. The right of the people to be secure in their
SEARCH WARRANTS THEMSELVES SHOW NO persons, houses, papers, and effects against
AMBIGUITY OF THE ITEMS TO BE SEIZED; unreasonable searches and seizures of whatever nature
and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon
V.
probable cause to be determined personally by the judge
after examination under oath or affirmation of the
THE HONORABLE COURT OF APPEALS ERRED IN complainant and the witnesses he may produce, and
RULING THAT THE COMPLAINT IS DIRECTED particularly describing the place to be searched and the
AGAINST MASAGANA GAS CORPORATION, ACTING persons or things to be seized. (emphasis supplied).
THROUGH ITS OFFICERS AND DIRECTORS, HENCE
MASAGANA GAS CORPORATION MAY NOT BE
Section 4 of Rule 126 of the Revised Rules on Criminal
CONSIDERED AS THIRD PARTY CLAIMANT WHOSE
Procedure, provides with more particularity the requisites
RIGHTS WERE VIOLATED AS A RESULT OF THE
in issuing a search warrant, viz:
SEIZURE.23

SEC. 4. Requisites for issuing search warrant. – A

Apropos the first issue, petitioners allege that Oblanca
search warrant shall not issue except upon probable
and Alajar had no personal knowledge of the matters on
cause in connection with one specific offense to be
which they testified; that Oblanca and Alajar lied to
determined personally by the judge after examination
Judge Sadang when they stated under oath that they
under oath or affirmation of the complainant and the
were the ones who conducted the test-buys on two
witnesses he may produce, and particularly describing
different occasions; that the truth of the matter is that
the place to be searched and the things to be seized
Oblanca and Alajar never made the purchases
which may be anywhere in the Philippines.
personally; that the transactions were undertaken by
other persons namely, Nikko Javier and G. Villanueva as
shown in the Entry/Exit Slips of MASAGANA; and that According to the foregoing provisions, a search warrant
even if it were true that Oblanca and Alajar asked Nikko can be issued only upon a finding of probable cause.
Javier and G. Villanueva to conduct the test-buys, the Probable cause for search warrant means such facts
information relayed by the latter two to the former was and circumstances which would lead a reasonably
mere hearsay.24 discreet and prudent man to believe that an offense has
been committed and that the objects sought in
connection with the offense are in the place to be
Petitioners also contend that if Oblanca and Alajar had
searched.26
indeed used different names in purchasing the LPG
cylinders, they should have mentioned it in their
applications for search warrants and in their testimonies The facts and circumstances being referred thereto
during the preliminary examination; that it was only after pertain to facts, data or information personally known to
the petitioners had submitted to the RTC the entry/exit the applicant and the witnesses he may present.27 The
slips showing different personalities who made the applicant or his witnesses must have personal
purchases that Oblanca and Alajar explained that they knowledge of the circumstances surrounding the
had to use different names in order to avoid detection; commission of the offense being complained of.
that Alajar is not connected with either of the private "Reliable information" is insufficient. Mere affidavits are
respondents; that Alajar was not in a position to inform not enough, and the judge must depose in writing the
the RTC as to the distinguishing trademarks of complainant and his witnesses.28
SHELLANE and GASUL; that Oblanca was not also
competent to testify on the marks allegedly infringed by Section 155 of Republic Act No. 8293 identifies the acts
petitioners; that Judge Sadang failed to ask probing constituting trademark infringement, thus:
SEC. 155. Remedies; Infringement. – Any person who These allegations were corroborated by Alajar in his
shall, without the consent of the owner of the registered separate affidavits.
mark:
In support of the foregoing statements, Oblanca also
155.1. Use in commerce any reproduction, counterfeit, submitted the following documentary and object
copy, or colorable imitation of a registered mark or the evidence:
same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, 1. Certified true copy of the Certificate of Registration
advertising of any goods or services including other No. 44046 for "SHELL (DEVICE)" in the name of Shell
preparatory steps necessary to carry out the sale of any International;
goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or 2. Certified true copy of the Certificate of Registration
to deceive; or No. 41789 for "SHELL (DEVICE)’ in the name of Shell
International;
155.2. Reproduce, counterfeit, copy or colorably imitate
a registered mark or a dominant feature thereof and 3. Certified true copy of the Certificate of Registration
apply such reproduction, counterfeit, copy or colorable No. 37525 for "SHELL (DEVICE) in the name of Shell
imitation to labels, signs, prints, packages, wrappers, International;
receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering
for sale, distribution, or advertising of goods or services 4. Certified true copy of the Certificate of Registration
on or in connection with which such use is likely to cause No. R-2813 for "SHELL" in the name of Shell
confusion, or to cause mistake, or to deceive, shall be International;
liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the 5. Certified true copy of the Certificate of Registration
infringement takes place at the moment any of the acts No. 31443 for "SHELLANE" in the name of Shell
stated in Subsection 155.1 or this subsection are International;
committed regardless of whether there is actual sale of
goods or services using the infringing material. 6. Certified true copy of the Certificate of Registration
No. 57945 for the mark "GASUL" in the name of Petron;
As can be gleaned in Section 155.1, mere unauthorized
use of a container bearing a registered trademark in 7. Certified true copy of the Certificate of Registration
connection with the sale, distribution or advertising of No. C-147 for "GASUL CYLINDER CONTAINING
goods or services which is likely to cause confusion, LIQUEFIED PETROLEUM GAS" in the name of Petron;
mistake or deception among the buyers/consumers can
be considered as trademark infringement. 8. Certified true copy of the Certificate of Registration
No. 61920 for the mark "GASUL AND DEVICE" in the
In his sworn affidavits,29 Oblanca stated that before name of Petron;
conducting an investigation on the alleged illegal
activities of MASAGANA, he reviewed the certificates of 9. Certified true copy of the Articles of Incorporation of
trademark registrations issued by the Philippine Masagana;
Intellectual Property Office in favor of Petron and
Pilipinas Shell; that he confirmed from Petron and
10. Certified true copy of the By-laws of Masagana;
Pilipinas Shell that MASAGANA is not authorized to sell,
use, refill or distribute GASUL and SHELLANE LPG
cylinder containers; that he and Alajar monitored the 11. Certified true copy of the latest General Information
activities of MASAGANA in its refilling plant station Sheet of Masagana on file with the Securities and
located within its compound at Governor’s Drive, Exchange Commission;
Barangay Lapidario, Trece Martires, Cavite City; that,
using different names, they conducted two test-buys 12. Pictures of delivery trucks coming in and out of
therein where they purchased LPG cylinders bearing the Masagana while it delivered Gasul and Shellane LPG;
trademarks GASUL and SHELLANE; that the said
GASUL and SHELLANE LPG cylinders were refilled in 13. Cash Invoice No. 56210 dated 13 February 2003
their presence by the MASAGANA employees; that while issued by Masagana for the Gasul and Shellane LPG
they were inside the MASAGANA compound, he noticed purchased by Agent Oblanca and witness Alajar;
stock piles of multi-branded cylinders including GASUL
and SHELLANE LPG cylinders; and that they observed 14. Pictures of the Shellane and Gasul LPG’’s covered
delivery trucks loaded with GASUL and SHELLANE LPG by Cash Invoice No. 56210 purchased from Masagana
cylinders coming in and out of the MASAGANA by Agent Oblanca and witness Alajar;
compound and making deliveries to various retail outlets.
15. Cash Invoice No. 56398 dated 27 February 2003 mention that they used aliases in entering the
issued by Masagana for the Gasul and Shellane LPG MASAGANA compound due to mere oversight.
purchased by Agent Oblanca and witness Alajar; and
It cannot be gainfully said that Oblanca and Alajar are
16. Pictures of the Shellane and Gasul LPG’s covered by not competent to testify on the trademarks infringed by
Cash Invoice No. 56398 purchased from Masagana by the petitioners. As earlier discussed, Oblanca declared
Agent Oblanca and witness Alajar.30 under oath that before conducting an investigation on the
alleged illegal activities of MASAGANA, he reviewed the
Extant from the foregoing testimonial, documentary and certificates of trademark registrations issued by the
object evidence is that Oblanca and Alajar have personal Philippine Intellectual Property Office in favor of Petron
knowledge of the fact that petitioners, through and Pilipinas Shell. These certifications of trademark
MASAGANA, have been using the LPG cylinders registrations were attached by Oblanca in his
bearing the marks GASUL and SHELLANE without applications for the search warrants. Alajar, on the other
permission from Petron and Pilipinas Shell, a probable hand, works as a private investigator and, in fact, owns a
cause for trademark infringement. Both Oblanca and private investigation and research/consultation firm. His
Alajar were clear and insistent that they were the very firm was hired and authorized, pursuant to the Brand
same persons who monitored the activities of Protection Program of Petron and Pilipinas Shell, to
MASAGANA; that they conducted test-buys thereon; and verify reports that MASAGANA is involved in the illegal
that in order to avoid suspicion, they used different sale and refill of GASUL and SHELLANE LPG
names during the test-buys. They also personally cylinders.32 As part of the job, he studied and familiarized
witnessed the refilling of LPG cylinders bearing the himself with the registered trademarks of GASUL and
marks GASUL and SHELLANE inside the MASAGANA SHELLANE, and the distinct features of the LPG
refilling plant station and the deliveries of these refilled cylinders bearing the same trademarks before
containers to some outlets using mini-trucks. conducting surveillance and test-buys on
MASAGANA.33 He also submitted to Oblanca several
copies of the same registered trademark registrations
Indeed, the aforesaid facts and circumstances are
and accompanied Oblanca during the surveillance and
sufficient to establish probable cause. It should be borne
test-buys.
in mind that the determination of probable cause does
not call for the application of the rules and standards of
proof that a judgment of conviction requires after trial on As to whether the form and manner of questioning made
the merits. As the term implies, "probable cause" is by Judge Sadang complies with the requirements of law,
concerned with probability, not absolute or even moral Section 5 of Rule 126 of the Revised Rules on Criminal
certainty. The standards of judgment are those of a Procedure, prescribes the rules in the examination of the
reasonably prudent man, not the exacting calibrations of complainant and his witnesses when applying for search
a judge after a full blown trial.31 warrant, to wit:

The fact that Oblanca and Alajar used different names in SEC. 5. Examination of complainant; record.- The judge
the purchase receipts do not negate personal knowledge must, before issuing the warrant, personally examine in
on their part. It is a common practice of the law enforcers the form of searching questions and answers, in writing
such as NBI agents during covert investigations to use under oath, the complainant and the witnesses he may
different names in order to conceal their true identities. produce on facts personally known to them and attach to
This is reasonable and understandable so as not to the record their sworn statements, together with the
endanger the life of the undercover agents and to affidavits submitted.
facilitate the lawful arrest or apprehension of suspected
violators of the law. The searching questions propounded to the applicant
and the witnesses depend largely on the discretion of the
Petitioners’ contention that Oblanca and Alajar should judge. Although there is no hard-and–fast rule governing
have mentioned the fact that they used different names how a judge should conduct his investigation, it is
in their respective affidavits and during the preliminary axiomatic that the examination must be probing and
examination is puerile. The argument is too vacuous to exhaustive, not merely routinary, general, peripheral,
merit serious consideration. There is nothing in the perfunctory or pro forma. The judge must not simply
provisions of law concerning the issuance of a search rehash the contents of the affidavit but must make his
warrant which directly or indirectly mandates that the own inquiry on the intent and justification of the
applicant of the search warrant or his witnesses should application.34
state in their affidavits the fact that they used different
names while conducting undercover investigations, or to After perusing the Transcript of Stenographic Notes of
divulge such fact during the preliminary examination. In the preliminary examination, we found the questions of
the light of other more material facts which needed to be Judge Sadang to be sufficiently probing, not at all
established for a finding of probable cause, it is not superficial and perfunctory.35 The testimonies of Oblanca
difficult to believe that Oblanca and Alajar failed to and Alajar were consistent with each other and their
narration of facts was credible. As correctly found by the [That] on 11 February 2003, the National Bureau of
Court of Appeals: Investigation (NBI) received a letter-complaint from Atty.
Bienvenido I. Somera, Jr. of Villaraza and Angangco, on
This Court is likewise not convinced that respondent behalf of among others, Petron Corporation (PETRON)
Judge failed to ask probing questions in his [and Pilipinas Shell Petroleum Corporation (PSPC), the
determination of the existence of probable cause. This authorized representative of Shell International
Court has thoroughly examined the Transcript of Petroleum Company Limited (SHELL
Stenographic Notes taken during the investigation INTERNATIONAL)] requesting assistance in the
conducted by the respondent Judge and found that investigation and, if warranted, apprehension and
respondent Judge lengthily inquired into the prosecution of certain persons and/or establishments
circumstances of the case. For instance, he required the suspected of violating the intellectual property rights of
NBI agent to confirm the contents of his affidavit, PETRON [and of PSPC and Shell International.]
inquired as to where the "test-buys" were conducted and
by whom, verified whether PSPC and PETRON have 11. [That] on the basis of the letter-complaint, I, together
registered trademarks or tradenames, required the NBI with Agent Angelo Zarzoso, was assigned as the NBI
witness to explain how the "test-buys" were conducted agent on the case.39
and to describe the LPG cylinders purchased from
Masagana Gas Corporation, inquired why the The fact that Oblanca is a member of the Anti-Organized
applications for Search Warrant were filed in Cavite City Crime Division and not that of the Intellectual Property
considering that Masagana Gas Corporation was located Division does not abrogate his authority to apply for
in Trece Martires, Cavite, inquired whether the NBI search warrant. As aptly stated by the RTC and the
Agent has a sketch of the place and if there was any Court of Appeals, there is nothing in the provisions on
distinguishing sign to identify the place to be searched, search warrant under Rule 126 of the Revised Rules on
and inquired about their alleged tailing and monitoring of Criminal Procedure, which specifically commands that
the delivery trucks. x x x.36 the applicant law enforcer must be a member of a
division that is assigned or related to the subject crime or
Since probable cause is dependent largely on the offense before the application for search warrant may be
opinion and findings of the judge who conducted the acted upon. The petitioners did not also cite any law, rule
examination and who had the opportunity to question the or regulation mandating such requirement. At most,
applicant and his witnesses, the findings of the judge petitioners may only be referring to the administrative
deserves great weight. The reviewing court can overturn organization and/or internal rule or practice of the NBI.
such findings only upon proof that the judge disregarded However, not only did petitioners failed to establish the
the facts before him or ignored the clear dictates of existence thereof, but they also did not prove that such
reason.37 We find no compelling reason to disturb Judge administrative organization and/or internal rule or
Sadang’s findings herein. practice are inviolable.

Anent the second issue, petitioners argue that Judge Neither is the presentation of the letter-complaint of Atty.
Sadang failed to require Oblanca to show his authority to Somera and board resolutions from Petron and Pilipinas
apply for search warrants; that Oblanca is a member of Shell required or necessary in determining probable
the Anti-Organized Crime and not that of the Intellectual cause. As heretofore discussed, the affidavits of Oblanca
Property Division of the NBI; that all complaints for and Alajar, coupled with the object and documentary
infringement should be investigated by the Intellectual evidence they presented, are sufficient to establish
Property Division of the NBI; that it is highly irregular that probable cause. It can also be presumed that Oblanca,
an agent not assigned to the Intellectual Property as an NBI agent, is a public officer who had regularly
Division would apply for a search warrant and without performed his official duty.40 He would not have initiated
authority from the NBI Director; that the alleged letter- an investigation on MASAGANA without a proper
complaint of Atty. Bienvenido Somera, Jr. of Villaraza complaint. Furthermore, Atty. Somera did not step up to
and Angangco Law Office was not produced in court; deny his letter-complaint.
that Judge Sadang did not require Oblanca to produce
the alleged letter-complaint which is material and Regarding the third issue, petitioners posit that the
relevant to the determination of the existence of probable applications for search warrants of Oblanca did not
cause; and that Petron and Pilipinas Shell, being two specify the particular area to be searched, hence, giving
different corporations, should have issued a board the raiding team wide latitude in determining what areas
resolution authorizing the Villaraza and Angangco Law they can search. They aver that the search warrants
Office to apply for search warrant in their behalf.38 were general warrants, and are therefore violative of the
Constitution. Petitioners also assert that since the
We reject these protestations. MASAGANA compound is about 10,000.00 square
meters with several structures erected on the lot, the
The authority of Oblanca to apply for the search warrants search warrants should have defined the areas to be
in question is clearly discussed and explained in his searched.
affidavit, viz:
The long standing rule is that a description of the place While it is true that the property to be seized under a
to be searched is sufficient if the officer with the warrant warrant must be particularly described therein and no
can, with reasonable effort, ascertain and identify the other property can be taken thereunder, yet the
place intended and distinguish it from other places in the description is required to be specific only in so far as the
community. Any designation or description known to the circumstances will ordinarily allow. The law does not
locality that points out the place to the exclusion of all require that the things to be seized must be described in
others, and on inquiry leads the officers unerringly to it, precise and minute details as to leave no room for doubt
satisfies the constitutional requirement.41 on the part of the searching authorities; otherwise it
would be virtually impossible for the applicants to obtain
Moreover, in the determination of whether a search a search warrant as they would not know exactly what
warrant describes the premises to be searched with kind of things they are looking for. Once described,
sufficient particularity, it has been held that the executing however, the articles subject of the search and seizure
officer’s prior knowledge as to the place intended in the need not be so invariant as to require absolute
warrant is relevant. This would seem to be especially concordance, in our view, between those seized and
true where the executing officer is the affiant on whose those described in the warrant. Substantial similarity of
affidavit the warrant had been issued, and when he those articles described as a class or specie would
knows that the judge who issued the warrant intended suffice.44
the compound described in the affidavit.42
Measured against this standard, we find that the items to
The search warrants in question commanded any peace be seized under the search warrants in question were
officer to make an immediate search on MASAGANA sufficiently described with particularity. The articles to be
compound located at Governor’s Drive, Barangay confiscated were restricted to the following: (1) LPG
Lapidario, Trece Martires, Cavite City. It appears that the cylinders bearing the trademarks GASUL and
raiding team had ascertained and reached MASAGANA SHELLANE; (2) Machines and equipments used or
compound without difficulty since MASAGANA does not intended to be used in the illegal refilling of GASUL and
have any other offices/plants in Trece Martires, Cavite SHELLANE cylinders. These machines were also
City. Moreover, Oblanca, who was with the raiding team, specifically enumerated and listed in the search
was already familiar with the MASAGANA compound as warrants; (3) Documents which pertain only to the
he and Alajar had monitored and conducted test-buys production, sale and distribution of the GASUL and
thereat. SHELLANE LPG cylinders; and (4) Delivery trucks
bearing Plate Nos. WTE-527, XAM-970 and WFC-603,
hauling trucks, and/or other delivery trucks or vehicles or
Even if there are several structures inside the
conveyances being used or intended to be used for the
MASAGANA compound, there was no need to
purpose of selling and/or distributing GASUL and
particularize the areas to be searched because, as
SHELLANE LPG cylinders.45
correctly stated by Petron and Pilipinas Shell, these
structures constitute the essential and necessary
components of the petitioners’ business and cannot be Additionally, since the described items are clearly limited
treated separately as they form part of one entire only to those which bear direct relation to the offense,
compound. The compound is owned and used solely by i.e., violation of section 155 of Republic Act No. 8293, for
MASAGANA. What the case law merely requires is that, which the warrant was issued, the requirement of
the place to be searched can be distinguished in relation particularity of description is satisfied.
to the other places in the community. Indubitably, this
requisite was complied with in the instant case. Given the foregoing, the indication of the accurate sizes
of the GASUL and SHELLANE LPG cylinders or tanks
As to the fourth issue, petitioners asseverate that the would be unnecessary.
search warrants did not indicate with particularity the
items to be seized since the search warrants merely Finally, petitioners claim that MASAGANA has the right
described the items to be seized as LPG cylinders to intervene and to move for the return of the seized
bearing the trademarks GASUL and SHELLANE without items; that the items seized by the raiding team were
specifying their sizes. being used in the legitimate business of MASAGANA;
that the raiding team had no right to seize them under
A search warrant may be said to particularly describe the the guise that the same were being used in refilling
things to be seized when the description therein is as GASUL and SHELLANE LPG cylinders; and that there
specific as the circumstances will ordinarily allow; or being no action for infringement filed against them and/or
when the description expresses a conclusion of fact not MASAGANA from the seizure of the items up to the
of law by which the warrant officer may be guided in present, it is only fair that the seized articles be returned
making the search and seizure; or when the things to the lawful owner in accordance with Section 20 of
described are limited to those which bear direct relation A.M. No. 02-1-06-SC.
to the offense for which the warrant is being issued.43
It is an elementary and fundamental principle of
corporation law that a corporation is an entity separate
and distinct from its stockholders, directors or officers. WHEREFORE, the petition is DENIED. The Decision
However, when the notion of legal entity is used to and Resolution of the Court of Appeals in CA-G.R. SP
defeat public convenience, justify wrong, protect fraud, No. 79256, dated 30 September 2004 and 1 June 2005,
or defend crime, the law will regard the corporation as an respectively, are hereby AFFIRMED. Costs against
association of persons, or in the case of two corporations petitioners.
merge them into one.46 In other words, the law will not
recognize the separate corporate existence if the SO ORDERED.
corporation is being used pursuant to the foregoing
unlawful objectives. This non-recognition is sometimes
referred to as the doctrine of piercing the veil of
corporate entity or disregarding the fiction of corporate
entity. Where the separate corporate entity is
disregarded, the corporation will be treated merely as an
association of persons and the stockholders or members
will be considered as the corporation, that is, liability will
attach personally or directly to the officers and
stockholders.47

As we now find, the petitioners, as directors/officers of

MASAGANA, are utilizing the latter in violating the
intellectual property rights of Petron and Pilipinas Shell.
Thus, petitioners collectively and MASAGANA should be
considered as one and the same person for liability
purposes. Consequently, MASAGANA’s third party claim
serves no refuge for petitioners.

Even if we were to sustain the separate personality of

MASAGANA from that of the petitioners, the effect will
be the same. The law does not require that the property
to be seized should be owned by the person against
whom the search warrants is directed. Ownership,
therefore, is of no consequence, and it is sufficient that
the person against whom the warrant is directed has
control or possession of the property sought to be
seized.48 Hence, even if, as petitioners claimed, the
properties seized belong to MASAGANA as a separate
entity, their seizure pursuant to the search warrants is
still valid.

Further, it is apparent that the motor compressor, LPG

refilling machine and the GASUL and SHELL LPG
cylinders seized were the corpus delicti, the body or
substance of the crime, or the evidence of the
commission of trademark infringement. These were the
very instruments used or intended to be used by the
petitioners in trademark infringement. It is possible that,
if returned to MASAGANA, these items will be used
again in violating the intellectual property rights of Petron
and Pilipinas Shell.49 Thus, the RTC was justified in
denying the petitioners’ motion for their return so as to
prevent the petitioners and/or MASAGANA from using
them again in trademark infringement.

Petitioners’ reliance on Section 20 of A.M. No. 02-1-06-

SC,50 is not tenable. As correctly observed by the
Solicitor General, A.M. 02-1-06-SC is not applicable in
the present case because it governs only searches and
seizures in civil actions for infringement of intellectual
property rights.51 The offense complained of herein is for
criminal violation of Section 155 in relation to Section
17052 of Republic Act No. 8293.
 a] The trademark sought to be registered is confusingly
similar to the word "CONVERSE" which is part of
petitioner's corporate name "CONVERSE RUBBER
CORPORATION" as to likely deceive purchasers of
products on which it is to be used to an extent that said
products may be mistaken by the unwary public to be
manufactured by the petitioner; and,

b] The registration of respondent's trademark will cause

great and irreparable injury to the business reputation
and goodwill of petitioner in the Philippines and would
cause damage to said petitioner within the, meaning of
Section 8, R.A. No. 166, as amended.

Thereafter, respondent filed its answer and at the pre-

trial, the parties submitted the following partial stipulation
of facts:

1] The petitioner's corporate name is "CONVERSE

RUBBER CORPORATION" and has been in existence
since July 31, 1946; it is duly organized under the laws
of Massachusetts, USA and doing business at 392 Pearl
St., Malden, County of Middle sex, Massachusetts;

2] Petitioner is not licensed to do business in the

Philippines and it is not doing business on its own in the
Philippines; and,

3] Petitioner manufacturers rubber shoes and uses

thereon the trademarks "CHUCK TAYLOR "and "ALL
G.R. No. L-27906 January 8, 1987 STAR AND DEVICE". 1

CONVERSE RUBBER CORPORATION, petitioner, At the trial, petitioner's lone witness, Mrs. Carmen B.
vs. Pacquing, a duly licensed private merchant with stores at
UNIVERSAL RUBBER PRODUCTS, INC. and the Sta. Mesa Market and in Davao City, testified that
TIBURCIO S. EVALLE, DIRECTOR OF she had been selling CONVERSE rubber shoes in the
PATENTS, respondents. local market since 1956 and that sales of petitioner's
rubber shoes in her stores averaged twelve to twenty
Parades, Poblador, Nazareno, Azada & Tomacruz for pairs a month purchased mostly by basketball players of
petitioner. local private educational institutions like Ateneo, La Salle
and San Beda.
RESOLUTION
Mrs. Pacquing, further stated that she knew petitioner's
  rubber shoes came from the United States "because it
says there in the trademark Converse Chuck Taylor with
star red or blue and is a round figure and made in U.S.A.
FERNAN, J.: " 2 In the invoices issued by her store, the rubber shoes
were described as "Converse Chuck
The undisputed facts of the case are as follows: Taylor", 3 "Converse All Star," 4 "All Star Converse Chuck
Taylor," 5 or "Converse Shoes Chuck Taylor." 6 She also
Respondent Universal Rubber Products, Inc. filed an affirmed that she had no business connection with the
application with the Philippine Patent office for petitioner.
registration of the trademark "UNIVERSAL CONVERSE
AND DEVICE" used on rubber shoes and rubber Respondent, on the other hand, presented as its lone
slippers. witness the secretary of said corporation who testified
that respondent has been selling on wholesale basis
Petitioner Converse Rubber Corporation filed its "Universal Converse" sandals since 1962 and "Universal
opposition to the application for registration on grounds Converse" rubber shoes since 1963. Invoices were
that: submitted as evidence of such sales. The witness also
testified that she had no Idea why respondent chose
"Universal Converse" as a trademark and that she was As correctly phrased by public respondent Director of
unaware of the name "Converse" prior to her Patents, the basic issue presented for our consideration
corporation's sale of "Universal Converse" rubber shoes is whether or not the respondent's partial appropriation
and rubber sandals. of petitioner's corporate name is of such character that it
is calculated to deceive or confuse the public to the
Eventually, the Director of Patents dismissed the injury of the petitioner to which the name belongs.
opposition of the petitioner and gave due course to
respondent's application. His decision reads in part: A trade name is any individual name or surname, firm
name, device or word used by manufacturers,
... the only question for determination is whether or not industrialists, merchants and others to Identify their
the applicant's partial appropriation of the Opposer's businesses, vocations or occupations. 8 As the trade
[petitioner'] corporate name is of such character that in name refers to the business and its goodwill ... the
this particular case, it is calculated to deceive or confuse trademark refers to the goods." 9 The ownership of a
the public to the injury of the corporation to which the trademark or tradename is a property right which the
name belongs ... owner is entitled to protect "since there is damage to him
from confusion or reputation or goodwill in the mind of
the public as well as from confusion of goods. The
I cannot find anything that will prevent registration of the
modern trend is to give emphasis to the unfairness of the
word 'UNIVERSAL CONVERSE' in favor of the
acts and to classify and treat the issue as fraud. 10
respondent. In arriving at this conclusion, I am guided by
the fact that the opposer failed to present proof that the
single word "CONVERSE' in its corporate name has From a cursory appreciation of the petitioner's corporate
become so Identified with the corporation that whenever name "CONVERSE RUBBER CORPORATION,' it is
used, it designates to the mind of the public that evident that the word "CONVERSE" is the dominant
particular corporation. word which Identifies petitioner from other corporations
engaged in similar business. Respondent, in the
stipulation of facts, admitted petitioner's existence since
The proofs herein are sales made by a single witness
1946 as a duly organized foreign corporation engaged in
who had never dealt with the petitioner . . . the entry of
the manufacture of rubber shoes. This admission
Opposer's [petitioner's] goods in the Philippines were not
necessarily betrays its knowledge of the reputation and
only effected in a very insignificant quantity but without
business of petitioner even before it applied for
the opposer [petitioner] having a direct or indirect hand in
registration of the trademark in question. Knowing,
the transaction so as to be made the basis for trademark
therefore, that the word "CONVERSE" belongs to and is
pre- exemption.
being used by petitioner, and is in fact the dominant
word in petitioner's corporate name, respondent has no
Opposer's proof of its corporate personality cannot right to appropriate the same for use on its products
establish the use of the word "CONVERSE" in any which are similar to those being produced by petitioner.
sense, as it is already stipulated that it is not licensed to
do business in the Philippines, and is not doing business
A corporation is entitled to the cancellation of a mark that
of its own in the Philippines. If so, it will be futile for it to
is confusingly similar to its corporate
establish that "CONVERSE" as part of its corporate
name."11 "Appropriation by another of the dominant part
name Identifies its rubber shoes. Besides, it was also
of a corporate name is an infringement."12
stipulated that opposer [petitioner], in manufacturing
rubber shoes uses thereon the trademark "CHUCK
TAYLOR" and "ALL STAR and DEVICE" and none Respondent's witness had no Idea why respondent
other. chose "UNIVERSAL CONVERSE" as trademark and the
record discloses no reasonable explanation for
respondent's use of the word "CONVERSE" in its
Furthermore, inasmuch as the Opposer never presented
trademark. Such unexplained use by respondent of the
any label herein, or specimen of its shoes, whereon the
dominant word of petitioner's corporate name lends itself
label may be seen, notwithstanding its witness'
open to the suspicion of fraudulent motive to trade upon
testimony touching upon her Identification of the rubber
petitioner's reputation, thus:
shoes sold in her stores, no determination can be made
as to whether the word 'CONVERSE' appears thereon.
A boundless choice of words, phrases and symbols is
available to one who wishes a trademark sufficient unto
. . .the record is wanting in proof to establish likelihood of
itself to distinguish his product from those of others.
confusion so as to cause probable damage to the
When, however, there is no reasonable explanation for
Opposer. 7
the defendant's choice of such a mark though the field
for his selection was so broad, the inference is inevitable
Its motion for reconsideration having been denied by the that it was chosen deliberately to deceive. 13
respondent Director of Patents, petitioner instituted the
instant petition for review.
The testimony of petitioner's witness, who is a legitimate
trader as well as the invoices evidencing sales of
petitioner's products in the Philippines, give credence to The trademark of respondent "UNIVERSAL CONVERSE
petitioner's claim that it has earned a business reputation and DEVICE" is imprinted in a circular manner on the
and goodwill in this country. The sales invoices side of its rubber shoes. In the same manner, the
submitted by petitioner's lone witness show that it is the trademark of petitioner which reads "CONVERSE
word "CONVERSE" that mainly Identifies petitioner's CHUCK TAYLOR" is imprinted on a circular base
products, i.e. "CONVERSE CHUCK attached to the side of its rubber shoes. The
TAYLOR, 14 "CONVERSE ALL STAR," 15 ALL STAR deteminative factor in ascertaining whether or not marks
CONVERSE CHUCK TAYLOR," 16 or "CONVERSE are confusingly similar to each other "is not whether the
SHOES CHUCK and TAYLOR." 17 Thus, contrary to the challenged mark would actually cause confusion or
determination of the respondent Director of Patents, the deception of the purchasers but whether the use of such
word "CONVERSE" has grown to be Identified with mark would likely cause confusion or mistake on the part
petitioner's products, and in this sense, has acquired a of the buying public. It would be sufficient, for purposes
second meaning within the context of trademark and of the law, that the similarity between the two labels is
tradename laws. such that there is a possibility or likelihood of the
purchaser of the older brand mistaking the new brand for
Furthermore, said sales invoices provide the best proof it." 19 Even if not an the details just mentioned were
that there were actual sales of petitioner's products in identical, with the general appearance alone of the two
the country and that there was actual use for a products, any ordinary, or even perhaps even [sic] a not
protracted period of petitioner's trademark or part thereof too perceptive and discriminating customer could be
through these sales. "The most convincing proof of use deceived ... "20
of a mark in commerce is testimony of such witnesses as
customers, or the orders of buyers during a certain When the law speaks co-purchaser," the reference is to
period. 18 Petitioner's witness, having affirmed her lack ordinary average purchaser. 21 It is not necessary in
of business connections with petitioner, has testified as either case that the resemblance be sufficient to deceive
such customer, supporting strongly petitioner's move for experts, dealers, or other persons specially familiar with
trademark pre-emption. the trademark or goods involve." 22

The sales of 12 to 20 pairs a month of petitioner's rubber The similarity y in the general appearance of
shoes cannot be considered insignificant, considering respondent's trademark and that of petitioner would
that they appear to be of high expensive quality, which evidently create a likelihood of confusion among the
not too many basketball players can afford to buy. Any purchasing public. But even assuming, arguendo, that
sale made by a legitimate trader from his store is a the trademark sought to be registered by respondent is
commercial act establishing trademark rights since such distinctively dissimilar from those of the petitioner, the
sales are made in due course of business to the general likelihood of confusion would still subsists, not on the
public, not only to limited individuals. It is a matter of purchaser's perception of the goods but on the origins
public knowledge that all brands of goods filter into the thereof. By appropriating the word "CONVERSE,"
market, indiscriminately sold by jobbers dealers and respondent's products are likely to be mistaken as
merchants not necessarily with the knowledge or having been produced by petitioner. "The risk of damage
consent of the manufacturer. Such actual sale of goods is not limited to a possible confusion of goods but also
in the local market establishes trademark use which includes confusion of reputation if the public could
serves as the basis for any action aimed at trademark reasonably assume that the goods of the parties
pre- exemption. It is a corollary logical deduction that originated from the same source. 23
while Converse Rubber Corporation is not licensed to do
business in the country and is not actually doing It is unfortunate that respondent Director of Patents has
business here, it does not mean that its goods are not concluded that since the petitioner is not licensed to do
being sold here or that it has not earned a reputation or business in the country and is actually not doing
goodwill as regards its products. The Director of Patents business on its own in the Philippines, it has no name to
was, therefore, remiss in ruling that the proofs of sales protect iN the forum and thus, it is futile for it to establish
presented "was made by a single witness who had never that "CONVERSE" as part of its corporate name
dealt with nor had never known opposer [petitioner] x x x identifies its rubber shoes. That a foreign corporation has
without Opposer having a direct or indirect hand in the a right to maintain an action in the forum even if it is not
transaction to be the basis of trademark pre- exemption." licensed to do business and is not actually doing
business on its own therein has been enunciated many
Another factor why respondent's applications should be times by this Court. In La Chemise Lacoste, S.A. vs.
denied is the confusing similarity between its trademark Fernandez, 129 SCRA 373, this Court,
"UNIVERSAL CONVERSE AND DEVICE" and reiterating Western Equipment and Supply Co. vs.
petitioner's corporate name and/or its trademarks Reyes, 51 Phil. 115, stated that:
"CHUCK TAYLOR" and "ALL STAR DEVICE" which
could confuse the purchasing public to the prejudice of ... a foreign corporation which has never done any
petitioner, business in the Philippines and which is unlicensed and
unregistered to do business here, but is widely and
favorably known in the Philippines through the use The mandate of the aforementioned Convention finds
therein of its products bearing its corporate and implementation in Sec. 37 of RA No. 166, otherwise
tradename, has a legal right to maintain an action in the known as the Trademark Law:
Philippines to restrain the residents and inhabitants
thereof from organizing a corporation therein bearing the Sec. 37. Rights of Foreign Registrants-Persons who are
same name as the foreign corporation, when it appears nationals of, domiciled or have a bona fide or effective
that they have personal knowledge of the existence of business or commercial establishment in any foreign
such a foreign corporation, and it is apparent that the country, which is a party to an international convention or
purpose of the proposed domestic corporation is to deal treaty relating to marks or tradenames on the repression
and trade in the same goods as those of the foreign of unfair competition to which the Philippines may be a
corporation. party, shall be entitled to the benefits and subject to the
provisions of this Act . . . ...
We further held:
Tradenames of persons described in the first paragraph
xxx xxx xxx of this section shall be protected without the obligation of
filing or registration whether or not they form parts of
That company is not here seeking to enforce any legal or marks. [emphasis supplied]
control rights arising from or growing out of, any
business which it has transacted in the Philippine WHEREFORE, the decision of the Director of Patents is
Islands. The sole purpose of the action: hereby set aside and a new one entered denying
Respondent Universal Rubber Products, Inc.'s
Is to protect its reputation, its corporate name, its application for registration of the trademark
goodwill whenever that reputation, corporate name or "UNIVERSAL CONVERSE AND DEVICE" on its rubber
goodwill have, through the natural development of its shoes and slippers.
trade, established themselves.' And it contends that its
rights to the use of its corporate and trade name: SO ORDERED.

Is a property right, a right in recess which it may assert

and protect against all the world, in any of the courts of
the world even in jurisdictions where it does not transact
business-just the same as it may protect its tangible
property, real or personal against trespass, or
conversion. Citing sec. 10, Nims on Unfair Competition
and Trademarks and cases cited; secs. 21-22, Hopkins
on Trademarks, Trade Names and Unfair Competition
and cases cited That point is sustained by the
authorities, and is well stated in Hanover Star Milling Co.
vs. Allen and Wheeler Co. [208 Fed., 5131, in which the
syllabus says:

Since it is the trade and not the mark that is to be

protected, a trademark acknowledges no territorial
boundaries of municipalities or states or nations, but
extends to every market where the trader's goods have
become known and Identified by the use of the mark.

The ruling in the aforecited case is in consonance with

the Convention of the Union of Paris for the Protection of
Industrial Property to which the Philippines became a
party on September 27, 1965. Article 8 thereof provides
that "a trade name [corporate name] shall be protected
in all the countries of the Union without the obligation of
filing or registration, whether or not it forms part of the
trademark. " [emphasis supplied]

The object of the Convention is to accord a national of a

member nation extensive protection "against
infringement and other types of unfair competition"
[Vanitary Fair Mills, Inc. vs. T. Eaton Co., 234 F. 2d
6331.
 Petitioner Philips Export B.V. (PEBV), a foreign
corporation organized under the laws of the Netherlands,
although not engaged in business here, is the registered
owner of the trademarks PHILIPS and PHILIPS SHIELD
EMBLEM under Certificates of Registration Nos. R-1641
and R-1674, respectively issued by the Philippine
Patents Office (presently known as the Bureau of
Patents, Trademarks and Technology Transfer).
Petitioners Philips Electrical Lamps, Inc. (Philips
Electrical, for brevity) and Philips Industrial
Developments, Inc. (Philips Industrial, for short),
authorized users of the trademarks PHILIPS and
PHILIPS SHIELD EMBLEM, were incorporated on 29
August 1956 and 25 May 1956, respectively. All
petitioner corporations belong to the PHILIPS Group of
Companies.

Respondent Standard Philips Corporation (Standard

Philips), on the other hand, was issued a Certificate of
Registration by respondent Commission on 19 May
1982.

On 24 September 1984, Petitioners filed a letter

complaint with the Securities & Exchange Commission
(SEC) asking for the cancellation of the word "PHILIPS"
from Private Respondent's corporate name in view of the
prior registration with the Bureau of Patents of the
trademark "PHILIPS" and the logo "PHILIPS SHIELD
EMBLEM" in the name of Petitioner, PEBV, and the
previous registration of Petitioners Philips Electrical and
Philips Industrial with the SEC.

As a result of Private Respondent's refusal to amend its

Articles of Incorporation, Petitioners filed with the SEC,
on 6 February 1985, a Petition (SEC Case No. 2743)
praying for the issuance of a Writ of Preliminary
Injunction, alleging, among others, that Private
Respondent's use of the word PHILIPS amounts to an
infringement and clear violation of Petitioners' exclusive
G.R. No. 96161 February 21, 1992 right to use the same considering that both parties
engage in the same business.
PHILIPS EXPORT B.V., PHILIPS ELECTRICAL
LAMPS, INC. and PHILIPS INDUSTRIAL In its Answer, dated 7 March 1985, Private Respondent
DEVELOPMENT, INC., petitioners, countered that Petitioner PEBV has no legal capacity to
vs. sue; that its use of its corporate name is not at all similar
COURT OF APPEALS, SECURITIES & EXCHANGE to Petitioners' trademark PHILIPS when considered in its
COMMISSION and STANDARD PHILIPS entirety; and that its products consisting of chain rollers,
CORPORATION, respondents. belts, bearings and cutting saw are grossly different from
Petitioners' electrical products.
MELENCIO-HERRERA, J.:
After conducting hearings with respect to the prayer for
Injunction; the SEC Hearing Officer, on 27 September
Petitioners challenge the Decision of the Court of
1985, ruled against the issuance of such Writ.
Appeals, dated 31 July 1990, in CA-GR Sp. No. 20067,
upholding the Order of the Securities and Exchange
Commission, dated 2 January 1990, in SEC-AC No. 202, On 30 January 1987, the same Hearing Officer
dismissing petitioners' prayer for the cancellation or dismissed the Petition for lack of merit. In so ruling, the
removal of the word "PHILIPS" from private respondent's latter declared that inasmuch as the SEC found no
corporate name. sufficient ground for the granting of injunctive relief on
the basis of the testimonial and documentary evidence
presented, it cannot order the removal or cancellation of
the word "PHILIPS" from Private Respondent's corporate
name on the basis of the same evidence adopted in as a property right and one which cannot be impaired or
toto during trial on the merits. Besides, Section 18 of the defeated by subsequent appropriation by another
Corporation Code (infra) is applicable only when the corporation in the same field (Red Line Transportation
corporate names in question are identical. Here, there is Co. vs. Rural Transit Co., September 8, 1934, 20 Phil
no confusing similarity between Petitioners' and Private 549).
Respondent's corporate names as those of the
Petitioners contain at least two words different from that A name is peculiarly important as necessary to the very
of the Respondent. Petitioners' Motion for existence of a corporation (American Steel Foundries vs.
Reconsideration was likewise denied on 17 June 1987. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160;
Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First
On appeal, the SEC en banc affirmed the dismissal National Bank vs. Huntington Distilling Co. 40 W Va 530,
declaring that the corporate names of Petitioners and 23 SE 792). Its name is one of its attributes, an element
Private Respondent hardly breed confusion inasmuch as of its existence, and essential to its identity (6 Fletcher
each contains at least two different words and, therefore, [Perm Ed], pp. 3-4). The general rule as to corporations
rules out any possibility of confusing one for the other. is that each corporation must have a name by which it is
to sue and be sued and do all legal acts. The name of a
On 30 January 1990, Petitioners sought an extension of corporation in this respect designates the corporation in
time to file a Petition for Review on Certiorari before this the same manner as the name of an individual
Court, which Petition was later referred to the Court of designates the person (Cincinnati Cooperage Co. vs.
Appeals in a Resolution dated 12 February 1990. Bate. 96 Ky 356, 26 SW 538; Newport Mechanics Mfg.
Co. vs. Starbird. 10 NH 123); and the right to use its
corporate name is as much a part of the corporate
In deciding to dismiss the petition on 31 July 1990, the
franchise as any other privilege granted (Federal Secur.
Court of
Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100,
Appeals1 swept aside Petitioners' claim that following the
66 ALR 934; Paulino vs. Portuguese Beneficial
ruling in Converse Rubber Corporation v. Universal
Association, 18 RI 165, 26 A 36).
Converse Rubber Products, Inc., et al, (G. R. No. L-
27906, January 8, 1987, 147 SCRA 154), the word
PHILIPS cannot be used as part of Private Respondent's A corporation acquires its name by choice and need not
corporate name as the same constitutes a dominant part select a name identical with or similar to one already
of Petitioners' corporate names. In so holding, the appropriated by a senior corporation while an individual's
Appellate Court observed that the Converse case is not name is thrust upon him (See Standard Oil Co. of New
four-square with the present case inasmuch as the Mexico, Inc. v. Standard Oil Co. of California, 56 F 2d
contending parties in Converse are engaged in a similar 973, 977). A corporation can no more use a corporate
business, that is, the manufacture of rubber shoes. name in violation of the rights of others than an individual
Upholding the SEC, the Appellate Court concluded that can use his name legally acquired so as to mislead the
"private respondents' products consisting of chain rollers, public and injure another (Armington vs. Palmer, 21 RI
belts, bearings and cutting saw are unrelated and non- 109. 42 A 308).
competing with petitioners' products i.e. electrical lamps
such that consumers would not in any probability Our own Corporation Code, in its Section 18, expressly
mistake one as the source or origin of the product of the provides that:
other."
No corporate name may be allowed by the Securities
The Appellate Court denied Petitioners' Motion for and Exchange Commission if the proposed name
Reconsideration on 20 November 1990, hence, this is identical or deceptively or confusingly similar to that of
Petition which was given due course on 22 April 1991, any existing corporation or to any other name already
after which the parties were required to submit their protected by law or is patently deceptive, confusing or
memoranda, the latest of which was received on 2 July contrary to existing law. Where a change in a corporate
1991. In December 1991, the SEC was also required to name is approved, the commission shall issue an
elevate its records for the perusal of this Court, the same amended certificate of incorporation under the amended
not having been apparently before respondent Court of name. (Emphasis supplied)
Appeals.
The statutory prohibition cannot be any clearer. To come
We find basis for petitioners' plea. within its scope, two requisites must be proven, namely:

As early as Western Equipment and Supply Co. v. (1) that the complainant corporation acquired a prior right
Reyes, 51 Phil. 115 (1927), the Court declared that a over the use of such corporate name; and
corporation's right to use its corporate and trade name is
a property right, a right in rem, which it may assert and (2) the proposed name is either:
protect against the world in the same manner as it may
protect its tangible property, real or personal, against (a) identical; or
trespass or conversion. It is regarded, to a certain extent,
(b) deceptively or confusingly similar their parts which fall under international class where
"chains, rollers, belts, bearings and cutting saw," the
to that of any existing corporation or to any other name goods in connection with which Respondent is seeking
already protected by law; or to register 'STANDARD PHILIPS' . . . also belong" ( Inter
Partes Case No. 2010, June 17, 1988, SEC Rollo).
(c) patently deceptive, confusing or contrary to existing
law. Furthermore, the records show that among Private
Respondent's primary purposes in its Articles of
Incorporation (Annex D, Petition p. 37, Rollo) are the
The right to the exclusive use of a corporate name with
following:
freedom from infringement by similarity is determined by
priority of adoption (1 Thompson, p. 80 citing Munn v.
Americana Co., 82 N. Eq. 63, 88 Atl. 30; San Francisco To buy, sell, barter, trade, manufacture, import, export,
Oyster House v. Mihich, 75 Wash. 274, 134 Pac. 921). In or otherwise acquire, dispose of, and deal in and deal
this regard, there is no doubt with respect to Petitioners' with any kind of goods, wares, and merchandise such as
prior adoption of' the name ''PHILIPS" as part of its but not limited to plastics, carbon products, office
corporate name. Petitioners Philips Electrical and Philips stationery and supplies, hardware parts, electrical wiring
Industrial were incorporated on 29 August 1956 and 25 devices, electrical component parts, and/or complement
May 1956, respectively, while Respondent Standard of industrial, agricultural or commercial machineries,
Philips was issued a Certificate of Registration on 12 constructive supplies, electrical supplies and other
April 1982, twenty-six (26) years later (Rollo, p. 16). merchandise which are or may become articles of
Petitioner PEBV has also used the trademark "PHILIPS" commerce except food, drugs and cosmetics and to
on electrical lamps of all types and their accessories carry on such business as manufacturer, distributor,
since 30 September 1922, as evidenced by Certificate of dealer, indentor, factor, manufacturer's representative
Registration No. 1651. capacity for domestic or foreign companies. (emphasis
ours)
The second requisite no less exists in this case. In
determining the existence of confusing similarity in For its part, Philips Electrical also includes, among its
corporate names, the test is whether the similarity is primary purposes, the following:
such as to mislead a person, using ordinary care and
discrimination. In so doing, the Court must look to the To develop manufacture and deal in electrical products,
record as well as the names themselves (Ohio Nat. Life including electronic, mechanical and other similar
Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298). While the products . . . (p. 30, Record of SEC Case No. 2743)
corporate names of Petitioners and Private Respondent
are not identical, a reading of Petitioner's corporate Given Private Respondent's aforesaid underlined
names, to wit: PHILIPS EXPORT B.V., PHILIPS primary purpose, nothing could prevent it from dealing in
ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL the same line of business of electrical devices, products
DEVELOPMENT, INC., inevitably leads one to conclude or supplies which fall under its primary purposes.
that "PHILIPS" is, indeed, the dominant word in that all Besides, there is showing that Private Respondent not
the companies affiliated or associated with the principal only manufactured and sold ballasts for fluorescent
corporation, PEBV, are known in the Philippines and lamps with their corporate name printed thereon but also
abroad as the PHILIPS Group of Companies. advertised the same as, among others, Standard Philips
(TSN, before the SEC, pp. 14, 17, 25, 26, 37-42, June
Respondents maintain, however, that Petitioners did not 14, 1985; pp. 16-19, July 25, 1985). As aptly pointed out
present an iota of proof of actual confusion or deception by Petitioners, [p]rivate respondent's choice of
of the public much less a single purchaser of their "PHILIPS" as part of its corporate name [STANDARD
product who has been deceived or confused or showed PHILIPS CORPORATION] . . . tends to show said
any likelihood of confusion. It is settled, however, that respondent's intention to ride on the popularity and
proof of actual confusion need not be shown. It suffices established goodwill of said petitioner's business
that confusion is probably or likely to occur (6 Fletcher throughout the world" (Rollo, p. 137). The subsequent
[Perm Ed], pp. 107-108, enumerating a long line of appropriator of the name or one confusingly similar
cases). thereto usually seeks an unfair advantage, a free ride of
another's goodwill (American Gold Star Mothers, Inc. v.
It may be that Private Respondent's products also National Gold Star Mothers, Inc., et al, 89 App DC 269,
consist of chain rollers, belts, bearing and the like, while 191 F 2d 488).
petitioners deal principally with electrical products. It is
significant to note, however, that even the Director of In allowing Private Respondent the continued use of its
Patents had denied Private Respondent's application for corporate name, the SEC maintains that the corporate
registration of the trademarks "Standard Philips & names of Petitioners PHILIPS ELECTRICAL LAMPS.
Device" for chain, rollers, belts, bearings and cutting INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC.
saw. That office held that PEBV, "had shipped to its contain at least two words different from that of the
subsidiaries in the Philippines equipment, machines and corporate name of respondent STANDARD PHILIPS
CORPORATION, which words will readily identify Private similar to one adopted by another corporation, whether a
Respondent from Petitioners and vice-versa. business or a nonbusiness or non-profit organization if
misleading and likely to injure it in the exercise in its
True, under the Guidelines in the Approval of Corporate corporate functions, regardless of intent, may be
and Partnership Names formulated by the SEC, the prevented by the corporation having the prior right, by a
proposed name "should not be similar to one already suit for injunction against the new corporation to prevent
used by another corporation or partnership. If the the use of the name (American Gold Star Mothers, Inc.
proposed name contains a word already used as part of v. National Gold Star Mothers, Inc., 89 App DC 269, 191
the firm name or style of a registered company; the F 2d 488, 27 ALR 2d 948).
proposed name must contain two other words different
from the company already registered"  (Emphasis ours). WHEREFORE, the Decision of the Court of Appeals
It is then pointed out that Petitioners Philips Electrical dated 31 July 1990, and its Resolution dated 20
and Philips Industrial have two words different from that November 1990, are SET ASIDE and a new one entered
of Private Respondent's name. ENJOINING private respondent from using "PHILIPS" as
a feature of its corporate name, and ORDERING the
What is lost sight of, however, is that PHILIPS is a Securities and Exchange Commission to amend private
trademark or trade name which was registered as far respondent's Articles of Incorporation by deleting the
back as 1922. Petitioners, therefore, have the exclusive word PHILIPS from the corporate name of private
right to its use which must be free from any infringement respondent.
by similarity. A corporation has an exclusive right to the
use of its name, which may be protected by injunction No costs.
upon a principle similar to that upon which persons are
protected in the use of trademarks and tradenames (18 SO ORDERED.
C.J.S. 574). Such principle proceeds upon the theory
that it is a fraud on the corporation which has acquired a
right to that name and perhaps carried on its business
thereunder, that another should attempt to use the same
name, or the same name with a slight variation in such a
way as to induce persons to deal with it in the belief that
they are dealing with the corporation which has given a
reputation to the name (6 Fletcher [Perm Ed], pp. 39-
40, citing Borden Ice Cream Co. v. Borden's Condensed
Milk Co., 210 F 510). Notably, too, Private Respondent's
name actually contains only a single word, that is,
"STANDARD", different from that of Petitioners
inasmuch as the inclusion of the term "Corporation" or
"Corp." merely serves the Purpose of distinguishing the
corporation from partnerships and other business
organizations.

The fact that there are other companies engaged in

other lines of business using the word "PHILIPS" as part
of their corporate names is no defense and does not
warrant the use by Private Respondent of such word
which constitutes an essential feature of Petitioners'
corporate name previously adopted and registered and-
having acquired the status of a well-known mark in the
Philippines and internationally as well (Bureau of Patents
Decision No. 88-35 [TM], June 17, 1988, SEC Records).

In support of its application for the registration of its

Articles of Incorporation with the SEC, Private
Respondent had submitted an undertaking "manifesting
its willingness to change its corporate name in the event
another person, firm or entity has acquired a prior right to
the use of the said firm name or one deceptively or
confusingly similar to it." Private respondent must now
be held to its undertaking.

As a general rule, parties organizing a corporation must

choose a name at their peril; and the use of a name
 Office, Certificate of Registration No. 11750 for its
trademark consisting of the word "ARMCO" and a
triangular device for "ferrous metals and ferrous metal
castings and forgings." On April 14, 1971, pursuant to
trademark rules, the petitioner filed with the said patent
office an "Affidavit of Use" for said trademark, which was
subsequently accepted and for which the Patent Office
issued the corresponding notice of acceptance of
"Affidavit of Use."

ARMCO Marsteel-Alloy Corporation was also

incorporated on July 11, 1972 under its original name
Marsteel Alloy Company, Inc. but on March 28, 1973 its
name was changed to ARMCO-Marsteel Alloy
Corporation hereinafter called ARMCO-Marsteel, by
amendment of its Articles of Incorporation after the
ARMCO-Ohio purchased 40% of its capital stock. Both
said corporations are engaged in the manufacture of
steel products. Its article of incorporation in part reads as
follows as to its purposes: "to manufacture, process ...
and deal in all kinds, form, and combinations of iron,
steel or other metals and all or any products or articles
particularly consisting of iron, steel or other metals .... .

On the other hand ARMCO Steel Corporation was

incorporated in the Philippines on April 25, 1973,
hereinafter called ARMCO-Philippines. A pertinent
portion of its articles of incorporation provides as among
its purposes: "to contract, fabricate ... manufacture ...
regarding pipelines, steel frames ... ."

ARMCO-Ohio and ARMCO-Marsteel then filed a petition

in the Securities and Exchange Commission (SEC) to
compel ARMCO-Philippines to change its corporate
name on the ground that it is very similar, if not exactly
the same as the name of one of the petitioners, which is
docketed as SEC Case No. 1187. In due course an
order was issued by the SEC on February 14, 1975
granting the petition, the dispositive part of which reads
as follows:

In view of the foregoing, the respondent, ARMCO

STEEL CORPORATION, is hereby ordered to take out
'ARMCO' and substitute another word in lieu thereof in
its corporate name by amending the articles of
incorporation to that effect, within thirty (30) days from
G.R. No. L-54580 December 29, 1987 date of receipt of a copy of this Order; after which, three
(3) copies of the amended articles of incorporation, duly
ARMCO STEEL CORPORATION (OF THE certified by a majority of the board of directors and
PHILIPPINES), petitioner, countersigned by the president and secretary of the
vs. corporation, shall be submitted to this Commission,
SECURITIES AND EXCHANGE COMMISSION, together with the corresponding filing fees, as required
ARMCO STEEL CORPORATION (of Ohio, U.S.A.) and by law. 1
ARMCO MARSTEEL ALLOY
CORPORATION, respondents. A motion for reconsideration of the said order was filed
by said respondent on March 6. 1975 but this was
GANCAYCO, J.: denied in, an order of April 16, 1965 as the motion was
filed out of time, a copy of the questioned order having
On July 1, 1965 ARMCO Steel Corporation, a been received by respondent on February 18, 1975 so
corporation organized in Ohio, U.S.A., hereinafter called that said order had become final and executory. 2 A
ARMCO-OHIO, obtained from the Philippine Patent motion for reconsideration filed by respondent to set
aside said order of April 16, 1965 was also denied by the oficio for having been substantially complied with by the
SEC on June 23, 1975. 3 An appeal was interposed by petitioner. The grounds of the petition are as follows:
respondent to the Court of Appeals which was docketed
as CA G.R. No. 04448-R but the appeal was dismissed I
in a resolution of January 13, 1976, on the ground that
the appeal was perfected beyond the reglementary THE SECURITIES AND EXCHANGE COMMISSION
period allowed by law. ERRED WHEN IT DID NOT CONSIDER ITS ORDER
DATED FEBRUARY 14,1975 FUNCTUS OFFICIO
On March 22, 1976 said respondent amended its articles PURSUANT TO THE LEGAL MAXIM CESSANTE
of incorporation by changing its name to "ARMCO LEGIS RATIONE CESSAT ET IPSA LEX' AFTER
structures, Inc." which was filed with and approved by PETITIONER HAD SUBSTANTIALLY COMPLIED IN
the SEC. GOOD FAITH WITH SAID ORDER AND SAID
COMPLIANCE HAD ACHIEVED THE PURPOSE OF
Nevertheless, in an order of January 6, 1977, the SEC THE ORDER, BY CHANGING ITS CORPORATE NAME
issued an order requiring respondent, its directors and WITH THE APPROVAL OF SAID COMMISSION.
officers to comply with the aforesaid order of the
Commission of February 14, 1975 within ten (10) days II
from notice thereof. 5
THE COMMISSION ERRED WHEN IT DID NOT FIND
A manifestation and motion was filed by respondent THAT ITS APPROVAL OF PETITIONER'S AMENDED
informing SEC that it had already changed its corporate ARTICLES OF INCORPORATION CHANGING
name with the approval of the SEC to ARMCO PETITIONER'S CORPORATE NAME FROM "ARMCO
Structures, Inc. in substantial compliance with the said STEEL CORPORATION" TO "ARMCO STRUCTURES,
order or in the alternative prayed for a hearing to INCORPORATED" WAS REGULAR AND LEGAL.
determine if there is a confusing similarity between the
names of the petitioners on one hand and the ARMCO III
Structures, Inc. on the other.
THE COMMISSION ERRED WHEN IT DID NOT FIND
Petitioners then filed a comment to said manifestation THAT PRIVATE RESPONDENTS WERE NO LONGER
alleging that the change of name of said respondent was ENTITLED TO THE RELIEF AWARDED BY THE
not done in good faith and is not in accordance with the ORDER DATED FEBRUARY 14,1975 CONSIDERING
order of the Commission of February 14, 1975 so that THAT SAID ORDER HAD BECOME FUNCTUS
drastic action should be taken against the respondent OFFICIO AND FURTHER ENFORCEMENT THEREOF
and its officers. Subsequently, petitioners filed a motion WILL BE INEQUITABLE AS IT WILL DEPRIVE
to cite said respondent, its directors and officers in PETITIONER OF EQUAL PROTECTION OF LAWS.
contempt for disobeying the orders of February 14, 1975
and January 6, 1977. In an order of August 31, 1977, the
SEC finding that the respondent, its directors, and IV
officers have not complied with the final order of
February 14, 1975 required them to appeal before the THE COMMISSION ERRED WHEN, THERE BEING A
Commission on September 22, 1977 at 10:00 o'clock in DISPUTE AS TO WHETHER OR NOT THE PURPOSE
the morning to show cause why they should not be OF THE ORDER DATED FEBRUARY 14,1975 HAD
punished for contempt by the Commission. 6 BEEN COMPLIED WITH AND WHETHER THERE WAS
STILL CONFUSING SIMILARITY BETWEEN THE
After the hearing the parties submitted their respective CORPORATE NAMES OF RESPONDENTS AND THE
memoranda. In another order of January 17, 1979, the NEW NAME OF PETITIONER, IT DID NOT GRANT
SEC finding that the respondent did not make the proper PETITIONER'S PRAYER THAT A HEART NG BE HELD
disclosure of the circumstances when it amended its TO THRESH THE ISSUE."
articles of incorporation and submitted the same for the
approval of the SEC thus said respondent, its directors, The Court finds no merit in the petition.
and officers were ordered within ten (10) days from
notice to comply with the order of February 14, 1975. An The order of the public respondent SEC of February 14,
appeal was interposed by the respondent to the SEC en 1975 which has long become final and executory clearly
banc. The Commission en banc in an order of December spells out that petitioner must "take out ARMCO and
14, 1979 dismissed the appeal for lack of merit. 7 substitute another word in lieu thereof in its corporate
name by amending the articles of incorporation to that
Hence, the herein petition for review filed by ARMCO- effect, ... ." Far from complying with said order petitioner
Philippines wherein it seeks the reversal of the orders of amended its corporate name into ARMCO Structures,
the SEC of December 14, 1979 and August 6, 1980 and Inc., and secured its approval by the SEC on March 22,
that the order of February 14, 1975 be declared functus 1976. That this amendment was made by petitioner
without the knowledge of the proper authorities of the
SEC is home by the fact that thereafter on January 6, The actuations in this respect of petitioner are far from
1977 an order was issued by the SEC requiring regular much less in good faith.
petitioner, its board of directors, and officers to comply
with the order of the Commission of February 14, 1975. The arguments of the petitioner that the SEC had
When the attention of the SEC was called by petitioner approved the registration of several other entities with
that the change of corporate name had been undertaken one principal word common to all as "ARMCO," and that
by it to ARMCO Structures, Inc. and asked that it be there is no confusing similarity between the corporate
considered as a substantial compliance with the order of names of respondents and the new name of petitioner,
February 14, 1975, the SEC in its order of January 17, would indeed in effect be reopening the final and
1979 speaking through its hearing officer Antonio R. executory order of the SEC of February 14, 1975 which
Manabat ruled as follows: had already foreclosed the issue. Indeed, in said final
order the SEC made the following findings which are
The Order of February 14, 1975, cannot but be clearer conclusive and well-taken:
than what it purports to require or demand from
respondent. Under in no distinct terms, it enjoins the The only question for resolution in this case is whether
removal or deletion of the word 'Armco' from therespondent's name ARMCO STEEL CORPORATION
respondent's corporate name, which was not so is similar, if not Identical with that of petitioner, ARMCO
complied with. The Commission, therefore, cannot give STEEL CORPORATION (of Ohio, U.S.A.) and of
its imprimatur to the new corporate name because there petitioner, ARMCO-MARSTEEL ALLOY
was no compliance at all. CORPORATION, as to create uncertainty and confusion
in the minds of the public.
The fact that the Securities and Exchange Commission
issued its certificate of filing of amended articles of By mere looking at the names it is clear that the name of
incorporation on March 22, 1976, is nothing but an petitioner, ARMCO STEEL CORPORATION (of Ohio,
illusory approval of the change of corporate name and a U.S.A.), and that of the respondent, ARMCO STEEL
self-induced protection from the Commission to further CORPORATION, are not only similar but Identical and
exact compliance of the Order of February 14, 1975. the words "of Ohio, U.S.A.," are being used only to
Craftily, the Securities and Exchange Commission Identify petitioner ARMCO STEEL-OHIO as a U.S.
and/or its administrative personnel were made to issue corporation.
such certificate during its unguarded moment. Verily, the
certificate could not have been issued were it not for It is indisputable that ARMCO-STEEL-OHIO, having
such lapses or had respondent been in good faith by patented the term 'Armco' as part of its trademark on its
making the proper disclosures of the circumstances steel products, is entitled to protection in the use thereof
which led it to amend its articles of incorporation. in the Philippines. The term "Armco" is now being used
on the products being manufactured and sold in this
Correctly pointed out by petitioners, a 'new determination country by Armco-Marsteel by virtue of its tie-up with
as to whether or not there is confusing similarity between ARMCO-STEEL-OHIO. Clearly, the two companies have
petitioners' names and that of 'Armco Structures, the right to the exclusive use and enjoyment of said
Incorporated,' cannot be ordered without transgression term.
on the rule of, or the decisional law on, finality of
judgment. 8 ARMCO STEEL-PHILIPPINES, has not only an Identical
name but also a similar line of business, as shown
The Court finds that the said amendment in the above, as that of ARMCO STEEL- OHIO. People who
corporate name of petitioner is not in substantial are buying and using products bearing the trademark
compliance with the order of February 14, 1975. Indeed "Armco" might be led to believe that such products are
it is in contravention therewith. To repeat, the order was manufactured by the respondent, when in fact, they
for the removal of the word "ARMCO" from the corporate might actually be produced by the petitioners. Thus, the
name of the petitioner which it failed to do. And even if goodwill that should grow and inure to the benefit of
this change of corporate name was erroneously petitioners could be impaired and prejudiced by the
accepted and approved in the SEC it cannot thereby continued use of the same term by the respondent.
legalize nor change what is clearly unauthorized if not
contemptuous act of petitioner in securing the Obviously, the petition for review is designed to further
registration of a new corporate name against the very delay if not simply evade compliance with the said final
order of the SEC of February 14, 1975. Certainly the and executory SEC order. Petitioner also seeks a review
said order of February 14, 1975 is not rendered functus of the orders of execution of the SEC of the said
oficio thereby. Had petitioner revealed at the time of the February 14, 1975 order. An order or resolution granting
registration of its amended corporate name that there execution of the final judgment cannot be
was the said order, the registration of the amended appealed 9 otherwise there will be no end to the
corporate name could not have been accepted and litigation. 10
approved by the persons in-charge of the registration.
WHEREFORE, the petition is DISMISSED for lack of WESTERN EQUIPMENT AND SUPPLY COMPANY,
merit with costs against petitioner. This decision is WESTERN ELECTRIC COMPANY, INC., W. Z. SMITH
immediately executory. and FELIX C. REYES, plaintiffs-appellees,
vs.
SO ORDERED. FIDEL A. REYES, as Director of the Bureau of
Commerce and Industry, HENRY HERMAN, PETER
O'BRIEN, MANUEL B. DIAZ, FELIPE MAPOY and
ARTEMIO ZAMORA, defendants-appellants.

J. W. Ferrier for appellants.

DeWitt, Perkins and Bradly for appellees.

STATEMENT

October 23, 1926, in the Court of First Instance of

Manila, plaintiffs filed the following complaint against the
defendants:

Now come the plaintiffs in the above entitled case, by the

undersigned their attorneys, and to this Honorable Court
respectfully show:

I. That the Western Equipment and Supply Company is a

foreign corporation organized under the laws of the State
of Nevada, United States of America; that the Western
Electric Company, Inc., is likewise a foreign corporation
organized under the laws of the State of New York,
United States of America; and that the plaintiffs W. Z.
Smith and Felix C. Reyes are both of lawful age and
residents of the City of Manila, Philippine Islands.

II. That the defendant Fidel A. Reyes is the duly

appointed and qualified Director of the Bureau of
Commerce and Industry and as such Director is charged
with the duty of issuing and denying the issuance of
certificates of incorporation to persons filing articles of
incorporation with the Bureau of Commerce and
Industry.

III. That the defendants Henry Herman, Peter O' Brien,

Manuel B. Diaz, Felipe Mapoy and Artemio Zamora are
all of lawful age and are residents of the City of Manila,
Philippines Islands.

IV. That on or about May 4, 1925, the plaintiff the

Western Equipment and Supply Company applied to the
defendant Director of the Bureau of Commerce and
Industry for the issuance of a license to engage in
business in the Philippine Islands and, accordingly, on
May 20, 1926, a provisional license was by said
defendant issued in its favor, which license was made
permanent on August 23, 1926.

V. That from and since the issuance of said provisional

license of May 20,. 1926, said plaintiff Western
Equipment and Supply Company has been and still is
engaged in importing and selling in the Philippine Islands
the electrical and telephone apparatus and supplies
G.R. No. L-27897 December 2, 1927 manufactured by the plaintiff Western Electric Company,
Inc., its offices in the City of Manila being at No. 600
Rizal Avenue, in the charge and management of the XI. That on October 18, 1926, the plaintiff W. Z. Smith
plaintiff Felix C. Reyes, its resident agent in the formally lodged with the defendant Director of the
Philippine Islands. Bureau of Commerce and Industry his protest, and
opposed said attempted incorporation, by the defendants
VI. That the electric and telephone apparatus and Henry Herman, Peter O'Brien, Manuel B. Diaz, Felipe
supplies manufactured by the plaintiff Western Electric Mapoy and Artemio Zamora, of the `Western Electric
Company, Inc., have been sold in foreign and interstate Company, Inc.,' as a domestic corporation, upon the
commerce and have become well and thoroughly known ground among others, that the corporate name by which
to the trade in all countries of the world for the past fifty said defendants desire to be known, being identical with
years; that at present time the greater part of all that of the plaintiff Western Equipment and Supply
telephone equipment used in Manila and elsewhere in Company, will deceive and mislead the public
the Philippine Islands was manufactured by the said purchasing electrical and telephone apparatus and
Western Electric Company, Inc., and sold by it in supplies. A copy of said protest is hereunto annexed,
commerce between the United States and the Philippine and hereby made a part hereof, marked Exhibit A.
Islands; that about three fourths of such equipment in
use throughout the world are of the manufacture of said XII. That the defendant Fidel A. Reyes, Director of the
"Western Electric Company, Inc.," and bear its corporate Bureau of Commerce and Industry has announced to
name; and that these facts are well known to the these plaintiffs his intention to overrule the protest of
defendant Henry Herman who for many years up to May plaintiffs, and to issue to the other defendants a
20, 1926, has himself been buying said products from certificate of incorporation constituting said defendants a
the plaintiff Western Electric Company, Inc., and selling body politic and corporate under the name "Western
them in the Philippine Islands. Electric Company, Inc.," unless restrained by this
Honorable Court.
VII. That the name `Western Electric Company, Inc., has
been registered as a trade-mark under the provisions of XIII. That the issuance of a certificate of incorporation in
the Act of Congress of February 20, 1905, in the office of favor of said defendants under said name of "Western
the Commissioner of Patents, at Washington, District of Electric Company, Inc.," would, under the circumstances
Columbia, and said trade-mark remains in force to this hereinbefore stated, constitute a gross abuse of the
date. discretionary powers conferred by law upon the
defendant Director of the Bureau of Commerce and
VIII. That on or about . . ., the defendants Henry Industry.
Herman, Peter O' Brien, Manuel B. Diaz, Felipe Mapoy
and Artemio Zamora filed articles of incorporation with XIV. That the issuance of said certificate of incorporation
the defendant Director of the Bureau of Commerce and would, if carried out, be in violation of plaintiff's rights
Industry with the intention of organizing a domestic and would cause them irreparable injury which could not
corporation to be known as the "Western Electric be compensated in damages, and from which petitioner
Company, Inc.," for the purpose principally of would have no appeal or any plain, speedy and
manufacturing, buying, selling and generally dealing in adequate remedy at law, other than that herein prayed
electrical and telephone apparatus and supplies. for.

IX. That the purpose of said defendant in attempting to They prayed for a temporary injunction, pending the final
incorporate under the corporate name of plaintiff decision of the court when it should be made permanent,
Western Electric Company, Inc., is to profit and trade restraining the issuance of the certificate of incorporation
upon the plaintiff's business and reputation, by in favor of the defendants under the name of Western
misleading and deceiving the public into purchasing the Electric Company, Inc., or the use of that name for any
goods manufactured or sold by them as those of plaintiff purpose in the exploitation and sale of electric apparatus
Western Electric Company, Inc., in violation of the and supplies. The preliminary writ was issued.
provisions of Act No. 666 of the Philippine Commission,
particularly section 4 thereof. For answer the defendant Fidel A. Reyes, as Director of
the Bureau of Commerce and Industry, admits the
X. That on October 20, 1926, plaintiff W. Z. Smith was allegations of paragraphs 1, 2, 3 and 4 of the complaint,
authorized by the Board of Directors of the Western and as to paragraphs 5, 6 and 7, he alleges that he has
Electric Company, Inc., to take all necessary steps for no information upon which to form a belief, and therefore
the issuance of a license to said company to engage in denies them. He admits the allegations of paragraph 8,
business in the Philippine Islands and to accept service and denies paragraph 9. He denies the first part of
of summons and process in all legal proceedings against paragraph 10, but admits that an application for a license
said company, and on October 21, 1926, said plaintiff W. to do business was filed by the Western Electric
Z. Smith filed a written application for the issuance of Company, Inc., as alleged. He admits paragraphs 11
such license with the defendant Director of Bureau of and 12, and denies paragraphs 13 and 14, and further
Commerce and Industry, which application, however, alleges that the present action is prematurely brought, in
has not yet been acted upon by said defendant. that it is an attempt to coerce his discretion, and that the
mere registration of the articles of incorporation of the duly authorized agent, the plaintiff, Felix C. Reyes,
locally organized Western Electric Company, Inc., applied to the defendant Director of the Bureau of
cannot in any way injure the plaintiffs, and prays that the Commerce and Industry for the issuance of a license to
complaint be dismissed. engage in business in the Philippine Islands and on May
20, 1926, said defendant issued in favor of said plaintiff a
For answer the defendants Herman, O' Brien, Diaz, provisional license for that purpose which was
Mapoy and Zamora admit the allegations of paragraphs permanent on August 23, 1926.
1, 2, 3, 4 and 5 of the complaint, and deny paragraph 7,
but allege that on October 15, 1926, the articles of V. That the plaintiff, Western Electric Company, Inc., has
incorporation in question were presented to the Director ever been licensed to engage in business in the
of the Bureau of Commerce and Industry for registration. Philippine Islands, and has never engaged in business
They deny paragraphs 9 and 10, except as to the filing of therein.
the application. They admit the allegations made in
paragraph 11, but alleged that W. Z. Smith was without VI. That from and since the issuance of said provisional
any right or authority. Admit the allegations of paragraph license of May 20, 1926, to the plaintiff, Western
12, but deny the allegations of paragraphs 13 and 14, Equipment and Supply Company, said plaintiff has been
and allege that the Western Electric Company, Inc., has and still is engaged in importing and selling in the
never transacted business in the Philippine Islands; that Philippine Islands electrical and telephone apparatus
its foreign business has been turned over to the and supplies manufactured by the plaintiff Western
International Standard Electric Corporation; that the Electric Company, Inc. (as well as those manufactured
action is prematurely brought; and that the registration of by other factories), said Western Equipment and Supply
the articles of incorporation in question cannot in any Company's offices in the City of Manila being at No. 600
way injure plaintiffs. Rizal Avenue, and at the time of the filing of the
complaint herein was under the charge and
Wherefore, such defendants pray that the preliminary management of the plaintiff, Felix C. Reyes, its then
injunction be dissolved, and plaintiffs' cause of action be resident agent in the Philippine Islands.
dismissed, with costs.
VII. That the electrical and telephone apparatus and
The case was tried and submitted upon the following supplies manufactured by the plaintiff, Western Electric
stipulated facts: Company, Inc., have been sold in foreign and interstate
commerce for the past fifty years, and have acquired
Now come the parties plaintiff and defendants in the high trade reputation throughout the world; that at the
above entitled cause, by their respective undersigned present time the greater part of all telephone equipment
attorneys, and for the purpose of this action, agree that used in Manila, and elsewhere in the Philippine Islands,
the following facts are true: was manufactured by the said plaintiff, Western Electric
Company, Inc., and sold by it for exportation to the
Philippine Islands; that such equipment, manufactured
I. That the Western Equipment and Supply Company is a
by the said Western Electric Company, Inc., and bearing
foreign corporation, organized under the laws of the
its trade-mark "Western Electric" or its corporate name is
State of Nevada, United States of America; that the
generally sold and used throughout the world; that a
Western Electric Company, Inc., is likewise a foreign
Philippine Corporation known as the `Electric Supply
corporation organized under the laws of the State of New
Company, Inc.,' has been importing the manufactures of
York, United States of America; and that the plaintiff W.
the plaintiff, Western Electric Company, Inc., into the
Z. Smith and Felix C. Reyes, are both of lawful age and
Philippine Islands for the purpose of selling the same
residents of the City of Manila, Philippine Islands.
therein, and that the defendant Henry Herman, is the
President and General Manager of said corporation.
II. That the defendant Fidel A. Reyes is the duly
appointed and qualified Director of the Bureau of
VIII. That the words `Western Electric' have been
Commerce and Industry and as such Director is charge
registered by the plaintiff, Electric Company, Inc., as a
with the duty of issuing and/or denying the issuance of
trade-mark under the provisions of the Act of Congress
certificates of incorporation to persons filing articles of
of February 20, 1905, in the office of the Commissioner
incorporation with the Bureau of Commerce and
of the Patents at Washington, District of Columbia, and
Industry.
said trade-mark remains in force as the property of said
plaintiff to this date.
III. That the defendants, Henry Herman, Peter O' Brien,
Manuel B. Diaz, Felipe Mapoy and Artemio Zamora are
IX. That the plaintiff, Western Electric Company, Inc., is
all of lawful age and all residents of the City of Manila,
advertising its manufacturers in its own name by means
Philippine Islands.
of advertising its manufactures in its own name by
means of advertisements inserted in periodicals which
IV. That on or about May 4, 1925, the plaintiff, the circulate generally throughout the English and Spanish
Western Equipment and Supply Company, through its speaking portions of the world, and has never
abandoned its corporate name or trade-mark, but, on the constituting said defendants a Philippine body politic and
contrary, all of its output bears said corporate name and corporate under the name of "Western Electric
trade-mark, either directly upon the manufactured article Company, Inc."
or upon its container, including that sold and used in the
Philippine Islands. XIV. That the defendant, Henry Herman, acting in behalf
of said corporation, Electrical Supply Company, Inc., has
X. That on October 15, 1926, the defendants Henry written letters to Messrs. Fisher, DeWitt, Perkins &
Herman, Peter O'Brien, Manuel B. Diaz, Felipe Mapoy Brady, acting as attorneys for plaintiff, Western Electric
and Artemio Zamora signed and filed articles of Company, Inc., copies of which are hereunto annexed
incorporation with the defendant, Fidel A. Reyes, as and hereby made a part hereof, marked Exhibits B, C
Director of the Bureau of Commerce and Industry, with and D.
the intention of organizing a domestic corporation under
the Philippine Corporation Law to be known as the XV. That the defendants, while admitting the facts set
"Western Electric Company, Inc.," for the purpose, out in paragraph VII and IX regarding the business done,
among other things or manufacturing, buying, selling and merchandise sold and advertisements made throughout
dealing generally in electrical and telephone apparatus the world by the plaintiff Western Electric Company, Inc.,
and supplies; that said defendants Peter O'Brien, Felipe insist and maintain that said allegations of fact are
Mapoy and Artemio Zamora are employees of the said immaterial and irrelevant to the issues in the present
Electrical Supply Company, of which said defendant, case, contending that such issued should be determined
Henry Herman, is and has been, during the period upon the facts as they exist in the Philippine Islands
covered by this stipulation, the president and principal alone.
stockholder; and that they, together with the said
defendant Herman, signed said articles of incorporation To which were attached Exhibits A, B, C and D.
for the incorporation of a domestic company to be known
and the "Western Electric Company, Inc.," with full
knowledge of the existence of the plaintiff Western The lower court rendered judgment for the plaintiffs as
Electric Company, Inc., of its corporate name, of its prayed for in their complaint, and made the temporary
trade-mark, "Western Electric," and of the fact that the injunction permanent, from which the defendants appeal
manufactures of said plaintiff bearing its trade-mark or and assign the following errors:
corporate name are in general use in the Philippine
Islands and in the United States. The lower court erred:

XI. That on October 20, 1926, the plaintiff, W. Z. Smith, (1) When it granted the writ of preliminary injunction
was authorized by the Board of Directors of the plaintiff, (pages 9 and 10, record; 12 to 14, B. of E.).
Western Electric Company, Inc., to take all necessary
steps for the issuance of a license to said company to (2) When it held that the Western Electric Co., Inc., a
engage in business in the Philippine Islands, and to foreign corporation, had a right to bring the present suit
accept service of summons and process in all legal in courts of the Philippine Islands, wherein it is
proceedings against said company, and on October 21, unregistered and unlicensed, as was done in the
1926, said plaintiff, W. Z. Smith, filed a written decision upon the petition for a preliminary injunction
application for the issuance of such license with the (pages 97 to 115 record), and in repeating such holding
defendant Director of the Bureau of Commerce and in the final decision herein (pages 51 and 52, B. of E.),
Industry, which application, however, has not yet been as well as in basing such holding upon the decision of
acted upon by said defendant. this Honorable Supreme Court in Marshall-Wells Co. vs.
Henry W. Elser & Co. (46 Phil., 70.)
XII. That on October 18, 1926, the Philippine Telephone
and Telegraph Co., by its general manager, the plaintiff (3) When it found that the plaintiff, the Western Electric
W. Z. Smith. lodged with the defendant Director of the Co., Inc., has any such standing in the Philippine Islands
registration of the proposed corporation by the or before the courts thereof as to authorize it to maintain
defendants Henry Herman, Peter O'Brien, Manuel B. an action therein under the present case.
Diaz, Felipe Mapoy and Artemio Zamora, to be known as
the Western Electric Company, Inc., as a domestic (4) When it found that the other plaintiffs herein have any
corporation under the Philippine Corporation Law. A rights in the present controversy or any legal standing
copy of said protest, marked Exhibit A, hereunto therein.lawphi1.net
attached and is hereby made a part of this stipulation.
(5) In ordering the issuance of a permanent injunction
XIII. That the defendant, Fidel A. Reyes, Director of the restraining the defendant Fidel A. Reyes, as Director of
Bureau of Commerce and Industry, announced his the Bureau of Commerce and Industry, from issuing a
intention of overrule said protest and will, unless certificate of incorporation in favor of the other
judicially restrained therefrom, issue to the other defendants under the name of "Western Electric Co.,
defendants herein a certificate of incorporation, Inc.," or any similar name, and restraining the other
defendants from using the name "Western Electric Co., stated, in that it overlooks and disregards paragraphs 12
Inc.," or any like name, in the manufacture of sale of and 13 of the stipulation of facts, and that the second
electrical and telephone apparatus and supplies or as a question should be revised to read as follows:
business name or style in the Philippine Islands.
Has an unregistered corporation which has not
(6) In finding that the purpose of the defendants, other transacted business in the Philippine Islands, but which
than the defendant Fidel A. Reyes, in seeking to secure has acquired a valuable goodwill and high reputation
the registration of a local corporation under the name of therein, through the sale, by importers, and the extensive
"Western Electric Co., Inc.," was "certainly not an use within the Islands of products bearing either its
innocent one," thereby imputing to said defendants a corporate name, or trade-mark consisting of its corporate
fraudulent and wrongful intent. name, a legal right to restrain an officer of the
Commerce and Industry, with knowledge of those facts,
(7) In failing to dismiss plaintiffs' complaint with costs from issuing a certificate of incorporation to residents of
against the plaintiffs. the Philippine Islands who attempt to organize a
corporation for the purpose of pirating the corporate
name of such foreign corporation, of engaging in the
(8) In overruling and denying defendants' motion for a
same business as such foreign corporation, and of
new trial.
defrauding the public into thinking that its goods are
those of such foreign corporation, and of defrauding
  such foreign corporation and its local dealers of their
legitimate trade?
JOHNS, J.:
We agree with the revisions of both questions as made
The appellants say that the two questions presented are: by the appellees, for the reason that they are more in
accord with the stipulated facts. First, it is stipulated that
Has a foreign corporation, which has never done the Western Electric Company, Inc., "has never engaged
business in the Philippine Islands, and which is in business in the Philippine Islands."
unlicensed and unregistered therein, any right to
maintain an action to restrain residents and inhabitants In the case of Marshall-Wells Co. vs. Henry W. Elser &
of the Philippine Islands from organizing a corporation Co. (46 Phil., 70, 76), this court held:
therein bearing the same name as such foreign
corporation? The noncompliance of a foreign corporation with the
statute may be pleaded as an affirmative defense.
Has such foreign corporation a legal right to restrain an Thereafter, it must appear from the evidence, first, that
officer of the Government of the Philippine Islands, i. e., the plaintiff is a foreign corporation, second, that it is
the Director of the Bureau of Commerce and Industry doing business in the Philippines, and third, that it has
from exercising his discretion, and from registering a not obtained the proper license as provided by the
corporation so organized by residents and inhabitants of statute.
the Philippine Islands?
If it had been stipulated that the plaintiff, Western Electric
As to the first question, the appellees say that it should Company, Inc., had been doing business in the
be revised, so as to read as follows: Philippine Islands without first obtaining a license,
another and a very different question would be
Has a foreign corporation which has never done presented. That company is not here seeking to enforce
business in the Philippine Islands, and which is any legal or contract rights arising from, or growing out
unlicensed and unregistered therein, any right to of, any business which it has transacted in the Philippine
maintain an action to restrain residents and inhabitants Islands. The sole purpose of the action:
of the Philippine Islands from organizing a corporation
therein bearing the same name as such foreign "Is to protect its reputation, its corporate name, its
corporation, when said residents and inhabitants have goodwill, whenever that reputation, corporate name or
knowledge of the existence of such foreign corporation, goodwill have, through the natural development of its
having dealt with it, and sold its manufactures, and when trade, established themselves." And it contends that its
said foreign corporation is widely and favorably known in rights to the use of its corporate and trade name:
the Philippine Islands through the use therein of its
products bearing its corporate and trade name, and Is a property right, a right in rem, which may assert and
when the purpose of the proposed domestic corporation protect against all the world, in any of the courts of the
is to deal in precisely the same goods as those of the world — even in jurisdictions where it does not transact
foreign corporation? business — just the same as it may protect its tangible
property, real or personal, against trespass, or
As to the second, the appellees say that the question as conversion. Citing sec. 10, Nims on Unfair Competition
propounded by the appellants is not fully and fairly and Trade-Marks and cases cited; secs. 21-22, Hopkins
on Trade-Marks, Trade Names and Unfair Competition error, but decided that question correctly, then, of
and cases cited." That point is sustained by the course, his action will be affirmed to the extent that we
authorities, and is well stated in Hanover Star Milling will deny the relief prayed for.
Co. vs. Allen and Wheeler Co. (208 Fed., 513), in which
they syllabus says: It is very apparent that the purpose and intent of Herman
and his associates in seeking to incorporate under the
Since it is the trade and not the mark that is to be name of Western Electric Company, Inc., was to unfairly
protect, a trade-mark acknowledges no territorial and unjustly compete in the Philippine Islands with the
boundaries of municipalities or states or nations, but Western Electric Company, Inc., in articles which are
extends to every market where the trader's goods have manufactured by, and bear the name of, that company,
become known and identified by the use of the mark. all of which is prohibited by Act No. 666, and was made
known to the defendant Reyes by the letter known in the
In Walter E. Olsen & Co. vs. Lambert (42 Phil., 633, record to the defendant Reyes by the letter known in the
640), this court said: record as Exhibit A.

In order that competition in business should be unfair in As appellees say:

the sense necessary to justify the granting of an
injunction to restrain such competition it must appear These defendant, Herman and his associates, are
that there has been, or is likely to be, a diversion of trade actually asking the Government of the Philippine Island
from the business of the complainant to that of the to permit them to pirate the name of the Western Electric
wrongdoer, or methods generally recognized as Company, Inc., by incorporating thereunder, so that they
unfair; . . . In most, if not all, of the cases in which relief may deceive the people of the Philippine Islands into
has hitherto been granted against unfair competition the thinking that the goods they propose to sell are goods of
means and methods adopted by the wrongdoer in order the manufacture of the real Western Electric Company. It
to divert the coveted trade from his rival have been such would be a gross prostitution of the powers of
as were calculated to deceive and mislead the public into government to utilize those powers in such a way as to
thinking that the goods or business of the wrongdoer are authorize such a fraud upon the people governed. It
the goods or business of the rival. Diversion of trade is would be the grossest abuse of discretion to permit
really the fundamental thing here, and if diversion of these defendants to usurp the corporate mane of the
trade be accomplished by any means which according to plaintiff, and to trade thereupon in these Islands, in fraud
accepted legal canons are unfair, the aggrieved party is of the Philippine public and of the true owners of the
entitled to relief. name and the goodwill incidental thereto.

In Shaver vs. Heller & Merz Co. (48 C.C. A., 48; 108 The plaintiff, Western Electric Company, Inc., has been
Fed., 821; 65 L. R. A., 878,. 881), it is said: in existence as a corporation for over fifty years, during
which time it has established a reputation all over the
The contention of counsel for the appellants here is a world including the Philippine Islands, for the kind and
confusion of the bases of two classes of suits, — those quality of its manufactured articles, and it is very
for infringements of trade-marks, and those for unfair apparent that the whole purpose and intent of Herman
competition in trade. . . . In the former, title to the trade- and his associates in seeking to incorporate another
marks is indispensable to a good cause of action; in the corporation under the identical name of Western Electric
latter, no proprietary interest in the words, names, or Company, Inc., and for the same identical purpose as
means by which the fraud is perpetrated is requisite to that of the plaintiff, is to trespass upon and profit by its
maintain a suit to enjoin it. It is sufficient that the good name and business reputation. The very fact that
complainant is entitled to the custom — the goodwill — Herman and his associates have sought the use of that
of a business, and that this goodwill is injured, or is particular name for that identical purpose is conclusive
about to be injured, by the palming off of the goods of evidence of the fraudulent intent with which it is done.
another as his.
The judgment of the lower court is affirmed, with costs.
The remaining question as to the jurisdiction of the So ordered.
courts over the defendant Reyes, as Director of the
Bureau of Commerce and Industry, has been adversely
decided to his contention in the case of Asuncion vs. De
Yriarte (28 Phil., 67), in which, among other things, it is
said:

If, therefore, the defendant erred in determining the

question presented when the articles were offered for
registration, then that error will be corrected by this court
in this action and he will be compelled to register the
articles as offered. If, however, he did not commit an
G.R. No. 169504               March 3, 2010

COFFEE PARTNERS, INC., Petitioner,

vs.
SAN FRANCISCO COFFEE & ROASTERY,
INC., Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 15 June 2005

Decision2 and the 1 September 2005 Resolution3 of the
Court of Appeals in CA-G.R. SP No. 80396. In its 15
June 2005 Decision, the Court of Appeals set aside the
22 October 2003 Decision4 of the Office of the Director
General-Intellectual Property Office and reinstated the
14 August 2002 Decision5 of the Bureau of Legal Affairs-
Intellectual Property Office. In its 1 September 2005
Resolution, the Court of Appeals denied petitioner’s
motion for reconsideration and respondent’s motion for
partial reconsideration.

The Facts

Petitioner Coffee Partners, Inc. is a local corporation

engaged in the business of establishing and maintaining
coffee shops in the country. It registered with the
Securities and Exchange Commission (SEC) in January
2001. It has a franchise agreement6 with Coffee Partners
Ltd. (CPL), a business entity organized and existing
under the laws of British Virgin Islands, for a non-
exclusive right to operate coffee shops in the Philippines
using trademarks designed by CPL such as "SAN
FRANCISCO COFFEE."

Respondent is a local corporation engaged in the

wholesale and retail sale of coffee. It registered with the
SEC in May 1995. It registered the business name "SAN
FRANCISCO COFFEE & ROASTERY, INC." with the
Department of Trade and Industry (DTI) in June 1995.
Respondent had since built a customer base that
included Figaro Company, Tagaytay Highlands, Fat
Willy’s, and other coffee companies.

In 1998, respondent formed a joint venture company with

Boyd Coffee USA under the company name Boyd Coffee
Company Philippines, Inc. (BCCPI). BCCPI engaged in
the processing, roasting, and wholesale selling of coffee.
Respondent later embarked on a project study of setting is determined from priority of adoption. Since respondent
up coffee carts in malls and other commercial registered its business name with the DTI in 1995 and
establishments in Metro Manila. petitioner registered its trademark with the IPO in 2001 in
the Philippines and in 1997 in other countries, then
In June 2001, respondent discovered that petitioner was respondent must be protected from infringement of its
about to open a coffee shop under the name "SAN trade name.
FRANCISCO COFFEE" in Libis, Quezon City. According
to respondent, petitioner’s shop caused confusion in the The BLA-IPO also held that respondent did not abandon
minds of the public as it bore a similar name and it also the use of its trade name as substantial evidence
engaged in the business of selling coffee. Respondent indicated respondent continuously used its trade name in
sent a letter to petitioner demanding that the latter stop connection with the purpose for which it was organized.
using the name "SAN FRANCISCO COFFEE." It found that although respondent was no longer involved
Respondent also filed a complaint with the Bureau of in blending, roasting, and distribution of coffee because
Legal Affairs-Intellectual Property Office (BLA-IPO) for of the creation of BCCPI, it continued making plans and
infringement and/or unfair competition with claims for doing research on the retailing of coffee and the setting
damages. up of coffee carts. The BLA-IPO ruled that for
abandonment to exist, the disuse must be permanent,
In its answer, petitioner denied the allegations in the intentional, and voluntary.
complaint. Petitioner alleged it filed with the Intellectual
Property Office (IPO) applications for registration of the The BLA-IPO held that petitioner’s use of the trademark
mark "SAN FRANCISCO COFFEE & DEVICE" for class "SAN FRANCISCO COFFEE" will likely cause confusion
42 in 1999 and for class 35 in 2000. Petitioner because of the exact similarity in sound, spelling,
maintained its mark could not be confused with pronunciation, and commercial impression of the words
respondent’s trade name because of the notable "SAN FRANCISCO" which is the dominant portion of
distinctions in their appearances. Petitioner argued respondent’s trade name and petitioner’s trademark. It
respondent stopped operating under the trade name held that no significant difference resulted even with a
"SAN FRANCISCO COFFEE" when it formed a joint diamond-shaped figure with a cup in the center in
venture with Boyd Coffee USA. Petitioner contended petitioner's trademark because greater weight is given to
respondent did not cite any specific acts that would lead words – the medium consumers use in ordering coffee
one to believe petitioner had, through fraudulent means, products.
passed off its mark as that of respondent, or that it had
diverted business away from respondent. On the issue of unfair competition, the BLA-IPO
absolved petitioner from liability. It found that petitioner
Mr. David Puyat, president of petitioner corporation, adopted the trademark "SAN FRANCISCO COFFEE"
testified that the coffee shop in Libis, Quezon City because of the authority granted to it by its franchisor.
opened sometime in June 2001 and that another coffee The BLA-IPO held there was no evidence of intent to
shop would be opened in Glorietta Mall, Makati City. He defraud on the part of petitioner.
stated that the coffee shop was set up pursuant to a
franchise agreement executed in January 2001 with The BLA-IPO also dismissed respondent’s claim of
CPL, a British Virgin Island Company owned by Robert actual damages because its claims of profit loss were
Boxwell. Mr. Puyat said he became involved in the based on mere assumptions as respondent had not even
business when one Arthur Gindang invited him to invest started the operation of its coffee carts. The BLA-IPO
in a coffee shop and introduced him to Mr. Boxwell. For likewise dismissed respondent’s claim of moral
his part, Mr. Boxwell attested that the coffee shop "SAN damages, but granted its claim of attorney’s fees.
FRANCISCO COFFEE" has branches in Malaysia and
Singapore. He added that he formed CPL in 1997 along Both parties moved for partial reconsideration. Petitioner
with two other colleagues, Shirley Miller John and Leah protested the finding of infringement, while respondent
Warren, who were former managers of Starbucks Coffee questioned the denial of actual damages. The BLA-IPO
Shop in the United States. He said they decided to invest denied the parties’ partial motion for reconsideration.
in a similar venture and adopted the name "SAN The parties appealed to the Office of the Director
FRANCISCO COFFEE" from the famous city in General-Intellectual Property Office (ODG-IPO).
California where he and his former colleagues once lived
and where special coffee roasts came from.
The Ruling of the Office of the Director General-
The Ruling of the Bureau of Legal Affairs-Intellectual
Property Office Intellectual Property Office

In its 14 August 2002 Decision, the BLA-IPO held that In its 22 October 2003 Decision, the ODG-IPO reversed
petitioner’s trademark infringed on respondent’s trade the BLA-IPO. It ruled that petitioner’s use of the
name. It ruled that the right to the exclusive use of a trademark "SAN FRANCISCO COFFEE" did not infringe
trade name with freedom from infringement by similarity on respondent's trade name. The ODG-IPO found that
respondent had stopped using its trade name after it previously used in trade or commerce in the Philippines.
entered into a joint venture with Boyd Coffee USA in Respondent insists it never abandoned the use of its
1998 while petitioner continuously used the trademark trade name as evidenced by its letter to petitioner
since June 2001 when it opened its first coffee shop in demanding immediate discontinuation of the use of its
Libis, Quezon City. It ruled that between a subsequent trademark and by the filing of the infringement case.
user of a trade name in good faith and a prior user who Respondent alleges petitioner’s trademark is confusingly
had stopped using such trade name, it would be similar to respondent’s trade name. Respondent
inequitable to rule in favor of the latter. stresses ordinarily prudent consumers are likely to be
misled about the source, affiliation, or sponsorship of
The Ruling of the Court of Appeals petitioner’s coffee.

In its 15 June 2005 Decision, the Court of Appeals set As to the issue of alleged abandonment of trade name
aside the 22 October 2003 decision of the ODG-IPO in by respondent, the BLA-IPO found that respondent
so far as it ruled that there was no infringement. It continued to make plans and do research on the retailing
reinstated the 14 August 2002 decision of the BLA-IPO of coffee and the establishment of coffee carts, which
finding infringement. The appellate court denied negates abandonment. This finding was upheld by the
respondent’s claim for actual damages and retained the Court of Appeals, which further found that while
award of attorney’s fees. In its 1 September 2005 respondent stopped using its trade name in its business
Resolution, the Court of Appeals denied petitioner’s of selling coffee, it continued to import and sell coffee
motion for reconsideration and respondent’s motion for machines, one of the services for which the use of the
partial reconsideration. business name has been registered. The binding effect
of the factual findings of the Court of Appeals on this
Court applies with greater force when both the quasi-
The Issue
judicial body or tribunal like the BLA-IPO and the Court
of Appeals are in complete agreement on their factual
The sole issue is whether petitioner’s use of the findings. It is also settled that absent any circumstance
trademark "SAN FRANCISCO COFFEE" constitutes requiring the overturning of the factual conclusions made
infringement of respondent’s trade name "SAN by the quasi-judicial body or tribunal, particularly if
FRANCISCO COFFEE & ROASTERY, INC.," even if the affirmed by the Court of Appeals, the Court necessarily
trade name is not registered with the Intellectual upholds such findings of fact.8
Property Office (IPO).
Coming now to the main issue, in Prosource
The Court’s Ruling International, Inc. v. Horphag Research Management
SA,9 this Court laid down what constitutes infringement
The petition has no merit. of an unregistered trade name, thus:

Petitioner contends that when a trade name is not (1) The trademark being infringed is registered in the
registered, a suit for infringement is not available. Intellectual Property Office; however, in infringement of
Petitioner alleges respondent has abandoned its trade trade name, the same need not be registered;
name. Petitioner points out that respondent’s registration
of its business name with the DTI expired on 16 June (2) The trademark or trade name is reproduced,
2000 and it was only in 2001 when petitioner opened a counterfeited, copied, or colorably imitated by the
coffee shop in Libis, Quezon City that respondent made infringer;
a belated effort to seek the renewal of its business name
registration. Petitioner stresses respondent’s failure to
(3) The infringing mark or trade name is used in
continue the use of its trade name to designate its goods
connection with the sale, offering for sale, or advertising
negates any allegation of infringement. Petitioner claims
of any goods, business or services; or the infringing
no confusion is likely to occur between its trademark and
mark or trade name is applied to labels, signs, prints,
respondent’s trade name because of a wide divergence
packages, wrappers, receptacles, or advertisements
in the channels of trade, petitioner serving ready-made
intended to be used upon or in connection with such
coffee while respondent is in wholesale blending,
goods, business, or services;
roasting, and distribution of coffee. Lastly, petitioner
avers the proper noun "San Francisco" and the generic
word "coffee" are not capable of exclusive appropriation. (4) The use or application of the infringing mark or trade
name is likely to cause confusion or mistake or to
deceive purchasers or others as to the goods or services
Respondent maintains the law protects trade names
themselves or as to the source or origin of such goods or
from infringement even if they are not registered with the
services or the identity of such business; and
IPO. Respondent claims Republic Act No. 8293 (RA
8293)7 dispensed with registration of a trade name with
the IPO as a requirement for the filing of an action for (5) It is without the consent of the trademark or trade
infringement. All that is required is that the trade name is name owner or the assignee thereof.10 (Emphasis
supplied)
Clearly, a trade name need not be registered with the trademarks that might cause confusion and deception,
IPO before an infringement suit may be filed by its owner thus constituting infringement. If the competing
against the owner of an infringing trademark. All that is trademark contains the main, essential, and dominant
required is that the trade name is previously used in features of another, and confusion or deception is likely
trade or commerce in the Philippines.11 to result, infringement occurs. Exact duplication or
imitation is not required. The question is whether the use
Section 22 of Republic Act No. 166,12 as amended, of the marks involved is likely to cause confusion or
required registration of a trade name as a condition for mistake in the mind of the public or to deceive
the institution of an infringement suit, to wit: consumers.14

Sec. 22. Infringement, what constitutes. – Any person In contrast, the holistic test entails a consideration of the
who shall use, without the consent of the registrant, any entirety of the marks as applied to the products,
reproduction, counterfeit, copy, or colorable imitation of including the labels and packaging, in determining
any registered mark or trade name in connection with the confusing similarity.15 The discerning eye of the observer
sale, offering for sale, or advertising of any goods, must focus not only on the predominant words but also
business or services on or in connection with which such on the other features appearing on both marks in order
use is likely to cause confusion or mistake or to deceive that the observer may draw his conclusion whether one
purchasers or others as to the source or origin of such is confusingly similar to the other.16
goods or services, or identity of such business; or
reproduce, counterfeit, copy, or colorably imitate any Applying either the dominancy test or the holistic test,
such mark or trade name and apply such reproduction, petitioner’s "SAN FRANCISCO COFFEE" trademark is a
counterfeit, copy, or colorable imitation to labels, signs, clear infringement of respondent’s "SAN FRANCISCO
prints, packages, wrappers, receptacles, or COFFEE & ROASTERY, INC." trade name. The
advertisements intended to be used upon or in descriptive words "SAN FRANCISCO COFFEE" are
connection with such goods, business, or services, shall precisely the dominant features of respondent’s trade
be liable to a civil action by the registrant for any or all of name. Petitioner and respondent are engaged in the
the remedies herein provided. (Emphasis supplied) same business of selling coffee, whether wholesale or
retail. The likelihood of confusion is higher in cases
However, RA 8293, which took effect on 1 January 1998, where the business of one corporation is the same or
has dispensed with the registration requirement. Section substantially the same as that of another corporation. In
165.2 of RA 8293 categorically states that trade names this case, the consuming public will likely be confused as
shall be protected, even prior to or without registration to the source of the coffee being sold at petitioner’s
with the IPO, against any unlawful act including any coffee shops. Petitioner’s argument that "San Francisco"
subsequent use of the trade name by a third party, is just a proper name referring to the famous city in
whether as a trade name or a trademark likely to mislead California and that "coffee" is simply a generic term, is
the public.1avvph!1 Thus: untenable. Respondent has acquired an exclusive right
to the use of the trade name "SAN FRANCISCO
COFFEE & ROASTERY, INC." since the registration of
SEC. 165.2 (a) Notwithstanding any laws or
the business name with the DTI in 1995. Thus,
regulations providing for any obligation to register
respondent’s use of its trade name from then on must be
trade names, such names shall be protected, even
free from any infringement by similarity. Of course, this
prior to or without registration, against any unlawful
does not mean that respondent has exclusive use of the
act committed by third parties.
geographic word "San Francisco" or the generic word
"coffee." Geographic or generic words are not, per se,
(b) In particular, any subsequent use of a trade name by subject to exclusive appropriation. It is only the
a third party, whether as a trade name or a mark or combination of the words "SAN FRANCISCO COFFEE,"
collective mark, or any such use of a similar trade name which is respondent’s trade name in its coffee business,
or mark, likely to mislead the public, shall be deemed that is protected against infringement on matters related
unlawful. (Emphasis supplied) to the coffee business to avoid confusing or deceiving
the public.
It is the likelihood of confusion that is the gravamen of
infringement. But there is no absolute standard for In Philips Export B.V. v. Court of Appeals,17 this Court
likelihood of confusion. Only the particular, and held that a corporation has an exclusive right to the use
sometimes peculiar, circumstances of each case can of its name. The right proceeds from the theory that it is
determine its existence. Thus, in infringement cases, a fraud on the corporation which has acquired a right to
precedents must be evaluated in the light of each that name and perhaps carried on its business
particular case.13 thereunder, that another should attempt to use the same
name, or the same name with a slight variation in such a
In determining similarity and likelihood of confusion, our way as to induce persons to deal with it in the belief that
jurisprudence has developed two tests: the dominancy they are dealing with the corporation which has given a
test and the holistic test. The dominancy test focuses on reputation to the name.18
the similarity of the prevalent features of the competing
This Court is not just a court of law, but also of equity.
We cannot allow petitioner to profit by the name and
reputation so far built by respondent without running
afoul of the basic demands of fair play. Not only the law
but equity considerations hold petitioner liable for
infringement of respondent’s trade name.

The Court of Appeals was correct in setting aside the 22

October 2003 Decision of the Office of the Director
General-Intellectual Property Office and in reinstating the
14 August 2002 Decision of the Bureau of Legal Affairs-
Intellectual Property Office.

WHEREFORE, we DENY the petition for review.

We AFFIRM the 15 June 2005 Decision and 1
September 2005 Resolution of the Court of Appeals in
CA-G.R. SP No. 80396.

Costs against petitioner.

SO ORDERED.