G.R. No.
180677 February 18, 2013 likely caused confusion, mistake, and /or deceived the general consuming public,
VICTORIO P. DIAZ, Petitioner, vs. PEOPLE OF THE PHILIPPINES AND LEVI
STRAUSS [PHILS.], INC., Respondents.
DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be confused with the registered
trademark that is the gravamen of the offense of infringement of a registered
trademark. The acquittal of the accused should follow if the allegedly infringing
mark is not likely to cause confusion. Thereby, the evidence of the State does not
satisfy the quantum of proof beyond reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17,
20071 and November 22, 2007,2 whereby the Court of Appeals (CA), respectively,
dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated filing of the
appellant's brief, and denied his motion for reconsideration. Thereby, the decision
rendered on February 13, 2006 in Criminal Case No. 00-0318 and Criminal Case
No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City (RTC)
convicting him for two counts of infringement of trademark were affirmed.3
Antecedents
On February 10, 2000, the Department of Justice filed two informations in the RTC
of Las Piñas City, charging Diaz with violation of Section 155, in relation to Section
170, of Republic Act No. 8293, also known as the Intellectual Property Code of the
Philippines (Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City,
and within the jurisdiction of this Honorable Court, the abovenamed accused, with
criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred to as
LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and
intentionally engaged in commerce by reproducing, counterfeiting, copying and
colorably imitating Levi’s registered trademarks or dominant features thereof such
as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO
HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE
ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for
sale, manufactured, distributed counterfeit patches and jeans, including other
preparatory steps necessary to carry out the sale of said patches and jeans, which
without the consent, permit or authority of the registered owner, LEVI’S, thus
depriving and defrauding the latter of its right to the exclusive use of its trademarks
and legitimate trade, to the damage and prejudice of LEVI’S.
CONTRARY TO LAW.
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City,
and within the jurisdiction of this Honorable Court, the abovenamed accused, with
criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred to as
LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and
intentionally engaged in commerce by reproducing, counterfeiting, copying and
colorably imitating Levi’s registered trademarks or dominant features thereof such
as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO
HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE
ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for
sale, manufactured, distributed counterfeit patches and jeans, including other
preparatory steps necessary to carry out the sale of said patches and jeans, which
likely caused confusion, mistake, and /or deceived the general consuming public,
without the consent, permit or authority of the registered owner, LEVI’S, thus
depriving and defrauding the latter of its right to the exclusive use of its trademarks
and legitimate trade, to the damage and prejudice of LEVI’S.
CONTRARY TO LAW.
The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to
each information on June 21, 2000.6
1. Evidence of the Prosecution
Levi Strauss and Company (Levi’s), a foreign corporation based in the State of
Delaware, United States of America, had been engaged in the apparel business. It
is the owner of trademarks and designs of Levi’s jeans like LEVI’S 501, the arcuate
design, the two-horse brand, the two-horse patch, the two-horse patch with pattern
arcuate, and the composite tab arcuate. LEVI’S 501 has the following registered
trademarks, to wit: (1) the leather patch showing two horses pulling a pair of pants;
(2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;" (3) the arcuate
design that refers to "the two parallel stitching curving downward that are being
sewn on both back pockets of a Levi’s Jeans;" and (4) the tab or piece of cloth
located on the structural seam of the right back pocket, upper left side. All these
1
trademarks were registered in the Philippine Patent Office in the 1970’s, 1980’s
and early part of 1990’s.7
Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After
receiving information that Diaz was selling counterfeit LEVI’S 501 jeans in his
tailoring shops in Almanza and Talon, Las Piñas City, Levi’s Philippines hired a
private investigation group to verify the information. Surveillance and the purchase
of jeans from the tailoring shops of Diaz established that the jeans bought from the
tailoring shops of Diaz were counterfeit or imitations of LEVI’S 501. Levi’s
Philippines then sought the assistance of the National Bureau of Investigation
(NBI) for purposes of applying for a search warrant against Diaz to be served at his
tailoring shops. The search warrants were issued in due course. Armed with the
search warrants, NBI agents searched the tailoring shops of Diaz and seized
several fake LEVI’S 501 jeans from them. Levi’s Philippines claimed that it did not
authorize the making and selling of the seized jeans; that each of the jeans were
mere imitations of genuine LEVI’S 501 jeans by each of them bearing the
registered trademarks, like the arcuate design, the tab, and the leather patch; and
that the seized jeans could be mistaken for original LEVI’S 501 jeans due to the
placement of the arcuate, tab, and two-horse leather patch.8
2. Evidence of the Defense
On his part, Diaz admitted being the owner of the shops searched, but he denied
any criminal liability.
Diaz stated that he did not manufacture Levi’s jeans, and that he used the label
"LS Jeans Tailoring" in the jeans that he made and sold; that the label "LS Jeans
Tailoring" was registered with the Intellectual Property Office; that his shops
received clothes for sewing or repair; that his shops offered made-to-order jeans,
whose styles or designs were done in accordance with instructions of the
customers; that since the time his shops began operating in 1992, he had received
no notice or warning regarding his operations; that the jeans he produced were
easily recognizable because the label "LS Jeans Tailoring," and the names of the
customers were placed inside the pockets, and each of the jeans had an "LSJT"
red tab; that "LS" stood for "Latest Style;" and that the leather patch on his jeans
had two buffaloes, not two horses.9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding Diaz guilty as
charged, disposing thus:
WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz,
a.k.a. Vic Diaz, GUILTY beyond reasonable doubt of twice violating Sec. 155, in
relation to Sec. 170, of RA No. 8293, as alleged in the Informations in Criminal
Case Nos. 00-0318 & 00-0319, respectively, and hereby sentences him to suffer in
each of the cases the penalty of imprisonment of TWO (2) YEARS of prision
correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as
maximum, as well as pay a fine of ₱50,000.00 for each of the herein cases, with
subsidiary imprisonment in case of insolvency, and to suffer the accessory
penalties provided for by law.
Also, accused Diaz is hereby ordered to pay to the private complainant Levi’s
Strauss (Phils.), Inc. the following, thus:
1. ₱50,000.00 in exemplary damages; and
2. ₱222,000.00 as and by way of attorney’s fees.
Costs de officio.
SO ORDERED.
Ruling of the CA
Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground
that Diaz had not filed his appellant’s brief on time despite being granted his
requested several extension periods.
Upon denial of his motion for reconsideration, Diaz is now before the Court to
plead for his acquittal.
Issue
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE
WHEN IT APPLIED RIGIDLY THE RULE ON TECHNICALITIES AND OVERRIDE
SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE PETITIONER
FOR LATE FILING OF APPELLANT’S BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the appeal of Diaz due
to the late filing of his appellant’s brief.
2
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the
appellant’s brief in the CA "within forty-five (45) days from receipt of the notice of
the clerk that all the evidence, oral and documentary, are attached to the record,
seven (7) copies of his legibly typewritten, mimeographed or printed brief, with
proof of service of two (2) copies thereof upon the appellee." Section 1(e) of Rule
50 of the Rules of Court grants to the CA the discretion to dismiss an appeal either
motu proprio or on motion of the appellee should the appellant fail to serve and file
the required number of copies of the appellant’s brief within the time provided by
the Rules of Court.
The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal
of the appeal upon failure to file the appellant’s brief is not mandatory, but
discretionary. Verily, the failure to serve and file the required number of copies of
the appellant’s brief within the time provided by the Rules of Court does not have
the immediate effect of causing the outright dismissal of the appeal. This means
that the discretion to dismiss the appeal on that basis is lodged in the CA, by virtue
of which the CA may still allow the appeal to proceed despite the late filing of the
appellant’s brief, when the circumstances so warrant its liberality. In deciding to
dismiss the appeal, then, the CA is bound to exercise its sound discretion upon
taking all the pertinent circumstances into due consideration.
The records reveal that Diaz’s counsel thrice sought an extension of the period to
file the appellant’s brief. The first time was on March 12, 2007, the request being
for an extension of 30 days to commence on March 11, 2007. The CA granted his
motion under its resolution of March 21, 2007. On April 10, 2007, the last day of
the 30-day extension, the counsel filed another motion, seeking an additional 15
days. The CA allowed the counsel until April 25, 2007 to serve and file the
appellant’s brief. On April 25, 2007, the counsel went a third time to the CA with
another request for 15 days. The CA still granted such third motion for extension,
giving the counsel until May 10, 2007. Notwithstanding the liberality of the CA, the
counsel did not literally comply, filing the appellant’s brief only on May 28, 2007,
which was the 18th day beyond the third extension period granted.
Under the circumstances, the failure to file the appellant’s brief on time rightly
deserved the outright rejection of the appeal. The acts of his counsel bound Diaz
like any other client. It was, of course, only the counsel who was well aware that
the Rules of Court fixed the periods to file pleadings and equally significant papers
like the appellant’s brief with the lofty objective of avoiding delays in the
administration of justice.
Yet, we have before us an appeal in two criminal cases in which the appellant lost
his chance to be heard by the CA on appeal because of the failure of his counsel
to serve and file the appellant’s brief on time despite the grant of several
extensions the counsel requested. Diaz was convicted and sentenced to suffer two
indeterminate sentences that would require him to spend time in detention for each
conviction lasting two years, as minimum, to five years, as maximum, and to pay
fines totaling ₱100,000.00 (with subsidiary imprisonment in case of his insolvency).
His personal liberty is now no less at stake. This reality impels us to look beyond
the technicality and delve into the merits of the case to see for ourselves if the
appeal, had it not been dismissed, would have been worth the time of the CA to
pass upon. After all, his appellant’s brief had been meanwhile submitted to the CA.
While delving into the merits of the case, we have uncovered a weakness in the
evidence of guilt that cannot be simply ignored and glossed over if we were to be
true to our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing the excuses of
oversight and excusable negligence tendered by Diaz’s counsel to justify the
belated filing of the appellant’s brief as unworthy of serious consideration, Diaz
should not be made to suffer the dire consequence. Any accused in his shoes, with
his personal liberty as well as his personal fortune at stake, expectedly but
innocently put his fullest trust in his counsel’s abilities and professionalism in the
handling of his appeal. He thereby delivered his fate to the hands of his counsel.
Whether or not those hands were efficient or trained enough for the job of handling
the appeal was a learning that he would get only in the end. Likelier than not, he
was probably even unaware of the three times that his counsel had requested the
CA for extensions. If he were now to be left to his unwanted fate, he would surely
suffer despite his innocence. How costly a learning it would be for him! That is
where the Court comes in. It is most important for us as dispensers of justice not to
allow the inadvertence or incompetence of any counsel to result in the outright
deprivation of an appellant’s right to life, liberty or property.13
We do not mind if this softening of judicial attitudes be mislabeled as excessive
leniency. With so much on the line, the people whose futures hang in a balance
should not be left to suffer from the incompetence, mindlessness or lack of
professionalism of any member of the Law Profession. They reasonably expect a
just result in every litigation. The courts must give them that just result. That
assurance is the people’s birthright. Thus, we have to undo Diaz’s dire fate.
Even as we now set aside the CA’s rejection of the appeal of Diaz, we will not
remand the records to the CA for its review. In an appeal of criminal convictions,
the records are laid open for review. To avoid further delays, therefore, we take it
upon ourselves to review the records and resolve the issue of guilt, considering
that the records are already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute infringement of
trademark, viz:
3
Remedies; Infringement. — Any person who shall, without the consent of the
owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation
of a registered mark or the same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a
dominant feature thereof and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers, 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 on or in
connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the infringement takes place at
the moment any of the acts stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of goods or services using the
infringing material.
The elements of the offense of trademark infringement under the Intellectual
Property Code are, therefore, the following:
1. The trademark being infringed is registered in the Intellectual Property Office;
2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the
infringer;
3. The infringing mark is used in connection with the sale, offering for sale, or
advertising of any goods, business or services; or the infringing mark is applied to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or services;
4. The use or application of the infringing mark is likely to cause confusion or
mistake or to deceive purchasers or others as to the goods or services themselves
or as to the source or origin of such goods or services or the identity of such
business; and
5. The use or application of the infringing mark is without the consent of the
trademark owner or the assignee thereof.14
As can be seen, the likelihood of confusion is the gravamen of the offense of
trademark infringement.15 There are two tests to determine likelihood of
confusion, namely: the dominancy test, and the holistic test. The contrasting
concept of these tests was explained in Societes Des Produits Nestle, S.A. v. Dy,
Jr., thus:
x x x. The dominancy test focuses on the similarity of the main, prevalent or
essential features of the competing trademarks that might cause confusion.
Infringement takes place when the competing trademark contains the essential
features of another. Imitation or an effort to imitate is unnecessary. The question is
whether the use of the marks is likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and
packaging, in determining confusing similarity. The focus is not only on the
predominant words but also on the other features appearing on the labels.16
As to what test should be applied in a trademark infringement case, we said in
McDonald’s Corporation v. Macjoy Fastfood Corporation17 that:
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each case
must be decided on its merits. In such cases, even more than in any other
litigation, precedent must be studied in the light of the facts of the particular case.
That is the reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point.
The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18
which involved an alleged trademark infringement of jeans products, is worth
referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the United
States of America, claimed that Emerald Garment’s trademark of "STYLISTIC MR.
LEE" that it used on its jeans products was confusingly similar to the "LEE"
trademark that H.D. Lee used on its own jeans products. Applying the holistic test,
the Court ruled that there was no infringement.
The holistic test is applicable here considering that the herein criminal cases also
involved trademark infringement in relation to jeans products. Accordingly, the
jeans trademarks of Levi’s Philippines and Diaz must be considered as a whole in
determining the likelihood of confusion between them. The maong pants or jeans
made and sold by Levi’s Philippines, which included LEVI’S 501, were very
popular in the Philippines. The consuming public knew that the original LEVI’S 501
jeans were under a foreign brand and quite expensive. Such jeans could be
purchased only in malls or boutiques as ready-to-wear items, and were not
4
available in tailoring shops like those of Diaz’s as well as not acquired on a "made-
to-order" basis. Under the circumstances, the consuming public could easily
discern if the jeans were original or fake LEVI’S 501, or were manufactured by
other brands of jeans. Confusion and deception were remote, for, as the Court has
observed in Emerald Garments:
First, the products involved in the case at bar are, in the main, various kinds of
jeans. These are not your ordinary household items like catsup, soy sauce or soap
which are of minimal cost. Maong pants or jeans are not inexpensive. Accordingly,
the casual buyer is predisposed to be more cautious and discriminating in and
would prefer to mull over his purchase. Confusion and deception, then, is less
likely. In Del Monte Corporation v. Court of Appeals, we noted that:
.... Among these, what essentially determines the attitudes of the purchaser,
specifically his inclination to be cautious, is the cost of the goods. To be sure, a
person who buys a box of candies will not exercise as much care as one who buys
an expensive watch. As a general rule, an ordinary buyer does not exercise as
much prudence in buying an article for which he pays a few centavos as he does
in purchasing a more valuable thing. Expensive and valuable items are normally
bought only after deliberate, comparative and analytical investigation. But mass
products, low priced articles in wide use, and matters of everyday purchase
requiring frequent replacement are bought by the casual consumer without great
care....
Second, like his beer, the average Filipino consumer generally buys his jeans by
brand. He does not ask the sales clerk for generic jeans but for, say, a Levis,
Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable
and familiar with his preference and will not easily be distracted.
Finally, in line with the foregoing discussions, more credit should be given to the
"ordinary purchaser." Cast in this particular controversy, the ordinary purchaser is
not the "completely unwary consumer" but is the "ordinarily intelligent buyer"
considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the
present case. There, the "ordinary purchaser" was defined as one "accustomed to
buy, and therefore to some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception of some
persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is
not found in the deception, or the possibility of deception, of the person who knows
nothing about the design which has been counterfeited, and who must be
indifferent between that and the other. The simulation, in order to be objectionable,
must be such as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to purchase.19
Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and
sold in his tailoring shops. His trademark was visually and aurally different from the
trademark "LEVI STRAUSS & CO" appearing on the patch of original jeans under
the trademark LEVI’S 501. The word "LS" could not be confused as a derivative
from "LEVI STRAUSS" by virtue of the "LS" being connected to the word
"TAILORING", thereby openly suggesting that the jeans bearing the trademark "LS
JEANS TAILORING" came or were bought from the tailoring shops of Diaz, not
from the malls or boutiques selling original LEVI’S 501 jeans to the consuming
public.
There were other remarkable differences between the two trademarks that the
consuming public would easily perceive. Diaz aptly noted such differences, as
follows:
The prosecution also alleged that the accused copied the "two horse design" of the
petitioner-private complainant but the evidence will show that there was no such
design in the seized jeans. Instead, what is shown is "buffalo design." Again, a
horse and a buffalo are two different animals which an ordinary customer can
easily distinguish. x x x.
The prosecution further alleged that the red tab was copied by the accused.
However, evidence will show that the red tab used by the private complainant
indicates the word "LEVI’S" while that of the accused indicates the letters "LSJT"
which means LS JEANS TAILORING. Again, even an ordinary customer can
distinguish the word LEVI’S from the letters LSJT.
xxxx
In terms of classes of customers and channels of trade, the jeans products of the
private complainant and the accused cater to different classes of customers and
flow through the different channels of trade. The customers of the private
complainant are mall goers belonging to class A and B market group – while that
of the accused are those who belong to class D and E market who can only afford
Php 300 for a pair of made-toorder pants.20 x x x.
Moreover, based on the certificate issued by the Intellectual Property Office, "LS
JEANS TAILORING" was a registered trademark of Diaz. He had registered his
trademark prior to the filing of the present cases.21 The Intellectual Property Office
would certainly not have allowed the registration had Diaz’s trademark been
confusingly similar with the registered trademark for LEVI’S 501 jeans.
5
Given the foregoing, it should be plain that there was no likelihood of confusion
between the trademarks involved. Thereby, the evidence of guilt did not satisfy the
quantum of proof required for a criminal conviction, which is proof beyond
reasonable doubt. According to Section 2, Rule 133 of the Rules of Court, proof
beyond a reasonable doubt does not mean such a degree of proof as, excluding
possibility of error, produces absolute certainty. Moral certainty only is required, or
that degree of proof which produces conviction in an unprejudiced mind.
Consequently, Diaz should be acquitted of the charges.

WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of

infringement of trademark charged in Criminal Case No. 00-0318 and Criminal
Case No. 00-0319 for failure of the State to establish his guilt by proof beyond
reasonable doubt.

No pronouncement on costs of suit.

SO ORDERED.

6
G.R. No. 118192 October 23, 1997
PRO LINE SPORTS CENTER, INC., and QUESTOR CORPORATION,
petitioners, vs. COURT OF APPEALS, UNIVERSAL ATHLETICS INDUSTRIAL
PRODUCTS, INC., and MONICO SEHWANI, respondents.
BELLOSILLO, J.:
This case calls for revisit of the demesne of malicious prosecution and its
implications.
This petition stemmed from a criminal case for unfair competition filed by Pro Line
Sports Center, Inc. (PRO LINE) and Questor Corporation (QUESTOR) against
Monico Sehwani, president of Universal Athletics and Industrial Products, Inc.
(UNIVERSAL). In that case Sehwani was exonerated. As a retaliatory move,
Sehwani and UNIVERSAL filed a civil case for damages against PRO LINE and
QUESTOR for what they perceived as the wrongful and malicious filing of the
criminal action for unfair competition against them.
But first, the dramatis personae. By virtue of its merger with A.G. Spalding Bros.,
Inc., on 31 December 1971,1 petitioner QUESTOR, a US-based corporation,
became the owner of the trademark "Spalding" appearing in sporting goods,
implements and apparatuses. Co-petitioner PRO LINE, a domestic corporation, is
the exclusive distributor of "Spalding" sports products in the Philippines.2
Respondent UNIVERSAL, on the other had, is a domestic corporation engaged in
the sale and manufacture of sporting goods while co-respondent Monico Sehwani
is impleaded in his capacity as president of the corporation.
On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General Manager of
PRO LINE, sent a letter-complaint to the National Bureau of Investigation (NBI)
regarding the alleged manufacture of fake "Spalding" balls by UNIVERSAL. On 23
February 1981 the NBI 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 QUESTOR, to file with the Court
of Appeals a joint petition for certiorari and prohibition with preliminary injunction
(CA G.R. No. 12413) seeking the annulment of the order of 28 April 1981. On 18
May 1981, the appellate court issued a temporary restraining order enjoining
Judge Vera from implementing her latest order.
Meanwhile, on 26 February 1981, PRO LINE and QUESTOR filed a criminal
complaint for unfair competition against respondent Monico Sehwani together with
Robert, Kisnu, Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los Reyes
before the Provincial Fiscal of Rizal (I. S. No. 81-2040). The complaint was
dropped on 24 June 1981 for the reason that it was doubtful whether QUESTOR
had indeed acquired the registration rights over the mark "Spalding" from A.G.
Spalding Bros., Inc., and complainants failed to adduce an actual receipt for the
sale of "Spalding" balls by UNIVERSAL.3
On 9 July 1981 a petition for review seeking reversal of the dismissal of the
complaint was filed with the Ministry of Justice. While this was pending, the Court
of Appeals rendered judgment on 4 August 1981 in CA G.R. No. 12413 affirming
the order of Judge Vera which lifted the seal and padlock on the machineries of
UNVERSAL. The People, NBI, PRO LINE and QUESTOR challenged the decision
of the appellate court before this Court in G.R. No. 57814. On 31 August 1981 we
issued a temporary restraining order against the Court of Appeals vis-a-vis the
aforesaid decision.
In connection with the criminal complaint for unfair competition, the Minister of
Justice issued on 10 September 1981 a Resolution overturning the earlier
dismissal of the complaint and ordered the Provincial Fiscal of Rizal to file an
Information for unfair competition against Monico Sehwani. The Information was
accordingly filed on 29 December 1981 with then Court of First Instance of Rizal,
docketed as Crim. Case No. 45284, and raffled to Br. 21 presided over by Judge
Gregorio Pineda.
Sehwani pleaded not guilty to the charge. But, while he admitted to having
manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed
that this was only for the purpose of complying with the requirement of trademark
registration with the Philippine Patent Office. He cited Chapter 1, Rule 43 of the
Rules of Practice on Trademark Cases, which requires that the mark applied for be
used on applicant's goods for at least sixty (60) days prior to the filing of the
trademark application and that the applicant must show substantial investment in
the use of the mark. He also disclosed that UNIVERSAL applied for registration
with the Patent Office on 20 February 1981.
7
After the prosecution rested its case, Sehwani filed a demurrer to evidence arguing
that the act of selling the manufactured goods was an essential and constitutive
element of the crime of unfair competition under Art. 189 of the Revised Penal
Code, and the prosecution was not able to prove that he sold the products. In its
Order of 12 January 1981 the trial court granted the demurrer and dismissed the
charge against Sehwani.
PRO LINE and QUESTOR impugned before us in G.R. No. 93055 the dismissal of
the criminal case. In our Resolution of 2 March 1983 we consolidated G.R. No.
63055 with G.R. No. 57814 earlier filed. On 20 April 1983 we dismissed the
petition in G.R. No. 63055 finding that the dismissal by the trial court of Crim. Case
No. 45284 was based on the merits of the case which amounted to an acquittal of
Sehwani. Considering that the issue raised in G.R. No. 58714 had already been
rendered moot and academic by the dismissal of Crim. Case No. 45284 and the
fact that the petition in G.R. No. 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 with the entry of judgment made on 10
August 1983.
Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with the
Regional Trial Court of Pasig4 charging that PRO LINE and QUESTOR maliciously
and without legal basis committed the following acts to their damage and
prejudice: (a) procuring the issuance by the Pasig trial court of Search Warrant No.
2-81 authorizing the NBI to raid the premises of UNIVERSAL; (b) procuring an
order from the same court authorizing the sealing and padlocking of UNIVERSAL's
machineries and equipment resulting in the paralyzation and virtual closure of its
operations: (c) securing a temporary restraining order from the Court of Appeals to
prevent the implementation of the trial court's order of 28 April 1981 which
authorized the lifting of the seal and padlock on the subject machineries and
equipment to allow UNIVERSAL to resume operations; (d) securing a temporary
restraining order from the High Tribunal against the Court of Appeals and charging
the latter with grave abuse of discretion for holding that the order of 28 April 1981
was judiciously issued, thus prolonging the continued closure of UNIVERSAL's
business; (e) initiating the criminal prosecution of Monico Sehwani for unfair
competition under Art. 189 of the Penal Code; and, (g) appealing the order of
acquittal in Crim. Case No. 45284 directly to the Supreme Court with no other
purpose than to delay the proceedings of the case and prolong the wrongful
invasion of UNIVERSAL's rights and interests.
Defendants PRO LINE and QUESTOR denied all the allegations in the complaint
and filed a counterclaim for damages based mainly on the unauthorized and illegal
manufacture by UNIVERSAL of athletic balls bearing the trademark "Spalding."
The trial court granted the claim of UNIVERSAL declaring that the series of acts
complained of were "instituted with improper, malicious, capricious motives and
without sufficient justification." It ordered PRO LINE and QUESTOR jointly and
severally to pay UNIVERSAL and Sehwani P676,000.00 as actual and
compensatory damages, P250,000.00 as moral damages, P250,000.00 as
exemplary damages 5 and P50,000.00 as attorney's fees. The trial court at the
same time dismissed the counterclaim of PRO LINE and QUESTOR.
The Court of Appeals affirmed the decision of the lower court but reduced the
amount of moral damages to P150,000.00 and exemplary damages to
P100,000.00.
Two (2) issues are raised before us: (a) whether private respondents Sehwani and
UNIVERSAL are entitled to recover damages for the alleged wrongful recourse to
court proceedings by petitioners PRO LINE and QUESTOR; and, (b) whether
petitioners' counterclaim should be sustained.
PRO LINE and QUESTOR cannot be adjudged liable for damages for the alleged
unfounded suit. The complainants were unable to prove two (2) essential element
of the crime of malicious prosecution, namely, absence of probable cause and
legal malice on the part of petitioners.
UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was bereft of
probable cause. Probable cause is the existence of such facts and circumstances
as would excite the belief in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty of the crime for
which he was prosecuted.6 In the case before us, then Minister of Justice Ricardo
C. Puno found probable cause when he reversed the Provincial Fiscal who initially
dismissed the complaint and directed him instead to file the corresponding
Information for unfair competition against private respondents herein.7 The
relevant portions of the directive are quoted hereunder:
The intent on the part of Universal Sports to deceive the public and to defraud a
competitor by the use of the trademark "Spalding" on basketballs and volleyballs
seems apparent. As President of Universal and as Vice President of the
Association of Sporting Goods Manufacturers, Monico Sehwani should have
known of the prior registration of the trademark "Spalding" on basketballs and
volleyballs when he filed the application for registration of the same trademark on
February 20, 1981, in behalf of Universal, with the Philippine Patent Office. He was
even notified by the Patent Office through counsel on March 9, 1981, that
"Spalding" was duly registered with said office in connection with sporting goods,
implements and apparatus by A.G. Spalding & Bros., Inc. of the U.S.A.
8
That Universal has been selling these allegedly misbranded "Spalding" balls has
been controverted by the firms allegedly selling the goods. However, there is
sufficient proof that Universal manufactured balls with the trademark "Spalding" as
admitted by Monico himself and as shown by the goods confiscated by virtue of
the search warrant.
Jurisprudence abounds to the effect that either a seller or a manufacturer of
imitation goods may be liable for violation of Section 29 of Rep. Act No. 166
(Alexander v. Sy Bok, 97 Phil. 57). This is substantially the same rules obtaining in
statutes and judicial construction since 1903 when Act No. 666 was approved
(Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) . . . .8
The existence of probable cause for unfair competition by UNIVERSAL is derivable
from the facts and circumstances of the case. The affidavit of Graciano Lacanaria,
a former employee of UNIVERSAL, attesting to the illegal sale and manufacture of
"Spalding " balls and seized "Spalding" products and instruments from
UNIVERSAL's factory was sufficient prima facie evidence to warrant the
prosecution of private respondents. That a corporation other than the certified
owner of the trademark is engaged in the unauthorized manufacture of products
bearing the same trademark engenders a reasonable belief that a criminal offense
for unfair competition is being committed.
Petitioners PRO LINE and QUESTOR could not have been moved by legal malice
in instituting the criminal complaint for unfair competition which led to the filing of
the Information against Sehwani. Malice is an inexcusable intent to injure, oppress,
vex, annoy or humiliate. We cannot conclude that petitioners were impelled solely
by a desire to inflict needless and unjustified vexation and injury on UNIVERSAL's
business interests. A resort to judicial processes is not per se evidence of ill will
upon which a claim for damages may be based. A contrary rule would discourage
peaceful recourse to the courts of justice and induce resort to methods less than
legal, and perhaps even violent.9
We are more disposed, under the circumstances, to hold 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 respect to the trademark in
question. If the process resulted in the closure and padlocking of UNIVERSAL's
factory and the cessation of its business operations, these were unavoidable
consequences of petitioners' valid and lawful exercise of their right. One who
makes use of his own legal right does no injury. Qui jure suo utitur nullum damnum
facit. If damage results from a person's exercising his legal rights, it is damnum
absque injuria. 10
Admittedly, UNIVERSAL incurred expenses and other costs in defending itself
from the accusation. But, as Chief Justice Fernando would put it, "the expenses
and annoyance of litigation form part of the social burden of living in a society
which seeks to attain social control through law." 11 Thus we see no cogent
reason for the award of damages, exorbitant as it may seem, in favor of
UNIVERSAL. To do so would be to arbitrarily impose a penalty on petitioners' right
to litigate.
The criminal complaint for unfair competition, including all other legal remedies
incidental thereto, was initiated by petitioners in their honest belief that the charge
was meritorious. For indeed it was. The law brands business practices which are
unfair, unjust or deceitful not only as contrary to public policy but also as inimical to
private interests. In the instant case, we find quite aberrant Sehwani's reason for
the manufacture of 1,200 "Spalding" balls, i.e., the pending application for
trademark registration UNIVERSAL with the Patent Office, when viewed in the light
of his admission that the application for registration with the Patent Office was filed
on 20 February 1981, a good nine (9) days after the goods were confiscated by the
NBI. This apparently was an afterthought but nonetheless too late a remedy. Be
that as it may, what is essential for registrability is proof of actual use in commerce
for at least sixty (60) days and not the capability to manufacture and distribute
samples of the product to clients.
Arguably, respondents' act may constitute unfair competition even if the element of
selling has not been proved. To hold that the act of selling is an indispensable
element of the crime of unfair competition is illogical because if the law punishes
the seller of imitation goods, then with more reason should the law penalize the
manufacturer. In U.S. v. Manuel, 12 the Court ruled that the test of unfair
competition is whether certain goods have been intentionally clothed with an
appearance which is likely to deceive the ordinary purchasers exercising ordinary
care. In this case, it was observed by the Minister of Justice that the manufacture
of the "Spalding" balls was obviously done to deceive would-be buyers. The
projected sale would have pushed through were it not for the timely seizure of the
goods made by 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 machinery and other equipment installed in the factory.
We nonetheless affirm the dismissal of petitioners' counterclaim for damages. A
counterclaim partakes of the nature of a complaint and/or a cause of action 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
9
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.

SO ORDERED.

10
G.R. No. L-30266 June 29, 1984
UNIVERSAL RUBBER PRODUCTS, INC., petitioner, vs. HON. COURT OF
APPEALS, CONVERSE RUBBER CORPORARION, EDWARDSON
MANUFACTURING 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 to reconsider its order denying the motion to
quash the subpoena duces tecum. This, too, was opposed by the private
respondents. Acting on this motion, as well as on the opposition thereto,
respondent Judge. issued the second controverted order on June 28, 1968,
denying the motion for reconsideration.
Consequently, on August 6, 1968, petitioner Universal Rubber Products, Inc. filed
its present petition for certiorari with preliminary injunction, alleging that in so
denying its motion to quash the subpoena duces tecum and its subsequent motion
for reconsideration, respondent Judge acted with grave abuse of discretion
amounting to an excess of jurisdiction.1
Pending the resolution of the appealed case, the Court of Appeals issued on
September 25, 1968 a temporary restraining order directing the respondent Judge
of the trial court to refrain from implementing his order dated May 6, 1968 in Civil
Case No. 9686. 2
On November 12, 1968, the respondent Court rendered its decision denying the
petition for certiorari filed by petitioner for lack of merit. The dispositive portion of
the said decision reads: 3
WHEREFORE, for lack of merit, the present petition for certiorari with preliminary
injunction is hereby denied and the temporary restraining order issued by this
Court on September 25, 1968 is now lifted, with costs against the petitioner.
SO ORDERED.
Petitioner argues three errors to support his petition, to wit: 4
I
The respondent court erred when it found the fact of the petition and its annexes
as not demonstrating clear abuse of discretion by respondent Judge.
II
The respondent court erred when it refused to sustain the contention of petitioner
that the issuance by the respondent judge of the subpoena duces tecum was an
arbitrary exercise of judicial power.
III
The respondent court erred when it did not consider the subpoena duces tecum
issued by the respondent judge as a fishing bill when it refused to order its
quashal.
11
The issues summarized, We are called upon to answer whether the issuance of
the "subpoena duces tecum" is proper in a suit for unfair competition.
Private respondent claims the affirmative because (1) the subpoena duces tecum
in question specifically designates the books and documents that should be
produced in court and they are 4 sales invoices, sales books and ledgers where
are recorded the sales of Plymouth Star Player Rubber Shoes from the time the
corporation started manufacturing and selling shoes (that is from April 1, 1963) up
to the present; and (2) the relevancy of the books subject to the controverted
subpoena duces tecum cannot be seriously denied, because if and when herein
respondent corporations are ultimately adjudged to be entitled to recover
compensatory damages from the petitioner, there would be no factual basis for the
amount of such damages unless those books and documents are laid open for the
court's scrutiny.
On the other hand, petitioner submits a contrary opinion and insists that the
question of liability of petitioner should be determined first before discovery by
means of a subpoena duces tecum is allowed: that respondent Converse is a
foreign corporation not licensed to do business in the Philippines and that
Edwardson is merely 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 tecum issued by respondent judge was merely a
"Fishing Bill."
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
together with all the records which is sought to be produced in court by the
questioned "subpoena duces tecum" on May 3, 1970. In effect, it renders the
present petition moot and academic. However, the legal principles arising from the
issues deserve Our discussion and resolution.
As a general rule, on obtaining an injunction for infringement of a trademark,
complainant is entitled to an accounting and recovery of defendant's profits on the
goods sold under that mark, as incident to, and a part of, his property right, and
this rule applies in cases of unfair competition. In such case, the infringer or unfair
trader is required in equity to account for and yield up his gains on a principle
analogous to that which charges as trustee with the profits acquired by the
wrongful use of the 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 suffered by him. 6
Well-settled is Our jurisprudence that, in order to entitle a party to the issuance of a
"subpoena duces tecum ", it must appear, by clear and unequivocal proof, that the
book or document sought to be produced contains evidence relevant and material
to the issue before the court, and that the precise book, paper or document
containing such evidence has been so designated or described that it may be
identified. 7 A "subpoena duces tecum once issued by the court may be quashed
upon motion if the issuance thereof is unreasonable and oppressive or the
relevancy of the books, documents or things does not appear, or if the persons in
whose behalf the subpoena is issued fails to advance the reasonable cost of
production thereof. 8
In the instant case, in determining whether the books subject to the subpoena
duces tecum are relevant and reasonable in relation to the complaint of private
respondent for unfair competition, We have to examine Republic Act No. 166,'
which provides:
CHAPTER V.—Rights and Remedies
xxx xxx xxx
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 shag 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 infringment
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 percentage based upon the amount of gross sales of the defendant of
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.
The complaining party, upon proper showing may also be granted injunction.
In recovering the loss suffered by the aggrieved party due to unfair competition,"
Sec. 23 of R.A. 166 grants the complainant three options within which to ascertain
the amount of damages recoverable, either (1) the reasonable profit which the
complaining party would have made, had the defendant not infringed his said
rights; or (2) the profit which the defendant actually made out of the infringement;
or (3) the court may award as damages a reasonable percentage based upon the
amount of gross sales of the defendant of the value of the services in connection
with which the mark or tradename was issued in the infringement of the rights of
the complaining party.
12
In giving life to this remedial statute, We must uphold the order of the court a quo As We said earlier, the establishment of the petitioner burned down together with
denying the motion. of the petitioner to quash the "subpoena duces tecum" all the records sought to be produced by the questioned "subpoena duces tecum,"
previously issued against the petitioner. In a suit for unfair competition, it is only hence this case has become moot and academic. We have no recourse but to
through the issuance of the questioned "subpoena duces tecum " that the dismiss the same.
complaining party is afforded his full rights of redress.
WHEREFORE, the instant petition is DISMISSED for becoming moot and
The argument that the petitioner should first be found guilty unfair competition academic. No costs.
before an accounting for purposes of ascertaining the amount of damages
recoverable can proceed, stands without merit.. The complaint for unfair SO ORDERED.
competition is basically a suit for "injunction and damages". 10 Injunction, for the
purpose of enjoining the unlawful competitor from proceeding further with the
unlawful competition, and damages, in order to allow the aggrieved party to
recover the damage he has suffered by virtue of the said unlawful competition.
Hence, the election of the complainant (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 determine the amount of damages allowable
after the final determination of the unfair labor case would not only render nugatory
the rights of complainant under Sec. 23 of R.A. 166, but would be a repetitious
process causing only unnecessary delay.

The sufficiency in the description of the books sought to be produced in court by

the questioned "subpoena duces tecum is not disputed in this case, hence, We
hold that the same has passed the test of sufficient description.

Petitioner also assails that private respondent is a foreign corporation not licensed
to do business in the Philippines and that respondent Edwardson is merely its
licensee; that respondent Converse has no goodwill to speak of and that it has no
registrable right over its own name. We have already answered this issue squarely
in Our decision of the case of Converse Rubber Corporation vs. Jacinto Rubber &
Plastic Co., Inc., 11 where We explained:

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
business which it has transacted in the Philippine Islands ... On the other hand,
where the purpose of the suit is "to protect its reputation, its corporate name, its
goodwill, whenever that reputation, corporate name or goodwill have, through the
natural development of its trade, established themselves", an unlicensed foreign
corporation may sue in the Philippines. So interpreted by the Supreme Court, it is
clear that Section 29 of the Corporation Law does not disqualify plaintiff-appellee
Converse Rubber, which does not have a branch office in any part of the
Philippines and is not "doing business" in the Philippines, from filing and
prosecuting this action for unfair competition.

13
G.R. Nos. L-27425 & L-30505 April 28, 1980
CONVERSE RUBBER CORPORATION and EDWARDSON MANUFACTURING
CORPORATION, plaintiffs-appellants, vs. JACINTO RUBBER & PLASTICS
CO., INC., and ACE RUBBER & PLASTICS CORPORATION, Defendants-
Appellants.
BARREDO, J.:
Direct appeal in G.R. No. L-27425 by both plaintiffs and defendants from the
decision of the Court of First Instance of Rizal in its Civil Case No. 9380, a case
alleged unfair competition, the dispositive part of which reads:
Upon the foregoing, judgment is hereby rendered:
1. Permanently restraining the defendants, their agents, employees and other
persons acting in their behalf from manufacturing and selling in the Philippines
rubber shoes having the same or confusingly similar appearance as plaintiff
Converse Rubber's Converse Chuck Taylor All Star' rubber shoes, particularly
from manufacturing and selling in the Philippines rubber Shoes with (a) ankle
patch with a five-pointed blue star against a white background, (b) red and blue
bands, (c) white toe patch with raised diamond shaped areas, and (d) brown sole
of the same or similar design as the sole of "Converse Chuck Taylor All Star"
rubber-soled canvas footwear;
2. Ordering defendant Jacinto Rubber & Plastics Company, Inc. to change
the design and appearance of "Custombuilt" shoes in accordance with the
sketch submitted by defendant Jacinto Rubber to plaintiff Converse
Rubber on October 3, 1964 and to desist from using a star both as a
symbol and as a word
3. Ordering defendant Jacinto Rubber & Plastics Company, Inc. to pay
plaintiffs the sum of P160,000.00 as compensatory damages for the years
1962 to 1965 plus 5% of the gross sales of "Custombuilt" shoes from 1966
until defendant Jacinto Rubber & Plastics Company, Inc. stop selling
"Custombuilt" shoes of the present design and appearance;
4. Ordering defendants jointly and severally to pay plaintiffs P10,000.00 as
attorney's fees.
SO ORDERED. (Pages 228-229, Record on Appeal.)
plaintiffs praying for a bigger amount of damages and defendants asking that the
decision be declared null and void for lack of jurisdiction, or, alternatively, that the
same be reversed completely by dismissing the complaint; and another direct
appeal, in G. R. No. L-30505 by above defendant Jacinto Rubber & Plastics Co.,
Inc. and, a new party, Philippine Marketing and Management Corporation from the
same trial court's order in the same main civil case finding them in contempt of
court "in disregarding the permanent injunction" contained in the appealed
decision.
RE G. R. NO L-27425
Being comprehensive and well prepared, We consider it sufficient to quote the
following portions of the impugned decision as basis for the resolution of the
conflicting appeals aforementioned:
This is an action for unfair competition. Plaintiff Converse Rubber Corporation, (is)
an American Corporation, manufacturer (of) canvas rubber shoes under the trade
name "Converse Chuck Taylor All Star"; in the Philippines, it has an exclusive
licensee, plaintiff Edwardson Manufacturing Corporation, for the manufacture and
sale in the Philippines of its product. Plaintiff Converse is the owner of trademarks
and patent, registered with United States Patent Office, covering the words. "All
Star", the representation and design of a five-pointed star, and the design of the
sole. The trademark "Chuck Taylor" was registered by plaintiff Converse with the
Philippines Patent Office on March 3, 1966. Since 1946, "Chuck Taylor" is being
sold in the Philippines. It has been used exclusively by Philippine basketball teams
competing in international competitions. It is also popular among players in various
basketball leagues, like the MICAA and the NCAA, because of its high quality and
attractive style. "Chuck Taylor" currently retails at P46.00 per pair.
Defendant Jacinto Rubber & Plastics Company, Inc., a local corporation, likewise,
manufactures and sells canvas rubber shoes. It sells its product under the trade
names "Custombuilt Viscount", "Custombuilt Challenger", and "Custombuilt
Jayson's". Its trademark "Custombuilt Jayson's" was registered by the Philippines
Patent Office on November 29, 1957. The gross sales from 1962 to 1965 of
"Custombuilt" shoes total P16,474,103.76."Custombuilt" is retailed at P11.00.
In 1963, plaintiff Converse and defendant Jacinto entered into protracted
negotiations for a licensing agreement whereby defendant Jacinto would be the
exclusive license of plaintiff Converse in the Philippines for the manufacture and
sale of "Chuck Taylor" shoes but with the right to continue manufacturing and
selling 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 defendant Jacinto change the design of "Custombuilt" shoes so as to
14
give "Custombuilt" a general appearance different from "Chuck Taylor." After an
extensive discussion, defendant Jacinto gave into to the demand of plaintiff
Converse; it submitted to plaintiff Converse for the latter's approval a sketch of a
new design for "Custombuilt". This design was accepted by plaintiff Converse.
Defendant Jacinto Rubber then proposed that the licensing agreement be made in
favor of its affiliates, defendant Ace Rubber. On January 22, 1965, defendant Ace
Rubber signed the licensing agreement while defendant Jacinto Rubber and Arturo
Jacinto signed the guarantee agreement to secure the performance by defendant
Ace Rubber of its obligations under the licensing agreement. Both documents, it
should be noted, contained the following covenants:
9. (a) Ace acknowledges that Converse is the exclusive owner of the said
Converse - names and design, as used in connection with the manufacture,
advertising and sale of footwear: that Converse has the exclusive right to use said
Converse names in such connection throughout the world. subject to the terms of
this Agreement; and that neither Ace nor any person acting by, through or under
Ace will, at anytime, question or dispute said ownership or the exclusive rights of
Converse with respect thereto
(b) Nothing herein shall be deemed to constitute a warranty by Converse as to the
non-existence of infringements of Converse-names in the Republic of the
Philippines. The term "infringement"as used in this Agreement shall include
practices which give rise to a cause of action for damages or to injunctive relief
under Sections 23 and 29 of R. A. No. 166 of the Republic of the Philippines or any
other applicable law of said Republic. During the term thereof, Ace at its expense
shall diligently investigate all infringements of the use of said Converse-names,
whether or not such infringements violate laws pertaining to the registration of
trademarks or trade names, and shall notify Converse promptly as to any
infringements of said Converse names within said territory, and shall at its expense
use its best efforts to prevent such infringements by an reasonable means,
including the prosecution of litigation where necessary or advisable. Any award for
damages which Ace may recover in such litigation shall accrue to the benefit of,
and shall be owned and retained by Ace.
14. Ace shall not,during the term hereof, manufacture or sell footwear which would,
by reason of its appearance and/or design, be likely, or tend, to be confused by the
public with any of the Converse-named products to be manufactured and sold
hereunder, or shall in any manner, infringe Converse designs. If at any time and
from time to time the manufacture of footwear under Converse-names for sale
hereunder does not fully utilize Ace's production capacity, Ace shalt on Converse's
order, within the limits of such surplus capacity, manufacture footwear of kinds and
in amounts specified by Converse, at a price no higher than the lowest price at
which similar footwear has been sold to customer of Ace during the period of one
(1) year immediately preceding the date of such order, and upon no less favorable
discounts and terms of sale than similar footwear is customarily offered by Ace to
its most favored customer, payable in United States funds, if the earned royalty
hereunder is then so payable, otherwise in Republic of the Philippines funds.
20. It being the mutual intention of the parties that Converse's exclusive property
interests in the Converse-names shall at all times be protected to the full extent of
the law, Ace agrees that it will execute all amendments to this Agreement which
may be proposed from time to time by Converse for the purpose of fully protecting
said interests.
However, the licensing agreement did not materialize, because Hermogenes
Jacinto refused to sign the guarantee.
Plaintiff Converse and plaintiff Edwardson then executed licensing agreement,
making plaintiff Edwardson the exclusive Philippine licensee for the manufacture
and sale of "Chuck Taylor." On June 18, 1966, plaintiffs sent a written demand to
defendants to stop manufacturing and selling "Custombuilt" shoes of Identical
appearance as "Chuck Taylor". Defendants did not reply to plaintiffs' letter. Hence,
this suit.
Plaintiffs contend that "Custombuilt" shoes are Identical in design and General
appearance to "Chuck Taylor" and, claiming prior Identification of "Chuck Taylor" in
the mind of the buying public in the Philippines, they contend that defendants are
guilty of unfair competition by selling "Custombuilt" of the design and with the
general appearance of "Chuck Taylor". The design and appearance of both
products, as shown by the samples and photographs of both products, are not
disputed. Defendants insist that (a) there is no similarity in design and general
appearance between "Custombuilt" and "Chuck Taylor", pointing out that
"Custombuilt" is readily Identifiable by the tradename "Custombuilt" appearing on
the ankle patch, the heel patch, and on the sole. It is also vigorously contended by
defendants that the registration of defendant Jacinto Rubber's trademark
"Custombuilt" being prior to the registration in the Philippines of plaintiff Converse
Rubber's trademark "Chuck Taylor", plaintiffs have no cause of action. It appears
that defendant started to manufacture and sell "Custombuilt" of its present design
and with its present appearance in 1962. On the other hand, as earlier mentioned,
"Chuck Taylor" started to be sold in the Philippines in 1946 and has been enjoying
a reputation for quality among basketball players in the Philippines.
The Court sees no difficulty in finding that the competing products are Identical in
appearance except for the trade names. The respective designs, the shapes and
the color of the ankle patch, the bands, the toe patch and the sole of the two
products are exactly the same. At a distance of a few meters, it is impossible to
15
distinguish Custombuilt' from "Chuck Taylor". The casual buyer is thus liable to
mistake one for the other. Only by a close-examination and by paying attention to
the trade names will the ordinary buyer be able to tell that the product is either
"Custombuilt" or "Chuck Taylor", as the case may be. Even so, he will most likely
think that the competing products, because they are strikingly Identical in design
and appearance are manufactured by one and the same manufacturer. Clearly,
this case satisfied the test of unfair competition. Priority in registration in the
Philippines of a trademark is not material in an action for unfair competition as
distinguished from an action for infringement of trademark. The basis of an action
for unfair competition is confusing and misleading similarity in general appearance,
not similarity of trademarks.
The Court is not impressed by defendants' good faith in claiming that they have the
right to continue manufacturing "Custombuilt" of Identical design and appearance
as "Chuck Taylor". While it is true that the licensing agreement between plaintiff
Converse and defendant did not materialize, the execution of the documents by
the defendants constitute an admission on the part of plaintiff Converse Rubber's
property right in design and appearance of "Chuck Taylor". The covenants, quoted
above, show that defendants acknowledged that plaintiff Converse Rubber "is the
exclusive owner of the said Converse-names and design." Defendants further
covenanted not to "manufacture or sell footwear which would by reason of its
appearance and/or design, be likely, or tend, to be confused by the public with any
of the Converse-named products ... or shall, in any manner, infringe Converse
designs". That defendants are fully aware that "Custombuilt" is Identical in design
and appearance to "Chuck Taylor" has conclusively been admitted by them in their
correspondence with plaintiff Converse leading to the submission by defendants to
plaintiff Converse of a sketch of a new design that should give "Custombuilt" an
appearance different from that of "Chuck Taylor".
Aside from the written admission of defendants, the facts clearly indicate that
defendants copied the design of "Chuck Taylor" with intent to gain "Chuck Taylor",
as has been noted earlier, was ahead ot Custombuilt' in the Philippines market and
has been enjoining a high reputation for quality and style. Even defendants' own
exhibits leave no room for doubt that defendants copied the design and
appearance of "Chuck Taylor" for the purpose of cashing in on the reputation of
"Chuck Taylor". The samples of defendants' product show, indeed, as announced
by defendants' counsel the "metamorphosis" of defendants' product. In the
beginning, the design of defendants' product was entirely different from its present
design and the design of "Chuck Taylor". It was only in 1962, or 16 years after
"Chuck Taylor" has been in the market, that defendants adopted the present
design of "Custombuilt". It is also 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 surprisingly, the volume of sales of
"Custombuilt" increased from 35% to 75% of defendants' total sales after they
incorporated in their product the design and appearance of "Chuck Taylor".
It is thus clear that defendants are guilty of unfair competition by giving
"Custombuilt" the same general appearance as "Chuck Taylor". It is equally clear
that defendants in so doing are guilty of bad faith. There remains for the Court to
consider the damages that defendants should be liable for to plaintiffs. Plaintiffs
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, the gross sales of "Custombuilt" from 1962, the year defendants
adopted the present design of their product, to 1965 total P16,474,103.76. If the
Court should grant plaintiffs' prayer for compensatory damages equivalent to 30%
of defendants' gross sales, the compensatory damages would amount to
P4,942,231.13. Considering the amount of gross sales of "Custombuilt", an award
to plaintiffs for 30% of defendants' annual gross sales would seriously ripple, if not
bankrupt, defendant companies. The Court is aware that defendants' investment is
substantial and that defendants support a substantial number of employees and
laborers. This being so, the Court is of the opinion that plaintiffs are entitled to only
one (1) per cent of annual gross sales of "Custombuilt" shoes of current design. As
for attorney s fees, the Court is of the opinion that, P10,000.00 is reasonable.
(Pages 217-228, Record on Appeal.)
Defendants-appellants have assigned the following alleged errors:
I
THE COURT A QUO ERRED IN ASSUMING JURISDICTION OVER THE
COMPLAINT OF PLAINTIFFS-APPELLEES.
THE COURT A QUO ERRED IN ARRIVING AT THE CONCLUSION THAT THE
DEFENDANTS ARE GUILTY OF UNFAIR COMPETITION WHEN DEFENDANT
JACINTO RUBBER & PLASTICS CO., INC., MANUFACTURED AND SOLD
RUBBER-SOLED CANVASS SHOES UNDER ITS REGISTERED TRADE MARK
"CUSTOMBUILT".
THE COURT A QUO ERRED IN ADJUDICATING IN FAVOR OF THE PLAINTIFF
THE SUM OF P160,000.00 AS COMPENSATORY DAMAGES AND P10,000.00
AS ATTORNEY'S FEES. (Pp. A & B, Brief for Defendants-Appellants.)
We have carefully gone over the records and reviewed the evidence to satisfy
Ourselves of the similarity of the shoes manufactured and sold by plaintiffs with
those sold by defendants, and We find the conclusions of the 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 kinds of
16
shoes in question is concerned. We have Ourselves examined the exhibits in
detail, particularly, the comparative pictures and other representations if the shoes
in question, and We do not hesitate in holding that he plaintiffs complaint of unfair
competition is amply justified.
From said examination, We find the shoes manufactured by defendants to contain,
as found by the trial court, practically all the features of those of the plaintiff
Converse Rubber Corporation and manufactured, sold or marketed by plaintiff
Edwardson Manufacturing Corporation, except for heir respective brands, of
course. We fully agree with the trial court that "the respective designs, shapes, the
colors of the ankle patches, the bands, the toe patch and the soles of the two
products are exactly the same ... (such that) at a distance of a few meters, it is
impossible to distinguish "Custombuilt" from "Chuck Taylor". These elements are
more than sufficient to serve as basis for a charge of unfair competition. Even if not
all the details just mentioned were Identical, with the general appearances alone of
the two products, any ordinary, or even perhaps even a not too perceptive and
discriminating customer could be deceived, and, therefore, Custombuilt could
easily be passed off for Chuck Taylor. Jurisprudence supports the view that under
such circumstances, the imitator must be held liable. In R. F. & J. Alexander & Co.
Ltd. et al. vs. Ang et al., 97 Phil. 157, at p. 160, this Court held:
By "purchasers" and "public" likely to be deceived by the appearance of the goods,
the statute means the "ordinary purchaser". And although this Court apparently
shifted its position a bit in Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, by referring to
simulations likely to mislead "the ordinarily intelligent buyer", it turned to the
general accepted doctrine in E. Spinner & Co. vs. Neuss Hesslein, 54 Phil. 224,
where it spoke of "the casual purchasers" "who knows the goods only by name."
It stands to reason that when the law speaks of purchasers' it generally refers to
ordinary or average purchasers.
... in cases of unfair competition, while the requisite degree of resemblance or
similarity between the names, brands, or other indicia is not capable of exact
definition, it may be stated generally that the similarity must be such, but need only
be such, as is likely to mislead purchasers of ordinary caution and prudence; or in
other words, the ordinary buyer, into the belief that the goods or wares are those,
or that the name or business is that, of another producer or tradesman. It is not
necessary in either case that the resemblance be sufficient to deceive experts,
dealers, or other persons specially familiar with the trademark or goods involved.
Nor is it material that a critical inspection and comparison would disclose
differences, or that persons seeing the trademarks or articles side by side would
not be deceived (52 Am. Jur. pp. 600-601). (Brief for Plaintiffs as Appellees, pp.
28-29, p. 71, Record.)
Indeed, the very text of the law on unfair competition in this country is clear
enough. It is found in Chapter VI of Republic Act 166 reading thus:
SEC. 29. Unfair competition, rights and remedies. - A person who has Identified in
the mind of the public the goods he manufactures or deals in, his business or
services from those of others, whether or not a mark or trade name 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 other property rights.
Such a person shall have the remedies provided in section twenty-three, Chapter
V hereof.
Any person who shall employ deception or any other means contrary to good faith
by which he shall pass off the goods manufactured by him or in which he deals, or
his business, or services of those of the one having established 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.
In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in
the wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer
or dealer other than the actual manufacturer or dealer, or who otherwise clothes
the goods with such appearance as shall deceive the public and defraud another
of his legitimate trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose;
(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 who has Identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to discredit
the goods, business or services of another.
It is the theory of defendants-appellants, however, that plaintiffs-appellees have
failed to establish a case of unfair competition because "inasmuch as the former
(Converse Chuck Taylor) was not sold in the local markets from 1949 to 1967, no
competition, fair or unfair, could have been offered to it by the latter product
(Custombuilt Challenger) during the said period." While the argument, it may be
17
conceded, makes sense as a proposition in practical logic, as indeed, it served as
a legal defense in jurisprudence in the past, the modern view, as contended by
plaintiffs "represents a tendency to mold, and even to expand; legal remedies in
this field to conform to ethical practices." (Brief of Plaintiffs as Appellees, pp. 16-
17.) As a matter of fact, in Ang vs. Toribio, 74 Phil. 129, this Court aptly pointed
out:
... As trade has developed and commercial changes have come about, the law of
unfair competition has expanded to keep pace with the times and the elements of
strict competition in itself has ceased to be the determining factor. The owner of a
trademark or trade-name has property right in which he is entitled to protection,
since there is damage to him from confusion of reputation or goodwill in the mind
of the public as well as from confusion of goods. The modern trend is to give
emphasis to the unfairness of the acts and to classify and treat the issue as fraud.
Additionally, We quote with approval counsel's contention thus:
In no uncertain terms, the statute on unfair competition extends protection to the
goodwill of a manufacturer or dealer. It attaches no fetish to the word
"competition". In plain language it declares that a "person who has Identified in the
public the goods he manufactures or deals in, his business or services from those
of others, whether or not a right in the goodwill of the said goods, business or
services so Identified, which will be protected in the same manner as other
property rights." It denominates as "unfair competition" "any acts" calculated to
result in the passing off of other goods "for those of the one having established
such goodwill." Singularly absent is a requirement that the goodwill sought to be
protected in an action for unfair competition must have been established in an
actual competitive situation. Nor does the law require that the deception or other
means contrary to good faith or any acts calculated to pass off other goods for
those of one who has established a goodwill must have been committed in an
actual competitive situation.
To read such conditions, as defendants-appellants seek to do, in the plain
prescription of the law is to re-construct it. Indeed, good-will established in other
than a competitive milieu is no less a property right that deserves protection from
unjust appropriation or injury. This, to us, is precisely the clear sense of the law
when it declares without equivocation that a "person who has Identified in the mind
of the public the goods he manufactures or deals in, his business or services from
those of others, 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 other
property rights."
Plaintiffs-appellees have a established goodwill. This goodwill, the trial court found,
defendants-appellants have pirated in clear bad faith to their unjust enrichment. It
is strange that defendants-appellants now say that they should be spared from the
penalty of the law, because they were not really in competition with plaintiffs-
appellees. (Pp. 21-22, Id.)
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
Converse Rubber Corporation is a non-resident corporation, it has no legal right to
sue in the courts of the Philippines, citing Marshall-Wells Co. vs. Elser & C ., 46
Phil. 70 and Commissioner of Internal Revenue vs. United States Lines Co., G. R.
No. L-16850, May 30, 1962 (5 SCRA 175) and, furthermore, that plaintiff
Edwardson Manufacturing Corporation, although "a domestic corporation, is
nothing but a licensee of Converse Rubber Corporation in the local manufacturing,
advertisement, sale and distribution of the rubber-soled footwear", hence, it is
equally without such personality. (p. 18, Brief of Defendants-Appellants).
We are not impressed. The easy and, We hold to be correct, refutation of
defendants' position is stated adequately and understandably in plaintiffs' brief as
appellees as follows:
The disability under Section 69 of the Corporation Law of an unlicensed foreign
corporation refers to transacting business in the Philippines and maintaining a "suit
for the recovery of any debt, claim, or demand whatever" arising from its
transacting business in the Philippines. In Marshall-Wells, this Court precisely
rejected a reading of Section 69 of the Corporation Law as "would give it a literal
meaning", i.e., "No foreign corporation shall be permitted by itself or assignee any
suit for the recovery of any deed, claim, or demand unless it shall have the license
prescribed by Section 68 of the Law." "The effect of the statute," declared this
Court, "preventing foreign corporations from doing business and from bringing
actions in the local courts, except on compliance with elaborate requirements,
must not be unduly extended or improperly applied (at page 75). In Commissioner
of Internal Revenue v. United States Lines Company, this Court did not hold that
an unlicensed foreign corporation may not sue in the Philippines. The Court simply
held that a foreign shipping company, represented by a local agent, is doing
business in the Philippines so as to subject it to the "operation of our revenue and
tax."
Western Equipment and Supply Co. v. Reyes, 51 Phil. 115, made clear that the
disability of a foreign corporation from suing in the Philippines is limited to suits "to
enforce any legal or contract rights arising from, or growing out, of any business
which it has transacted in thePhilippine Islands." ... On the other hand, where the
purpose of a suit is "to protect its reputation, its corporate name, its goodwill,
18
whenever that reputation, corporate name or goodwill have, through the natural
development of its trade, established themselves," an unlicensed foreign
corporation may sue in the Philippines (at page 128). So interpreted by the
Supreme Court, it is clear that Section 69 of the Corporation Law does not
disqualify plaintiff-appellee Converse Rubber, which does not have a branch office
in any part of the Philippines and is not "doing business" in the Philippines (Record
on Appeal, pp. 190-191), from filing and prosecuting this action for unfair
competition.
The futility of the error assigned by defendants-appellants becomes more evident
in light of the explicit provision of Section 21 (a) of Republic Act No. 166, as
amended, that a foreign corporation, whether or not licensed to transact business
in the Philippines may bring an action for unfair competition provided the country of
which it "is a citizen, or in which it is domiciled, by treaty, convention or law, grants
a similar privilege to juristic persons in the Philippines." The Convention of Paris
for the Protection of Industrial Property, to which the Philippines adheres, provides,
on a reciprocal basis that citizens of a union member may file an action for unfair
competition and infringement of trademarks, patents, etc. (610. G. 8010) in and of
the union members. The United States of America, of which Converse Rubber is a
citizen, is also a signatory to this Convention. Section 1126 (b) and (h) of Public
Law 489 of the United States of America allows corporations organized under the
laws of the Philippines to file an action for unfair competition in the United States of
America, whether or not it is licensed to do business in the United States. (Annex
"H" of Partial Stipulation of Facts, Record on Appeal, p. 192).
As regards the other plaintiff-appellee, Edwardson Manufacturing Corporation, it is
indisputable that it has a direct interest in the success of this action: as exclusive
licensee of Converse Rubber in the manufacture and sale of "Chuck Taylor" shoes
in the Philippines, naturally it would be directly affected by the continued
manufacture and sale by defendants-appellants of shoes that are confusingly
Identical in appearance and design with "Chuck Taylor." (Brief of Plaintiffs as
Appellees, pp. 11-14.)
As can be seen, what is actually the only controversial matter in this case is that
which refers to the assessment ot damages by the trial court, which both plaintiffs
and defendants consider erroneous, defendants maintaining, of course, that it is
excessive, even baseless, while, on the other hand, plaintiffs posit that it is far
short from what the law and the relevant circumstances require.
Under Section 29 of the Republic Act 166, aforequoted, it will be observed that the
first paragraph thereof refers to the property rights in goodwill of a "person who has
Identified in the mind of the public goods he manufactures or deals in, his business
or offices from those of others, whether or not a mark or trade name is employed",
while the second paragraph speaks of "any person who shall employ deception or
any other means contrary to good faith by which he shall pass off the goods
manufactured by him ... for those of the one having established such goodwill."
This second paragraph, which may be read together with the first paragraph,
makes the deceiver or imitator "guilty of unfair competition and shall be subjected
to an action therefore", meaning what the first paragraph refers to as the "remedies
provided in Section twenty-three, Chapter V" of the Act. It is implicit in the decision
of the trial court and the briefs of the parties that everyone here concerned has
acted on the basis of the assumptions just stated.
Now, Section 23 reads:
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, then the court
may award as damages a reasonable percentage based upon the amount of gross
sales of the defendant of 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.
The complaining party, upon proper showing, may also be granted injunction.
In the light of the foregoing provision, We find difficulty in seeing the basis of the
trial court for reducing the 30%, claimed by plaintiffs, of the gross earnings of
defendants from the sale of Custombuilt from 1962 to merely 1% as the measure
of compensatory damages to which plaintiffs are entitled for that period. Perhaps,
as His Honor pessimistically argued, defendants would suffer crippling of their
business. But it is quite clear from the circumstances surrounding their act of
deliberately passing off the rubber shoes produced by them for those over which
plaintiffs had priorly established goodwill, that defendants had tremendously
increased their volume of business and profits in the imitated shoes and have
precisely incurred, strictly speaking, the liability of the damages to be paid by them
be doubled, per the last sentence of Section 23.
We are of the considered opinion that the trial court was overly liberal to the
defendants-appellants. The P160,000.00 awarded by His Honor as compensatory
damages for the years 1962 to 1965 are utterly inadequate. Even the 5% of the
19
gross sales of "Custombuilt" shoes from 1966 until its injunction is fully obeyed are
short of what the law contemplates in cases of this nature. We hold that
considering that the gross sales of defendants-appellants increased to
P16,474,103.76, (as admitted in defendants-appellants' own brief, p. 2), only 75%
of which, plaintiffs-appellants generously assert corresponded to Custombuilt
sales, it would be but fair and just to award plaintiffs-appellants 15% of such 75%
as compensatory damages from 1962 up to the finality of this decision. In other
words, 75% of P16,474,103.76 would be P12,355,577.82 and 15% of this last
amount would be P1,853,336.67, which should be awarded to plaintiffs-appellants
for the whole period 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-appellants continue to disobey the injunction
herein affirmed after the finality of this decision.
We feel that this award is reasonable. It is not farfetched to assume that the net
profit of the imitator which, after all is what the law contemplates as basis for
damages if it were only actually ascertainable, in the manufacture of rubber shoes
should not be less than 20 to 25% of the gross sales. Regrettably, neither of the
parties presented positive evidence in this respect, and the Court is left to use as
basis its own projection in the light of usual business practices. We could, to be
sure, return this case to the lower court for further evidence on this point, but,
inasmuch as this litigation started way back about fourteen years ago and it would
take more years before any final disposition is made hereof should take the
course, We are convinced that the above straight computation, without any penalty
of interest, is in accordance with the spirit of the law governing this case.
In re G. R. No. L-30505
The subject matter of this appeal is the order of the trial court, incident to its main
decision We have just reviewed above, dismissing "for lack 6f jurisdiction the
contempt charge filed by plaintiffs against defendant Jacinto Rubber & Plastics Co.
Inc., Ace Rubber & Plastics Corporation; Philippine & Management Corporation
and their respective corporate officers.
Importantly, it is necessary to immediately clear up the minds of appellees in
regard to some aspects of the argument on double jeopardy discussed by their
distinguished counsel in his preliminary argument in his brief (pp. 9-13). It is
contended therein that inasmuch as the denial orders of August 23, 1967,
December 29, 1967 and January 24, 1968 have the character of acquittals,
contempt proceedings being criminal in nature, this appeal subjects appellees to
double jeopardy. Such contention misses, however, the important consideration
that the said denial orders, were, as explained by His Honor himself in his last two
orders, based on the assumption that he had lost jurisdiction over the incident by
virtue of the earlier perfection of the appeals of both parties from the decision on
the merits.
It is thus the effect of this assumption, revealed later by the trial judge, on the first
order of August 23, 1967 that needs clarificatory disquisition, considering that the
said first order was exclusively based on "the interests of justice" and "lack of
merit" and made no reference at all to jurisdiction. If indeed the trial court had lost
jurisdiction, it would be clear that said order could have no legal standing, and the
argument of double jeopardy would have no basis.
But after mature deliberation, and in the light of Cia General de Tabacos de
Filipinas vs. Alhambra Cigar & Cigarette Manufacturing Co., 33 Phil. 503, cited by
appellant's counsel in his brief, We are convinced that the trial court in the case at
bar had jurisdiction to entertain and decide the motion for contempt in question.
Indeed, the enforcement of either final or preliminary-made-final injunctions in
decisions of trial courts are immediately executory. The reason for this rule lies in
the nature itself of the remedy. If a preliminary injunction, especially one issued
after a hearing is enforceable immediately to protect the rights of the one asking
for it, independently of the pendency of the main action, there is no reason why
when that preliminary injunction is made final after further and fuller hearing the
merits of the plaintiff's cause of action, its enforceability should lesser, force. The
same must be true with stronger basis in the case of a permanent injunction issued
as part ot the judgment. The aim is to stop the act complained of immediately
because the court has found it necessary to serve the interests of justice involved
in the litigation already resolve by it after hearing and reception of the evidence of
both parties.
As a matter ot fact, it is quite obvious that an action for unfair competition with
prayer for an injunction partakes of the nature of an action for injunction within the
contemplation of Section 4 of Rule 39, and this cited provision states explicitly that
"unless otherwise ordered by the court, a judgment in an action for injunction -
shall not be stayed after its rendition and before an appeal is taken or during the
pendency of an appeal." In the above-mentioned case of Cia. General de Tabacos,
the Court held:
The applicant contends here: First, that the injunction is indefinite and uncertain to
such an extent that a person of ordinary intelligence would be unable to comply
with it and still protect his acknowledged rights; second, that the injunction is void
for the reason that the judgment of the court on which it 's based is not responsive
to the pleadings or to the evidence in the case and has nothing in the record to
support it; third, that the court erred in assuming jurisdiction and fining defendant
after an appeal had been taken from the judgment of the court and the perpetual
20
injunction issued thereon. There are other objections that need no particular
discussion.
Discussing these questions generally it may be admitted, as we stated in our
decision in the main case (G. R No. 10251, ante p. 485) that, while the complaint
set forth an action on a trade-name and for unfair competition, accepting the
plaintiff's interpretation of it, the trial court based its judgment on the violation of a
trade-mark, although the complaint contained no allegation with respect to a trade-
mark and no issue was joined on that subject by the pleadings and no evidence
was introduced on the trial with respect thereto. There Aas however, some
evidence in the case with respect to the plaintiff's ownership of the trade-name
"Isabela," for the violation of which the plaintiff was suing, and there was some
evidence which might support an action of unfair competition, if such an action
could be sustained under the statute. Therefore, although the judgment of the trial
court was based on the violation of a trade-mark, there was some evidence to
sustain the judgment if it had been founded on a violation of the trade-name or on
unfair competition. The judgment, as we have already found in the main case, was
erroneous and was reversed for that reason; but having some evidence to sustain
it, it was not void and the injunction issued in that action was one which the court
had power to issue. Although the judgment was clearly erroneous and without
basis in law, it was, nevertheless a judgment of a court of competent jurisdiction
which had authority to render that particular judgment and to issue a permanent
injunction thereon.
xxx xxx
... The question is not was the judgment correct on the law and the facts, but was it
a valid judgment? If so, and if the injunction issued thereon was definite and
certain and was within the subject matter of the judgment, the defendant was
bound to obey it, however erroneous it may have been. (Pp. 505-506, 506, 33
Phil.)
It is interesting to note that while the trial court was of the opinion that it had lost
jurisdiction over the motion for contempt, upon insistence of the plaintiffs, in its
order of January 24, 1968, it made the following findings of fact: chanrobles virtual
law library
It is not controverted on December 14, 1966, the Philippine Marketing and
Management sold to Virginia Ventures 12 pairs of "Custombuilt" rubber shoes
bearing an Identical design and general appearance as that prohibited in the
injunction. It is likewise not controverted that subsequent to December 14, 1966
the sale of the said rubber shoes was advertised by Philippine Marketing and
Management Corporation in several metropolitan newspapers even during the
pendency of the contempt proceedings.
The only issue of fact is whether or not in selling and advertising the sale of the
prescribed shoes the Philippine Marketing and Management Corporation
conspired with the defendants, particularly defendant Jacinto Rubber, or acted as
its agent, employee or in any other capacity with knowledge of the issuance of the
said permanent injunction. On this point, the evidence of the plaintiffs shows that
Hermogenes Jacinto, Arturo Jacinto, Fernando Jacinto and Milagros J. Jose
constitute the majority of the board of directors of the Philippine Marketing and
Management Corporation; that Hermogenes Jacinto is the president, Arturo
Jacinto is the vice-president, and Fernando Jacinto and Milagros J. Jose are
directors, of defendant Jacinto Rubber; that Milagros J. Jose is the treasurer of the
Philippine Marketing and Management Corporation; and that Ramon V. Tupas,
corporate secretary of the Philippine Marketing and Management Corporation,
actively assisted by Atty. Juan T. David, counsel of record of the defendants, in
defending the defendants in this case. It also appears from the different
advertisements published in the metropolitan papers that Philippine Marketing and
Management Corporation is the exclusive distributor of the questioned
"Custombuilt" rubber shoes. Moreover, during the trial of this case on the merits
the defendants admitted that the Philippine Marketing and Management
Corporation is a sister corporation of defendant Jacinto Rubber, both corporations
having Identical stockholders, and Hermogenes Jacinto and Fernando Jacinto are
stockholders and incorporators of the Philippine Marketing and Management
Corporation.
On the other hand, the defendants, particularly defendant Jacinto Rubber,
presented no evidence to disprove its intra-corporate relationship with the
Philippine Marketing and Management Corporation. Instead it presented, over the
objection of the plaintiffs, the affidavit of its executive vice-president, Geronimo
Jacinto, who affirmed that defendant Jacinto Rubber had no knowledge of, or
participation in, the acts complained of in the motion to declare them in contempt
of Court and that it has not in any way violated any order of this Court. On its part,
the Philippine Marketing and Management Corporation presented as a witness its
general manager, Aniceto Tan, who testified that the Philippine Marketing and
Management Corporation is not an agent or sister corporation of defendant Jacinto
Rubber; that he came to know of the pendency of this case and the issuance of the
permanent injunction only on December 19, 1966 when served with a copy of
plaintiffs' motion; and that the Philippine Marketing and Management Corporation
buys the "Custombuilt Rubber" shoes from defendant Jacinto Rubber which it
resells to the general public. It is noteworthy, however, that this particular witness
made several admissions in the course of his testimony which shed light on the
question at issue. Thus, he admitted that prior to the formal organization of the
21
Philippine Marketing and Management Corporation in January 1966 he was the
sales manager of defendant Jacinto Rubber; that after the organization of the said
corporation, he was informed that defendant Jacinto Rubber would discontinue its
sales operations and instead give the exclusive distribution of the shoes to the
Philippine Marketing and Management Corporation; and that he was then offered
the position of sales manager of Philippine Marketing and Management because of
his extensive experience in the distribution of "Custombuilt" rubber shoes. Also, he
testified that the subscribed capital stock of the Philippine Marketing and
Management Corporation is only P100,000.00 out of which P25,000.00 has been
paid whereas its average monthly purchases of "Custombuilt" rubber shoes is
between P300,000.00 to P400,000.00 or between P4,000,000.00 to P5,000,000.00
annually. Such huge purchases Philippine Marketing and Management
Corporation is able to make, in spite of its meager capital, because defendant
Jacinto Rubber allows it to buy on credit.
Considering the substantial Identity of the responsible corporate officers of the
defendant Jacinto Rubber and the Philippine Marketing and Management
Corporation, the huge volume of alleged purchases of "Custombuilt" shoes by the
Philippine Marketing and Management Corporation compared to its paid in capital,
and the cessation of the sales operations of defendant Jacinto Rubber after the
organization of the former, the Court is convinced beyond reasonable doubt that
the Philippine Marketing and Management Corporation is the selling arm or branch
of defendant Jacinto Rubber and that both corporations are controlled by
substantially the same persons, the Jacinto family. The contention of the Philippine
Marketing and Management Corporation that it sold the 12 pairs of "Custombuilt"
shoes on December 14, 1966 without knowledge of the issuance of the injunction
is belied by its conduct of continuing the sale and the advertisement of said shoes
even during the pendency of the contempt proceedings. This conduct clearly
reveals the wilfulness and contumacy with which it had disregarded the injunction.
Besides, it is inherently improbable that defendant Jacinto Rubber and Atty.
Ramon B. Tupas did not inform the Philippine Marketing and Management
Corporation of the issuance of the injunction, a fact which undoubtedly has a
material adverse effect on its business.
Upon the foregoing, the Court is convinced that defendants and Philippine
Marketing and Management Corporation are guilty of contempt of court in
disregarding the permanent injunction issued by this Court in its decision on the
merits of the main case. However, for the reasons stated in the Order of December
29, 1967, the Court maintains that it has lost jurisdiction over the case. (Pp. 115-
120, Record on Appeal.)
Stated differently, since the trial court had jurisdiction to take cognizance of the
motion, its findings of facts should as a rule bind the parties, and, in this
connection, appellees do not seriously challenge said findings. And since We are
holding that the trial court had jurisdiction, the above findings may be determinative
of the factual issues among the parties herein. We are thus faced with the
following situations:
The first order of dismissal of August 23, 1967, albeit issued with jurisdiction, was
incomplete because it contained no statements of facts and law on which it was
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 found them not guilty. What they have overlooked however
is that such a finding cannot be equated with an acquittal in a criminal case that
bars a subsequent jeopardy. True it is that generally, contempt proceedings are
characterized as criminal in nature, but the more accurate juridical concept is that
contempt proceedings may actually be either civil or criminal, even if the distinction
between one and the other may be so thin as to be almost imperceptible. But it
does exist in law. It is criminal when the purpose is to vindicate the authority of the
court and protect its outraged dignity. It is civil when there is failure to do
something ordered by a court to be done for the benefit of a party. (3 Moran, Rules
of Court, pp. 343-344, 1970 ed; see also Perkins vs. Director of Prisons, 58 Phil.
272; Harden vs. Director of Prisons, 81 Phil. 741.) And with this distinction in mind,
the fact that the injunction in the instant case is manifestly for the benefit of
plaintiffs makes of the contempt herein involved civil, not criminal. Accordingly, the
conclusion is inevitable that appellees have been virtually found by the trial court
guilty of civil contempt, not criminal contempt, hence the rule on double jeopardy
may not be invoked.
WHEREFORE, judgment is hereby rendered - in G. R. No. L-27425 - affirming the
decision of the trial court with the modification of the amount of the damages
22
awarded to plaintiffs in the manner hereinabove indicated; and in G.R. No. L-
30505 - the three orders of dismissal of the trial court of the contempt charges
against appellees are all hereby reversed, and on the basis of the factual findings
made by said court in its last order of January 24, 1968, appellees are hereby
declared in contempt of court and the records of the contempt proceedings (G. 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 decision
being incomplete in that respect. Costs against appellees in G. R. No. L-27425, no
costs in G. R. No. L-30505. These decisions may be executed separately.

23
[G.R. No. 144309. November 23, 2001.]
SOLID TRIANGLE SALES CORPORATION and ROBERT SITCHON,
Petitioners, v. 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.
DECISION
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:chanrob1es virtual 1aw library
. . . 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 assailed order of March 18, 1999. Respondent Judge
held that there is doubt whether the act complained of (unfair competition) is
criminal in nature.
Petitioner Solid Triangle filed a motion for reconsideration contending that the
quashal of the search warrant is not proper considering the pendency of the
preliminary investigation in I.S. No. 1-99-2870 for unfair competition wherein the
seized items will be used as evidence.
On March 26, 1999, Judge Bruselas issued the second assailed order denying
Solid Triangle’s motion for reconsideration.
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
damages and injunction with prayer for writs of preliminary injunction and
attachment. Impleaded as defendants were Sanly, LWT and ERA.
On March 30, 1999, the defendants filed their opposition to the application for the
issuance of writs of injunction and attachment.
On March 31, 1999, Judge Genilo denied petitioner’s application for a preliminary
attachment on the ground that the application is not supported with an affidavit by
the applicant, through its authorized officer, who personally knows the facts.
Meanwhile, on April 20, 1999, Judge Bruselas issued the third assailed order, the
dispositive portion of which reads:chanrob1es virtual 1aw library
WHEREFORE, the foregoing premises considered, the court directs
1) EIIB, Mr. Robert Sitchon and Solid Triangle Sales Corporation to divulge and
report to the court the exact location of the warehouse where the goods subject of
this proceeding are presently kept within seventy-two hours from receipt hereof;
2) Mr. Robert Sitchon and Solid Triangle Sales Corporation to appear and show
cause why they should not be held in contempt of court for failure to obey a lawful
order of the court at a hearing for the purpose on 12 May 1999 at 8:30 o’clock in
the morning;
24
3) The Deputy Sheriff of this Court to take custody of the seized goods and cause
their delivery to the person from whom the goods were seized without further lost
[sic] of time;
Let a copy of this order be served by personal service upon Mr. Robert Sitchon
and Solid Triangle Sales Corporation. Serve copies also to EIIB and the
respondents Rod Castro and Sanly Corporation.
SO ORDERED. 1
Alleging grave abuse of discretion, petitioners questioned before the Court of
Appeals the orders of Branch 93 of the Quezon City RTC granting private
respondents’ motion for reconsideration and denying that of petitioners’, as well as
the order dated April 20, 1999 directing petitioners to, among other things, show
cause why they should not be held in contempt. Petitioners also assailed the order
of the Quezon City RTC, Branch 91 denying their application for a writ of
attachment. Upon the filing of the petition on April 26, 1999, the Court of Appeals
issued a temporary restraining order to prevent Judge Bruselas from implementing
the Order dated April 20, 1999.chanrob1es virtua1 1aw 1ibrary
On July 6, 1999, the Court of Appeals rendered judgment initially granting
certiorari. It held that the quashing of the warrant deprived the prosecution of vital
evidence to determine probable cause.
Admittedly, the City Prosecutor of Quezon City has filed a complaint for unfair
competition against private respondents and that the undergoing preliminary
investigation is in progress. In the said proceedings, the prosecution inevitably will
present the seized items to establish a prima facie case of unfair competition
against private respondents.
Considering that Judge Bruselas quashed the search warrant, he practically
deprived the prosecution of its evidence so vital in establishing the existence of
probable cause.
Petitioners’ reliance on Vlasons Enterprises Corporation v. Court of Appeals [155
SCRA 186 (1987).] is in order. Thus:chanrob1es virtual 1aw library
The proceeding for the seizure of property in virtue of a search warrant does not
end with the actual taking of the property by the proper officers and its delivery ,
usually constructive, to the court. The order for the issuance of the warrant is not a
final one and cannot constitute res judicata (Cruz v. Dinglasan, 83 Phil. 333). Such
an order does not ascertain and adjudicate the permanent status or character of
the seized property. By its very nature, it is provisional, interlocutory (Marcelo v. de
Guzman, 114 SCRA 657). It is merely the first step in the process to determine the
character and title of the property. That determination is done in the criminal action
involving the crime or crimes in connection with which the search warrant was
issued. Hence, such a criminal action should be prosecuted, or commenced if not
yet instituted, and prosecuted. The outcome of the criminal action will dictate the
disposition of the seized property. 2
The appellate court further ruled that the affidavit of merits is not necessary for the
order of preliminary attachment to issue considering that the petition itself is under
oath:
The denial was based on the ground that the application is not supported by an
affidavit of the applicant corporation, through its authorized officer, who personally
knows the facts.
We cannot go along with respondent judge’s theory. In Consul v. Consul [17 SCRA
667 (1996)], the Supreme Court held:
Affidavit of merits has a known purpose: Courts and parties should not require the
machinery of justice to grind anew, if the prospects of a different conclusion cannot
be reasonably reached should relief from judgment be granted. We look back at
the facts here. The petition for relief is verified by petitioner himself. The merits of
petitioner’s case are apparent in the recitals of the petition. Said petition is under
oath. That oath, we believe, elevates the petition to the same category as a
separate affidavit. To require defendant to append an affidavit of merits to his
verified petition to the circumstances, is to compel him to do the unnecessary.
Therefore, the defect pointed by the court below is one of forms, not of substance.
Result: Absence of a separate affidavit is of de minimis importance. 3
Upon motion by respondents, however, the Court of Appeals reversed itself. In its
"Amendatory Decision," the appellate court held that there was no probable cause
for the issuance of the search warrant. Accordingly, the evidence obtained by
virtue of said warrant was inadmissible in the preliminary investigation.
. . . Under Sections 168 and 170 of R.A. 8293 (the Intellectual Property Code),
there is unfair competition if the alleged offender has given to his goods the
general appearance of the goods of another manufacturer or dealer and sells or
passes them off as goods of that manufacturer or dealer in order to deceive or
defraud the general public or the legitimate trader. Also, if he makes false
statements in the course of trade to discredit the goods, business, or services of
another.
25
Undisputedly, the seized goods from Sanly are genuine and not mere imitations.
This is admitted by petitioners in 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 stressing that there is no showing or
allegation that Sanly has presented, sold, or passed off its photographic paper as
goods which come from Solid Triangle. There is no attempt on its part to deceive.
Both Sanly and Solid Triangle sell genuine Mitsubishi products. Solid Triangle
acquires its goods from Japan on the basis of its exclusive distributorship with
Mitsubishi Corporation. While Sanly buys its goods from Hongkong, claiming it is a
parallel importer, not an unfair competitor. As defined, a parallel importer is one
which imports, distributes, and sells genuine products in the market, independently
of an exclusive distributorship or agency agreement with the manufacturer. And,
this is precisely what Sanly states as its commercial status.
Records show that Sanly sold its photographic paper purchased from Hongkong
without altering its appearance. It is distributed in the same Mitsubishi box with its
logo and distinguishing marks as marketed in Japan. The same brown paper with
the Mitsubishi seal is wrapped around its products. Copies of the importation
documents and the certification on imports issued by the Philippine government
recognized Societe’ Generale’ d’ Surveillance (SGS) were appended to the motion
to quash search warrant.
Thus, on factual basis, the real dispute is actually between Solid Triangle and the
manufacturer Mitsubishi. If Solid Triangle feels aggrieved, it should sue Mitsubishi
for damages, if at all for breach of its distributorship. But that is between them.
Certainly, there is here no probable cause to justify the issuance of a search
warrant based on a criminal action for "unfair competition."
Therefore, since there is no probable cause for unfair competition in this case, then
the quashal of the search warrant by respondent Judge Bruselas is valid. This
being the case, there is merit in the motion for reconsideration.
In ascertaining the legality of a search warrant and the validity of the search and
seizure conducted by the EIIB agents by virtue of the warrant, it is essential that a
crime has been committed or is being committed and that the things seized are
fruits of the crime or the means by which it is committed.
The validity of a search and seizure is of constitutional dimensions. The right to
privacy and the sanctity of a person’s house, papers and effects against
unreasonable searches and seizures are not only ancient. They are also zealously
protected.
x x x
Solid Triangle contends that the quashal of the search warrant deprived it of its
right to prove a prima facie case of unfair competition in the preliminary
investigation. We initially agreed with it.
While Solid Triangle has the right to present every single piece of evidence it can
gather and muster, however, it has no right to prove its case through the use of
illegally seized evidence secured in derogation of a constitutionally guaranteed
right.
The constitutional provision that any evidence obtained in violation of the provision
against unreasonable 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 poisonous tree and cannot be used for the purpose
of proving unfair competition during preliminary investigation proceedings.
The case of Vlasons Enterprises Corporation v. Court of Appeals does not apply
since it involved a different set of facts and issues.
On the contrary, it is the case of People v. Court of Appeals [216 SCRA 101
(1992)] that governs, where the Supreme Court ruled that with the quashal of the
search warrant, the seized goods could not be used as evidence for any purpose,
in any proceeding.
As regards the preliminary attachment, the appellate court found that there was no
ground for the issuance of the writ because:
. . . Sanly does not deny that it sells Mitsubishi photographic color paper. But there
is no showing that it attempts to depart from country, defraud Solid Triangle or the
buying public, conceal or dispose of unjustly detained personal property, or commit
any of the acts provided in Rule 57 of the 1997 Rules of Civil Procedure as
grounds for the issuance of a writ of preliminary attachment. 5
Petitioners moved for reconsideration but the same was denied by the Court of
Appeals in its Resolution dated August 4, 2000.
In assailing the Amendatory Decision of the Court of Appeals, petitioners argue
that:chanrob1es virtual 1aw library
I.
THE JUDGE WHO ISSUED A SEARCH WARRANT THAT HAS ALREADY BEEN
IMPLEMENTED CANNOT QUASH THE WARRANT ANYMORE, AT LEAST
26
WITHOUT WAITING FOR THE FINDINGS OF THE CITY PROSECUTOR WHO
HAS THE EXCLUSIVE JURISDICTION TO DETERMINE PROBABLE CAUSE.
II.
IN THE PARALLEL IMPORTATION EFFECTED BY THE RESPONDENTS WITH
DECEIT AND BAD FAITH, THERE EXISTS PROBABLE CAUSE THAT THE
CRIME OF UNFAIR COMPETITION UNDER THE INTELLECTUAL PROPERTY
CODE HAS BEEN COMMITTED BY THE RESPONDENTS.
III.
PETITIONERS’ APPLICATION FOR A WRIT OF ATTACHMENT CANNOT BE
DENIED ON THE GROUND THAT AN AFFIDAVIT OF MERITS IS NOT
APPENDED TO THE COMPLAINT, AS THE COURT OF APPEALS HAS
ALREADY RULED, AND ON THE GROUND THAT THERE IS NO
JUSTIFICATION FOR IT BECAUSE THE QUESTIONS PERTINENT THERETO
ARE NOT BEFORE THE COURT OF APPEALS BUT BEFORE THE TRIAL
COURT.
IV.
PETITIONERS CANNOT BE HELD LIABLE FOR CONTEMPT IN NOT
RETURNING THE GOODS SUBJECT OF THE SEARCH WARRANT
NOTWITHSTANDING THE REFUSAL OF THE COURT OF APPEALS TO RULE
ON THIS POINT FURTHER WHICH IS A GRIEVOUS ERROR TO THE
PREJUDICE OF THE PETITIONERS.
Petitioners contend that the Constitution does not authorize the judge to reverse
himself and quash the warrant, "especially after goods had been seized pursuant
to the search warrant, and the prosecution is poised to push forward with the
goods as evidence." 7 In finding that doubt exists that a crime has been
committed, it is argued that the judge "trench[ed] upon the prerogative and duty of
the city prosecutor." 8
The contention has no merit.
It is undisputed that only judges have the power to issue search warrants. 9 This
function is exclusively judicial. Article III of the Constitution unequivocally
states:chanrob1es virtual 1aw library
SECTION 2. The right of the people to be secure in their persons, houses, papers,
and effects against 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 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 particularly describing the place to be searched and the persons
or things to be seized. [Emphasis supplied.]
Inherent in the courts’ power to issue search warrants is 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 a criminal case
has already been instituted in another court, in which case, the motion should be
filed with the latter. 10 The ruling has since been incorporated in Rule 126 of the
Revised Rules of Criminal Procedure:chanrob1es virtual 1aw library
SECTION 14. Motion to quash a search warrant or to suppress evidence; where to
file. — A motion to quash a search warrant and/or to suppress evidence obtained
thereby may be filed in and acted upon only by the court where the action has
been instituted. If no criminal action has been instituted, the motion may be filed in
and resolved by the court that issued the search warrant. However, if such court
failed to resolve the motion and a criminal case is subsequently filed in another
court, the motion shall be resolved by the latter court.
In the determination of probable cause, the court must necessarily resolve whether
or not an offense exists to justify the issuance or quashal of the search warrant.
Prior to the revision of December 1, 2000, Rule 126 of the Rules of Court provided:
SECTION 3. Requisites for issuing search warrant. — A search warrant shall not
issue but upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or 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 supplied.] 11
Note that probable cause is defined as:
. . .the existence of such facts and circumstances which could lead a reasonably
discreet and prudent man to believe that an offense has been committed and that
the item(s), article(s) or object(s) sought in connection with said offense or subject
to seizure and destruction by law is in the place to be searched.
In Kenneth Roy Savage/K Angelin Export Trading v. Taypin, 13 the Court was
confronted with a search warrant that was issued purportedly in connection with
unfair competition involving design patents. The Court held that the alleged crime
is not punishable under Article 189 of the Revised Penal Code, and accordingly,
quashed the search warrant issued for the non-existent crime.
In the issuance of search warrants, the Rules of Court requires a finding of
probable cause in connection with one specific offense to be determined
27
personally by the judge after examination of the complainant and the witnesses he
may produce, and particularly describing the place to be searched and the things
to be seized. Hence, since there is no crime to speak of, the search warrant does
not even begin to fulfill these stringent requirements and is therefore defective on
its face. . .
A preliminary investigation, by definition, also requires a finding by the authorized
officer of the commission of a crime. Previous to the 2000 revision, Section 1 of
Rule 112 of the Rules of Court defined a preliminary 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 Trial Court has been
committed and the respondent is probably guilty thereof, and should be held for
trial.’’ 14
Section 2 of the same Rule enumerates who may conduct preliminary
investigations:
SECTION 2. Officers authorized to conduct preliminary investigations. — The
following may conduct preliminary investigations:
(a) Provincial or city fiscals and their assistants;
(b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Courts;
(c) National and Regional state prosecutors; and
(d) Such other officers as may be authorized by law.
Their authority to conduct preliminary investigations shall include all crimes
cognizable by the proper court in their respective territorial jurisdictions.
The determination of probable cause during a preliminary investigation has been
described as an executive function.
The proceedings for the issuance/quashal of a search warrant before a court on
the one hand, and the preliminary investigation before an authorized officer on the
other, are proceedings entirely independent of each other. One is not bound by the
other’s finding as regards the existence of a crime. The purpose of each
proceeding differs from the other. The first is to determine whether a warrant
should issue or be quashed, and the second, whether an information should be
filed in court.chanrob1es virtua1 1aw 1ibrary
When the court, in determining probable cause for issuing or quashing a search
warrant, finds that no offense has been committed, it does not interfere with or
encroach upon the proceedings in the preliminary investigation. The court does not
oblige the investigating officer not to file an information for the court’s ruling that no
crime exists is only for purposes of issuing or quashing the warrant. This does not,
as petitioners would like to believe, constitute a usurpation of the executive
function. Indeed, to shirk from this duty would amount to an abdication of a
constitutional obligation.
The effect of the quashal of the warrant on the ground that no offense has been
committed is to render the evidence obtained by virtue of the warrant "inadmissible
for any purpose in any proceeding," including the preliminary investigation. Article
III of the Constitution provides:
SECTION 3. (1) . . .
(2) Any evidence obtained in violation of this or the preceding section [Section 2]
shall be inadmissible for any purpose in any proceeding.
It may be true that, as a result of the quashal of the warrant, the private
complainant is deprived of vital evidence to establish his case, but such is the
inevitable consequence.
Nevertheless, the inadmissibility of the evidence obtained through an illegal
warrant does not necessarily render the preliminary investigation academic. The
preliminary investigation and the filing of the information may still proceed if,
because of other (admissible) evidence, there exists "sufficient ground to engender
a well-founded belief that a crime has been committed and the respondent is
probably guilty thereof, and should be held for trial." The finding by the court that
no crime exists does not preclude the authorized officer conducting the preliminary
investigation from making his own determination that a crime has been committed
and that probable cause exists for purposes of filing the information.
Petitioners also argue that Section 14, Rule 126 of the Revised Rules of Criminal
Procedure, supra, while intended "to resolve conflicts of responsibility between
courts," "does not expressly cover the situation where the criminal complaint is
pending with the prosecutor." In such a case, petitioners submit, the public
prosecutor should be allowed to resolve the question of whether or not probable
cause exists.
The Court finds this interpretation too contrived. Section 14, Rule 126 precisely
covers situations like the one at bar. Section 14 expressly provides that a motion to
quash a search warrant and/or to suppress evidence obtained thereby may be filed
in and acted upon only by the court where the action has been instituted. Under
the same section, the court which issued the search warrant may be prevented
from resolving a motion to quash or suppress evidence only when a criminal case
is subsequently filed in another court, in which case, the motion is to be resolved
28
by the latter court. It is therefore puerile to argue that the court that issued the
warrant cannot entertain motions to suppress evidence while a preliminary
investigation is ongoing. Such erroneous interpretation would place a person
whose property has been seized by virtue of an invalid warrant without a remedy
while the goods procured by virtue thereof are subject of a preliminary
investigation
We now turn to the question of whether the facts, as presented before the trial
court, constitute an offense.
Private respondents are alleged to have committed unfair competition in violation
of Section 168 of the Intellectual Property Code, which states:
SECTION 168. Unfair Competition, Rights, Regulation 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 or not a registered
mark 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 other
property rights.
168.2 Any person who shall employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in which
he deals, or his business, or services for those of the one having established 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.
168.3 In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in
the wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer
or dealer, other than the actual manufacturer or dealer, or who otherwise clothes
the goods with such appearance as shall deceive the public and defraud another
of his legitimate trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a lie purpose;
(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 service of
another who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to discredit
the goods, business or services of another.
168.4 The remedies provided by Sections 156, 157 and 161 shall apply mutatis
mutandis.
The same law, in Section 170, provides the penalty for violation of Section 168:
SECTION 170. Penalties. — Independent of the civil and administrative sanctions
imposed by law, a criminal penalty of imprisonment from two (2) years to five (5)
years and a fine ranging from Fifty thousand pesos (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 and Subsection
169.1.
Petitioners submit that "the importation of even genuine goods can constitute a
crime under the Intellectual Property Code so long as fraud or deceit is present."
The intent to deceive in this case, according to petitioners, is "patent" "from the
following undisputed facts" :chanrob1es virtual 1aw library
(a) Before marketing its product, the respondents totally obliterated and erased the
Emulsion Number and Type that was printed on the box/carton of the product
because of which the source of the goods can no longer be traced.
(b) Respondents even covered the boxes with newspapers to conceal true identity.
(c) Being also engaged in the sale of photo equipments [sic] and having had the
occasion of participating in the same exhibit with petitioner Solid Triangle several
times already, respondents certainly knew that petitioner Solid Triangle is the sole
and exclusive importer and distributor of Mitsubishi Photo Paper.
(d) Two agents of the EIIB were also able to confirm from a salesgirl of
respondents that substantial quantity of stocks of Mitsubishi Photo Paper are
available at respondents’ store and that the products are genuine, as they are duly
authorized to sell and distribute it to interested customers.
(e) No better proof of unfair competition is the seizure of the goods, 451 boxes of
Mitsubishi photographic color paper.
Petitioners further expound:
47. We may categorize the acts of the respondents as "underground sales and
marketing" of genuine goods, undermining the property rights of petitioner Solid
29
Triangle. The Court of Appeals itself recognized the rights of a dealer. The acts of
the respondents were made to appropriate unjustly the goodwill of petitioner Solid
Triangle, and goodwill is protected by the law on unfair competition.
48. Petitioner Solid Triangle has established a trade or business in which it had
acquired goodwill and reputation that will be protected, and so, to permit
respondents to continue importing and distributing Mitsubishi Photo Paper, would
be to countenance the unlawful appropriation of the benefit of a goodwill which
petitioner Solid Triangle has acquired and permit the respondent to grab the
reputation or goodwill of the business of another.
49. . . petitioners have a valid cause to complain against respondents for the
criminal violation of the Intellectual Property Law when the latter made it appear
that they were duly authorized to sell or distribute Mitsubishi Photo Paper in the
Philippines, when in truth and in fact they were not, and when they were hiding
their importation from the petitioners by such acts as removing the Emulsion
Number and Type and covering the boxes with old newspapers.
We disagree with petitioners and find that the evidence presented before the trial
court does not prove unfair 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 "made it appear that they were duly authorized to sell or
distribute Mitsubishi Photo Paper in the Philippines." Assuming that this act
constitutes a crime, there is no proof to establish such an allegation.
rule on the matter, and for this Court now to hold petitioners’ act contemptuous
would preempt said court.
WHEREFORE, the petition is GRANTED IN PART. The Amendatory Decision of
the Court of Appeals dated March 31, 2000, as well as its Resolution dated August
4, 2000, is AFFIRMED insofar as it holds that (1) the Quezon City Regional Trial
Court, Branch 93, has the power to determine the existence of a crime in quashing
a search warrant and, (2) the evidence does not support a finding that the crime of
unfair competition has been committed by respondents; and REVERSED insofar
as it holds that (1) there are no grounds to warrant the issuance of a writ of
preliminary attachment and (2) petitioners are guilty of contempt. The case is
remanded for further proceedings to the courts of origin, namely, Branch 91 of
RTC, Quezon City for resolution of the application for a writ of attachment, and
Branch 93 of the same court for resolution of the application to cite petitioners for
contempt.
Petitioners are ordered to return to respondent Sanly Corporation the 451 boxes of
Mitsubishi photographic color paper seized by virtue of Search Warrant No. 3324
(99) issued by the Quezon City Regional Trial Court, Branch 93.
SO ORDERED.

We agree with petitioners, however, that the Court of Appeals went beyond the
issues when it ruled that there were no grounds for the issuance of an order of
preliminary attachment. The only issue raised with respect to the preliminary
attachment was whether the application for the writ should have been denied
because the same was not supported by an affidavit of the applicant corporation,
through its authorized officer, who personally knows the facts. Whether there are
sufficient grounds to justify the order is a matter best left to the trial 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 the petition
is verified by an authorized officer who personally knows the facts.

Similarly premature is whether petitioners’ failure to return the goods to

respondents constituted indirect contempt. The assailed order dated April 20, 1999
was a "show cause" order. Before any hearing on the order could be held,
petitioners promptly filed a petition for certiorari. Clearly, the trial court had yet to

30
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 search
warrant failed to particularly describe the properties to be seized. The trial court
denied the motion for lack of merit.
On August 4, 2001, respondent filed another motion to quash, this time,
questioning the propriety of the venue. Petitioner opposed the motion on the
ground that it violated the omnibus motion rule wherein all objections not included
shall be deemed waived. In an Order3 dated October 5, 2001, the trial court
affirmed the validity of Search Warrants Nos. 01-1989 to 01-1991 covering
respondent’s premises in Parañaque City, but quashed Search Warrants Nos. 01-
1986 to 01-1988 covering respondent’s premises in Cavite. The trial court held that
lack of jurisdiction is an exception to the omnibus motion rule and may be raised at
any stage of the proceedings. The dispositive portion of the order read,
Accordingly, Search Warrants Nos. 01-1986, 01-1987 and 01-1988 are hereby
ordered quashed and set aside.
The National Bureau of Investigation and/or any other person in actual custody of
the goods seized pursuant thereto are hereby directed to return the same to the
respondents.
SO ORDERED.
Petitioner elevated the matter to the Court of Appeals, which dismissed the petition
for certiorari. The appellate court ruled that under Section 2,5 Rule 126 of the
Rules of Court, the RTC of Manila had no jurisdiction to issue a search warrant
enforceable in Cavite, and that lack of jurisdiction was not deemed waived.
Petitioner moved for reconsideration but the same was denied. The Court of
Appeals disposed, as follows:
WHEREFORE, the instant Petition is hereby denied and accordingly DISMISSED.
SO ORDERED.
Petitioner now comes before us raising the following issues:
I
WHETHER OR NOT VENUE IN SEARCH WARRANT APPLICATIONS
INVOLVES TERRITORIAL JURISDICTION.
II
WHETHER OR NOT THE CORRECTNESS OF VENUE IN AN APPLICATION
FOR SEARCH WARRANT IS DEEMED WAIVED IF NOT RAISED BY THE
RESPONDENT IN ITS MOTION TO QUASH.
III
WHETHER OR NOT THE OFFENSES INVOLVED IN THE SUBJECT SEARCH
WARRANTS ARE "CONTINUING CRIMES" WHICH MAY BE VALIDLY TRIED IN
ANOTHER JURISDICTION WHERE THE OFFENSE WAS PARTLY
COMMITTED.
In sum, we are asked to resolve whether the quashal of Search Warrants Nos. 01-
1986 to 01-1988 was valid.
31
Citing Malaloan v. Court of Appeals,8 where this Court clarified that a search
warrant application is only a special criminal process and not a criminal action,
petitioner contends that the rule on venue for search warrant application is not
jurisdictional. Hence, failure to raise the objection waived it. Moreover, petitioner
maintains that applying for search warrants in different courts increases the
possibility of leakage and contradictory outcomes that could defeat the purpose for
which the warrants were issued.
Petitioner further asserts that even granting that the rules on search warrant
applications are jurisdictional, the application filed either in the courts of the
National Capital Region or Fourth Judicial Region is still proper because the crime
was continuing and committed in both Parañaque City and Cavite.
Respondent counters that Section 2 is explicit on where applications should be
filed and provided the territorial limitations on search warrants. Respondent claims
that Malaloan is no longer applicable jurisprudence with the promulgation of the
2000 Rules of Criminal Procedure. Even granting that petitioner has compelling
reasons, respondent maintains that petitioner cannot file the application with the
RTC of Manila because Cavite belongs to another judicial region. Respondent also
argues that the doctrine on continuing crime is applicable only to the institution of a
criminal action, not to search warrant applications which is governed by Rule 126,
and in this case Section 2.
To start, we cautioned that our pronouncement in Malaloan should be read into the
Judiciary Reorganization Act of 19809 conferring on the regional trial courts and
their judges a territorial jurisdiction, regional in scope. Both the main decision and
the dissent in Malaloan recognized this.
Now, in the present case, respondent’s premises in Cavite, within the Fourth
Judicial Region, is definitely 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 offenses committed in Cavite. Hence,
petitioner’s reliance in Malaloan is misplaced. Malaloan involved a court in the
same judicial region where the crime was committed. The instant case involves a
court in another region. Any other interpretation re-defining territorial jurisdiction
would amount to judicial legislation.10
Nonetheless, we agree with petitioner that this case involves a transitory or
continuing offense of unfair competition under Section 168 of Republic Act No.
8293,11 which provides,
SEC. 168. Unfair Competition, Rights, Regulation and Remedies. – …
168.2. Any person who shall employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in which
he deals, or his business, or services for those of the one having established 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.
168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in
the wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer
or dealer, other than the actual manufacturer or dealer, or who otherwise clothes
the goods with such appearance as shall deceive the public and defraud another
of his legitimate trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose;
(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 who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to discredit
the goods, business or services of another.
Pertinent too is Article 189 (1) of the Revised Penal Code that enumerates the
elements of unfair competition, to wit:
(a) That the offender gives his goods the general appearance of the goods of
another manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the
(2) wrapping of their packages, or in the (3) device or words therein, or in (4) any
other feature of their appearance;
(c) That the offender offers to sell or sells those goods or gives other persons a
chance or opportunity to do the same with a like purpose; and
(d) That there is actual intent to deceive the public or defraud a competitor.12
32
Respondent’s imitation of the general appearance of petitioner’s goods was done
allegedly in Cavite. It sold the goods allegedly in Mandaluyong City, Metro Manila.
The alleged acts would constitute a transitory or continuing offense. Thus, clearly,
under Section 2 (b) of Rule 126, Section 168 of Rep. Act No. 8293 and Article 189
(1) of the Revised Penal Code, petitioner may apply for a search warrant in any
court where any element of the alleged offense was committed, including any of
the courts within the National Capital Region (Metro Manila).13

WHEREFORE, the petition is GRANTED. The Decision dated June 30, 2003 and
the Resolution dated January 16, 2004 of the Court of Appeals in CA-G.R. SP No.
67612 are SET ASIDE. The Order dated October 5, 2001 of the Regional Trial
Court of Manila, Branch 1, is PARTLY MODIFIED. Search Warrants Nos. 01-1986
to 01-1988 are hereby declared valid.

SO ORDERED.

33
G.R. No. 209843
TAIWAN KOLIN CORPORATION, LTD., Petitioner, vs. KOLIN ELECTRONICS
CO., INC., Respondent.
DECISION
VELASCO, JR., J.:
Nature of the Case
Before the Court is a petition for review under Rule 45 of the Rules of Court
interposed by petitioner Taiwan Kolin Corporation, Ltd. (Taiwan Kolin), assailing
the April 30, 2013 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No.
122565 and its subsequent November 6, 2013 Resolution.2 The assailed
issuances effectively denied petitioner's trademark application for the use of
"KOLIN" on its television and DVD players.
The Facts
On February 29, 1996, Taiwan Kolin filed with the Intellectual Property Office
(IPO), then Bureau of Patents, Trademarks, and Technology Transfer, a trademark
application, docketed as Application No. 4-1996-106310, for the use of "KOLIN" on
a combination of goods, including colored televisions, refrigerators, window-type
and split-type air conditioners, electric fans and water dispensers. Said goods
allegedly fall under Classes 9, 11, and 21 of the Nice Classification (NCL).
Application No. 4-1996-106310 would eventually be considered abandoned for
Taiwan Kolin’s failure to respond to IPO’s Paper No. 5 requiring it to elect one
class of good for its coverage. However, the same application was subsequently
revived through Application Serial No. 4-2002-011002,3 with petitioner electing
Class 9 as the subject of its application, particularly: television sets, cassette
recorder, VCD Amplifiers, camcorders and other audio/video electronic equipment,
flat iron, vacuum cleaners, cordless handsets, videophones, facsimile machines,
teleprinters, cellular phones and automatic goods vending machine. The
application would in time be duly published.4
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin Electronics)
opposed petitioner’s revived application, docketed as Inter Partes Case No. 14-
2006-00096. As argued, the mark Taiwan Kolin seeks to register is identical, if not
confusingly similar, with its "KOLIN" mark registered on November 23, 2003,
covering the following products under Class 9 of the NCL: automatic voltage
regulator, converter, recharger, stereo booster, AC-DC regulated power supply,
step-down transformer, and PA amplified AC-DC.5
To digress a bit, Kolin Electronics’ "KOLIN" registration was, as it turns out, the
subject of a prior legal dispute between the parties in Inter Partes Case No. 14-
1998-00050 beforethe IPO. In the said case, Kolin Electronics’ own application
was opposed by Taiwan Kolin, being, as Taiwan Kolin claimed, the prior registrant
and user of the "KOLIN" trademark, having registered the same in Taipei, Taiwan
on December 1, 1988. The Bureau of Legal Affairs of the IPO (BLA-IPO), however,
did not accord priority right to Taiwan Kolin’s Taipei registration absent evidence to
prove that it has already used the said mark in the Philippines as early as 1988.
On appeal, the IPO Director General affirmed the BLA-IPO’s Decision. Taiwan
Kolin elevated the case to the CA, but without injunctive relief, Kolin Electronics
was able to register the "KOLIN" trademark on November 23, 2003for its
products.6 Subsequently, the CA, on July 31, 2006, affirmed7 the Decision of the
Director General.
In answer to respondent’s opposition in Inter Partes Case No. 14-2006-00096,
petitioner argued that it should be accorded the benefits of a foreign-registered
mark under Secs. 3 and 131.1 of Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines (IP Code);8 that it has already
registered the "KOLIN" mark in the People’s Republic of China, Malaysia and
Vietnam, all of which are parties to the Paris Convention for the Protection of
Industrial Property (Paris Convention) and the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS); and that benefits accorded to a
well-known mark should be accorded to petitioner.9
Ruling of the BLA-IPO
By Decision10 dated August 16, 2007, the BLA-IPO denied petitioner’s application
disposing as follows:
In view of all the foregoing, the instant Opposition is as, it is hereby SUSTAINED.
Accordingly, application bearing Serial No. 4-1996-106310 for the mark "KOLIN"
filed in the name of TAIWAN KOLIN., LTD. on February 29, 1996 for goods falling
under Class 09 of the International Classification of Goods such as cassette
recorder, VCD, woofer, amplifiers, camcorders and other audio/video electronic
equipment, flat iron, vacuum cleaners, cordless handsets, videophones, facsimile
machines, teleprinters, cellular phones, automatic goods vending machines and
other electronic equipment is hereby REJECTED.
Let the file wrapper of "KOLIN", subject of this case be forwarded to the Bureau of
Trademarks (BOT) for appropriate action in accordance with this Decision.
34

SO ORDERED.
Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark cannot be
registered if it is identical with a registered mark belonging to a different proprietor
in respect of the same or closely-related goods. Accordingly, respondent, as the
registered owner of the mark "KOLIN" for goods falling under Class 9 of the NCL,
should then be protected against anyone who impinges on its right, including
petitioner who seeks to register an identical mark to be used on goods also
belonging to Class 9 of the NCL.12 The BLA-IPO also noted that there was proof
of actual confusion in the form of consumers writing numerous e-mails to
respondent asking for information, service, and complaints about petitioner’s
products.13
Petitioner moved for reconsideration but the same was denied on January 26,
2009 for lack of merit.14 Thus, petitioner appealed the above Decision to the
Office of the Director General of the IPO.
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a Decision15 reversing
that of the BLA-IPO in the following wise:
Wherefore, premises considered, the appeal is hereby GRANTED. The Appellant’s
Trademark Application No. 4-1996-106310 is hereby GIVEN DUE COURSE
subject to the use limitation or restriction for the goods "television and DVD
player". Let a copy of this Decision as well as the trademark application and
records be furnished and returned to the Director of the Bureau of Legal Affairs for
appropriate action. Further, let the Director of the Bureau of Trademarks and the
library of the Documentation, Information and Technology Transfer Bureau be
furnished a copy of this Decision for information, guidance, and records purposes.
SO ORDERED.
In so ruling, the IPO Director General ratiocinated that product classification alone
cannot serve as the decisive factor in the resolution of whether or not the goods
are related and that emphasis should be on the similarity of the products involved
and not on the arbitrary classification or general description of their properties or
characteristics. As held, the mere fact that one person has adopted and used a
particular trademark for his goods does not prevent the adoption and use of the
same trademark by others on articles of a different description.16
Aggrieved, respondent elevated the case to the CA.
Ruling of the Court of Appeals
In its assailed Decision, the CA found for Kolin Electronics, on the strength of the
following premises: (a) the mark sought to be registered by Taiwan Kolin is
confusingly similar to the one already registered in favor of Kolin Electronics; (b)
there are no other designs, special shape or easily identifiable earmarks that would
differentiate the products of both competing companies;17 and (c) the intertwined
use of television sets with amplifier, booster and voltage regulator bolstered the
fact that televisions can be considered as within the normal expansion of Kolin
Electronics,18 and is thereby deemed covered by its trademark as explicitly
protected under Sec. 13819 of the IP Code.20 Resultantly, the CA granted
respondent’s appeal thusly:
WHEREFORE, the appeal is GRANTED. The November 23, 2011 Decision of the
Director General of the Intellectual Property Office in Inter Partes Case No. 14-
2006-0096 is REVERSED and SET ASIDE. The September 17, 2007 Decision of
the Bureau of Legal Affairs of the same office is REINSTATED.
SO ORDERED.
Petitioner moved for reconsideration only to be denied by the CA through its
equally assailed November 6, 2013 Resolution. Hence, the instant recourse.
The Issue
The primordial issue to be resolved boils down to whether or not petitioner is
entitled to its trademark registration of "KOLIN" over its specific goods of television
sets and DVD players. Petitioner postulates, in the main, that its goods are not
closely related to those of Kolin Electronics. On the other hand, respondent hinges
its case on the CA’s findings that its and petitioner’s products are closely-related.
Thus, granting petitioner’s application for trademark registration, according to
respondent, would cause confusion as to the public.
The Court's Ruling
The petition is impressed with merit.
Identical marks may be registered for products from the same classification
To bolster its opposition against petitioner’s application to register trademark
"KOLIN," respondent maintains that the element of mark identity argues against
approval of such application, quoting the BLA IPO’s ruling in this regard:21
35
Indubitably, Respondent-Applicant’s [herein petitioner] mark is identical to the
registered mark of herein Opposer [herein respondent] and the identical mark is
used on goods belonging to Class 9 to which Opposer’s goods are also classified.
On this point alone, Respondent-Applicant’s application should already be denied.
The argument is specious.
The parties admit that their respective sets of goods belong to Class 9 of the NCL,
which includes the following:
Class 9
Scientific, nautical, surveying, photographic, cinematographic, optical, weighing,
measuring, signalling, checking (supervision), life-saving and teaching apparatus
and instruments; apparatus and instruments for conducting, switching,
transforming, accumulating, regulating or controlling electricity; apparatus for
recording, transmission or reproduction of sound or images; magneticdata carriers,
recording discs; compact discs, DVDs and other digital recording media;
mechanisms for coin-operated apparatus; cash registers, calculating machines,
data processing equipment, computers; computer software; fire-extinguishing
apparatus.
But mere uniformity in categorization, by itself, does not automatically preclude the
registration of what appears to be an identical mark, if that be the case. In fact, this
Court, in a long line of cases, has held that such circumstance does not
necessarily result in any trademark infringement. The survey of jurisprudence cited
in Mighty Corporation v. E. & J Gallo Winery23 is enlightening on this point:
(a) in Acoje Mining Co., Inc. vs. Director of Patents,24 we ordered the approval of
Acoje Mining’s application for registration of the trademark LOTUS for its soy
sauce even though Philippine Refining Company had prior registration and use of
such identical mark for its edible oil which, like soy sauce, also belonged to Class
47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,25 we
upheld the Patent Director’s registration of the same trademark CAMIA for Ng
Sam’s ham under Class 47, despite Philippine Refining Company’s prior trademark
registration and actual use of such mark on its lard, butter, cooking oil (all of which
belonged to Class 47), abrasive detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun
Liong,26 we dismissed Hickok’s petition to cancel private respondent’s HICKOK
trademark registration for its Marikina shoes as against petitioner’s earlier
registration of the same trademark for handkerchiefs, briefs, belts and wallets.
Verily, whether or not the products covered by the trademark sought to be
registered by Taiwan Kolin, on the one hand, and those covered by the prior
issued certificate of registration in favor of Kolin Electronics, on the other, fall under
the same categories in the NCL is not the sole and decisive factor in determining a
possible violation of Kolin Electronics’ intellectual property right should petitioner’s
application be granted. It is hornbook doctrine, as held in the above-cited cases,
that emphasis should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties or characteristics.
The mere fact that one person has adopted and used a trademark on his goods
would not, without more, prevent the adoption and use of the same trademark by
others on unrelated articles of a different kind.27 The CA erred in denying
petitioner’s registration application
Respondent next parlays the idea of relation between products as a factor
militating against petitioner’s application. Citing Esso Standard Eastern, Inc. v.
Court of Appeals,28 respondent argues that the goods covered by petitioner’s
application and those covered by its registration are actually related belonging as
they do to the same class or have the same physical characteristics with reference
to their form, composition, texture, or quality, or if they serve the same purpose.
Respondent likewise draws parallelisms between the present controversy and the
following cases:29
(a) In Arce & Sons, Inc. vs. Selecta Biscuit Company,30 biscuits were held related
to milk because they were both food products;
(b) In Chua Che vs. Phil. Patents Office,31 soap and perfume, lipstick and nail
polish are held to be similarly related because they are common household items;
(c) In Ang vs. Teodoro,32 the trademark "Ang Tibay" for shoes and slippers was
disallowed to be used for shirts and pants because they belong to the same
general class of goods; and
(d) In Khe vs. Lever Bros. Co.,33 soap and pomade, although noncompetitive,
were held to be similar or belong to the same class, since both are toilet articles.
Respondent avers that Kolin Electronics’ and Taiwan Kolin’s products are closely-
related not only because both fall under Class 9 of the NCL, but mainly because
they both relate to electronic products, instruments, apparatus, or appliances.34
Pushing the point, respondent would argue that Taiwan Kolin and Kolin
Electronics’ goods are inherently similar in that they are all plugged into electric
sockets and perform a useful function.35 Furthermore, respondent echoes the
appellate court’s ratiocination in denying petitioner’s application, viz:36
36
Significantly, Kolin Electronics’ goods (automatic voltage regulator; converter;
recharger; stereo booster; AC-DC regulated power supply; step-down transformer;
and PA amplified AC-DC) and Taiwan Kolin’s television sets and DVD players are
both classified under class 9 of the NICE agreement. At first glance, it is also
evident that all these goods are generally described as electrical devices. x x x
[T]he goods of both Kolin Electronics and Taiwan Kolin will inevitably be introduced
to the public as "KOLIN" products and will be offered for sale in the same channels
of trade. Contrary to Taiwan Kolin’s claim, power supply as well as audio and
stereo equipment like booster and amplifier are not only sold in hardware and
electrical shops. These products are commonly found in appliance stores
alongside television sets and DVD players. With the present trend in today’s
entertainment of having a home theater system, it is not unlikely to see a stereo
booster, amplifier and automatic voltage regulator displayed together with the
television sets and DVD players. With the intertwined use of these products
bearing the identical "KOLIN" mark, the ordinary intelligent consumer would likely
assume that they are produced by the same manufacturer.
In sum, the intertwined use, the same classification of the products as class 9
under the NICE Agreement, and the fact that they generally flow through the same
channel of trade clearly establish that Taiwan Kolin’s television sets and DVD
players are closely related to Kolin Electronics’ goods. As correctly pointed out by
the BLA-IPO, allowing Taiwan Kolin’s registration would only confuse consumers
as to the origin of the products they intend to purchase. Accordingly, protection
should be afforded to Kolin Electronics, as the registered owner of the "KOLIN"
trademark.37 (emphasis added)
The CA’s approach and reasoning to arrive at the assailed holding that the
approval of petitioner’s application is likely to cause confusion or deceive fail to
persuade.
a. The products covered by petitioner’s application and respondent’s
registration are unrelated
A certificate of trademark registration confers upon the trademark owner the
exclusive right to sue those who have adopted a similar mark not only in
connection with the goods or services specified in the certificate, but also with
those that are related thereto.38
In resolving one of the pivotal issues in this case––whether or not the products of
the parties involved are related––the doctrine in Mighty Corporation is
authoritative. There, the Court held that the goods should be tested against several
factors before arriving at a sound conclusion on the question of relatedness.
Among these are:
(a) the business (and its location) to which the goods belong;
(b) the class of product to which the goods belong;
(c) the product’s quality, quantity, or size, including the nature of the package,
wrapper or container;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or essential characteristics with
reference to their form, composition, texture or quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate consumption, that is, day-to-day
household items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually purchased; and
(j) the channels of trade through which the goods flow, how they are distributed,
marketed, displayed and sold.39
As mentioned, the classification of the products under the NCL is merely part and
parcel of the factors to be considered in ascertaining whether the goods are
related. It is not sufficient to state that the goods involved herein are electronic
products under Class 9 in order to establish relatedness between the goods, for
this only accounts for one of many considerations enumerated in Mighty
Corporation. In this case, credence is accorded to petitioner’s assertions that:40
a. Taiwan Kolin’s goods are classified as home appliances as opposed to Kolin
Electronics’ goods which are power supply and audio equipment accessories;
b. Taiwan Kolin’s television sets and DVD players perform distinct function and
purpose from Kolin Electronics’ power supply and audio equipment; and
c. Taiwan Kolin sells and distributes its various home appliance products on
wholesale and to accredited dealers, whereas Kolin Electronics’ goods are sold
and flow through electrical and hardware stores.
Clearly then, it was erroneous for respondent to assume over the CA to conclude
that all electronic products are related and that the coverage of one electronic
product necessarily precludes the registration of a similar mark over another. In
this digital age wherein electronic products have not only diversified by leaps and
bounds, and are geared towards interoperability, it is difficult to assert readily, as
respondent simplistically did, that all devices that require plugging into sockets are
necessarily related goods.
It bears to stress at this point that the list of products included in Class 941 can be
sub-categorized into five (5) classifications, namely: (1) apparatus and instruments
for scientific or research purposes, (2) information technology and audiovisual
equipment, (3) apparatus and devices for controlling the distribution and use of
37
electricity, (4) optical apparatus and instruments, and (5) safety equipment.42
From this sub-classification, it becomes apparent that petitioner’s products, i.e.,
televisions and DVD players, belong to audio visiual equipment, while that of
respondent, consisting of automatic voltage regulator, converter, recharger, stereo
booster, AC-DC regulated power supply, step-down transformer, and PA amplified
AC-DC, generally fall under devices for controlling the distribution and use of
electricity.
b. The ordinarily intelligent buyer is not likely to be confused
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no rigid set rules can plausible be formulated. Each
case must be decided on its merits, with due regard to the goods or services
involved, the usual purchaser’s character and attitude, among others. In such
cases, even more than in any other litigation, precedent must be studied in the
light of the facts of a particular case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically
in point.43 For a clearer perspective and as matter of record, the following image
on the left44 is the trademark applied for by petitioner, while the image juxtaposed
to its right45 is the trademark registered by respondent:
While both competing marks refer to the word "KOLIN" written in upper case letters
and in bold font, the Court at once notes the distinct visual and aural differences
between them: Kolin Electronics’ mark is italicized and colored black while that of
Taiwan Kolin is white in pantone red color background. The differing features
between the two, though they may appear minimal, are sufficient to distinguish one
brand from the other.
It cannot be stressed enough that the products involved in the case at bar are,
generally speaking, various kinds of electronic products. These are not ordinary
consumable household items, like catsup, soy sauce or soap which are of minimal
cost.46 The products of the contending parties are relatively luxury items not easily
considered affordable. Accordingly, the casual buyer is predisposed to be more
cautious and discriminating in and would prefer to mull over his purchase.
Confusion and deception, then, is less likely.47 As further elucidated in Del Monte
Corporation v. Court of Appeals:48
x x x Among these, what essentially determines the attitudes of the purchaser,
specifically his inclination to be cautious, is the cost of the goods. To be sure, a
person who buys a box of candies will not exercise as much care as one who buys
an expensive watch. As a general rule, an ordinary buyer does not exercise as
much prudence in buying an article for which he pays a few centavos as he does
in purchasing a more valuable thing. Expensive and valuable items are normally
bought only after deliberate, comparative and analytical investigation. But mass
products, low priced articles in wide use, and matters of everyday purchase
requiring frequent replacement are bought by the casual consumer without great
care x x x. (emphasis added) Respondent has made much reliance on Arce &
Sons, Chua Che, Ang, and Khe, oblivious that they involved common household
items––i.e., biscuits and milk, cosmetics, clothes, and toilet articles, respectively––
whereas the extant case involves luxury items not regularly and inexpensively
purchased by the consuming public. In accord with common empirical experience,
the useful lives of televisions and DVD players last for about five (5) years,
minimum, making replacement purchases very infrequent. The same goes true
with converters and regulators that are seldom replaced despite the acquisition of
new equipment to be plugged onto it. In addition, the amount the buyer would be
parting with cannot be deemed minimal considering that the price of televisions or
DVD players can exceed today’s monthly minimum wage. In light of these
circumstances, it is then expected that the ordinary intelligent buyer would be more
discerning when it comes to deciding which electronic product they are going to
purchase, and it is this standard which this Court applies herein in determining the
likelihood of confusion should petitioner’s application be granted.
To be sure, the extant case is reminiscent of Emerald Garment Manufacturing
Corporation v. Court of Appeals,49 wherein the opposing trademarks are that of
Emerald Garment Manufacturing Corporation’s "Stylistic Mr. Lee" and H.D. Lee’s
"LEE." In the said case, the appellate court affirmed the decision of the Director of
Patents denying Emerald Garment’s application for registration due to confusing
similarity with H.D. Lee’s trademark. This Court, however, was of a different beat
and ruled that there is no confusing similarity between the marks, given that the
products covered by the trademark, i.e., jeans, were, at that time, considered
pricey, typically purchased by intelligent buyers familiar with the products and are
more circumspect, and, therefore, would not easily be deceived. As held:
Finally, in line with the foregoing discussions, more credit should be given to the
"ordinary purchaser." Cast in this particular controversy, the ordinary purchaser is
not the "completely unwary consumer" but is the "ordinarily intelligent buyer"
considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok50 is better suited to the
present case. There, the "ordinary purchaser" was defined as one "accustomed to
buy, and therefore to some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception of some
persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is
not found in the deception, or the possibility of deception, of the person who knows
nothing about the design which has been counterfeited, and who must be
38
indifferent between that and the other. The simulation, in order to be objectionable,
must be such as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to purchase."51
(emphasis added)
Consistent with the above ruling, this Court finds that the differences between the
two marks, subtle as they may be, are sufficient to prevent any confusion that may
ensue should petitioner’s trademark application be granted. As held in Esso
Standard Eastern, Inc.:52
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The
Decision and the Resolution of the Court of Appeals in CA-G.R. SP No. 122565,
dated April 30, 2013 and November 6, 2013, respectively, are hereby REVERSED
and SET ASIDE. Accordingly, the Decision of the Intellectual Property Office
Director General in Inter Partes Case No. 14-2006-00096, dated November 23,
2011, is hereby REINSTATED.
SO ORDERED.

Respondent court correctly ruled that considering the general appearances of each
mark as a whole, the possibility of any confusion is unlikely. A comparison of the
labels of the samples of the goods submitted by the parties shows a great many
differences on the trademarks used. As pointed out by respondent court in its
appealed decision, "(A) witness for the plaintiff, Mr. Buhay, admitted that the color
of the ‘ESSO’ used by the plaintiff for the oval design where the blue word ESSO is
contained is the distinct and unique kind of blue. In his answer to the trial court’s
question, Mr. Buhay informed the court that the plaintiff never used its trademark
on any product where the combination of colors is similar to the label of the Esso
cigarettes," and "Another witness for the plaintiff, Mr. Tengco, testified that
generally, the plaintiff’s trademark comes all in either red, white, blue or any
combination of the three colors. It is to be pointed out that not even a shade of
these colors appears on the trademark of the appellant’s cigarette. The only color
that the appellant uses in its trademark is green."

Even the lower court, which ruled initially for petitioner, found that a "noticeable
difference between the brand ESSO being used by the defendants and the
trademark ESSO of the plaintiff is that the former has a rectangular background,
while in that of the plaintiff the word ESSO is enclosed in an oval background."

All told, We are convinced that petitioner's trademark registration not only covers
unrelated good, but is also incapable of deceiving the ordinary intelligent buyer.
The ordinary purchaser must be thought of as having, and credited with, at least a
modicum of intelligence to be able to see the differences between the two
trademarks in question.53

Questions of fact may still be entertained

On a final note, the policy according factual findings of courts a quo great respect,
if not finality, is not binding where they have overlooked, misapprehended, or
misapplied any fact or circumstance of weight and substances.54 So it must be
here; the nature of the products involved materially affects the outcome of the
instant case. A reversal of the appellate Court's Decision is then in order.

39
G.R. No. 202423 January 28, 2013
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-ONG,
Petitioners, vs. VICENTE LO, Respondent.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration1 dated October 22, 2012 filed by
petitioners Chester Uyco, Winston Uychiyong and Cherry C. Uyco-Ong to set
aside the Resolution2 dated September 12, 2012 of this Court, which affirmed the
decision3 dated March 9, 2012 and the resolution4 dated June 21, 2012 of the
Court of Appeals (CA) in CA-G.R. SP No. 111964. The CA affirmed the resolution5
dated September 1, 2008 of the Department of Justice (DOJ). Both the CA and the
DOJ found probable cause to charge the petitioners with false designation of
origin, in violation of Section 169.1, in relation with Section 170, of Republic Act
No. (RA) 8293, otherwise known as the "Intellectual Property Code of the
Philippines."6
The disputed marks in this case are the "HIPOLITO & SEA HORSE &
TRIANGULAR DEVICE," "FAMA," and other related marks, service marks and
trade names of Casa Hipolito S.A. Portugal appearing in kerosene burners.
Respondent Vicente Lo and Philippine Burners Manufacturing Corporation (PBMC)
filed a complaint against the officers of Wintrade Industrial SalesCorporation
(Wintrade), including petitioners Chester Uyco, Winston Uychiyong and Cherry
Uyco-Ong, and of National Hardware, including Mario Sy Chua, for violation of
Section 169.1, in relation to Section 170, of RA 8293.
Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes
para Gass, Lda. (Gasirel), the owner of the disputed marks, executed a deed of
assignment transferring these marks in his favor, to be used in all countries except
for those in Europe and America.7 In a test buy, Lo purchased from National
Hardware kerosene burners with the subject marks and the designations "Made in
Portugal" and "Original Portugal" in the wrappers. These products were
manufactured by Wintrade. Lo claimed that as the assignee for the trademarks, he
had not authorized Wintrade to use these marks, nor had Casa Hipolito S.A.
Portugal. While a prior authority was given to Wintrade’s predecessor-in-interest,
Wonder Project & Development Corporation (Wonder), Casa Hipolito S.A. Portugal
had already revoked this authority through a letter of cancellation dated May 31,
1993.8 The kerosene burners manufactured by Wintrade have caused confusion,
mistake and deception on the part of the buying public. Lo stated that the real and
genuine burners are those manufactured by its agent, PBMC.
In their Answer, the petitioners stated that they are the officers of Wintrade which
owns the subject trademarks and their variants. To prove this assertion, they
submitted as evidence the certificates of registration with the Intellectual Property
Office. They alleged that Gasirel, not Lo, was the real party-in-interest. They
allegedly derived their authority to use the marks from Casa Hipolito S.A. Portugal
through Wonder, their predecessor-in-interest. Moreover, PBMC had already
ceased to be a corporation and, thus, the licensing 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 Section 87 of RA 8293. The
petitioners pointed out that Lo failed to sufficiently prove that the burners bought
from National Hardware were those that they manufactured. But at the same time,
they also argued that the marks "Made in Portugal" and "Original Portugal" are
merely descriptive and refer to the source of the design and the history of
manufacture.
In a separate Answer, Chua admitted that he had dealt with Wintrade for several
years and had sold its products. He had not been aware that Wintrade had lost the
authority to manufacture, distribute, and deal with products containing the subject
marks, and he was never informed of Wintrade’s loss of authority. Thus, he could
have not been part of any conspiracy.
After the preliminary investigation, the Chief State Prosecutor found probable
cause to indict the petitioners for violation of Section 169.1, in relation with Section
170, of RA 8293. This law punishes any person who uses in commerce any false
designation of origin which is likely to cause confusion or mistake as to the origin
of the product. The law seeks to protect the public; thus, even if Lo does not have
the legal capacity to sue, the State can still prosecute the petitioners to prevent
damage and prejudice to the public.
On appeal, the DOJ issued a resolution affirming the finding of probable case. It
gave credence to Lo’s assertion that he is the proper assignee of the subject
marks. More importantly, it took note of the petitioners’ admission that they used
the words "Made in Portugal" when in fact, these products were made in the
Philippines. Had they intended to refer to the source of the design or the history of
the manufacture, they should have explicitly said so in their packaging. It then
concluded that the petitioners’ defenses would be better ventilated during the trial
and that the admissions of the petitioners make up a sufficient basis for probable
cause.
The CA found no grave abuse of discretion on the part of the DOJ and affirmed the
DOJ’s ruling.
40
When the petitioners filed their petition before us, we denied the petition for failure
to sufficiently show any reversible error in the assailed judgment to warrant the
exercise of the Court’s discretionary power.
We find no reversible error on the part of the CA and the DOJ to merit
reconsideration. The petitioners reiterate their argument that the products bought
during the test buy bearing the trademarks in question were not manufactured by,
or in any way connected with, the petitioners and/or Wintrade. They also allege
that the words "Made in Portugal" and "Original Portugal" refer to the origin of the
design and not to the origin of the goods.
The petitioners again try to convince the Court that they have not manufactured
the products bearing the marks "Made in Portugal" and "Original Portugal" that
were bought during the test buy. However, their own admission and the statement
given by Chua bear considerable weight.
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 Philippines; to their use of the disputed marks; and to
their justification for their use. It reads as follows:
24. As earlier mentioned, the predecessor-in-interest of Wintrade was the former
exclusive licensee of Casa Hipolito SA of Portugal since the 1970’s, and that
Wintrade purchased all the rights on the said trademarks prior to the closure of
said company. Indeed, the burners sold by Wintrade used to be imported from
Portugal, but Wintrade later on discovered the possibility of obtaining these
burners from other sources or of manufacturing the same in the Philippines.
Wintrade’s decision to procure these burners from 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 WINTRADE.101âwphi1
Thus, the evidence shows that petitioners, who are officers of Wintrade, placed the
words "Made in Portugal" and "Original Portugal" with the disputed marks knowing
fully well — because of their previous dealings with the Portuguese company —
that these were the marks used in the products of Casa Hipolito S.A. Portugal.
More importantly, the products that Wintrade sold were admittedly produced in the
Philippines, with no authority from Casa Hipolito S.A. Portugal. The law on
trademarks and trade names precisely precludes a person from profiting from the
business reputation built by another and from deceiving the public as to the origins
of products. These facts support the consistent findings of the State Prosecutor,
the DOJ and the CA that probable cause exists to charge the petitioners with false
designation of origin. The fact that the evidence did not come from Lo, but had
been given by the petitioners, is of no significance.
The argument that the words "Made in Portugal" and "Original Portugal" refer to
the origin of the design and not to the origin of the goods does not negate the
finding of probable cause; at the same time, it is an argument that the petitioners
are not barred by this Resolution from raising as a defense during the hearing of
the case.
WHEREFORE, premises considered, we hereby DENY the motion for
reconsideration for lack of merit.
SO ORDERED.
41
G.R. No. L-37494 March 30, 1982
MANUEL SY Y LIM, petitioner, vs. HON. COURT OF APPEALS, HON.
EDUARDO P. CAGUIOA, as Judge of the CFI of Bulacan, HON. PEDRO D.
OPIANA as Provincial Fiscal of Bulacan, ATTYS. DAKILA CASTRO and
CRISTINO CARREON, as Counsel for SEA COMMERCIAL COMPANY,
INC., respondents.
DE CASTRO, J.:p
Petition for certiorari seeking the review of the decision of the Court of
Appeals 1 sustaining the order of the Court of First instance of Bulacan denying the
motion to quash filed by petitioner to an information for violation of Article 188,
paragraph 2 of the Revised Penal Code,
It appears that petitioner was charged with violation of Article 189, paragraph 1, of
the Revised Penal Code in an information quoted as follows:
That in or about during the period from June, 1970 to October,
1970, in the municipality of Valenzuela, province of Bulacan,
Philippines and within the jurisdiction of this Honorable Court, the
said accused Manuel Sy y Lim, in unfair competition and for the
purpose of deceiving or defrauding the Sea Commercial
Company, Incorporated, a domestic corporation duly 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 sale hand pumps of inferior quality and
labeled JETMATIC DRAGON HAND PUMP and at a lower price
and giving them the general appearance of the JETMATIC
DRAGON hand pumps of the Sea Commercial Company,
Incorporated, as to the outside appearance, including, among
others, the color, the embossed words PAT No. 463490 on the
spout the embossed word MODEL chamber assembly, the
embossed words JETMATIC DRAGON HAND PUMP on the
lateral surface of the cylinder assembly and many other parts both
as to the design and the materials used which induced the public
to believe that the JETMATIC DRAGON HAND pumps offered are
those of the Sea Commercial Company, Incorporated, to the
damage and prejudice of the said Sea Commercial Company,
Incorporated and the general public. 2
After trial, the trial court rendered judgment the dispositive portion
of which reads:
WHEREFORE, the prosecution having failed to prove that the
accused gave his goods the general appearance of the goods of
another manufacturer or dealer, this Court finds him not guilty of
the same and acquits him of the charge of violating Article 189,
paragraph 1 of the Revised Penal Code. However, the Court finds
that the 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 Fiscal to prepare the
corresponding information charging the accused Manuel Sy y Lim
with violation of Article 188, No. 2 of the Revised Penal Code and
to file the same within five (5) days from today. 3
The respondent Fiscal filed the information as ordered by the trial court, alleging as
follows:
That in or about or during the period from June, 1970 to October,
1970, in the municipality of Valenzuela, province of Bulacan,
Philippines, and within the jurisdiction of this Honorable Court, the
said accused Manuel Sy y Lim, in infringement of trademark and
for the purpose of deceiving or defrauding the Sea Commercial
Company, Incorporated, a domestic corporation duly organized
under the laws of and doing business in the Philippines, of its
legitimate trade and/or the public in general, did then and there
wilfully, unlawfully and feloniously sell and/or offer for sale hand
pumps of inferior quality and labeled JETMATIC DRAGON HAND
PUMP at a lower price, accused knowing fully well that the mark
JETMATIC DRAGON HAND PUMP has been fraudulently used in
the said hand pumps, thereby giving them the general appearance
of the old and/or being offered for sale are those of the Sea
Commercial Company, Incorporated, when in fact they are not to
the damage and prejudice of the said Sea Commercial Company,
Incorporated and the general public. 4
To the above information, petitioner filed a motion to quash alleging that it did not
conform to the prescribed form; that the Court had no jurisdiction over the case
because no preliminary investigation was conducted, thereby depriving accused of
due process; and that the new information would place accused in double
jeopardy. 5 As already stated, this motion was denied.
In the instant case, petitioner makes the following assignment of errors:
42
 I successfully contended that what happened with respect to the offense of
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER IS NOT PLACED IN DOUBLE JEOPARDY
BY HIS PROSECUTION UNDER THE SECOND INFORMATION
IN QUESTION.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER COULD BE VALIDLY ARRAIGNED AND
TRIED UNDER THE SECOND INFORMATION WITHOUT A
PRELIMINARY INVESTIGATION HAVING BEEN PREVIOUSLY
CONDUCTED THEREON BY THE FISCAL, AS INSISTED UPON.
III
THE HONORABLE COURT OF APPEALS ERRED IN DENYING
PETITIONER'S PLEA FOR certiorari AND mandamus TOWARD
QUASHING THE SECOND INFORMATION IN QUESTION. 6
1. It is the contention of petitioner that by the filing of the second information, he
would be placed in double jeopardy because under the first information, he could
have been convicted of the offense charged in the second information. Since he
was acquitted under the first information, to charge him again for the same offense
as aforestated would according to petitioner, constitute double jeopardy.
Petitioner supports this contention by pointing out that the only difference between
the two informations, in so far as the charge of infringement of trademark is
concerned, is that in the first information, there is no allegation that the trademark
is registered while in the second information, the allegation is made that the
trademark is registered. He contends, however, that registration is not an element
of the crime as defined in Article 188, par. 2, of the Revised Penal Code. The
absence of allegation of registration of the trademark is, therefore, no impediment
to his conviction for infringement of trademark under the first information which, in
all other respects, alleged what would constitute the aforesaid offense. Although by
express designation of the offense, what was charged therein is unfair competition,
it is the allegation of the information that determines what offense is being actually
charged.
In advancing the above propositions, petitioner would treat the two offenses of
infringement of trademark and unfair competition as separate and distinct, not as
one necessarily included in, or including, the other. Upon this premise, it cannot be
infringement of trademark, assuming it was also charged in the first information as
a separate offense, is, by no manner of reasoning, one of acquittal for said
offense. The trial court precisely found sufficient evidence with which to indict him
for said offense and accordingly ordered the filing of a more proper information,
proceeding in accordance with Section 13 paragraph 2, of Rule 110 and Section
12, of Rule 119 of the Rules of Court, which are quoted:
If it appears at any time before judgment that a mistake has been
made in charging the proper offense the court may dismiss the
original complaint or information and order the filing of a new one
charging the proper offense, provided the defendant would not be
placed thereby in double jeopardy, and may also require the
witnesses to give bail for their appearance at the trial.
SEC. 12. When mistake has been made in charging the proper
offense. — When it appears at any time after trial has begun and
before judgment is taken, that a mistake has been made in
charging the proper offense, and the defendant cannot be
convicted of the offense charged, nor of any other offense
necessarily included therein, the defendant must not be
discharged, if there appears to be a good cause to detain him in
custody, but the court must commit him to answer for the proper
offense, and may also require the witnesses to give bail for their
appearance at the trial.
In the opinion of the trial court, the first information did not properly charge the
offense of infringement of trademark, for what was expressly charged was unfair
competition. In proceeding in accordance with the above quoted provisions of the
Rules of Court, the trial court evidently felt it can not properly convict the accused
of infringement of trademark, although it found evidence sufficient to justify filing
the proper information for said offense. But, undoubtedly, the court found it not
proper to acquit the accused of said offense. Hence there can be no double
jeopardy as to the offense charged in the second information on the ground of a
prior acquittal for the same offense.
It is, therefore, absolutely correct to hold that there is on the basis of the facts as
stated above, no double jeopardy even on the premise that "registration" is not an
essential element of the offense charged in the second information as contended
by petitioner. It becomes more so if registration is a necessary element as
submitted by the Solicitor General with whom We are inclined to agree, although
an express ruling on the matter need no longer be made for not being material nor
decisive.
43
Upon a slightly different theory, petitioner would, likewise invoke his right against
double jeopardy. Thus he cites the case of U.S. vs. Lim Suco 7 which hold that
after conviction for a crime which has various incidents included in it, he cannot be
a second time tried for one of those incidents without being twice put in jeopardy.
He also cites another case 8 for the proposition that the charge in the second
information for an act already alleged in the first information which flowed from an
identical or a single criminal intent, in this case the single criminal act of unfair
competition, should not be divided into separate crimes, as would happen if a
separate crime of infringement of trademark is to be prosecuted again, More
specifically, he cites the case of a charge for illegal importation of explosives as
not allowing a subsequent prosecution for illegal possession of the same
explosives. 9 This holds true, according to petitioner, if the description of the
offense is merely changed in the second information but which would not make for
any substantial difference between the description in the first information and that
in the second information. citing Chief Justice Moran. 10
What makes the ruling cited by petitioner not applicable to the present is that in the
cases cited, acquittal was for the offense specifically charged without the trial court
expressly finding that for the other offense also charged but not expressly so by
the statutory designation of the offense, evidence exists to justify his being held to
answer for such offense, in accordance with Section 12, Rule 119 of the Rules of
Court, as the trial court in the instant case very explicitly did. It is this circumstance
that, clearly and undisputably would prevent double jeopardy to attach, for there is
neither acquittal nor conviction, not even dismissal of the case, which might result
in double jeopardy arising to ban the proceedings contemplated in the aforecited
provisions of the Rules of Court.
Court cited speaks of "before judgment." But as already intimated, as to the
offense of infringement of trademark, which petitioner himself contends was also
charged in the first information, the Court rendered no judgment yet, either for
acquittal or for conviction, as it appeared to the trial judge that the accused cannot
properly be convicted for said offense, even if conviction was warranted by the
evidence, a mistake having been made, as he read the information, and with
reason, in charging the proper offense.
However, if petitioner insists on another preliminary investigation, the same may
be granted by way of "reinvestigation", the Solicitor General who actually
represents also the prosecution having expressed conformity to the holding of one,
Let it not be said that We are not mindful of the rule that all doubts should be
resolved in favor of the accused, a rule which itself should be liberally construed in
his favor.
WHEREFORE, as recommended by the Solicitor General, the decision appealed
from is modified as to give petitioner the right of preliminary investigation before he
is arraigned and tried under the second information for violation of Article 188,
paragraph 2, of the Revised Penal Code. No costs.
SO ORDERED.

From what has been said above, the applicability of Section 13, paragraph 2 of
Rule 110, in relation to 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 also sufficiently included in the first information as a
separate offense. But with respect thereto, the trial court made no decision, either
of acquittal or conviction. It felt that under the information as so worded, conviction
was not legally possible obviously for not sufficiently informing the accused of the
nature and cause of the accusation against him, which is one of his constitutional
rights, although factually, the assessment of the evidence by the court tended
towards justifying conviction. Verily, the situation fits into what is contemplated by
the provisions of the Rules of Court already referred to, which do not call for a new
or separate preliminary investigation, which petitioner contends is indispensable, to
which the Solicitor General expressed agreement.

What evidently led the Solicitor General to give his conformity to the stand taken
by petitioner as to the necessity of a new preliminary investigation is his belief that
"judgment has already been rendered acquitting the accused", while the Rules of

44
G.R. Nos. 160054-55 July 21, 2004
MANOLO P. SAMSON, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge, Regional Trial
Court of Quezon City, Branch 90, PEOPLE OF THE PHILIPPINES and
CATERPILLAR, INC., respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for certiorari is the March 26, 2003 Order1 of the Regional
Trial Court of Quezon City, Branch 90, which denied petitioner’s – (1) motion to
quash the information; and (2) motion for reconsideration of the August 9, 2002
Order denying his motion to suspend the arraignment and other proceedings in
Criminal Case Nos. Q-02-108043-44. Petitioner also questioned its August 5, 2003
Order2 which denied his motion for reconsideration.
The undisputed facts show that on March 7, 2002, two 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 dates and
places of commission, were filed against petitioner Manolo P. Samson, the
registered owner of ITTI Shoes. The accusatory portion of said informations read:
That on or about the first week of November 1999 and sometime prior or
subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this
Honorable Court, above-named accused, owner/proprietor of ITTI Shoes/Mano
Shoes Manufactuirng Corporation located at Robinson’s Galleria, EDSA corner
Ortigas Avenue, Quezon City, did then and there willfully, unlawfully and
feloniously distribute, sell and/or offer for sale CATERPILLAR products such as
footwear, garments, clothing, bags, accessories and paraphernalia which are
closely identical to and/or colorable imitations of the authentic Caterpillar products
and likewise using trademarks, symbols and/or designs as would cause confusion,
mistake or deception on the part of the buying public to the damage and prejudice
of CATERPILLAR, INC., the prior adopter, user and owner of the following
internationally: "CATERPILLAR", "CAT", "CATERPILLAR & DESIGN", "CAT AND
DESIGN", "WALKING MACHINES" and "TRACK-TYPE TRACTOR & DESIGN."
CONTRARY TO LAW.3
On April 19, 2002, petitioner filed a motion to suspend arraignment and other
proceedings in view of the existence of an alleged prejudicial question involved in
Civil Case No. Q-00-41446 for unfair competition pending with the same branch;
and also in view of the 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 with unfair competition. In an Order dated August 9, 2002, the
trial court denied the motion to suspend arraignment and other proceedings.
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
challenging the jurisdiction of the trial court over the offense charged. He
contended that since under Section 170 of R.A. No. 8293, the penalty4 of
imprisonment for unfair competition does not exceed six years, the offense is
cognizable by the Municipal Trial Courts and not by the Regional Trial Court, per
R.A. No. 7691.
In its assailed March 26, 2003 Order, the trial court denied petitioner’s twin
motions.6 A motion for reconsideration thereof was likewise denied on August 5,
2003.
Hence, the instant petition alleging that respondent Judge gravely abused its
discretion in issuing the assailed orders.
The issues posed for resolution are – (1) Which court has jurisdiction over criminal
and civil cases for violation of intellectual property rights? (2) Did the respondent
Judge gravely abuse his discretion in refusing to 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 pendency of a petition for
review with the Secretary of Justice on the finding of probable cause for unfair
competition?
Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the
criminal penalty for infringement of registered marks, unfair competition, false
designation of origin and false description or representation, is imprisonment from
2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two Hundred
Thousand Pesos, to wit:
SEC. 170. Penalties. – Independent of the civil and administrative sanctions
imposed by law, a criminal penalty of imprisonment from two (2) years to five (5)
years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred
thousand pesos (P200,000.00), shall be imposed on any person who is found
guilty of committing any of the acts mentioned in Section 155 [Infringement],
Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin
45
and False Description or Representation].
Corollarily, Section 163 of the same Code states that 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 existing laws, thus –
SEC. 163. Jurisdiction of Court. – All actions under Sections 150, 155, 164 and
166 to 169 shall be brought before the proper courts with appropriate jurisdiction
under existing laws. (Emphasis supplied)
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 registered marks, unfair competition, false designation of origin and false
description or representation, is lodged with the Court of First Instance (now
Regional Trial Court) –
SEC. 27. Jurisdiction of Court of First Instance. – All actions under this Chapter [V
– Infringement] and Chapters VI [Unfair Competition] and VII [False Designation of
Origin and False Description or Representation], hereof shall be brought before the
Court of First Instance.
We find no merit in the claim of petitioner that R.A. No. 166 was expressly
repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293, reads –
SEC. 239. Repeals. – 239.1. All Acts and parts of Acts inconsistent herewith, more
particularly Republic Act No. 165, as amended; Republic Act No. 166, as
amended; and Articles 188 and 189 of the Revised Penal Code; Presidential
Decree No. 49, including Presidential Decree No. 285, as amended, are hereby
repealed. (Emphasis added)
Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its
entirety, otherwise, it would not have used the phrases "parts of Acts" and
"inconsistent herewith;" and it would have simply stated "Republic Act No. 165, as
amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the
Revised Penal Code; Presidential Decree No. 49, including Presidential Decree
No. 285, as amended are hereby repealed." It would have removed all doubts that
said specific laws had been rendered without force and effect. The use of the
phrases "parts of Acts" and "inconsistent herewith" only means that the repeal
pertains only to provisions which are repugnant or not susceptible of harmonization
with R.A. No. 8293.6 Section 27 of R.A. No. 166, however, is consistent and in
harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest
jurisdiction over violations of intellectual property rights with the Metropolitan Trial
Courts, it would have expressly stated so under Section 163 thereof.
Moreover, the settled rule in statutory construction is that in case of conflict
between a general law and a special law, the latter must prevail. Jurisdiction
conferred by a special law to Regional Trial Courts must prevail over that granted
by a general law to Municipal Trial Courts.7
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws8 conferring
jurisdiction over violations of intellectual property rights to the Regional Trial Court.
They should therefore prevail over R.A. No. 7691, which is a general law.9 Hence,
jurisdiction over the instant criminal case for unfair competition is properly lodged
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.
In fact, to implement and ensure the speedy disposition of cases involving
violations of intellectual property rights under R.A. No. 8293, the Court issued A.M.
No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts
as Intellectual Property Courts. On June 17, 2003, the Court further issued a
Resolution consolidating jurisdiction to hear and decide Intellectual Property Code
and Securities and Exchange Commission cases in specific Regional Trial Courts
designated as Special Commercial Courts.
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. No. 166 was repealed by R.A. No. 8293. Neither did we make a categorical
ruling therein that jurisdiction over cases for violation of intellectual property rights
is lodged with the Municipal Trial Courts. The passing remark in Mirpuri on the
repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the
enactment of the present Intellectual Property Code and cannot thus be construed
as a jurisdictional pronouncement in cases for violation of intellectual property
rights.
Anent the second issue, petitioner failed to substantiate his claim that there was a
prejudicial question. In his petition, he prayed for the reversal of the March 26,
2003 order which sustained the denial of his motion to suspend arraignment and
other proceedings in Criminal Case Nos. Q-02-108043-44. For unknown reasons,
however, he made no discussion in support of said prayer in his petition and reply
to comment. Neither did he attach a copy of the complaint in Civil Case No. Q-00-
41446 nor quote the pertinent portion thereof to prove the existence of a prejudicial
question.
46
At any rate, there is no prejudicial question if the civil and the criminal action can,
according to law, proceed independently of each other.11 Under Rule 111, Section
3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32,
33, 34 and 2176 of the Civil Code, the independent civil action may be brought by
the offended party. It shall proceed independently of the criminal action and shall
require only a preponderance of evidence.
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:

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

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.

47
G.R. No. 96161 February 21, 1992
PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS
INDUSTRIAL DEVELOPMENT, INC., petitioners,
vs.
COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION and
STANDARD PHILIPS CORPORATION, respondents.
Emeterio V. Soliven & Associates for petitioners.
Narciso A. Manantan for private respondent.
MELENCIO-HERRERA, J.:
Petitioners challenge the Decision of the Court of 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, dismissing petitioners'
prayer for the cancellation or removal of the word "PHILIPS" from private
respondent's corporate name.
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 right to use the same
considering that both parties engage in the same business.
In its Answer, dated 7 March 1985, Private Respondent countered that Petitioner
PEBV has no legal capacity to sue; that its use of its corporate name is not at all
similar to Petitioners' trademark PHILIPS when considered in its entirety; and that
its products consisting of chain rollers, belts, bearings and cutting saw are grossly
different from Petitioners' electrical products.
After conducting hearings with respect to the prayer for Injunction; the SEC
Hearing Officer, on 27 September 1985, ruled against the issuance of such Writ.
On 30 January 1987, the same Hearing Officer dismissed the Petition for lack of
merit. In so ruling, the latter declared that inasmuch as the SEC found no 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 toto during trial on the merits. Besides, Section 18 of
the Corporation Code (infra) is applicable only when the corporate names in
question are identical. Here, there is no confusing similarity between Petitioners'
and Private Respondent's corporate names as those of the Petitioners contain at
least two words different from that of the Respondent. Petitioners' Motion for
Reconsideration was likewise denied on 17 June 1987.
On appeal, the SEC en banc affirmed the dismissal declaring that the corporate
names of Petitioners and Private Respondent hardly breed confusion inasmuch as
each contains at least two different words and, therefore, rules out any possibility
of confusing one for the other.
On 30 January 1990, Petitioners sought an extension of time to file a Petition for
Review on Certiorari before this Court, which Petition was later referred to the
Court of Appeals in a Resolution dated 12 February 1990.
In deciding to dismiss the petition on 31 July 1990, the Court of
Appeals1 swept aside Petitioners' claim that following the ruling in Converse
Rubber Corporation v. Universal 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 corporate name as the same constitutes a dominant
part of Petitioners' corporate names. In so holding, the Appellate Court observed
48
that the Converse case is not four-square with the present case inasmuch as the
contending parties in Converse are engaged in a similar business, that is, the
manufacture of rubber shoes. Upholding the SEC, the Appellate Court concluded
that "private respondents' products consisting of chain rollers, belts, bearings and
cutting saw are unrelated and non-competing with petitioners' products i.e.
electrical lamps such that consumers would not in any probability mistake one as
the source or origin of the product of the other."
The Appellate Court denied Petitioners' Motion for Reconsideration on 20
November 1990, hence, this Petition which was given due course on 22 April
1991, after which the parties were required to submit their memoranda, the latest
of which was received on 2 July 1991. In December 1991, the SEC was also
required to elevate its records for the perusal of this Court, the same not having
been apparently before respondent Court of Appeals.
We find basis for petitioners' plea.
As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927), the
Court declared that a corporation's right to use its corporate and trade name is a
property right, a right in rem, which it may assert and protect against the world in
the same manner as it may protect its tangible property, real or personal, against
trespass or conversion. It is regarded, to a certain extent, as a property right and
one which cannot be impaired or defeated by subsequent appropriation by another
corporation in the same field (Red Line Transportation Co. vs. Rural Transit Co.,
September 8, 1934, 20 Phil 549).
A name is peculiarly important as necessary to the very existence of a corporation
(American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160;
Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington
Distilling Co. 40 W Va 530, 23 SE 792). Its name is one of its attributes, an
element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-
4). The general rule as to corporations 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 corporation
in this respect designates the corporation in the same manner as the name of an
individual designates the person (Cincinnati Cooperage Co. vs. 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 franchise as any other
privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P
1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18 RI 165, 26 A
36).
A corporation acquires its name by choice and need not select a name identical
with or similar to one already appropriated by a senior corporation while an
individual's name is thrust upon him (See Standard Oil Co. of New Mexico, Inc. v.
Standard Oil Co. of California, 56 F 2d 973, 977). A corporation can no more use a
corporate name in violation of the rights of others than an individual can use his
name legally acquired so as to mislead the public and injure another (Armington
vs. Palmer, 21 RI 109. 42 A 308).
Our own Corporation Code, in its Section 18, expressly provides that:
No corporate name may be allowed by the Securities and Exchange Commission if
the proposed name is identical or deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing law. Where a change in a corporate
name is approved, the commission shall issue an amended certificate of
incorporation under the amended name. (Emphasis supplied)
The statutory prohibition cannot be any clearer. To come within its scope, two
requisites must be proven, namely:
(1) that the complainant corporation acquired a prior right over the use of such
corporate name; and
(2) the proposed name is either:
(a) identical; or
(b) deceptively or confusingly similar
to that of any existing corporation or to any other name already protected by law;
or
(c) patently deceptive, confusing or contrary to existing law.
The right to the exclusive use of a corporate name with 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 Oyster House v. Mihich,
75 Wash. 274, 134 Pac. 921). In this regard, there is no doubt with respect to
Petitioners' prior adoption of' the name ''PHILIPS" as part of its corporate name.
Petitioners Philips Electrical and Philips Industrial were incorporated on 29 August
1956 and 25 May 1956, respectively, while Respondent Standard Philips was
issued a Certificate of Registration on 12 April 1982, twenty-six (26) years later
(Rollo, p. 16). Petitioner PEBV has also used the trademark "PHILIPS" on
electrical lamps of all types and their accessories since 30 September 1922, as
evidenced by Certificate of Registration No. 1651.
49

The second requisite no less exists in this case. In determining the existence of
confusing similarity in corporate names, the test is whether the similarity is such as
to mislead a person, using ordinary care and discrimination. In so doing, the Court
must look to the record as well as the names themselves (Ohio Nat. Life Ins. Co. v.
Ohio Life Ins. Co., 210 NE 2d 298). While the corporate names of Petitioners and
Private Respondent are not identical, a reading of Petitioner's corporate names, to
wit: PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS
INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to conclude that
"PHILIPS" is, indeed, the dominant word in that all the companies affiliated or
associated with the principal corporation, PEBV, are known in the Philippines and
abroad as the PHILIPS Group of Companies.
Respondents maintain, however, that Petitioners did not present an iota of proof of
actual confusion or deception of the public much less a single purchaser of their
product who has been deceived or confused or showed any likelihood of
confusion. It is settled, however, that proof of actual confusion need not be shown.
It suffices that confusion is probably or likely to occur (6 Fletcher [Perm Ed], pp.
107-108, enumerating a long line of cases).
It may be that Private Respondent's products also consist of chain rollers, belts,
bearing and the like, while petitioners deal principally with electrical products. It is
significant to note, however, that even the Director of Patents had denied Private
Respondent's application for registration of the trademarks "Standard Philips &
Device" for chain, rollers, belts, bearings and cutting saw. That office held that
PEBV, "had shipped to its subsidiaries in the Philippines equipment, machines and
their parts which fall under international class where "chains, rollers, belts,
bearings and cutting saw," the goods in connection with which Respondent is
seeking to register 'STANDARD PHILIPS' . . . also belong" ( Inter Partes Case No.
2010, June 17, 1988, SEC Rollo).
Furthermore, the records show that among Private Respondent's primary
purposes in its Articles of Incorporation (Annex D, Petition p. 37, Rollo) are the
following:
To buy, sell, barter, trade, manufacture, import, export, or otherwise acquire,
dispose of, and deal in and deal with any kind of goods, wares, and merchandise
such as but not limited to plastics, carbon products, office stationery and supplies,
hardware parts, electrical wiring devices, electrical component parts, and/or
complement of industrial, agricultural or commercial machineries, constructive
supplies, electrical supplies and other merchandise which are or may become
articles of commerce except food, drugs and cosmetics and to carry on such
business as manufacturer, distributor, dealer, indentor, factor, manufacturer's
representative capacity for domestic or foreign companies. (emphasis ours)
For its part, Philips Electrical also includes, among its primary purposes, the
following:
To develop manufacture and deal in electrical products, including electronic,
mechanical and other similar products . . . (p. 30, Record of SEC Case No. 2743)
Given Private Respondent's aforesaid underlined primary purpose, nothing could
prevent it from dealing in the same line of business of electrical devices, products
or supplies which fall under its primary purposes. Besides, there is showing that
Private Respondent not only manufactured and sold ballasts for fluorescent lamps
with their corporate name printed thereon but also advertised the same as, among
others, Standard Philips (TSN, before the SEC, pp. 14, 17, 25, 26, 37-42, June 14,
1985; pp. 16-19, July 25, 1985). As aptly pointed out by Petitioners, [p]rivate
respondent's choice of "PHILIPS" as part of its corporate name [STANDARD
PHILIPS CORPORATION] . . . tends to show said respondent's intention to ride on
the popularity and established goodwill of said petitioner's business throughout the
world" (Rollo, p. 137). The subsequent appropriator of the name or one confusingly
similar thereto usually seeks an unfair advantage, a free ride of another's goodwill
(American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89
App DC 269, 191 F 2d 488).
In allowing Private Respondent the continued use of its corporate name, the SEC
maintains that the corporate names of Petitioners PHILIPS ELECTRICAL LAMPS.
INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC. contain at least two words
different from that of the corporate name of respondent STANDARD PHILIPS
CORPORATION, which words will readily identify Private Respondent from
Petitioners and vice-versa.
True, under the Guidelines in the Approval of Corporate and Partnership Names
formulated by the SEC, the proposed name "should not be similar to one already
used by another corporation or partnership. If the proposed name contains a word
already used as part of the firm name or style of a registered company; the
proposed name must contain two other words different from the company already
registered" (Emphasis ours). It is then pointed out that Petitioners Philips Electrical
and Philips Industrial have two words different from that of Private Respondent's
name.
What is lost sight of, however, is that PHILIPS is a trademark or trade name which
was registered as far back as 1922. Petitioners, therefore, have the exclusive right
to its use which must be free from any infringement by similarity. A corporation has
50
an exclusive right to the use of its name, which may be protected by injunction
upon a principle similar to that upon which persons are protected in the use of No costs.
trademarks and tradenames (18 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 SO ORDERED.
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 similar to one adopted by another corporation,
whether a business or a nonbusiness or non-profit organization if misleading and
likely to injure it in the exercise in its corporate functions, regardless of intent, may
be prevented by the corporation having the prior right, by a suit for injunction
against the new corporation to prevent the use of the name (American Gold Star
Mothers, Inc. v. National Gold Star Mothers, Inc., 89 App DC 269, 191 F 2d 488,
27 ALR 2d 948).

WHEREFORE, the Decision of the Court of Appeals dated 31 July 1990, and its
Resolution dated 20 November 1990, are SET ASIDE and a new one entered
ENJOINING private respondent from using "PHILIPS" as a feature of its corporate
name, and ORDERING the Securities and Exchange Commission to amend
private respondent's Articles of Incorporation by deleting the word PHILIPS from
the corporate name of private respondent.

51
G.R. No. L-27897 December 2, 1927
WESTERN EQUIPMENT AND SUPPLY COMPANY, WESTERN ELECTRIC
COMPANY, INC., W. Z. SMITH and FELIX C. REYES, plaintiffs-appellees,
vs.
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 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 plaintiff Felix C. Reyes, its resident agent in the
Philippine Islands.
VI. That the electric and telephone apparatus and supplies manufactured by the
plaintiff Western Electric Company, Inc., have been sold in foreign and interstate
commerce and have become well and thoroughly known to the trade in all
countries of the world for the past fifty years; that at present time the greater part of
all telephone equipment used in Manila and elsewhere in the Philippine Islands
was manufactured by the said Western Electric Company, Inc., and sold by it in
commerce between the United States and the Philippine Islands; that about three
fourths of such equipment in use throughout the world are of the manufacture of
said "Western Electric Company, Inc.," and bear its corporate name; and that
these facts are well known to the defendant Henry Herman who for many years up
to May 20, 1926, has himself been buying said products from the plaintiff Western
Electric Company, Inc., and selling them in the Philippine Islands.
VII. That the name `Western Electric Company, Inc., has been registered as a
trade-mark under the provisions of the Act of Congress of February 20, 1905, in
the office of the Commissioner of Patents, at Washington, District of Columbia, and
said trade-mark remains in force to this date.
VIII. That on or about . . ., the defendants Henry Herman, Peter O' Brien, Manuel
B. Diaz, Felipe Mapoy and Artemio Zamora filed articles of incorporation with the
defendant Director of the Bureau of Commerce and Industry with the intention of
organizing a domestic corporation to be known as the "Western Electric Company,
Inc.," for the purpose principally of manufacturing, buying, selling and generally
dealing in electrical and telephone apparatus and supplies.
IX. That the purpose of said defendant in attempting to incorporate under the
corporate name of plaintiff Western Electric Company, Inc., is to profit and trade
upon the plaintiff's business and reputation, by misleading and deceiving the public
into purchasing the goods manufactured or sold by them as those of plaintiff
Western Electric Company, Inc., in violation of the provisions of Act No. 666 of the
Philippine Commission, particularly section 4 thereof.
X. That on October 20, 1926, plaintiff W. Z. Smith was authorized by the Board of
Directors of the Western Electric Company, Inc., to take all necessary steps for the
issuance of a license to said company to engage in business in the Philippine
52
Islands and to accept service of summons and process in all legal proceedings
against said company, and on October 21, 1926, said plaintiff W. Z. Smith filed a
written application for the issuance of such license with the defendant Director of
Bureau of Commerce and Industry, which application, however, has not yet been
acted upon by said defendant.
XI. That on October 18, 1926, the plaintiff W. Z. Smith formally lodged with the
defendant Director of the Bureau of Commerce and Industry his protest, and
opposed said attempted incorporation, by the defendants Henry Herman, Peter
O'Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora, of the `Western
Electric Company, Inc.,' as a domestic corporation, upon the ground among
others, that the corporate name by which said defendants desire to be known,
being identical with that of the plaintiff Western Equipment and Supply Company,
will deceive and mislead the public purchasing electrical and telephone apparatus
and supplies. A copy of said protest is hereunto annexed, and hereby made a part
hereof, marked Exhibit A.
XII. That the defendant Fidel A. Reyes, Director of the Bureau of Commerce and
Industry has announced to these plaintiffs his intention to overrule the protest of
plaintiffs, and to issue to the other defendants a certificate of incorporation
constituting said defendants a body politic and corporate under the name "Western
Electric Company, Inc.," unless restrained by this Honorable Court.
XIII. That the issuance of a certificate of incorporation in favor of said defendants
under said name of "Western Electric Company, Inc.," would, under the
circumstances hereinbefore stated, constitute a gross abuse of the discretionary
powers conferred by law upon the defendant Director of the Bureau of Commerce
and Industry.
XIV. That the issuance of said certificate of incorporation would, if carried out, be in
violation of plaintiff's rights and would cause them irreparable injury which could
not be compensated in damages, and from which petitioner would have no appeal
or any plain, speedy and adequate remedy at law, other than that herein prayed
for.
They prayed for a temporary injunction, pending the final decision of the court
when it should be made permanent, restraining the issuance of the certificate of
incorporation in favor of the defendants under the name of Western Electric
Company, Inc., or the use of that name for any purpose in the exploitation and sale
of electric apparatus and supplies. The preliminary writ was issued.
For answer the defendant Fidel A. Reyes, as Director of the Bureau of Commerce
and Industry, admits the allegations of paragraphs 1, 2, 3 and 4 of the complaint,
and as to paragraphs 5, 6 and 7, he alleges that he has no information upon which
to form a belief, and therefore denies them. He admits the allegations of paragraph
8, and denies paragraph 9. He denies the first part of paragraph 10, but admits
that an application for a license to do business was filed by the Western Electric
Company, Inc., as alleged. He admits paragraphs 11 and 12, and denies
paragraphs 13 and 14, and further alleges that the present action is prematurely
brought, in that it is an attempt to coerce his discretion, and that the mere
registration of the articles of incorporation of the locally organized Western Electric
Company, Inc., cannot in any way injure the plaintiffs, and prays that the complaint
be dismissed.
For answer the defendants Herman, O' Brien, Diaz, Mapoy and Zamora admit the
allegations of paragraphs 1, 2, 3, 4 and 5 of the complaint, and deny paragraph 7,
but allege that on October 15, 1926, the articles of incorporation in question were
presented to the Director of the Bureau of Commerce and Industry for registration.
They deny paragraphs 9 and 10, except as to the filing of the application. They
admit the allegations made in paragraph 11, but alleged that W. Z. Smith was
without any right or authority. Admit the allegations of paragraph 12, but deny the
allegations of paragraphs 13 and 14, and allege that the Western Electric
Company, Inc., has never transacted business in the Philippine Islands; that its
foreign business has been turned over to the International Standard Electric
Corporation; that the action is prematurely brought; and that the registration of the
articles of incorporation in question cannot in any way injure plaintiffs.
Wherefore, such defendants pray that the preliminary injunction be dissolved, and
plaintiffs' cause of action be dismissed, with costs.
The case was tried and submitted upon the following stipulated facts:
Now come the parties plaintiff and defendants in the above entitled cause, by their
respective undersigned attorneys, and for the purpose of this action, agree that the
following facts are true:
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
plaintiff 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 charge with the duty
53
of issuing and/or 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 all residents of the City of
Manila, Philippine Islands.
IV. That on or about May 4, 1925, the plaintiff, the Western Equipment and Supply
Company, through its duly authorized agent, the plaintiff, Felix C. Reyes, 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 on May 20, 1926,
said defendant issued in favor of said plaintiff a provisional license for that purpose
which was permanent on August 23, 1926.
V. That the plaintiff, Western Electric Company, Inc., has ever been licensed to
engage in business in the Philippine Islands, and has never engaged in business
therein.
VI. That from and since the issuance of said provisional license of May 20, 1926,
to the plaintiff, Western Equipment and Supply Company, said plaintiff has been
and still is engaged in importing and selling in the Philippine Islands electrical and
telephone apparatus and supplies manufactured by the plaintiff Western Electric
Company, Inc. (as well as those manufactured by other factories), said Western
Equipment and Supply Company's offices in the City of Manila being at No. 600
Rizal Avenue, and at the time of the filing of the complaint herein was under the
charge and management of the plaintiff, Felix C. Reyes, its then resident agent in
the Philippine Islands.
VII. That the electrical and telephone apparatus and supplies manufactured by the
plaintiff, Western Electric Company, Inc., have been sold in foreign and interstate
commerce for the past fifty years, and have acquired high trade reputation
throughout the world; that at the present time the greater part of all telephone
equipment used in Manila, and elsewhere in the Philippine Islands, was
manufactured by the said plaintiff, Western Electric Company, Inc., and sold by it
for exportation to the Philippine Islands; that such equipment, manufactured by the
said Western Electric Company, Inc., and bearing its trade-mark "Western Electric"
or its corporate name is generally sold and used throughout the world; that a
Philippine Corporation known as the `Electric Supply Company, Inc.,' has been
importing the manufactures of the plaintiff, Western Electric Company, Inc., into
the Philippine Islands for the purpose of selling the same therein, and that the
defendant Henry Herman, is the President and General Manager of said
corporation.
VIII. That the words `Western Electric' have been registered by the plaintiff, Electric
Company, Inc., as a trade-mark under the provisions of the Act of Congress of
February 20, 1905, in the office of the Commissioner of the Patents at Washington,
District of Columbia, and said trade-mark remains in force as the property of said
plaintiff to this date.
IX. That the plaintiff, Western Electric Company, Inc., is advertising its
manufacturers in its own name by means of advertising its manufactures in its own
name by means of advertisements inserted in periodicals which circulate generally
throughout the English and Spanish speaking portions of the world, and has never
abandoned its corporate name or trade-mark, but, on the contrary, all of its output
bears said corporate name and trade-mark, either directly upon the manufactured
article or upon its container, including that sold and used in the Philippine Islands.
X. That on October 15, 1926, the defendants Henry Herman, Peter O'Brien,
Manuel B. Diaz, Felipe Mapoy and Artemio Zamora signed and filed articles of
incorporation with the defendant, Fidel A. Reyes, as Director of the Bureau of
Commerce and Industry, with the intention of organizing a domestic corporation
under the Philippine Corporation Law to be known as the "Western Electric
Company, Inc.," for the purpose, among other things or manufacturing, buying,
selling and dealing generally in electrical and telephone apparatus and supplies;
that said defendants Peter O'Brien, Felipe Mapoy and Artemio Zamora are
employees of the said Electrical Supply Company, of which said defendant, Henry
Herman, is and has been, during the period covered by this stipulation, the
president and principal stockholder; and that they, together with the said defendant
Herman, signed said articles of incorporation 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 Electric Company, Inc., of its
corporate name, of its trade-mark, "Western Electric," and of the fact that the
manufactures of said plaintiff bearing its trade-mark or corporate name are in
general use in the Philippine Islands and in the United States.
XI. That on October 20, 1926, the plaintiff, W. Z. Smith, was authorized by the
Board of Directors of the plaintiff, Western Electric Company, Inc., to take all
necessary steps for the issuance of a license to said company to engage in
business in the Philippine Islands, and to accept service of summons and process
in all legal proceedings against said company, and on October 21, 1926, said
plaintiff, W. Z. Smith, filed a written application for the issuance of such license
with the defendant Director of the Bureau of Commerce and Industry, which
application, however, has not yet been acted upon by said defendant.
XII. That on October 18, 1926, the Philippine Telephone and Telegraph Co., by its
general manager, the plaintiff W. Z. Smith. lodged with the defendant Director of
54
the registration of the proposed corporation by the defendants Henry Herman,
Peter O'Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora, to be known as
the Western Electric Company, Inc., as a domestic corporation under the
Philippine Corporation Law. A copy of said protest, marked Exhibit A, hereunto
attached and is hereby made a part of this stipulation.
XIII. That the defendant, Fidel A. Reyes, Director of the Bureau of Commerce and
Industry, announced his intention of overrule said protest and will, unless judicially
restrained therefrom, issue to the other defendants herein a certificate of
incorporation, constituting said defendants a Philippine body politic and corporate
under the name of "Western Electric Company, Inc."
XIV. That the defendant, Henry Herman, acting in behalf of said corporation,
Electrical Supply Company, Inc., has written letters to Messrs. Fisher, DeWitt,
Perkins & Brady, acting as attorneys for plaintiff, Western Electric Company, Inc.,
copies of which are hereunto annexed and hereby made a part hereof, marked
Exhibits B, C and D.
XV. That the defendants, while admitting the facts set out in paragraph VII and IX
regarding the business done, merchandise sold and advertisements made
throughout the world by the plaintiff Western Electric Company, Inc., insist and
maintain that said allegations of fact are immaterial and irrelevant to the issues in
the present case, contending that such issued should be determined upon the
facts as they exist in the Philippine Islands alone.
To which were attached Exhibits A, B, C and D.
The lower court rendered judgment for the plaintiffs as prayed for in their
complaint, and made the temporary injunction permanent, from which the
defendants appeal and assign the following errors:
The lower court erred:
(1) When it granted the writ of preliminary injunction (pages 9 and 10, record; 12 to
14, B. of E.).
(2) When it held that the Western Electric Co., Inc., a foreign corporation, had a
right to bring the present suit in courts of the Philippine Islands, wherein it is
unregistered and unlicensed, as was done in the decision upon the petition for a
preliminary injunction (pages 97 to 115 record), and in repeating such holding in
the final decision herein (pages 51 and 52, B. of E.), as well as in basing such
holding upon the decision of this Honorable Supreme Court in Marshall-Wells Co.
vs. Henry W. Elser & Co. (46 Phil., 70.)
(3) When it found that the plaintiff, the Western Electric Co., Inc., has any such
standing in the Philippine Islands or before the courts thereof as to authorize it to
maintain an action therein under the present case.
(4) When it found that the other plaintiffs herein have any rights in the present
controversy or any legal standing therein.lawphi1.net
(5) In ordering the issuance of a permanent injunction restraining the defendant
Fidel A. Reyes, as Director of the Bureau of Commerce and Industry, from issuing
a certificate of incorporation in favor of the other defendants under the name of
"Western Electric Co., Inc.," or any similar name, and restraining the other
defendants from using the name "Western Electric Co., Inc.," or any like name, in
the manufacture of sale of electrical and telephone apparatus and supplies or as a
business name or style in the Philippine Islands.
(6) In finding that the purpose of the defendants, other than the defendant Fidel A.
Reyes, in seeking to secure the registration of a local corporation under the name
of "Western Electric Co., Inc.," was "certainly not an innocent one," thereby
imputing to said defendants a fraudulent and wrongful intent.
(7) In failing to dismiss plaintiffs' complaint with costs against the plaintiffs.
(8) In overruling and denying defendants' motion for a new trial.
JOHNS, J.:
The appellants say that the two questions presented are:
Has a foreign corporation, which has never done business in the Philippine
Islands, and which is unlicensed and unregistered therein, any right to maintain an
action to restrain residents and inhabitants of the Philippine Islands from
organizing a corporation therein bearing the same name as such foreign
corporation?
Has such foreign corporation a legal right to restrain an officer of the Government
of the Philippine Islands, i. e., the Director of the Bureau of Commerce and
Industry from exercising his discretion, and from registering a corporation so
organized by residents and inhabitants of the Philippine Islands?
55
As to the first question, the appellees say that it should be revised, so as to read
as follows:
Has a foreign corporation which has never done business in the Philippine Islands,
and which is unlicensed and unregistered therein, any right to maintain an action to
restrain residents and inhabitants of the Philippine Islands from organizing a
corporation therein bearing the same name as such foreign corporation, when said
residents and inhabitants have knowledge of the existence of such foreign
corporation, having dealt with it, and sold its manufactures, and when said foreign
corporation is widely and favorably known in the Philippine Islands through the use
therein of its products bearing its corporate and trade name, and when the purpose
of the proposed domestic corporation is to deal in precisely the same goods as
those of the foreign corporation?
As to the second, the appellees say that the question as propounded by the
appellants is not fully and fairly stated, in that it overlooks and disregards
paragraphs 12 and 13 of the stipulation of facts, and that the second question
should be revised to read as follows:
Has an unregistered corporation which has not transacted business in the
Philippine Islands, but which has acquired a valuable goodwill and high reputation
therein, through the sale, by importers, and the extensive use within the Islands of
products bearing either its corporate name, or trade-mark consisting of its
corporate name, a legal right to restrain an officer of the Commerce and Industry,
with knowledge of those facts, from issuing a certificate of incorporation to
residents of 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 same business as such foreign corporation, and of 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?
We agree with the revisions of both questions as made by the appellees, for the
reason that they are more in accord with the stipulated facts. First, it is stipulated
that the Western Electric Company, Inc., "has never engaged in business in the
Philippine Islands."
In the case of Marshall-Wells Co. vs. Henry W. Elser & Co. (46 Phil., 70, 76), this
court held:
The noncompliance of a foreign corporation with the statute may be pleaded as an
affirmative defense. Thereafter, it must appear from the evidence, first, that the
plaintiff is a foreign corporation, second, that it is doing business in the Philippines,
and third, that it has not obtained the proper license as provided by the statute.
If it had been stipulated that the plaintiff, Western Electric Company, Inc., had been
doing business in the Philippine Islands without first obtaining a license, another
and a very different question would be presented. That company is not here
seeking to enforce any legal or contract rights arising from, or growing out of, any
business which it has transacted in the Philippine Islands. The sole purpose of the
action:
"Is to protect its reputation, its corporate name, its goodwill, whenever that
reputation, corporate name or goodwill have, through the natural development of
its trade, established themselves." And it contends that its rights to the use of its
corporate and trade name:
Is a property right, a right in rem, which 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 Trade-Marks and cases cited; secs. 21-22, Hopkins on Trade-
Marks, 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., 513), in which they syllabus says:
Since it is the trade and not the mark that is to be protect, a trade-mark
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.
In Walter E. Olsen & Co. vs. Lambert (42 Phil., 633, 640), this court said:
In order that competition in business should be unfair in the sense necessary to
justify the granting of an injunction to restrain such competition it must appear that
there has been, or is likely to be, a diversion of trade from the business of the
complainant to that of the wrongdoer, or methods generally recognized as
unfair; . . . In most, if not all, of the cases in which relief has hitherto been granted
against unfair competition the means and methods adopted by the wrongdoer in
order to divert the coveted trade from his rival have been such as were calculated
to deceive and mislead the public into thinking that the goods or business of the
wrongdoer are the goods or business of the rival. Diversion of trade is really the
fundamental thing here, and if diversion of trade be accomplished by any means
which according to accepted legal canons are unfair, the aggrieved party is entitled
to relief.
56
In Shaver vs. Heller & Merz Co. (48 C.C. A., 48; 108 Fed., 821; 65 L. R. A., 878,. plaintiff, and to trade thereupon in these Islands, in fraud of the Philippine public
881), it is said: and of the true owners of the name and the goodwill incidental thereto.

The contention of counsel for the appellants here is a confusion of the bases of
two classes of suits, — those for infringements of trade-marks, and those for unfair
competition in trade. . . . In the former, title to the trade-marks is indispensable to a
good cause of action; in the latter, no proprietary interest in the words, names, or
means by which the fraud is perpetrated is requisite to maintain a suit to enjoin it. It
is sufficient that the complainant is entitled to the custom — the goodwill — of a
business, and that this goodwill is injured, or is about to be injured, by the palming
off of the goods of another as his.
The remaining question as to the jurisdiction of the 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:
The plaintiff, Western Electric Company, Inc., has been in existence as a
corporation for over fifty years, during which time it has established a reputation all
over the world including the Philippine Islands, for the kind and quality of its
manufactured articles, and it is very apparent that the whole purpose and intent of
Herman and his associates in seeking to incorporate another corporation under the
identical name of Western Electric Company, Inc., and for the same identical
purpose as that of the plaintiff, is to trespass upon and profit by its good name and
business reputation. The very fact that Herman and his associates have sought the
use of that particular name for that identical purpose is conclusive evidence of the
fraudulent intent with which it is done.
The judgment of the lower court is affirmed, with costs. So ordered.

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 error, but decided that question correctly, then, of
course, his action will be affirmed to the extent that we will deny the relief prayed
for.

It is very apparent that the purpose and intent of Herman and his associates in
seeking to incorporate under the name of Western Electric Company, Inc., was to
unfairly and unjustly compete in the Philippine Islands with the Western Electric
Company, Inc., in articles which are manufactured by, and bear the name of, that
company, all of which is prohibited by Act No. 666, and was made known to the
defendant Reyes by the letter known in the record to the defendant Reyes by the
letter known in the record as Exhibit A.

As appellees say:

These defendant, Herman and his associates, are actually asking the Government
of the Philippine Island to permit them to pirate the name of the Western Electric
Company, Inc., by incorporating thereunder, so that they may deceive the people
of the Philippine Islands into thinking that the goods they propose to sell are goods
of the manufacture of the real Western Electric Company. It would be a gross
prostitution of the powers of government to utilize those powers in such a way as
to authorize such a fraud upon the people governed. It would be the grossest
abuse of discretion to permit these defendants to usurp the corporate mane of the

57