RO LINE SPORTS CENTER, INC.
, and QUESTOR PRO LINE and QUESTOR maliciously and without legal
CORPORATION, petitioners, vs. COURT OF
APPEALS, UNIVERSAL ATHLETICS INDUSTRIAL
P R O D U C T S , I N C . , a n d M O N I C O S E H WA N I ,
respondents.
Sycip, Salazar, Hernandez, and Gatmaitan for
petitioners.
Makalintal, Barot, Torres, and Ibarra for private
respondents.
SYNOPSIS
By virtue of its merger with A.G. Spalding Bros., Inc.,
petitioner QUESTOR became the owner of the
trademark "Spalding." Petitioner PRO LINE is the
exclusive distributor of "Spalding" sports products. PRO
LINE sent a letter-complaint to the NBI regarding the
alleged manufacture of fake "Spalding" balls by
respondent UNIVERSAL. By virtue of a Search Warrant,
the NBI seized and confiscated basketballs and
volleyballs marked "Spalding" from the premises of
UNIVERSAL. PRO LINE and QUESTOR filed a criminal
complaint for unfair competition against Monico
Sehwani and others but the same was dropped 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. On petition for
review, the Ministry of Justice overturned the dismissal
and ordered the filing of an information for unfair
competition against Sehwani, but the trial court
dismissed the said charge. Upon appeal, this decision
of dismissal was upheld. Thereafter, UNIVERSAL and
Sehwani filed a civil case for damages charging that
basis committed acts to their damage and prejudice.
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." The Court of Appeals
affirmed the trial court's decision.
The Supreme Court held that PRO LINE and
QUESTOR cannot be adjudged liable for damages for
the alleged unfounded suit. Respondents Universal and
Sehwani were unable to prove the essential elements of
the crime of malicious prosecution, namely, absence of
probable cause and legal malice on the part of
petitioners. CcAIDa
SYLLABUS
1 .  C I V I L L AW; M A L I C I O U S P R O S E C U T I O N ;
ELEMENTS; NOT PRESENT. — PRO LINE and
QUESTOR cannot be adjudged liable for damages for
the alleged unfounded suit. The complainants were
unable to prove two (2) essential elements of the crime
of malicious prosecution, namely, absence of probable
cause and legal malice on the part of petitioners.
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." 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.
2.  ID.; ID.; ID.; ABSENCE OF PROBABLE CAUSE;
NOT PRESENT. — UNIVERSAL failed to show that the
filing of a Criminal Case against PRO LINE and
QUESTOR 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. In the case before us, then Minister of
Justice Ricardo 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. The existence of probable
cause for unfair competition by UNIVERSAL is derivable
from the facts and circumstances of the case. 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.
3.  ID.; ID.; ID.; LEGAL MALICE; NOT PRESENT. —
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. 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. 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
jur suo utitur nullum damnum facit. If damage results
from a person's exercising his legal rights, it is damnum
absque injuria.
4.  COMMERCIAL LAW; UNFAIR COMPETITION;
PRESENT EVEN IF SELLING NOT PROVED. —
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. vs. Manuel, 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.
5 .  R E M E D I A L L A W ; C I V I L A C T I O N S ;
COUNTERCLAIM; PARTAKES THE NATURE OF
INDEPENDENT ACTION. — A counterclaim partakes of
the nature of a complaint and/or a cause of action
against the plaintiffs. 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. A counterclaim stands on the same
footing and is to be tested by the same rules, as if it
were an independent action.
6.  ID.; CRIMINAL PROCEDURE; PROSECUTION OF
OFFENSES; INTERVENTION OF OFFENDED
PARTIES IN CRIMINAL ACTION; EFFECT; CASE AT
BAR. — Petitioners' counterclaim for damages based
on the illegal and unauthorized manufacture of
"Spalding" balls 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. 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. 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. In an acquittal
on the ground that an essential element of the crime
was not proved, it is fundamental that the accused
cannot be held criminally nor civilly liable for the offense.
Although Art. 28 of the New Civil Code 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. 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. acHETI
 
DECISION
BELLOSILLO, J p:
This case calls for a 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
hand, is a domestic corporation engaged in the sale and
manufacture of sporting goods while co-respondent
Monica 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. cdasia
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 UNIVERSAL.
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.
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. 63055 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 Pasig 4
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 Monica 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
elements 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.
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 rule
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 sufficientprima 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 of 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 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
accused 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 cdpr
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.
Davide, Jr., Vitug and Kapunan, JJ ., concur.
||| (Pro Line Sports Center, Inc. v. Court of Appeals, G.R.
No. 118192, [October 23, 1997], 346 PHIL 143-158)

||| (Converse Rubber Corp. v. Rubber & Plastics Co.,

Inc., G.R. Nos. L-27425 & L-30505, [April 28, 1980], 186
PHIL 85-109)
R U B B E R C O R P O R AT I O N , E D WA R D S O N
MANUFACTURING CO., INC. and HON. PEDRO C.
NAVARRO, respondents.
Marcial O.T. Balgos for petitioner.
Sycip, Salazar, Feliciano, Hernandez and Castillo for
private respondent.
SYLLABUS
1.  REMEDIAL LAW; CIVIL ACTIONS; UNFAIR
C O M P E T I T I O N ; C O M P L A I N A N T O B TA I N I N G
INJUNCTION ENTITLED TO ACCOUNTING AND
RECOVERY OF DEFENDANT'S PROFITS. — As a
general rule, on obtaining an injunction for infringement
of 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 principal analogous to that which charges as
trustee with the profits acquired by the wrongful use of
the property of the cestui que trust, and defendant's
profits are regarded as an equitable measure of the
compensation plaintiff should receive for the past harm
suffered by him (87 Corpus Juris Secundum, pp.
604-606).
2.  ID.; ID.; SUBPOENA DUCES TECUM; WHEN
ISSUED. — 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
(Arnaldo vs. Locsin, 69 Phil. 113). 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 (Sec. 4, Rule 23,
Revised Rules of Court).
3.  ID.; ID.; UNFAIR COMPETITION; OPTIONS TO
ASCERTAIN THE AMOUNT OF RECOVERABLE
DAMAGES. — 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 of
tradename was issued in the infringement of rights
of the complaining party.
4 .  I D . ; I D . ; I D . ; B A S I C A L LY A S U I T F O R
"INJUNCTION." — The complaint for unfair competition
is basically a suit for "injunction and damages" (Sec. 23,
R.A. 166). 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) treasurer of the herein petitioner, the propriety of which
for the accounting of petitioner's (defendant below) was upheld by the defunct Court of Appeals (now
gross sales as damages per R.A. 166, appears most Intermediate Appellate Court).
relevant. For Us, to determine the amount of damages The facts of this case as stated in the decision of the
allowable after the final determination of the unfair labor then Court of Appeals are as follows:
case would not only render nugatory the rights of "Records disclose that the two
complainant under Sec. 23 of R.A. 166, but would be a respondent corporations
repetitious process causing only unnecessary delay. herein sued the present
5.  MERCANTILE LAW; CORPORATIONS; CAPACITY petitioner before the Court of
TO SUE; CORPORATIONS NOT LICENSED TO DO First Instance of Rizal for
BUSINESS IN THE PHILIPPINES. — In Converse unfair competition with
Rubber Corporation vs. Jacinto Rubber and Plastic Co., damages and attorney's fees.
Inc. 97 SCRA 158, 178, we held that the disability of a In due time herein petitioner,
foreign corporation from suing in the Philippines is who was the defendant in
limited to suits to enforce any legal or contract, rights that court suit, answered the
arising from, or growing out, of any business which it complaint and joined issues
has transacted in the Philippine Island. On the other with the plaintiffs therein,
hand, where the purpose of a suit is to 'protect its forthwith respondent Judge,
reputation, its corporate name, its goodwill, whenever to whom that lawsuit was
that reputation, corporate name or goodwill have, assigned, proceeded with the
through the natural development of its trade, trial thereof.
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 After they have presented about nine
Converse Rubber, which does not have a branch office witnesses and various pieces
in any part of the Philippines and is not 'doing business' of documentary evidence,
in the Philippines, from filing and prosecuting this action herein private respondents
for unfair competition. made a request to the
DECISION respondent Judge to issue a
GUERRERO, J p: subpoena duces tecum
This petition for review concerns a "subpoena duces against the treasurer of
tecum" which was issued by the trial court against the 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
called 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, lifted, with costs against the
petitioner Universal Rubber petitioner.
Products, Inc. filed its present
petition for certiorari with
preliminary injunction,
alleging that in so denying its SO ORDERED."
motion to quash the
subpoena duces tecum and
its subsequent motion for
reconsideration, respondent
Judge acted with grave Petitioner argues three errors to support his petition, to
abuse of discretion wit: 4
amounting to an excess of "I.
jurisdiction." 1

The respondent court erred when it

Pending the resolution of the appealed case, the Court found the fact of the petition
of Appeals issued on September 25, 1968 a temporary and its annexes as not
restraining order directing the respondent Judge of the demonstrating clear abuse of
trial court to refrain from implementing his order dated discretion by respondent
May 6, 1968 in Civil Case No. 9686. 2 Judge.
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 II
"WHEREFORE, for lack of merit, the
present petition for certiorari
with preliminary injunction is
hereby denied and the
temporary restraining order The respondent court erred when it
issued by this Court on refused to sustain the
September 25, 1968 is now 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."
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 cecum in question specifically
designates the books and documents that should be
produced in court and they are "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 Sec. 23.  Actions, and damages and
unfair competition. In such case, the infringer or unfair injunction for infringement. —
trader is required in equity to account for and yield up Any person entitled to the
his gains on a principle analogous to that which charges exclusive use of a registered
as trustee with the profits acquired by the wrongful use mark or trade name may
of the property of the cestui que trust, and defendant's recover damages in a civil
profits are regarded as an equitable measure of the action from any person who
compensation plaintiff should receive for the past harm infringes his rights and the
suffered by him. 6 measure of the damages
Well-settled is Our jurisprudence that, in order to entitle suffered shall be either the
a party to the issuance of a "subpoena duces tecum", it reasonable profit which the
must appear, by clear and unequivocal proof, that the complaining party would have
book or document sought to be produced contains made, had the defendant not
evidence relevant and material to the issue before the infringed his said rights, or
court, and that the precise book, paper or document the profit which the defendant
containing such evidence has been so designated or actually made out of the
described that it may be identified. 7 A "subpoena duces infringement, or in the event
cecum" once issued by the court may be quashed upon such measure of damages
motion if the issuance thereof is unreasonable and cannot be readily ascertained
oppressive, or the relevancy of the books, documents or with reasonable certainty,
things does not appear, or if the persons in whose then the court may award as
behalf the subpoena is issued fails to advance the damages a reasonable
reasonable cost of production thereof. 8 percentage based upon the
In the instant case, in determining whether the books amount of gross sales of the
subject to the subpoena duces tecum are relevant and defendant of the value of the
reasonable in relation to the complaint of private services in connection with
respondent for unfair competition, We have to examine which the mark or trade name
Republic Act No. 166, 9 which provides: was used in the infringement
"CHAPTER V. — Rights and Remedies of the rights of the
complaining party. In cases
where actual intent to mislead
the public or to defraud the
xxx xxx xxx 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.
In giving life to this remedial statute, We must uphold
the order of the court a quo denying the motion of the
petitioner to quash the "subpoena duces tecum"
previously issued against the petitioner. In a suit for
unfair competition, it is only through the issuance of the
questioned "subpoena duces tecum" that the
complaining party is afforded his full rights of redress.
The argument that the petitioner should first be
found guilty of unfair competition before an
accounting for purposes of ascertaining the amount
of damages recoverable can proceed. stands
without merit. The complaint for unfair 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
collection 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 As We said earlier, the establishment of the petitioner
from suing in the Philippines burned down together with all the records sought to be
is limited to suits to enforce produced by the questioned "subpoena duces tecum,"
any legal or contract rights hence this case has become moot and academic. We
arising from, or growing out, have no recourse but to dismiss the same.
of any business which it has WHEREFORE, the instant petition is DISMISSED for
transacted in the Philippine becoming moot and academic. No costs.
Islands . . . On the other SO ORDERED.
hand, where the purpose of a Makasiar, Concepcion, Jr., Abad Santos, Escolin and
suit is `to protect its Cuevas, JJ ., concur.
reputation, its corporate
name, its goodwill, whenever ||| (Universal Rubber Products, Inc. v. Court of Appeals,
that reputation, corporate G.R. No. L-30266, [June 29, 1984], 215 PHIL 85-94)
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."
SOLID TRIANGLE SALES CORPORATION and
ROBERT SITCHON, petitioners, vs. THE SHERIFF OF
RTC QC, Branch 93; SANLY CORPORATION, ERA
RADIO AND ELECTRICAL SUPPLY, LWT CO.,
INCORPORATED; ROD CASTRO, VICTOR TUPAZ
and the PEOPLE OF THE PHILIPPINES, respondents.
S.P. Rivera & Associates and Romulo Mabanta
Buenaventura Sayoc & Delos Angeles for petitioner.
The Solicitor General for respondents.
SYNOPSIS
Petitioner Solid Triangle Sales Corporation claimed to
be the sole and exclusive distributor of Mitsubishi brand
photo paper pursuant to an agreement with Mitsubishi
Corporation. Upon the application of Solid Triangle, a
search warrant was issued by the Economic Intelligence
and Investigation Bureau (EIIB) against respondent
Sanly Corporation for unfair competition. As a result of
the search made 451 boxes of Mitsubishi photographic
color paper were seized by the EIIB agents from Sanly's
premises. Forthwith, Solid Triangle filed with the Office
of the City Prosecutor an affidavit complaint for unfair
competition against the members of the Board of Sanly
and LWT Co., Inc. (LWT) and with the court an urgent ex
parte motion for the transfer of custody of the seized
photo paper stored in the office of the EIIB. With the
same court Sanly and the other private respondents
moved to quash the search warrant issued by the EIIB.
The court granted the quashal of the search warrant.
Solid Triangle then filed an action for damages and
injunction with prayer for writs of preliminary injunction
and attachment. The court denied the application for
preliminary injunction and attachment. The court denied
the application for preliminary attachment on the ground
that it was not supported with an affidavit by the
applicant, through its authorized officer, who personally
knew the facts therein stated. The court issued another
order directing the petitioners to divulge and report the
exact location of the seized goods, to show cause why
they should not be held in contempt of court for failure
to obey lawful order of the court, and the return of the
goods to its lawful owners. Alleging grave abuse of
discretion, petitioners questioned before the Court of
Appeals the above orders. 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. Since there was no probable
cause for unfair competition in this case, then the
quashal of the search warrant was valid. As regards the
preliminary attachment, the appellate court found no
ground for the issuance of the writ. Hence, petitioners
assailed the decision of the Court of Appeals. cHCIDE
The Supreme Court partly granted the petition. It
affirmed the ruling of the Court of Appeals, which held
that the Regional Trial Court has the power to determine
the existence of a crime in quashing a search warrant
and, that the evidence presented in this case was not
enough to support a finding that the crime of unfair
competition was committed by private respondents. The
ruling of the Court of Appeals finding no ground to
warrant the issuance of a writ of preliminary attachment
and that the petitioners were guilty of contempt were
reversed by the Supreme Court. The proceedings for
the issuance/quashal of a search warrant before a court
on one hand, and the preliminary investigation before
an authorized officer, on the other, are proceedings
entirely independent of each other. 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 purpose of
filing the information. The Court also was of the opinion
that an affidavit of merit was not necessary for the
application for preliminary injunction since the petition
was verified by an authorized officer who personally
knows the facts. Similarly premature was whether
petitioners' failure to return the goods to respondents
constituted indirect contempt.
SYLLABUS
1.  REMEDIAL LAW; CRIMINAL PROCEDURE;
SEARCH WARRANT; INHERENT IN THE POWER TO
ISSUE SEARCH WARRANT IS THE POWER TO
QUASH; CONSTRUED. — It is undisputed that only
judges have the power to issue search warrants. This
function is exclusively judicial. Under Section 2, Article
III of the Constitution. 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. The ruling has
since been incorporated in Rule 126 of the Revised
Rules of Criminal Procedure: 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.
2 .  I D . ; I D . ; P R E L I M I N A RY I N V E S T I G AT I O N ;
OFFICERS AUTHORIZED TO CONDUCT THEREOF.
— Section 2 of the same Rule enumerates who may
conduct preliminary investigations: Sec. 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.
3 .  I D . ; I D . ; I D . ; P R O C E E D I N G S T H E R E O F
DISTINGUISHED FROM THE PROCEEDING IN THE
ISSUANCE AND QUASHED OF SEARCH WARRANT.
— The proceedings for the issuance/quashed 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. 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.
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. TacADE
4 .  I D . ; I D . ; I D . ; M AY P R O C E E D D E S P I T E
INADMISSIBILITY OF EVIDENCE OBTAINED
THROUGH ILLEGAL WARRANT; RATIONALE. —
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. 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 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.
DECISION
KAPUNAN, J p:
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:
. . . 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 seventy-two hours
application is not supported from receipt hereof;
with an affidavit by the
applicant, through its
a u t h o r i z e d o f fi c e r, w h o
personally knows the facts. 2) Mr. Robert Sitchon and Solid Triangle
Sales Corporation to
appear and show
cause why they
Meanwhile, on April 20, 1999, Judge should not be held in
Bruselas issued the third contempt of court for
assailed order, the dispositive failure to obey a
portion of which reads: lawful order of the
court at a hearing for
the purpose on 12
May 1999 at 8:30
WHEREFORE, the foregoing premises o'clock in the
considered, the court morning;
directs

3)  The Deputy Sheriff of this Court to

1)  EIIB, Mr. Robert Sitchon and Solid take custody of the
Triangle Sales seized goods and
Corporation to cause their delivery
divulge and report to to the person from
the court the exact whom the goods
location of the were seized without
warehouse where further lost [sic] of
the goods subject of time;
this proceeding are
presently kept within
Let a copy of this order be served by quashing of the warrant deprived the prosecution of vital
personal service evidence to determine probable cause.
u p o n M r. R o b e r t Admittedly, the City Prosecutor of
Sitchon and Solid Quezon City has filed a
Triangle Sales complaint for unfair
Corporation. Serve competition against private
copies also to EIIB respondents and that the
and the respondents undergoing preliminary
Rod Castro and investigation is in progress. In
Sanly Corporation. the said proceedings, the
prosecution inevitably will
present the seized items to
establish a prima facie case
SO ORDERED. 1 of unfair competition against
private respondents.

Alleging grave abuse of discretion, petitioners

questioned before the Court of Appeals the orders of Considering that Judge Bruselas
Branch 93 of the Quezon City RTC granting private quashed the search warrant,
respondents' motion for reconsideration and denying he practically deprived the
that of petitioners', as well as the order dated April 20, prosecution of its evidence so
1999 directing petitioners to, among other things, show vital in establishing the
cause why they should not be held in contempt. existence of probable cause.
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 Petitioners' reliance on Vlasons
restraining order to prevent Judge Bruselas from Enterprises Corporation vs.
implementing the Order dated April 20, 1999. Court of Appeals [155 SCRA
On July 6, 1999, the Court of Appeals rendered 186 (1987).] is in order. Thus:
judgment initially granting certiorari. It held that the
The proceeding for the seizure of done in the criminal
property in virtue of action involving the
a search warrant crime or crimes in
does not end with connection with
the actual taking of which the search
the property by the warrant was issued.
proper officers and Hence, such a
its delivery, usually criminal action
constructive, to the should be
court. The order for prosecuted, or
the issuance of the commenced if not
warrant is not a final yet instituted, and
one and cannot prosecuted. The
constitute res outcome of the
judicata (Cruz vs. criminal action will
Dinglasan, 83 Phil. dictate the
333). Such an order disposition of the
does not ascertain seized property. 2
and adjudicate the
permanent status or
character of the
seized property. By The appellate court further ruled that the affidavit of
its very nature, it is merits is not necessary for the order of preliminary
provisional, attachment to issue considering that the petition itself is
interlocutory under oath:
(Marcelo vs. de The denial was based on the ground that
Guzman, 114 SCRA the application is not
657). It is merely the supported by an affidavit of
fi r s t s t e p i n t h e the applicant corporation,
process to determine through its authorized officer,
the character and who personally knows the
title of the property. facts.
That determination is
We cannot go along with respondent as a separate
judge's theory. In Consul vs. affidavit. To require
Consul [17 SCRA 667 defendant to append
(1996)], the Supreme Court an affidavit of merits
held: t o h i s v e r i fi e d
petition to the
circumstances, is to
compel him to do the
Affidavit of merits has a known purpose: u n n e c e s s a r y.
Courts and parties Therefore, the defect
should not require pointed by the court
the machinery of below is one of
justice to grind anew, forms, not of
if the prospects of a substance. Result:
different conclusion Absence of a
cannot be separate affidavit is
reasonably reached of de minimis
should relief from importance. 3
judgment be
granted. We look
back at the facts
here. The petition for Upon motion by respondents, however, the Court of
relief is verified by Appeals reversed itself. In its "Amendatory Decision,"
petitioner himself. the appellate court held that there was no probable
The merits of cause for the issuance of the search warrant.
petitioner's case are Accordingly, the evidence obtained by virtue of said
apparent in the warrant was inadmissible in the preliminary
recitals of the investigation.
petition. Said petition . . . Under Sections 168 and 170 of R.A.
is under oath. That 8293 (the Intellectual
oath, we believe, Property Code), there is
elevates the petition unfair competition if the
to the same category 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.
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.
xxx xxx xxx
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 vs. Court of
Appeals does not apply since
 it involved a different set of Procedure as grounds for the
facts and issues. issuance of a writ of
preliminary attachment. 5

On the contrary, it is the case of People

vs. Court of Appeals [216 Petitioners moved for reconsideration but the same was
SCRA 101 (1992)] that denied by the Court of Appeals in its Resolution dated
governs, where the Supreme August 4, 2000.
Court ruled that with the In assailing the Amendatory Decision of the Court of
quashal of the search Appeals, petitioners argue that:
warrant, the seized goods I.
could not be used as
evidence for any purpose, in
any proceeding. 4
THE JUDGE WHO ISSUED A SEARCH
W A R R A N T T H AT H A S
ALREADY BEEN
As regards the preliminary attachment, the appellate IMPLEMENTED CANNOT
court found that there was no ground for the issuance of QUASH THE WARRANT
the writ because: A N Y M O R E , AT L E A S T
. . . Sanly does not deny that it sells WITHOUT WAITING FOR
Mitsubishi photographic color THE FINDINGS OF THE
p a p e r. B u t t h e r e i s n o CITY PROSECUTOR WHO
showing that it attempts to HAS THE EXCLUSIVE
depart from country, defraud JURISDICTION TO
Solid Triangle or the buying DETERMINE PROBABLE
public, conceal or dispose of CAUSE.
unjustly detained personal
property, or commit any of the
acts provided in Rule 57 of
the 1997 Rules of Civil 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
C O M P L A I N T, A S T H E
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. 6
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:
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. [Italics
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:
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. [Italics 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. 12
In Kenneth Roy Savage/K Angelin Export Trading vs.
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
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 )  N a t i o n a l a n d R e g i o n a l s t a t e
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. 15
The determination of probable cause during a
preliminary investigation has been described as an
executive function. 16
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.
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. 17
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 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:
S E C T I O N 1 7 0 .  P e n a l t i e s . —
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) to
Two hundred thousand pesos
(P200,000), 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":
(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
Tr i a n g l e s e v e r a l t i m e s
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
a b l e t o c o n fi r m f r o m 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. 18
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 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. 19
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.
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 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.
Davide, Jr., C.J., Puno, Pardo, and Ynares-Santiago,
JJ., concur.
||| (Solid Triangle Sales Corp. v. Sheriff of RTC QC, Br.
93, G.R. No. 144309, [November 23, 2001], 422 PHIL
72-91)
SONY COMPUTER ENTERTAINMENT, INC., petitioner,
vs. SUPERGREEN, INCORPORATED, respondent.
DECISION
QUISUMBING, J p:
This petition for review seeks to reverse the Decision 1
dated June 30, 2003 of the Court of Appeals in CA-G.R.
SP No. 67612 and the Resolution 2 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. AIaHES
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 Order 3
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.
HTSAEa
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 APPLICATIONS INVOLVES
same to the respondents. T E R R I T O R I A L
JURISDICTION.

SO ORDERED. 4
II

Petitioner elevated the matter to the Court of Appeals,

which dismissed the petition for certiorari. The appellate WHETHER OR NOT THE
court ruled that under Section 2, 5 Rule 126 of the CORRECTNESS OF VENUE
Rules of Court, the RTC of Manila had no jurisdiction to IN AN APPLICATION FOR
issue a search warrant enforceable in Cavite, and that S E A R C H WA R R A N T I S
lack of jurisdiction was not deemed waived. Petitioner DEEMED WAIVED IF NOT
moved for reconsideration but the same was denied. RAISED BY THE
The Court of Appeals disposed, as follows: RESPONDENT IN ITS
WHEREFORE, the instant Petition is hereby denied MOTION TO QUASH.
and accordingly DISMISSED.
SO ORDERED. 6

III

Petitioner now comes before us raising the following

issues:
I WHETHER OR NOT THE OFFENSES
I N V O LV E D I N T H E
SUBJECT SEARCH
WARRANTS ARE
WHETHER OR NOT VENUE IN "CONTINUING CRIMES"
SEARCH WARRANT WHICH MAY BE VALIDLY
 TRIED IN ANOTHER
JURISDICTION WHERE THE
OFFENSE WAS PARTLY
COMMITTED. 7
In sum, we are asked to resolve whether the quashal of
Search Warrants Nos. 01-1986 to 01-1988 was valid.
AECacS
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 1980 9 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:
(b)  Any person who by any artifice, or
(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;
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 other feature of their
statement in the course of appearance;
trade or who shall commit
any other act contrary to
good faith of a nature
calculated to discredit the (c) That the offender offers to sell or sells
goods, business or services those goods or gives
of another. other persons a
chance or
opportunity to do the
same with a like
Pertinent too is Article 189 (1) of the Revised Penal purpose; and
Code that enumerates the elements of unfair
competition, to wit:
(a) That the offender gives his goods the
general appearance (d) That there is actual intent to deceive
of the goods of the public or defraud
a n o t h e r a competitor. 12
manufacturer or
dealer;

Respondent's imitation of the general appearance of

petitioner's goods was done allegedly in Cavite. It sold
(b)  That the general appearance is the goods allegedly in Mandaluyong City, Metro Manila.
shown in the (1) The alleged acts would constitute a transitory or
goods themselves, continuing offense. Thus, clearly, under Section 2 (b) of
or in the (2) Rule 126, Section 168 of Rep. Act No. 8293 and Article
wrapping of their 189 (1) of the Revised Penal Code, petitioner may apply
packages, or in the for a search warrant in any court where any element of
(3) device or words the alleged offense was committed, including any of the
therein, or in (4) any 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.
Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ.,
concur.
||| (Sony Computer Entertainment, Inc. v. Supergreen,
Inc., G.R. No. 161823, [March 22, 2007], 547 PHIL
639-646)
TAIWAN KOLIN CORPORATION, LTD., petitioner, vs.
KOLIN ELECTRONICS CO., INC., respondent.
DECISION
VELASCO, JR., J p:
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 Decision 1 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 before the 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, 2003 for its products. 6 Subsequently, the
CA, on July 31, 2006, affirmed 7 the Decision of the cleaners, cordless handsets,
Director General. videophones, facsimile
In answer to respondent's opposition in Inter Partes machines, teleprinters,
Case No. 14-2006-00096, petitioner argued that it cellular phones, automatic
should be accorded the benefits of a foreign-registered goods vending machines and
mark under Secs. 3. and 131.1 of Republic Act No. other electronic equipment is
8293, otherwise known as the Intellectual Property hereby REJECTED.
Code of the Philippines (IP Code); 8 that it has already HETDAC
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 Let the file wrapper of "KOLIN", subject
Trade-Related Aspects of Intellectual Property Rights of this case be forwarded to
(TRIPS); and that benefits accorded to a well-known the Bureau of Trademarks
mark should be accorded to petitioner. 9 (BOT) for appropriate action
Ruling of the BLA-IPO in accordance with this
By Decision 10 dated August 16, 2007, the BLA-IPO Decision.
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. SO ORDERED.
4-1996-106310 for the mark Citing Sec. 123 (d) of the IP Code, 11 the BLA-IPO held
"KOLIN" filed in the name of that a mark cannot be registered if it is identical with a
TAIWAN KOLIN., LTD. on registered mark belonging to a different proprietor in
February 29, 1996 for goods respect of the same or closely-related goods.
falling under Class 09 of the Accordingly, respondent, as the registered owner of the
International Classification of mark "KOLIN" for goods falling under Class 9 of the
Goods such as cassette NCL, should then be protected against anyone who
r e c o r d e r, V C D , w o o f e r, impinges on its right, including petitioner who seeks to
amplifiers, camcorders and register an identical mark to be used on goods also
other audio/video electronic belonging to Class 9 of the NCL. 12 The BLA-IPO also
equipment, flat iron, vacuum 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 Decision 15 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
a c t i o n . F u r t h e r, l e t t h e
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 approval of such application, quoting the BLA IPO's
deemed covered by its trademark as explicitly protected ruling in this regard: 21 IcSEAH
under Sec. 138 19 of the IP Code. 20 Resultantly, the Indubitably, Respondent-Applicant's
CA granted respondent's appeal thusly: [herein petitioner] mark is
WHEREFORE, the appeal is GRANTED. The identical to the registered
November 23, 2011 Decision of the Director General of mark of herein Opposer
the Intellectual Property Office in Inter Partes Case No. [herein respondent] and the
14-2006-0096 is REVERSED and SET ASIDE. The identical mark is used on
September 17, 2007 Decision of the Bureau of Legal goods belonging to Class 9 to
Affairs of the same office is REINSTATED. which Opposer's goods are
SO ORDERED. also classified. On this point
Petitioner moved for reconsideration only to be denied alone, Respondent-
by the CA through its equally assailed November 6, Applicant's application should
2013 Resolution. Hence, the instant recourse. already be denied.
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 The argument is specious.
television sets and DVD players. Petitioner postulates, The parties admit that their respective sets of goods
in the main, that its goods are not closely related to belong to Class 9 of the NCL, which includes the
those of Kolin Electronics. On the other hand, following: 22
respondent hinges its case on the CA's findings that its Class 9
and petitioner's products are closely-related. Thus, S c i e n t i fi c , n a u t i c a l , s u r v e y i n g ,
granting petitioner's application for trademark p h o t o g r a p h i c ,
registration, according to respondent, would cause cinematographic, optical,
confusion as to the public. weighing, measuring,
The Court's Ruling signalling, checking
The petition is impressed with merit. (supervision), life-saving and
Identical marks may be registered for teaching apparatus and
products from the same classification instruments; apparatus and
To bolster its opposition against petitioner's application instruments for conducting,
to register trademark "KOLIN," respondent maintains switching, transforming,
that the element of mark identity argues against
 accumulating, regulating or trademark LOTUS
controlling electricity; for its soy sauce
apparatus for recording, even though
transmission or reproduction Philippine Refining
of sound or images; magnetic Company had prior
data carriers, recording discs; registration and use
compact discs, DVDs and of such identical
other digital recording media; mark for its edible oil
mechanisms for coin- which, like soy
operated apparatus; cash sauce, also
registers, calculating belonged to Class
machines, data processing 47;
equipment, computers;
computer software; fire-
extinguishing apparatus.
(b) in Philippine Refining Co., Inc. vs. Ng
Sam and Director of
Patents, 25 we
But mere uniformity in categorization, by itself, does not upheld the Patent
automatically preclude the registration of what appears D i r e c t o r ' s
to be an identical mark, if that be the case. In fact, this registration of the
Court, in a long line of cases, has held that such same trademark
circumstance does not necessarily result in any CAMIA for Ng Sam's
trademark infringement. The survey of jurisprudence ham under Class 47,
cited in Mighty Corporation v. E. & J Gallo Winery 23 is despite Philippine
enlightening on this point: Refining Company's
(a) in Acoje Mining Co., Inc. vs. Director prior trademark
of Patents, 24 we registration and
ordered the approval actual use of such
of Acoje Mining's mark on its lard,
application for butter, cooking oil
registration of the (all of which
 belonged to Class possible violation of Kolin Electronics' intellectual
47), abrasive property right should petitioner's application be granted.
detergents, polishing It is hornbook doctrine, as held in the above-cited
materials and soaps; 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
(c) in Hickok Manufacturing Co., Inc. vs. adopted and used a trademark on his goods would not,
Court of Appeals and without more, prevent the adoption and use of the same
Santos Lim Bun trademark by others on unrelated articles of a different
Liong, 26 we kind. 27
dismissed Hickok's The CA erred in denying petitioner's
petition to cancel registration application
private respondent's Respondent next parlays the idea of relation between
HICKOK trademark products as a factor militating against petitioner's
registration for its application. Citing Esso Standard Eastern, Inc. v. Court
Marikina shoes as of Appeals, 28 respondent argues that the goods
against petitioner's covered by petitioner's application and those covered by
earlier registration of its registration are actually related belonging as they do
the same trademark to the same class or have the same physical
for handkerchiefs, characteristics with reference to their form, composition,
briefs, belts and texture, or quality, or if they serve the same purpose.
wallets. 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
Verily, whether or not the products covered by the related to milk
trademark sought to be registered by Taiwan Kolin, on because they were
the one hand, and those covered by the prior issued both food products;
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
(b) In Chua Che vs. Phil. Patents Office, Respondent avers that Kolin Electronics' and Taiwan
31 soap and Kolin's products are closely-related not only because
perfume, lipstick and both fall under Class 9 of the NCL, but mainly because
nail polish are held they both relate to electronic products, instruments,
to be similarly apparatus, or appliances. 34 Pushing the point,
related because they respondent would argue that Taiwan Kolin and Kolin
are common Electronics' goods are inherently similar in that they are
household items; 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 HTASIa
(c) In Ang vs. Teodoro, 32 the trademark Significantly, Kolin Electronics' goods
"Ang Tibay" for (automatic voltage regulator;
shoes and slippers converter; recharger; stereo
was disallowed to be booster; AC-DC regulated
used for shirts and power supply; step-down
pants because they transformer; and PA amplified
belong to the same AC-DC) and Taiwan Kolin's
general class of television sets and DVD
goods; and players are both classified
under class 9 of the NICE
agreement. At first glance, it
is also evident that all these
goods are generally
(d)  In Khe vs. Lever Bros. Co., 33 soap described as electrical
and pomade, devices. . . . [T]he goods of
although non- both Kolin Electronics and
competitive, were Taiwan Kolin will inevitably be
held to be similar or introduced to the public as
belong to the same "KOLIN" products and will be
class, since both are offered for sale in the same
toilet articles. 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
s e e a s t e r e o b o o s t e r,
a m p l i fi e r a n d a u t o m a t i c
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 TIDcEH
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 (g)  whether the article is bought for
goods belong; i m m e d i a t e
consumption, that is,
d a y - t o - d a y
household items;
(c) the product's quality, quantity, or size,
including the nature
of the package,
wrapper or (h) the fields of manufacture;
container;

(i) the conditions under which the article

(d) the nature and cost of the articles; is usually purchased;
and

(e)  the descriptive properties, physical

attributes or (j)  the channels of trade through which
e s s e n t i a l the goods flow, how
characteristics with they are distributed,
reference to their marketed, displayed
form, composition, and sold. 39
texture or quality;

As mentioned, the classification of the products under

(f) the purpose of the goods; 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 are sold and flow
this only accounts for one of many considerations through electrical
enumerated in Mighty Corporation. In this case, and hardware
credence is accorded to petitioner's assertions that: 40 stores.
a. Taiwan Kolin's goods are classified as
home appliances as
opposed to Kolin
Electronics' goods Clearly then, it was erroneous for respondent to assume
which are power over the CA to conclude that all electronic products are
supply and audio related and that the coverage of one electronic product
e q u i p m e n t necessarily precludes the registration of a similar mark
accessories; 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
b.  Taiwan Kolin's television sets and devices that require plugging into sockets are
DVD players perform necessarily related goods.
distinct function and It bears to stress at this point that the list of products
purpose from Kolin included in Class 9 41 can be sub-categorized into five
Electronics' power (5) classifications, namely: (1) apparatus and
supply and audio instruments for scientific or research purposes, (2)
equipment; and information technology and audiovisual equipment, (3)
apparatus and devices for controlling the distribution
and use of electricity, (4) optical apparatus and
instruments, and (5) safety equipment. 42 From this
c.  Taiwan Kolin sells and distributes its sub-classification, it becomes apparent that petitioner's
various home products, i.e., televisions and DVD players, belong to
appliance products audiovisual equipment, while that of respondent,
on wholesale and to consisting of automatic voltage regulator, converter,
accredited dealers, recharger, stereo booster, AC-DC regulated power
whereas Kolin supply, step-down transformer, and PA amplified AC-
Electronics' goods
DC, generally fall under devices for controlling the soap which are of minimal cost. 46 The products of the
distribution and use of electricity. contending parties are relatively luxury items not easily
b. The ordinarily intelligent considered affordable. Accordingly, the casual buyer is
buyer is not likely to be predisposed to be more cautious and discriminating in
confused and would prefer to mull over his purchase. Confusion
In trademark cases, particularly in ascertaining whether and deception, then, is less likely. 47 As further
one trademark is confusingly similar to another, no rigid elucidated in Del Monte Corporation v. Court of Appeals:
set rules can plausible be formulated. Each case must 48
be decided on its merits, with due regard to the goods . . . Among these, what essentially
or services involved, the usual purchaser's character determines the attitudes of
and attitude, among others. In such cases, even more the purchaser, specifically his
than in any other litigation, precedent must be studied in inclination to be cautious, is
the light of the facts of a particular case. That is the the cost of the goods. To be
reason why in trademark cases, jurisprudential sure, a person who buys a
precedents should be applied only to a case if they are box of candies will not
specifically in point. 43 exercise as much care as
For a clearer perspective and as matter of record, the one who buys an expensive
following image on the left 44 is the trademark applied watch. As a general rule, an
for by petitioner, while the image juxtaposed to its right ordinary buyer does not
45 is the trademark registered by respondent: exercise as much prudence
in buying an article for which
While both competing marks refer to the word "KOLIN" he pays a few centavos as he
written in upper case letters and in bold font, the Court does in purchasing a more
at once notes the distinct visual and aural differences valuable thing. Expensive
between them: Kolin Electronics' mark is italicized and and valuable items are
colored black while that of Taiwan Kolin is white in normally bought only after
pantone red color background. The differing features deliberate, comparative and
between the two, though they may appear minimal, are analytical investigation. But
sufficient to distinguish one brand from the other. mass products, low priced
It cannot be stressed enough that the products involved articles in wide use, and
in the case at bar are, generally speaking, various kinds matters of everyday
of electronic products. These are not ordinary purchase requiring
consumable household items, like catsup, soy sauce or frequent replacement are
 bought by the casual
consumer without great
care . . . . (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.
TaCIDS
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 Bok 50 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." 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
Respondent court correctly ruled that
considering the general
appearances of each mark as
a whole, the possibility of any
co n fu si o n i s u n l i ke l y. 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
substance. 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.
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. DCcHAa
SO ORDERED.
Peralta, Villarama, Jr., Reyes and Jardeleza, JJ.,
concur.
||| (Taiwan Kolin Corp., Ltd. v. Kolin Electronics Co., Inc.,
G.R. No. 209843, [March 25, 2015])