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G.R. No. 188225 : Shirley F. Torres v. Imelda Perez and Rodrigo Perez / Shirley F. Torres v. Imelda Perez and Rodrigo Perez

G.R. No. 188225 : Shirley F. Torres v. Imelda Perez and Rodrigo Perez / Shirley F. Torres v. Imelda Perez and Rodrigo Perez

PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

G.R. No. 188225 : November 28, 2012

SHIRLEY F. TORRES, Petitioner, v. IMELDA PEREZ and RODRIGO PEREZ, Respondents.

G.R. No. 198728

SHIRLEY F. TORRES, Petitioner, v. IMELDA PEREZ and RODRIGO PEREZ, Respondents.

D E C I S I O N

SERENO, C.J.:

These are Petitions for Review on Certiorari under Rule 45 of the Rules of Court. The petition docketed as G.R. No. 188225 assails the Decision1ςrνll of the Court of Appeals (CA) in CA-G.R. SP No. 103846 dated 11 March 2009. The CA Decision nullified the Orders dated 12 February 20082ςrνll and 11 April 20083ςrνll of the Regional Trial Court (RTC) of Makati, Branch 149. The RTC Orders had denied the Motion to Dismiss and/or Withdraw Information filed against respondents for unfair competition (violation of Section 168 in relation to Section 170)4ςrνll under Republic Act No. (R.A.) 8293 (Intellectual Property Code of the Philippines).

On the other hand, the petition docketed as G.R. No. 198728 assails the Decision5ςrνll in CA-G.R. SP No. 111903 dated 29 September 2011, which affirmed the RTC Orders dated 29 July 20096ςrνll and 19 October 2009,7ςrνll this time quashing the Information against respondents.

Respondents Imelda and Rodrigo are spouses who own RGP Footwear Manufacturing (RGP), which supplies ladies shoes to Shoe Mart (SM).8ςrνll They met petitioner when she sold them business-class plane tickets to the United States in 2002.9ςrνll She was also interested in doing business with SM, and they suggested that she form a partnership with their daughter Sunshine, nicknamed Sasay.10ςrνll

Petitioner and Sunshine formed Sasays Closet Co. (SCC), a partnership registered with the Securities and Exchange Commission on 17 October 2002. SCC was engaged in the supply, trading, retailing of garments such as underwear, childrens wear, womens and mens wear, and other incidental activities related thereto.11ςrνll

For its products, SCC used the trademark "Naturals with Design," which it filed with the Intellectual Property Office on 24 August 2005 and registered on 26 February 2007.12ςrνll These products were primarily supplied to SM,13ςrνll which assigned to them the vendor code "190501" for purposes of identification.14ςrνll

SCC used the facilities and equipment owned by RGP, as well as the latters business address (No. 72 Victoria Subdivision, Barangay Dela Paz, Bin, Laguna), which was also the residential address of respondents.15ςrνll

In August 2003, Sunshine pulled out of the partnership, because she was hired to work in an international school.16ςrνllRespondent Imelda took over Sunshines responsibilities in the partnership.17ςrνll

On 14 December 2005, petitioner sent an email to respondent Imelda asking to be reimbursed for expenses incurred in the formers travel to China.18ςrνllRespondent Imelda replied the following day, stating that the partnership could not reimburse petitioner, because the trip was personal and not business-related.19ςrνll In the same email, respondent Imelda vented her frustration over the fact that she, together with respondent Rodrigo, had been doing all the work for SCC and incurring expenses that they did not charge to the partnership.20ςrνllRespondent Imelda then informed petitioner of the formers decision to dissolve the partnership.21ςrνll Despite the objections of petitioner to the dissolution of SCC, various amounts were paid to her by respondents from January to April 2006 representing her share in the partnership assets.22ςrνll

Meanwhile, on 27 March 2006, petitioner established Tezares Enterprise, a sole proprietorship engaged in supplying and trading of clothing and accessories except footwear.23ςrνll Also in March 2006, she discovered that underwear products bearing the brand "Naturals" were being sold in SM with vendor code "180195."24ςrνll This code was registered to RGP,25ςrνll a fact confirmed by test buys conducted by her lawyers on 13 and 14 May 2006.26ςrνll

On 5 June 2006, a search warrant for unfair competition under Section 168 in relation to Section 170 of R.A. 8293 was issued by the RTC of Manila, Branch 24, against respondents at their address.27ςrνll The search warrant called for the seizure of womens undergarments bearing the brand "Naturals," as well as equipment and papers having the vendor code "180195" or the inscription "RGP." The search warrant was implemented on the same day. However, it was quashed by the same court on 20 October 2006 upon motion of respondents. The trial court ruled that respondents did not pass off "Naturals" as the brand of another manufacturer. On the contrary, they used the brand in the honest belief that they owned SCC, the owner of the brand.

On 9 June 2006, petitioner filed a criminal complaint for unfair competition against respondents and Sunshine before the City Prosecution Office of Makati City.28ςrνll Assistant City Prosecutor Imelda P. Saulog found probable cause to indict respondents for unfair competition.29ςrνll She ruled that they had clearly passed off the "Naturals" brand as RGPs even if the brand was owned by SCC. According to the prosecutor, SCC was indeed dissolved when respondent Imelda manifested her intention to cease from the partnership in an email sent to petitioner on 15 December 2005.30ςrνll The prosecutor said, however, that it remained operational, since the process of winding up its business had not been completed. Thus, SCC remained the owner of the "Naturals" brand, and petitioner being a legitimate partner thereof had a right to file the complaint against respondents. The prosecutor found no probable cause against Sunshine, as it was established that she had withdrawn from SCC as of August 2003.

The indictment was raffled to RTC Makati City, Branch 149. On 23 October 2006, it issued an Order finding probable cause for the issuance of a warrant of arrest against respondents.31ςrνll

Respondents filed a petition for review of the prosecutors resolution before the Department of Justice (DOJ), which on 13 December 2006 issued its own Resolution32ςrνll reversing the finding of existence of probable cause against them. Contrary to the prosecutors finding, the DOJ found that SCC had effectively wound up the latters partnership affairs on 24 April 2006 when petitioner was reimbursed for her trip to China. That was the last of the payments made to her to cover her share in the partnership affairs, which started after respondent Imelda manifested her intention to cease from the partnership business on 15 December 2005. Thus, when the criminal complaint for unfair competition was filed on 9 June 2006, there was "no longer any competition, unfair or otherwise, involving the partnership."33ςrνll

Furthermore, the DOJ ruled that even if SCC had not yet terminated its business and therefore still existed, respondents had the right to use the "Naturals" brand, as they were already the exclusive owners of SCC following the completion of payments of petitioners share in the partnership affairs. Also, the establishment by petitioner of Tezares Enterprise which directly competed with SCC in terms of products and its subsequent accreditation as supplier of intimate apparel for SM in April 2006 were regarded by the DOJ as apparent indications that she no longer had any share in SCC. Thus, the petition for review was granted, and the city prosecutor of Makati was ordered to withdraw the Information against respondents for unfair competition.

The DOJ denied the motion for reconsideration filed by petitioner on 28 March 2007.34ςrνll Hence, she filed a petition for certiorari before the CA, where it was docketed as CA-G.R. SP No. 98861. In her petition, she questioned the DOJ Resolution, but later withdrew the same on 6 December 2007 for an unknown reason.35ςrνll

Following the directive of the DOJ, the prosecutor filed before the RTC of Makati City, Branch 149, a Motion to Dismiss and/or Withdraw Information on 3 April 2007.36ςrνll The trial court denied the motion in an Order37ςrνll dated 12 February 2008. It maintained the correctness of its finding of existence of probable cause in the case and ruled that the findings of the DOJ would be better appreciated and evaluated in the course of the trial.

Respondents moved for reconsideration,38ςrνll but their motion was denied39ςrνll by the RTC. Aggrieved, they filed a Petition for Certiorari (with Prayer for the Issuance of a Temporary Restraining Order and thereafter a Preliminary Injunction)40ςrνll before the CA. They argued that probable cause for the issuance of a warrant of arrest is different from probable cause for holding a person for trial. The first is the function of the judge, while the second is the prosecutors.41ςrνll Thus, respondents claimed that it was wrong for Presiding Judge Cesar O. Untalan to deny the prosecutors motion to dismiss for lack of probable cause on the basis of the judges own finding that there was probable cause to issue a warrant of arrest against respondents. Furthermore, the Judge Untalan based his finding solely on the evidence submitted by petitioner without evaluating the evidence of respondents.

In the first assailed Decision in CA-G.R. SP No. 10384642ςrνll dated 11 March 2009, the CA granted the petition. It found that the trial judge committed grave abuse of discretion amounting to lack or excess of jurisdiction when he denied the prosecutors motion to dismiss for lack of probable cause. The CA sustained the position of respondents that the finding of probable cause for the filing of an information is an executive function lodged with the prosecutor. It also found that the trial judge did not make an independent assessment of the evidence on record in determining the existence of probable cause for the offense of unfair competition, as opposed to the exhaustive study made by the DOJ before arriving at its finding of lack of probable cause.

The CA also ruled that in determining probable cause, the essential elements of the crime charged must be considered, for their absence would mean that there is no criminal offense. In determining probable cause for unfair competition, the question is "whether or not the offenders by the use of deceit or any other means contrary to good faith passes 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."43ςrνll The CA affirmed the findings of the DOJ and the RTC of Manila, Branch 24 that respondents used the "Naturals" brand because they believed that they were the owners of SCC, which owned the brand. Furthermore, the partnership had been terminated as of April 2006; hence, the filing of the criminal complaint on 9 June 2006 could no longer prosper. Even if SCC had not yet terminated its business, respondents, having bought petitioner out of SCC, were already its exclusive owners and, as such, had the right to use the "Naturals" brand.

According to the CA, the filing of the criminal complaint for unfair competition was nothing but an offshoot of the misunderstanding and quarrel that arose when respondents initially refused to reimburse the expenses incurred by petitioner in her trip to China and further escalated when respondent Imelda decided to dissolve SCC.

Petitioner moved for reconsideration44ςrνll of the CA Decision, but the motion was denied on 1 June 2009.45ςrνll She then brought the matter before this Court via a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court and docketed as G.R. No. 188225.46ςrνll Without giving due course to the petition, the Court required47ςrνll respondents to comment thereon. Upon their compliance,48ςrνll petitioner was required49ςrνll to file a reply,50ςrνll which was later received on 11 December 2009. On 19 May 2011, she filed her Memorandum.51ςrνll

Meanwhile, following the promulgation of the Decision in CA-G.R. SP No. 103846, respondents filed an Urgent Motion to Dismiss the criminal complaint for unfair competition before the RTC on 1 April 2009.52ςrνll The motion was duly opposed by petitioner, arguing that the CA Decision had not yet attained finality in view of her pending petition before this Court; thus, the motion was premature.53ςrνll The RTC denied the motion to dismiss for lack of merit.54ςrνll However, upon motion for reconsideration55ςrνll filed by respondents, it issued the Order dated 29 July 200956ςrνll ordering the quashal of the Information against them. The trial court issued another Order on 19 October 200957ςrνll denying petitioners Motion for Reconsideration.58ςrνll

Petitioner filed a Petition for Certiorari59ςrνll before the CA on the ground that the trial judge committed grave abuse of discretion amounting to lack or excess of jurisdiction when he quashed the Information against respondents based on a CA Decision that was not yet final and executory, being the subject of a petition still pending before this Court.

On 29 September 2011, the CA issued the second assailed Decision in CA-G.R. SP No. 111903 affirming the RTC Orders dated 29 July 2009 and 19 October 2009. The appellate court ruled that while its Decision in CA-G.R. SP No. 103846 was still under review before this Court, neithercourt had issued a restraining order or injunction that would prevent the RTC from implementing the said Decision ordering the dismissal of the information against respondents. Furthermore, the CA ruled that since petitioner had withdrawn her petition in CA-G.R. SP No. 98861 questioning the DOJ Resolution, the issue of whether there was probable cause had "already been resolved with finality in the negative."60ςrνll Thus, the trial court cannot be faulted for following the CA directive to dismiss the Information against respondents.

Opting not to file a motion for reconsideration,61ςrνll petitioner again comes before us on a Petition for Review on Certiorari questioning the Decision in CA-G.R. SP No. 111903.62ςrνll In her petition docketed as G.R. No. 198728, she argues that Presiding Judge Cesar O. Untalan committed grave abuse of discretion amounting to lack or excess of jurisdiction when he dismissed the criminal case against respondents for unfair competition based on CA findings that were not yet final. The trial judge was fully aware that those findings were still subject to a pending petition before this Court.

On 23 November 2011, the Court consolidated G.R. Nos. 198728 and 188225.63ςrνll

ISSUE

Despite the extensive legal battle that petitioner and respondents have waged heretofore, these petitions will be settled simply through a ruling on whether there exists probable cause to indict respondents for unfair competition (violation of Section 168 in relation to Section 170) under R.A. 8293.

OUR RULING

No probable cause to indict respondents

At the outset, it is worth noting that Judge Untalan acted well within the exercise of his judicial discretion when he denied the Motion to Dismiss and/or Withdraw Information filed by the prosecution. His finding that there was probable cause to indict respondents for unfair competition, and that the findings of the DOJ would be better appreciated in the course of a trial, was based on his own evaluation of the evidence brought before him. It was an evaluation that was required of him as a judge.

Thus, in Yambot v. Armovit,64ςrνll this Court reiterated the mandate of judges to make a personal evaluation of records submitted in support of criminal complaints filed before their respective salas:chanroblesvirtuallawlibrary

Crespo v. Mogul instructs in a very clear manner that once a complaint or information is filed in court, any disposition of the case as to its dismissal, or the conviction or acquittal of the accused, rests on the sound discretion of the said court, as it is the best and sole judge of what to do with the case before it. While the resolution of the prosecutorial arm is persuasive, it is not binding on the court. It may therefore grant or deny at its option a motion to dismiss or to withdraw the information based on its own assessment of the records of the preliminary investigation submitted to it, in the faithful exercise of judicial discretion and prerogative, and not out of subservience to the prosecutor.65ςrνll x x x. (Emphasis supplied)

Judge Untalan stood firm on this finding in his denial of the motion for reconsideration and even initially after the CA had made a ruling on the matter. He only performed a task he was called upon to do, and his judgment on the matter although erroneous cannot be regarded as capricious and whimsical. Thus, he did not commit grave abuse of discretion amounting to lack or excess of jurisdiction.

However, while we recognize that Judge Untalan did not commit grave abuse of discretion, we take note of his apparent loss of steam when he issued the Order dated 29 July 2009 granting respondents motion for reconsideration of his earlier ruling denying the Urgent Motion to Dismiss. The good judge yielded, even though he was well aware that the CA Decision had not yet attained finality pending review by this Court.

We now rule on the issue of probable cause.

Probable cause, for purposes of filing a criminal information, is described as "such facts as are sufficient 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."66ςrνll

Thus, the determination of the existence of probable cause necessitates the prior determination of whether a crime or an offense was committed in the first place. Here, we find that there was no probable cause to indict respondents, because the crime of unfair competition was not committed.

In positing that respondents were guilty of unfair competition, petitioner makes a lot of the fact that they used the vendor code of RGP in marketing the "Naturals" products. She argues that they passed off the "Naturals" products, which they marketed under RGP, as those of SCC; thus, they allegedly prejudiced the rights of SCC as owner of the trademark. She also claims that she has the personality to prosecute respondents for unfair competition on behalf of SCC.

When Judge Untalan denied the Motion to Dismiss and/or Withdraw Information filed by the prosecution and thereby sustained the position of petitioner, his error lay in the fact that his focus on the crime of unfair competition was unwarranted. In this case, much more important than the issue of protection of intellectual property is the change of ownership of SCC. The arguments of petitioner have no basis, because respondents are the exclusive owners of SCC, of which she is no longer a partner.

Based on the findings of fact of the CA and the DOJ, respondents have completed the payments of the share of petitioner in the partnership affairs. Having bought her out of SCC, respondents were already its exclusive owners who, as such, had the right to use the "Naturals" brand.

The use of the vendor code of RGP was resorted to only for the practical purpose of ensuring that SMs payments for the "Naturals" products would go to respondents, who were the actual suppliers.

Furthermore, even if we were to assume that the issue of protection of intellectual property is paramount in this case, the criminal complaint for unfair competition against respondents cannot prosper, for the elements of the crime were not present. We have enunciated in CCBPI v. Gomez67ςrνll that the key elements of unfair competition are "deception, passing off and fraud upon the public."68ςrνll No deception can be imagined to have been foisted on the public through different vendor codes, which are used by SM only for the identification of suppliers products.ςηαοblενιrυαllαωlιbrαr

WHEREFORE, the Decisions dated 11 March 2009 in CA-G.R. SP No. 103846 and 29 September 2011 in CA-G.R. SP No. 111903, finding lack of probable cause for respondents alleged violation of Section 168 in relation to Section 170 of Republic Act No. 8293 (unfair competition), are AFFIRMED. The Information against respondents for unfair competition is

DISMISSED.ςrαlαωlιbrαr

SO ORDERED.

Endnotes:


1ςrνll Rollo (G.R. No. 188225), pp. 62-83. The Decision of the Court of Appeals (CA) Special Second Division in CA-G.R. SP No. 103846 dated 11 March 2009 was penned by Justice Ramon M. Bato, Jr. and concurred in by Justices Portia Alino-Hormachuelos and Vicente S. E. Veloso.

2ςrνll Id. at 225-226.

3ςrνll Id. at 238-239.

4ςrνll Sec. 168. Unfair Competition, Rights, Regulation and Remedies. - 168.1. A person who has identified in the mind of the public the goods he manufactures or deals in, his business or services from those of others, whether or not a 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 like purpose;

b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the services of another who has identified such services in the mind of the public; or

c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another.

168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis.

Sec. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) 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. (Arts. 188 and 189, Revised Penal Code)

5ςrνll Rollo (G.R. No. 198728), pp. 26-39. The Decision of the CA Special Fifteenth Division in CA-G.R. SP No. 111903 dated 29 September 2011 was penned by Justice Francisco P. Acosta and concurred in by Justices Vicente S. E. Veloso and Michael P. Elbinias.

6ςrνll Id. at 41.

7ςrνll Id. at 43.

8ςrνll Id. at 81.

9ςrνll Id.

10ςrνll Id. at 81-82.

11ςrνll Id. at 45-49.

12ςrνll Id. at 51-52.

13ςrνll Id. at 5.

14ςrνll Id.

15ςrνll Id. at 82.

16ςrνll Id.

17ςrνll Id.

18ςrνll Rollo (G.R. No. 188225), pp. 65-66.

19ςrνll Id. at 66.

20ςrνll Id.

21ςrνll Id.

22ςrνll Id.

23ςrνll Rollo (G.R. No. 198728), p. 85.

24ςrνll Id at 5.

25ςrνll Id.

26ςrνll Id. at 54-67.

27ςrνll Id. at 69-70.

28ςrνll Id. at 75-79.

29ςrνll Id. at 133-139, Resolution dated 5 October 2006.

30ςrνll Id. at 84.

31ςrνll Id. at 143.

32ςrνll Id. at 145-153.

33ςrνll Id. at 150.

34ςrνll Rollo (G.R. No. 188225), p. 69.

35ςrνll Id.

36ςrνll Rollo (G.R. No. 198728), pp. 155-156.

37ςrνll Id. at 158-159.

38ςrνll Id. at 161-169.

39ςrνll Id. at 171-172.

40ςrνll Id. at 174-257.

41ςrνll Id. at 342.

42ςrνll Id. at 474-495.

43ςrνll Rollo (G.R. No. 188225), p. 80.

44ςrνll Id. at 565-576.

45ςrνll Id. at 86-87.

46ςrνll Id. at 18-59, Petition for Review.

47ςrνll Id. at 577, First Division Resolution dated 24 August 2009.

48ςrνll Id. at 578-690, Comment/Opposition (to Petitioners Petition for Review on Certiorari).

49ςrνll Id. at 691.

50ςrνll Id. at 692-717.

51ςrνll Id. at 731-748.

52ςrνll Rollo (G.R. No. 198728), pp. 499-500.

53ςrνll Id. at 502-504.

54ςrνll Id. at 518.

55ςrνll Id. at 520-522.

56ςrνll Id. at 41.

57ςrνll Id. at 43.

58ςrνll Id. at 574-622.

59ςrνll Id. at 624-641.

60ςrνll Id. at 37.

61ςrνll Id. at 4.

62ςrνll Id. at 3-23.

63ςrνll Id. at 718.

64ςrνll G.R. No. 172677, 12 September 2008, 565 SCRA 177.

65ςrνll Id. at 180.

66ςrνll Alejandro v. Bernas, G.R. No. 179243, 7 September 2011, 657 SCRA 255, 264-265.

67ςrνll G.R. No. 154491, 14 November 2008, 571 SCRA 18.

68ςrνll Id. at 35.

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