"159.4 There shall be no infringement of trademarks or tradenames of imported or sold drugs and medicines allowed under Sec. 72.1 of this Act, as well as imported or sold off-patent drugs and medicines: Provided, That said drugs and medicines bear the registered marks that have not been tampered, unlawfully modified, or infringed upon as defined under Sec. 155 of this Code.

MANOLO P. SAMSON, petitioner, vs. HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge, Regional Trial Court of Quezon City, Branch 90, PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Assailed in this petition for certiorari is the March 26, 2003 Order[1] of the Regional Trial Court of Quezon City, Branch 90, which denied petitioner’s – (1) motion to quash the information; and (2) motion for reconsideration of the August 9, 2002 Order denying his motion to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44.  Petitioner also questioned its August 5, 2003 Order[2] which denied his motion for reconsideration.

The undisputed facts show that on March 7, 2002, two informations for unfair competition under Section 168.3 (a), in relation to Section 170, of the Intellectual Property Code (Republic Act No. 8293), similarly worded save for the dates and places of commission, were filed against petitioner Manolo P. Samson, the registered owner of ITTI Shoes.  The accusatory portion of said informations read:

That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, above-named accused, owner/proprietor of ITTI Shoes/Mano Shoes Manufactuirng Corporation located at Robinson’s Galleria, EDSA corner Ortigas Avenue, Quezon City, did then and there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely identical to and/or colorable imitations of the authentic Caterpillar products and likewise using trademarks, symbols and/or designs as would cause confusion, mistake or deception on the part of the buying public to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user and owner of the following internationally: “CATERPILLAR”, “CAT”, “CATERPILLAR & DESIGN”, “CAT AND DESIGN”, “WALKING MACHINES” and “TRACK-TYPE TRACTOR & DESIGN.”

CONTRARY TO LAW.[3]

On April 19, 2002, petitioner filed a motion to suspend arraignment and other proceedings in view of the existence of an alleged prejudicial question involved in Civil Case No. Q-00-41446 for unfair competition pending with the same branch; and also in view of the pendency of a petition for review filed with the Secretary of Justice assailing the Chief State Prosecutor’s resolution finding probable cause to charge petitioner with unfair competition.   In an Order dated August 9, 2002, the trial court denied the motion to suspend arraignment and other proceedings.

On August 20, 2002, petitioner filed a twin motion to quash the informations and motion for reconsideration of the order denying motion to suspend, this time challenging the jurisdiction of the trial court over the offense charged.   He contended that since under Section 170 of R.A. No. 8293, the penalty5 of imprisonment for unfair competition does not exceed six years, the offense is cognizable by the Municipal Trial Courts and not by the Regional Trial Court, per R.A. No. 7691.

In its assailed March 26, 2003 Order, the trial court denied petitioner’s twin motions.6 A motion for reconsideration thereof was likewise denied on August 5, 2003.

Hence, the instant petition alleging that respondent Judge gravely abused its discretion in issuing the assailed orders.

The issues posed for resolution are – (1) Which court has jurisdiction over criminal and civil cases for violation of intellectual property rights? (2) Did the respondent Judge gravely abuse his discretion in refusing to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44 on the ground of – (a) the existence of a prejudicial question; and (b) the pendency of a petition for review with the Secretary of Justice on the finding of probable cause for unfair competition?

Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:

SEC. 170. Penalties. – Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00), shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155

[Infringement], Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin and False Description or Representation].

Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws, thus –

SEC. 163. Jurisdiction of Court. – All actions under Sections 150, 155, 164 and 166 to 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws. (Emphasis supplied)

The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law) which provides that jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is lodged with the Court of First Instance (now Regional Trial Court) –

SEC. 27. Jurisdiction of Court of First Instance. – All actions under this Chapter [V – Infringement] and Chapters VI [Unfair Competition] and VII [False Designation of Origin and False Description or Representation], hereof shall be brought before the Court of First Instance.

We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293.  The repealing clause of R.A. No. 8293, reads –

SEC. 239. Repeals. – 239.1. All Acts and parts of Acts inconsistent herewith, more particularly Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis added)

Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used the phrases “parts of Acts” and “inconsistent herewith;” and it would have simply stated “Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended are hereby repealed.”  It would have removed all doubts that said specific laws had been rendered without force and effect.  The use of the phrases “parts of Acts” and “inconsistent herewith” only means that the repeal pertains only to provisions which are repugnant or not susceptible of harmonization with R.A. No. 8293.7 Section 27 of R.A. No. 166, however, is consistent and in harmony with Section 163 of R.A. No. 8293.  Had R.A. No. 8293 intended to vest jurisdiction over violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated so under Section 163 thereof.

Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special law, the latter must prevail.  Jurisdiction conferred by a special law to Regional Trial Courts must prevail over that granted by a general law to Municipal Trial Courts.8

In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws9 conferring jurisdiction over violations of intellectual property rights to the Regional Trial Court.  They should therefore prevail over R.A. No. 7691, which is a general law.10 Hence, jurisdiction over the instant criminal case for unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00.

In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property Courts.  On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated as Special Commercial Courts.

The case of Mirpuri v. Court of Appeals,11 invoked by petitioner finds no application in the present case.  Nowhere in Mirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293.  Neither did we make a categorical ruling therein that jurisdiction over cases for violation of intellectual property rights is lodged with the Municipal Trial Courts.  The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the enactment of the present Intellectual Property Code and cannot thus be construed as a jurisdictional pronouncement in cases for violation of intellectual property rights.

Anent the second issue, petitioner failed to substantiate his claim that there was a prejudicial question.   In his petition, he prayed for the reversal of the March 26, 2003 order which sustained the denial of his motion to suspend arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44.  For unknown reasons, however, he made no discussion in support of said prayer in his petition and reply to comment.  Neither did he attach a copy of the complaint in Civil Case No. Q-00-41446 nor quote the pertinent portion thereof to prove the existence of a prejudicial question.

At any rate, there is no prejudicial question if the civil and the criminal action can, according to law, proceed independently of each other.12 Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the offended party.  It shall proceed independently of the criminal action and shall require only a preponderance of evidence.

In the case at bar, the common element in the acts constituting unfair competition under Section 168 of R.A. No. 8293 is fraud.13 Pursuant to Article 33 of the Civil Code, in cases of defamation, fraud, and physical injuries, a civil action for damages,

entirely separate and distinct from the criminal action, may be brought by the injured party.   Hence, Civil Case No. Q-00-41446, which as admitted14 by private respondent also relate to unfair competition, is an independent civil action under Article 33 of the Civil Code.  As such, it will not operate as a prejudicial question that will justify the suspension of the criminal cases at bar.

Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure provides –

SEC. 11. Suspension of arraignment. – Upon motion by the proper party, the arraignment shall be suspended in the following cases –

x x x                          x x x                             x x x

(c)     A petition for review of the resolution of the prosecutor is pending at either the Department of Justice, or the Office of the President; Provided, that the period of suspension shall not exceed sixty (60) days counted from the filing of the petition with the reviewing office.

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

In the instant case, petitioner failed to establish that respondent Judge abused his discretion in denying his motion to suspend.  His pleadings and annexes submitted before the Court do not show the date of filing of the petition for review with the Secretary of Justice.15 Moreover, the Order dated August 9, 2002 denying his motion to suspend was not appended to the petition.  He thus failed to discharge the burden of proving that he was entitled to a suspension of his arraignment and that the questioned orders are contrary to Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure.   Indeed, the age-old but familiar rule is that he who alleges must prove his allegations.

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

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. — The petition shall contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for.

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner, and shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto.

x x x                          x x x                             x x x

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphasis added)

WHEREFORE, in view of all the foregoing, the petition is DISMISSED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concurWILLIAM C. YAO, SR., LUISA C. YAO, RICHARD C. YAO, WILLIAM C. YAO JR., and ROGER C. YAO,                             Petitioners,

  

-versus –  

THE PEOPLE OF THE PHILIPPINES, PETRON CORPORATION and PILIPINAS SHELL PETROLEUM CORP., and its Principal, SHELL INT’L PETROLEUM CO. LTD.,                             Respondents.

  G.R. No. 168306  Present:      YNARES-SANTIAGO,             Chairperson,     AUSTRIA-MARTINEZ,     CHICO-NAZARIO, and     NACHURA, JJ.     Promulgated:

 June 19, 2007

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D E C I S I O N  

CHICO-NAZARIO, J.:  

          In this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, petitioners William C. Yao, Sr., Luisa C. Yao,

Richard C. Yao, William C.Yao, Jr., and Roger C. Yao pray for the reversal of the Decision dated 30 September 2004, [2] and

Resolution dated 1 June 2005, of the Court of Appeals in CA G.R. SP No. 79256, [3] affirming the two Orders, both dated 5 June

2003, of the Regional Trial Court (RTC), Branch 17, Cavite City, relative to Search Warrants No. 2-2003 and No. 3-2003.[4]  In the

said Orders, the RTC denied the petitioners’ Motion to Quash Search Warrant [5] and Motion for the Return of the Motor Compressor

andLiquified Petroleum Gas (LPG) Refilling Machine.[6]

            The following are the facts:

 

Petitioners are incorporators and officers of MASAGANA GAS CORPORATION (MASAGANA), an entity engaged in the

refilling, sale and distribution of LPG products. Private respondents Petron Corporation (Petron) and Pilipinas Shell Petroleum

Corporation (Pilipinas Shell) are two of the largest bulk suppliers and producers of LPG in the Philippines. Their LPG products are

sold under the marks “GASUL” and “SHELLANE,” respectively.  Petron is the registered owner in thePhilippines of the trademarks

GASUL and GASUL cylinders used for its LPG products. It is the sole entity in the Philippines authorized to allow refillers and

distributors to refill, use, sell, and distribute GASUL LPG containers, products and its trademarks. Pilipinas Shell, on the other hand,

is the authorized user in thePhilippines of the tradename, trademarks, symbols, or designs of its principal, Shell International

Petroleum Company Limited (Shell International), including the marks SHELLANE and SHELL device in connection with the

production, sale and distribution of SHELLANE LPGs.  It is the only corporation in the Philippines authorized to allow refillers and

distributors to refill, use, sell and distribute SHELLANE LPG containers and products.[7]

 

On 3 April 2003, National Bureau of Investigation (NBI) agent Ritche N. Oblanca (Oblanca) filed two applications for

search warrant with the RTC, Branch 17,Cavite City, against petitioners and other occupants of the MASAGANA compound located

at Governor’s Drive, Barangay Lapidario, Trece Martires, Cavite City, for alleged violation of Section 155, in relation to Section 170

of Republic Act No. 8293, otherwise known as “The Intellectual Property Code of the Philippines.” [8]  The two applications for search

warrant uniformly alleged that per information, belief, and personal verification of Oblanca, the petitioners are actually producing,

selling, offering for sale and/or distributing LPG products using steel cylinders owned by, and bearing the tradenames, trademarks,

and devices of Petron and Pilipinas Shell, without authority and in violation of the rights of the said entities.

 

In his two separate affidavits[9] attached to the two applications for search warrant, Oblanca alleged:

 

1.                  [That] on 11 February 2003, the National Bureau of Investigation (“NBI”) received a letter-complaint from Atty. Bienvenido I. Somera Jr. of Villaraza and Angangco, on behalf of among others, [Petron Corporation (PETRON)] and Pilipinas Shell Petroleum Corporation (PSPC), the authorized representative of Shell International Petroleum Company Limited (“Shell International”), requesting assistance in the investigation and, if warranted, apprehension and prosecution of certain persons and/or establishments suspected of violating the intellectual property rights [of PETRON] and of PSPC and Shell International. 

2.                  [That] on the basis of the letter-complaint, I, together with Agent Angelo Zarzoso, was assigned as the NBI agent on the case. 

3.                  [That] prior to conducting the investigation on the reported illegal activities, he reviewed the certificates of trademark registrations issued in favor of [PETRON], PSPC and Shell International as well as other documents and other evidence obtained by the investigative agency authorized by [PETRON], PSPC and Shell International to investigate and cause the investigation of persons and establishments violating the rights of [PETRON], PSPC and Shell International, represented by Mr. Bernabe C.  Alajar.  Certified copies of the foregoing trademark registrations are attached hereto as Annexes “A” to “:E”. 

4.                   [That] among the establishments alleged to be unlawfully refilling and unlawfully selling and distributing [Gasul LPG and] Shellane products is Masagana Gas Corporation (“MASAGANA”).  Based on Securities and Exchange Commission Records, MASAGANA has its principal office address at 9775 Kamagong Street, San Antonio Village, Makati, MetroManila.  The incorporators and directors of MASAGANA are William C. Yao, Sr., Luisa C. Yao, Richard C. Yao, William C. Yao, Jr., and Roger C. Yao.  x x x. 

5.                   I confirmed that MASAGANA is not authorized to use [PETRON and] Shellane LPG cylinders and its trademarks and tradenames or to be refillers or distributors of [PETRON and] Shellane LPG’s. 

6.                  I went to MASAGANA’s refilling station located at Governor’s Drive, Barangay Lapidario, Trece Martires City (sic), Cavite to investigate its activities.  I confirmed that MASAGANA is indeed engaged in the unauthorized refilling, sale and/or distribution of [Gasul and] Shellane LPG cylinders.  I found out that MASAGANA delivery trucks with Plate Nos. UMN-971, PEZ-612, WTE-527, XAM-970 and WFC-603 coming in and out of the refilling plant located at the aforementioned address contained multi-brand LPG cylinders including [Gasul and] Shellane.  x x x. 

7.                  [That] on 13 February 2003, I conducted a test-buy accompanied by Mr. Bernabe C. Alajar.  After asking the purpose of our visit, MASAGANA’s guard allowed us to enter the MASAGANA refilling plant to purchase GASUL and SHELLANE LPGs.  x x x.   We were issued an order slip which we presented to the cashier’s office located near the refilling station.  After paying the amount x x x covering the cost of the cylinders and their contents, they were issued Cash Invoice No. 56210 dated February 13, 2003.  We were, thereafter, assisted by the plant attendant in choosing empty GASUL and SHELLANE 11 kg. cylinders, x x x were brought to the refilling station [and filled in their presence.]  I noticed that no valve seals were placed on the cylinders.             [That] while inside the refilling plant doing the test-buy, I noticed that stockpiles of multi-branded cylinders including GASUL and SHELLANE cylinders were stored near the refilling station.  I also noticed that the total land area of the refilling plant is about 7,000 to 10,000 square meters.   At the corner right side of the compound immediately upon entering the gate is a covered area where the maintenance of the cylinders is taking place.  Located at the back right corner of the compound are two storage tanks while at the left side also at the corner portion is another storage tank.   Several meters and fronting the said storage tank is where the refilling station and the office are located.  It is also in this storage tank where the elevated blue water tank depicting MASAGANA CORP. is located.  About eleven (11) refilling pumps and stock piles of multi-branded cylinders including Shellane and GASUL are stored in the refilling station.  At the left side of the entrance gate is the guard house with small door for the pedestrians and at the right is a blue steel gate used for incoming and outgoing vehicles. 

8.                  [That] on 27 February 2003, I conducted another test-buy accompanied by Mr. Bernabe C. Alajar.  x x x After choosing the cylinders, we were issued an order slip which we presented to the cashier.  Upon payment, Cash Invoice No. 56398 was issued covering the cost of both GASUL and SHELLANE LPG cylinders and their contents.  x x x Bothcylinders were refilled in our presence and no valve seals were placed on the cylinders.

 

  

Copies of the photographs of the delivery trucks, LPG cylinders and registration papers were also attached to the

aforementioned affidavits.[10]

 

Bernabe C. Alajar (Alajar), owner of Able Research and Consulting Services Inc., was hired by Petron and Pilipinas Shell

to assist them in carrying out their Brand Protection Program. Alajar accompanied Oblanca during the surveillance of and test-buys

at the refilling plant of MASAGANA. He also executed two separate affidavits corroborating the statements of Oblanca.  These were

annexed to the two applications for search warrant.[11]

 

After conducting the preliminary examination on Oblanca and Alajar, and upon reviewing their sworn affidavits and other

attached documents, Judge MelchorQ.C. Sadang (Judge Sadang), Presiding Judge of the RTC, Branch 17, Cavite City, found

probable cause and correspondingly issued Search Warrants No. 2-2003 and No. 3-2003. [12]  The search warrants commanded any

peace officer to make an immediate search of the MASAGANA compound and to seize the following items:                                               Under Search Warrant No. 2-2003: a.                   Empty/filled LPG cylinder tanks/containers, bearing the tradename “SHELLANE”, “SHELL”

(Device) of  Pilipinas Shell Petroleum Corporation and the trademarks and other devices owned by Shell International Petroleum Company, Ltd.;

 b.                  Machinery and/or equipment being used or intended to be used for the purpose of illegally refilling

LPG cylinders belonging to Pilipinas Shell Petroleum Corporation bearing the latter’stradename as well as the marks belonging to Shell International Petroleum Company, Ltd., enumerated hereunder:

 1.                  Bulk/Bullet LPG storage tanks;2.                  Compressor/s (for pneumatic refilling system);3.                  LPG hydraulic pump/s;4.                  LPG refilling heads/hoses and appurtenances or LPG filling assembly;5.                  LPG pipeline gate valve or ball valve and handles and levers;6.                  LPG weighing scales; and7.                  Seals simulating the shell trademark.

           c.                   Sales invoices, ledgers, journals, official receipts, purchase orders, and all other books of

accounts, inventories and documents pertaining to the production, sale and/or distribution of the aforesaid goods/products.

 d.                  Delivery truck bearing Plate Nos. WTE-527, XAM-970 and WFC-603, hauling trucks, and/or other

delivery trucks or vehicles or conveyances being used or intended to be used for the purpose of selling and/or distributing the above-mentioned counterfeit products.

           Under Search Warrant No. 3-2003: a.                   Empty/filled LPG cylinder tanks/containers, bearing Petron Corporation’s (Petron) tradename and

its tradename “GASUL” and other devices owned and/or used exclusively byPetron; b.                  Machinery and/or equipment being used or intended to be used for the purpose of illegally refilling

LPG cylinders belonging to Petron enumerated hereunder; 

1.                  Bulk/Bullet LPG storage tanks;2.                  Compressor/s (for pneumatic filling system);3.                  LPG hydraulic pump/s;4.                  LPG filling heads/hoses and appurtenances or LPG filling assembly;5.                  LPG pipeline gate valve or ball valve and handles levers;6.                  LPG weighing scales; and7.                  Seals bearing the Petron mark;

 c.                   Sales invoices, ledgers, journals, official receipts, purchase orders, and all other books of

accounts, inventories and documents pertaining to the production, sale and/or distribution of the aforesaid goods/products; and

 d.                  Delivery trucks bearing Plate Nos. UMN-971, PEZ-612 and WFC-603, hauling trucks, and/or other

delivery trucks or vehicles or conveyances being used for the purpose of selling and/or distributing the above-mentioned counterfeit products.

 

 

Upon the issuance of the said search warrants, Oblanca and several NBI operatives immediately proceeded to the

MASAGANA compound and served the search warrants on petitioners. [13] After searching the premises of MASAGANA, the

following articles described in Search Warrant No. 2-2003 were seized:  

a.                   Thirty-eight (38) filled 11 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and other devices owned by Shell International Petroleum Company, Ltd.; 

b.                  Thirty-nine (39) empty 11 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and other devices owned by Shell International Petroleum Company, Ltd.; 

c.                   Eight (8) filled 50 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and other devices owned by Shell International Petroleum Company, Ltd.; 

d.                  Three (3) empty 50 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and other devices owned by Shell International Petroleum Company, Ltd.; 

e.                   One (1) set of motor compressor for filling system. 

 

Pursuant to Search Warrant No. 3-2003, the following articles were also seized:

 a.                   Six (6) filled 11 kg. LPG cylinders without seal, bearing Petron’s tradename and its trademark

“GASUL” and other devices owned and/or used exclusively by Petron; b.                  Sixty-three (63) empty 11 kg. LPG cylinders, bearing Petron’s tradename and its

trademark  “GASUL” and other devices owned and/or used exclusively by Petron; c.                   Seven (7) tampered 11 kg. LPG cylinders, bearing Petron’s tradename and its trademark

“GASUL” and other devices owned and/or used exclusively by Petron; d.                  Five (5) tampered 50 kg. LPG cylinders, bearing Petron’s tradename and its trademark “GASUL”

and other devices owned and/or used exclusively by Petron with tampered “GASUL” logo; e.                   One (1) set of motor compressor for filling system; and f.                    One (1) set of LPG refilling machine.

 

         

On 22 April 2003, petitioners filed with the RTC a Motion to Quash Search Warrants No. 2-2003 and No. 3-2003 [14] on the

following grounds:

 1.                  There is no probable cause for the issuance of the search warrant and the conditions

for the issuance of a search warrant were not complied with; 2.                  Applicant NBI Agent Ritchie N. Oblanca and his witness Bernabe C. Alajar do not

have any authority to apply for a search warrant. Furthermore, they committed perjury when they alleged in their sworn statements that they conducted a test-buy on two occasions;

 3.                  The place to be searched was not specified in the Search Warrant as the place has

an area of 10,000 square meters (one hectare) more or less, for which reason the place to be searched must be indicated with particularity;

 4.                  The search warrant is characterized as a general warrant as the items to be seized

as mentioned in the search warrant are being used in the conduct of the lawful business of respondents and the same are not being used in refilling Shellane and Gasul LPGs.

  

On 30 April 2003, MASAGANA, as third party claimant, filed with the RTC a Motion for the Return of Motor Compressor

and LPG Refilling Machine.[15] It claimed that it is the owner of the said motor compressor and LPG refilling machine; that these

items were used in the operation of its legitimate business; and that their seizure will jeopardize its business interests.

 

On 5 June 2003, the RTC issued two Orders, one of which denied the petitioners’ Motion to Quash Search Warrants

No. 2-2003 and No. 3-2003, and the other one also denied the Motion for the Return of Motor Compressor and LPG Refilling

Machine of MASAGANA, for lack of merit.[16]

 

With respect to the Order denying the petitioners’ motion to quash Search Warrants No. 2-2003 and No. 3-2003, the

RTC held that based on the testimonies of Oblanca and Alajar, as well as the documentary evidence consisting of receipts,

photographs, intellectual property and corporate registration papers, there is probable cause to believe that petitioners are

engaged in the business of refilling or using cylinders which bear the trademarks or devices of  Petron and Pilipinas Shell in the

place sought to be searched  and that such activity is probably in violation of Section 155 in relation to Section 170 of Republic

Act No. 8293.

 

It also ruled that Oblanca and Alajar had personal knowledge of the acts complained of since they were the ones who

monitored the activities of and conducted test-buys on MASAGANA; that the search warrants in question are not general

warrants because the compound searched are solely used and occupied by MASAGANA, and as such, there was no need to

particularize the areas within the compound that would be searched; and that the items to be seized in the subject search

warrants were sufficiently described with particularity as the same was limited to cylinder tanks bearing the trademarks GASUL

and SHELLANE.

 

As regards the Order denying the motion of MASAGANA for the return of its motor compressor and LPG refilling

machine, the RTC resolved that MASAGANA cannot be considered a third party claimant whose rights were violated as a result

of the seizure since the evidence disclosed that petitioners are stockholders of MASAGANA and that they conduct their business

through the same juridical entity. It maintained that to rule otherwise would result in the misapplication and debasement of the veil

of corporate fiction. It also stated that the veil of corporate fiction cannot be used as a refuge from liability.

 

Further, the RTC ratiocinated that ownership by another person or entity of the seized items is not a ground to order its

return; that in seizures pursuant to a search warrant, what is important is that the seized items were used or intended to be used

as means of committing the offense complained of; that by its very nature, the properties sought to be returned in the instant case

appear to be related to and intended for the illegal activity for which the search warrants were applied for; and that the items

seized are instruments of an offense.

 

Petitioners filed Motions for Reconsideration of the assailed Orders, [17] but these were denied by the RTC in its Order

dated 21 July 2003 for lack of compelling reasons.[18]

 

Subsequently, petitioners appealed the two Orders of the RTC to the Court of Appeals via a special civil action

for certiorari under Rule 65 of the Rules of Court. [19] On 30 September 2004, the Court of Appeals promulgated its Decision

affirming the Orders of the RTC.[20] It adopted in essence the bases and reasons of the RTC in its two Orders.

The decretal portion thereof reads:

 Based on the foregoing, this Court finds no reason to disturb the assailed Orders of the respondent

judge. Grave abuse of discretion has not been proven to exist in this case. WHEREFORE, the petition is hereby DISMISSED for lack of merit. The assailed orders both

dated June 5, 2003 are hereby AFFIRMED.  

Petitioners filed a Motion for Reconsideration[21] of the Decision of the Court of Appeals, but this was denied in its

Resolution dated 1 June 2005 for lack of merit.[22]

 Petitioners filed the instant petition on the following grounds: 

                                         I. 

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PRESIDING JUDGE OF RTC CAVITE CITY HAD SUFFICIENT BASIS IN DECLARING THE EXISTENCE OF PROBABLE CAUSE;

                                              II. 

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NBI AGENT (RITCHIE OBLANCA) CAN APPLY FOR THE SEARCH WARRANTS NOTHWITHSTANDING HIS LACK OF AUTHORITY;

                                             III. 

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE REQUIREMENT OF GIVING A PARTICULAR DESCRIPTION OF THE PLACE TO BE SEARCHED WAS COMPLIED WITH;

                                             IV. 

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE APPLICATIONS AND THE SEARCH WARRANTS THEMSELVES SHOW NO AMBIGUITY OF THE ITEMS TO BE SEIZED;

                                              V. 

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE COMPLAINT IS DIRECTED AGAINST MASAGANA GAS CORPORATION, ACTING THROUGH ITS OFFICERS AND DIRECTORS, HENCE MASAGANA GAS CORPORATION MAY NOT BE CONSIDERED AS THIRD PARTY CLAIMANT WHOSE RIGHTS WERE VIOLATED AS A RESULT OF THE SEIZURE.[23]

  

Apropos the first issue, petitioners allege that Oblanca and Alajar had no personal knowledge of the matters on which

they testified; that Oblanca and Alajar lied to Judge Sadang when they stated under oath that they were the ones who conducted

the test-buys on two different occasions; that the truth of the matter is thatOblanca and Alajar never made the purchases personally;

that the transactions were undertaken by other persons namely, Nikko Javier and G. Villanueva as shown in the Entry/Exit Slips of

MASAGANA; and that even if it were true that Oblanca and Alajar asked Nikko Javier and G. Villanueva to conduct the test-buys,

the information relayed by the latter two to the former was mere hearsay.[24]

 

Petitioners also contend that if Oblanca and Alajar had indeed used different names in purchasing the LPG cylinders,

they should have mentioned it in their applications for search warrants and in their testimonies during the preliminary examination;

that it was only after the petitioners had submitted to the RTC the entry/exit slips showing different personalities who made the

purchases that Oblanca and Alajar explained that they had to use different names in order to avoid detection; thatAlajar  is not

connected with either of the private respondents; that Alajar was not in a position to inform the RTC as to the distinguishing

trademarks of SHELLANE and GASUL; that Oblanca was not also competent to testify on the marks allegedly infringed by

petitioners; that Judge Sadang failed to ask probing questions on the distinguishing marks of SHELLANE and GASUL; that the

findings of the Brand Protection Committee of Pilipinas Shell were not submitted nor presented to the RTC; that although

Judge Sadang examined Oblanca and Alajar, the former did not ask exhaustive questions; and that the questions

Judge Sadang asked were merely rehash of the contents of the affidavits of Oblanca and Alajar.[25]

 

These contentions are devoid of merit.

 

Article III, Section 2, of the present Constitution states the requirements before a search warrant may be validly issued, to

wit:

 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. (emphasissupplied).

 

 

Section 4 of Rule 126 of the Revised Rules on Criminal Procedure, provides with more particularity the requisites in

issuing a search warrant, viz:

 SEC. 4. Requisites for issuing search warrant. – A search warrant shall not issue except 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 which may be anywhere in the Philippines.

 

According to the foregoing provisions, a search warrant can be issued only upon a finding of probable cause. Probable

cause for search warrant means such facts and circumstances which would lead a reasonably discreet and prudent man to believe

that an offense has been committed and that the objects sought in connection with the offense are in the place to be searched.[26]

 

The facts and circumstances being referred thereto pertain to facts, data or information personally known to the applicant

and the witnesses he may present.[27]The applicant or his witnesses must have personal knowledge of the circumstances

surrounding the commission of the offense being complained of.  “Reliable information” is insufficient. Mere affidavits are not

enough, and the judge must depose in writing the complainant and his witnesses.[28]

 

Section 155 of Republic Act No. 8293 identifies the acts constituting trademark infringement, thus:

 SEC. 155. Remedies; Infringement. – Any person who shall, without the consent of the owner of the

registered mark: 155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered

mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

 155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature

thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material.

 

 

As can be gleaned in Section 155.1, mere unauthorized use of a container bearing a registered trademark in connection

with the sale, distribution or advertising of goods or services which is likely to cause confusion, mistake or deception among the

buyers/consumers can be considered as trademark infringement.

 

In his sworn affidavits,[29] Oblanca stated that before conducting an investigation on the alleged illegal activities of

MASAGANA, he reviewed the certificates of trademark registrations issued by the Philippine Intellectual Property Office in favor

of Petron and Pilipinas Shell; that he confirmed from Petron and Pilipinas Shell that MASAGANA is not authorized to sell, use, refill

or distribute GASUL and SHELLANE LPG cylinder containers; that he and Alajar monitored the activities of MASAGANA in its

refilling plant station located within its compound at Governor’s Drive, Barangay Lapidario, Trece Martires, Cavite City; that, using

different names, they conducted two test-buys therein where they purchased LPG cylinders bearing the trademarks GASUL and

SHELLANE; that the said GASUL and SHELLANE LPG cylinders were refilled in their presence by the MASAGANA employees; that

while they were inside the MASAGANA compound, he noticed stock piles of multi-branded cylinders including GASUL and

SHELLANE LPG cylinders; and that they observed delivery trucks loaded with GASUL and SHELLANE LPG cylinders coming in

and out of the MASAGANA compound and making deliveries to various retail outlets.  These allegations were corroborated

by Alajar in his separate affidavits.

 

In support of the foregoing statements, Oblanca also submitted the following documentary and object evidence:

 1.                  Certified true copy of the Certificate of Registration No. 44046 for “SHELL (DEVICE)” in the name

of Shell International; 2.                  Certified true copy of the Certificate of Registration No. 41789 for “SHELL (DEVICE)’ in the name

of Shell International; 3.                  Certified true copy of the Certificate of Registration No. 37525 for “SHELL (DEVICE) in the name

of Shell International; 4.                  Certified true copy of the Certificate of Registration No. R-2813 for “SHELL” in the name of Shell

International; 5.                  Certified true copy of the Certificate of Registration No. 31443 for “SHELLANE” in the name of

Shell International; 6.                  Certified true copy of the Certificate of Registration No. 57945 for the mark “GASUL” in the name

of Petron; 7.                  Certified true copy of the Certificate of Registration No. C-147 for “GASUL CYLINDER

CONTAINING LIQUEFIED PETROLEUM GAS” in the name of Petron; 8.                  Certified true copy of the Certificate of Registration No. 61920 for the mark “GASUL AND

DEVICE” in the name of Petron; 9.                  Certified true copy of the Articles of Incorporation of Masagana; 10.              Certified true copy of the By-laws of Masagana; 11.              Certified true copy of the latest General Information Sheet of Masagana on file with the Securities

and Exchange Commission; 12.              Pictures of delivery trucks coming in and out of Masagana while it

delivered Gasul and Shellane LPG; 13.              Cash Invoice No. 56210 dated 13 February 2003 issued by Masagana for

the Gasul and Shellane LPG purchased by Agent Oblanca and witness Alajar; 14.              Pictures of the Shellane and Gasul LPG’’s covered by Cash Invoice No. 56210 purchased

from Masagana by Agent Oblanca and witness Alajar; 15.              Cash Invoice No. 56398 dated 27 February 2003 issued by Masagana for

the Gasul and Shellane LPG purchased by Agent Oblanca and witness Alajar; and 16.              Pictures of the Shellane and Gasul LPG’s covered by Cash Invoice No. 56398 purchased

from Masagana by Agent Oblanca and witness Alajar.[30]          

 

Extant from the foregoing testimonial, documentary and object evidence is that Oblanca and Alajar have personal

knowledge of the fact that petitioners, through MASAGANA, have been using the LPG cylinders bearing the marks GASUL and

SHELLANE without permission from Petron and Pilipinas Shell, a probable cause for trademark infringement.

Both Oblanca and Alajar were clear and insistent that they were the very same persons who monitored the activities of

MASAGANA; that they conducted test-buys thereon; and that in order to avoid suspicion, they used different names during the test-

buys. They also personally witnessed the refilling of LPG cylinders bearing the marks GASUL and SHELLANE inside the

MASAGANA refilling plant station and the deliveries of these refilled containers to some outlets using mini-trucks.

 

Indeed, the aforesaid facts and circumstances are sufficient to establish probable cause. It should be borne in mind that

the determination of probable cause does not call for the application of the rules and standards of proof that a judgment of

conviction requires after trial on the merits. As the term implies, “probable cause” is concerned with probability, not absolute or even

moral certainty. The standards of judgment are those of a reasonably prudent man, not the exacting calibrations of a judge after a

full blown trial.[31]

 

The fact that Oblanca and Alajar used different names in the purchase receipts do not negate personal knowledge on

their part.  It is a common practice of the law enforcers such as NBI agents during covert investigations to use different names in

order to conceal their true identities. This is reasonable and understandable so as not to endanger the life of the undercover agents

and to facilitate the lawful arrest or apprehension of suspected violators of the law.

 

Petitioners’ contention that Oblanca and Alajar should have mentioned the fact that they used different names in their

respective affidavits and during the preliminary examination is puerile. The argument is too vacuous to merit serious consideration.

There is nothing in the provisions of law concerning the issuance of a search warrant which directly or indirectly mandates that the

applicant of the search warrant or his witnesses should state in their affidavits the fact that they used different names while

conducting undercover investigations, or to divulge such fact during the preliminary examination. In the light of other more material

facts which needed to be established for a finding of probable cause, it is not difficult to believe that Oblanca and Alajar failed to

mention that they used aliases in entering the MASAGANA compound due to mere oversight.  

 

It cannot be gainfully said that Oblanca and Alajar are not competent to testify on the trademarks infringed by the

petitioners. As earlier discussed, Oblancadeclared under oath that before conducting an investigation on the alleged illegal activities

of MASAGANA, he reviewed the certificates of trademark registrations issued by the Philippine Intellectual Property Office in favor

of Petron and Pilipinas Shell. These certifications of trademark registrations were attached by Oblanca in his applications for the

search warrants. Alajar, on the other hand, works as a private investigator and, in fact, owns a private investigation and

research/consultation firm. His firm was hired and authorized, pursuant to the Brand Protection Program

of Petron and Pilipinas Shell, to verify reports that MASAGANA is involved in the illegal sale and refill of GASUL and SHELLANE

LPG cylinders.[32] As part of the job, he studied and familiarized himself with the registered trademarks of GASUL and SHELLANE,

and the distinct features of the LPG cylinders bearing the same trademarks before conducting surveillance and test-buys on

MASAGANA.[33]  He also submitted to Oblanca several copies of the same registered trademark registrations and

accompanied Oblanca during the surveillance and test-buys.  

 

As to whether the form and manner of questioning made by Judge Sadang complies with the requirements of law, Section

5 of Rule 126 of the Revised Rules on Criminal Procedure, prescribes the rules in the examination of the complainant and his

witnesses when applying for search warrant, to wit: SEC. 5. Examination of complainant; record.- The judge must, before issuing the warrant, personally

examine in the form of searching questions and answers, in writing under oath, the complainant and the witnesses he may produce on facts personally known to them and attach to the record their sworn statements, together with the affidavits submitted.

 

The searching questions propounded to the applicant and the witnesses depend largely on the discretion of the judge.

Although there is no hard-and–fast rule governing how a judge should conduct his investigation, it is axiomatic that the examination

must be probing and exhaustive, not merely routinary, general, peripheral, perfunctory or pro forma. The judge must not simply

rehash the contents of the affidavit but must make his own inquiry on the intent and justification of the application.[34]

 

After perusing the Transcript of Stenographic Notes of the preliminary examination, we found the questions of

Judge Sadang to be sufficiently probing, not at all superficial and perfunctory. [35] The testimonies of Oblanca and Alajar were

consistent with each other and their narration of facts was credible.  As correctly found by the Court of Appeals:

  This Court is likewise not convinced that respondent Judge failed to ask probing questions in his

determination of the existence of probable cause. This Court has thoroughly examined the Transcript of Stenographic Notes taken during the investigation conducted by the respondent Judge and found that respondent Judge lengthily inquired into the circumstances of the case. For instance, he required the NBI agent to confirm the contents of his affidavit, inquired as to where the “test-buys” were conducted and by whom, verified whether PSPC and PETRON have registered trademarks or tradenames, required the NBI witness to explain how the “test-buys” were conducted and to describe the LPG cylinders purchased from Masagana Gas Corporation, inquired why the applications for Search Warrant were filed in Cavite City considering that Masagana Gas Corporation was located in Trece Martires, Cavite, inquired whether the NBI Agent has a sketch of the place and if there was any distinguishing sign to identify the place to be searched, and inquired about their alleged tailing and monitoring of the delivery trucks.  x x x.[36]   

 

 

Since probable cause is dependent largely on the opinion and findings of the judge who conducted the examination and

who had the opportunity to question the applicant and his witnesses, the findings of the judge deserves great weight.   The reviewing

court can overturn such findings only upon proof that the judge disregarded the facts before him or ignored the clear dictates of

reason.[37]  We find no compelling reason to disturb Judge Sadang’s findings herein.

 

Anent the second issue, petitioners argue that Judge Sadang failed to require Oblanca to show his authority to apply for

search warrants; that Oblanca is a member of the Anti-Organized Crime and not that of the Intellectual Property Division of the NBI;

that all complaints for infringement should be investigated by the Intellectual Property Division of the NBI; that it is highly irregular

that an agent not assigned to the Intellectual Property Division would apply for a search warrant and without authority from the NBI

Director; that the alleged letter-complaint of Atty. Bienvenido Somera, Jr. of Villaraza and Angangco Law Office was not produced in

court; that Judge Sadang did not require Oblanca to produce the alleged letter-complaint which is material and relevant to the

determination of the existence of probable cause; and that Petron and Pilipinas Shell, being two different corporations, should have

issued a board resolution authorizing the Villaraza and Angangco Law Office to apply for search warrant in their behalf.[38]

 

We reject these protestations.

 

The authority of Oblanca to apply for the search warrants in question is clearly discussed and explained in his

affidavit, viz:

             [That] on 11 February 2003, the National Bureau of Investigation (NBI) received a letter-complaint from Atty. Bienvenido I. Somera, Jr. of Villaraza and Angangco, on behalf of among others, Petron Corporation (PETRON) [and Pilipinas Shell Petroleum Corporation (PSPC), the authorized representative of Shell International Petroleum Company Limited (SHELL INTERNATIONAL)] requesting assistance in the investigation and, if warranted, apprehension and prosecution of certain persons and/or establishments suspected of violating the intellectual property rights of PETRON [and of PSPC and Shell International.]             11.       [That] on the basis of the letter-complaint, I, together with Agent Angelo Zarzoso, was assigned as the NBI agent on the case.[39]

  

The fact that Oblanca is a member of the Anti-Organized Crime Division and not that of the Intellectual Property Division

does not abrogate his authority to apply for search warrant. As aptly stated by the RTC and the Court of Appeals, there is nothing in

the provisions on search warrant under Rule 126 of the Revised Rules on Criminal Procedure, which specifically commands that the

applicant law enforcer must be a member of a division that is assigned or related to the subject crime or offense before the

application for search warrant may be acted upon. The petitioners did not also cite any law, rule or regulation mandating such

requirement. At most, petitioners may only be referring to the administrative organization and/or internal rule or practice of the NBI.

However, not only did petitioners failed to establish the existence thereof, but they also did not prove that such administrative

organization and/or internal rule or practice are inviolable.

 

Neither is the presentation of the letter-complaint of Atty. Somera and board resolutions from Petron and Pilipinas Shell

required or necessary in determining probable cause. As heretofore discussed, the affidavits of Oblanca and Alajar, coupled with

the object and documentary evidence they presented, are sufficient to establish probable cause. It can also be presumed

that Oblanca, as an NBI agent, is a public officer who had regularly performed his official duty. [40] He would not have initiated an

investigation on MASAGANA without a proper complaint. Furthermore, Atty. Somera did not step up to deny his letter-complaint.

 

Regarding the third issue, petitioners posit that the applications for search warrants of Oblanca did not specify the

particular area to be searched, hence, giving the raiding team wide latitude in determining what areas they can search. They aver

that the search warrants were general warrants, and are therefore violative of the Constitution. Petitioners also assert that since the

MASAGANA compound is about 10,000.00 square meters with several structures erected on the lot, the search warrants should

have defined the areas to be searched.

 

The long standing rule is that a description of the place to be searched is sufficient if the officer with the warrant can, with

reasonable effort, ascertain and identify the place intended and distinguish it from other places in the community. Any designation or

description known to the locality that points out the place to the exclusion of all others, and on inquiry leads the officers unerringly

to it, satisfies the constitutional requirement.[41]

 

 Moreover, in the determination of whether a search warrant describes the premises to be searched with sufficient

particularity, it has been held that the executing officer’s prior knowledge as to the place intended in the warrant is relevant. This

would seem to be especially true where the executing officer is the affiant on whose affidavit the warrant had been issued, and when

he knows that the judge who issued the warrant intended the compound described in the affidavit.[42]

 

 The search warrants in question commanded any peace officer to make an immediate search on MASAGANA compound

located at Governor’s Drive,Barangay Lapidario, Trece Martires, Cavite City.  It appears that the raiding team had ascertained and

reached MASAGANA compound without difficulty since MASAGANA does not have any other offices/plants

in Trece Martires, Cavite City.  Moreover, Oblanca, who was with the raiding team, was already familiar with the MASAGANA

compound as he and Alajar had monitored and conducted test-buys thereat.

 

Even if there are several structures inside the MASAGANA compound, there was no need to particularize the areas to be

searched because, as correctly stated by Petron and Pilipinas Shell, these structures constitute the essential and necessary

components of the petitioners’ business and cannot be treated separately as they form part of one entire compound. The compound

is owned and used solely by MASAGANA. What the case law merely requires is that, the place to be searched can be distinguished

in relation to the other places in the community. Indubitably, this requisite was complied with in the instant case.

 

As to the fourth issue, petitioners asseverate that the search warrants did not indicate with particularity the items to be

seized since the search warrants merely described the items to be seized as LPG cylinders bearing the trademarks GASUL and

SHELLANE without specifying their sizes.

 

A search warrant may be said to particularly describe the things to be seized when the description therein is as specific as

the circumstances will ordinarily allow; or when the description expresses a conclusion of fact not of law by which the warrant officer

may be guided in making the search and seizure; or when the things described are limited to those which bear direct relation to the

offense for which the warrant is being issued.[43]

 

While it is true that the property to be seized under a warrant must be particularly described therein and no other property

can be taken thereunder, yet the description is required to be specific only in so far as the circumstances will ordinarily allow. The

law does not require that the things to be seized must be described in precise and minute details as to leave no room for doubt on

the part of the searching authorities; otherwise it would be virtually impossible for the applicants to obtain a search warrant as they

would not know exactly what kind of things they are looking for. Once described, however, the articles subject of the search and

seizure need not be so invariant as to require absolute concordance, in our view, between those seized and those described in the

warrant. Substantial similarity of those articles described as a class or specie would suffice.[44]

 

Measured against this standard, we find that the items to be seized under the search warrants in question were

sufficiently described with particularity. The articles to be confiscated were restricted to the following:  (1) LPG cylinders bearing the

trademarks GASUL and SHELLANE; (2) Machines and equipments used or intended to be used in the illegal refilling of GASUL and

SHELLANE cylinders. These machines were also specifically enumerated and listed in the search warrants; (3) Documents which

pertain only to the production, sale and distribution of the GASUL and SHELLANE LPG cylinders; and (4) Delivery trucks bearing

Plate Nos. WTE-527, XAM-970 and WFC-603, hauling trucks, and/or other delivery trucks or vehicles or conveyances being used or

intended to be used for the purpose of selling and/or distributing GASUL and SHELLANE LPG cylinders.[45]

 

Additionally, since the described items are clearly limited only to those which bear direct relation to the offense,  i.e.,

violation of section 155 of Republic Act No. 8293, for which the warrant was issued, the requirement of particularity of description is

satisfied. 

 

Given the foregoing, the indication of the accurate sizes of the GASUL and SHELLANE LPG cylinders or tanks would be

unnecessary.

 

Finally, petitioners claim that MASAGANA has the right to intervene and to move for the return of the seized items; that

the items seized by the raiding team were being used in the legitimate business of MASAGANA; that the raiding team had no right

to seize them under the guise that the same were being used in refilling GASUL and SHELLANE LPG cylinders; and that there

being no action for infringement filed against them and/or MASAGANA from the seizure of the items up to the present, it is only fair

that the seized articles be returned to the lawful owner in accordance with  Section 20 of A.M. No. 02-1-06-SC.

 

It is an elementary and fundamental principle of corporation law that a corporation is an entity separate and distinct from

its stockholders, directors or officers. However, when the notion of legal entity is used to defeat public convenience, justify wrong,

protect fraud, or defend crime, the law will regard the corporation as an association of  persons, or in the case of two corporations

merge them into one.[46] In other words, the law will not recognize the separate corporate existence if the corporation is being used

pursuant to the foregoing unlawful objectives. This non-recognition is sometimes referred to as the doctrine of piercing the veil of

corporate entity or disregarding the fiction of corporate entity. Where the separate corporate entity is disregarded, the corporation

will be treated merely as an association of persons and the stockholders or members will be considered as the corporation, that is,

liability will attach personally or directly to the officers and stockholders.[47]

 

As we now find, the petitioners, as directors/officers of MASAGANA, are utilizing the latter in violating the intellectual

property rights of Petron and PilipinasShell. Thus, petitioners collectively and MASAGANA should be considered as one and the

same person for liability purposes. Consequently, MASAGANA’s third party claim serves no refuge for petitioners.

 

Even if we were to sustain the separate personality of MASAGANA from that of the petitioners, the effect will be the same.

The law does not require that the property to be seized should be owned by the person against whom the search warrants is

directed. Ownership, therefore, is of no consequence, and it is sufficient that the person against whom the warrant is directed has

control or possession of the property sought to be seized. [48] Hence, even if, as petitioners claimed, the properties seized belong to

MASAGANA as a separate entity, their seizure pursuant to the search warrants is still valid.

 

Further, it is apparent that the motor compressor, LPG refilling machine and the GASUL and SHELL LPG cylinders seized

were the corpus delicti, the body or substance of the crime, or the evidence of the commission of trademark infringement. These

were the very instruments used or intended to be used by the petitioners in trademark infringement. It is possible that, if returned to

MASAGANA, these items will be used again in violating the intellectual property rights of Petron and PilipinasShell.[49] Thus, the RTC

was justified in denying the petitioners’ motion for their return so as to prevent the petitioners and/or MASAGANA from using them

again in trademark infringement.

 

Petitioners’ reliance on Section 20 of A.M. No. 02-1-06-SC, [50] is not tenable. As correctly observed by the Solicitor

General, A.M. 02-1-06-SC is not applicable in the present case because it governs only searches and seizures in civil actions for

infringement of intellectual property rights.[51] The offense complained of herein is for criminal violation of Section 155 in relation to

Section 170[52] of Republic Act No. 8293.    

 

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 79256,

dated 30 September 2004 and 1 June 2005, respectively, are hereby AFFIRMED. Costs against petitioners.

CONVERSE RUBBER CORPORATION, petitioner, vs.UNIVERSAL RUBBER PRODUCTS, INC. and TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, respondents.

Parades, Poblador, Nazareno, Azada & Tomacruz for petitioner.

R E S O L U T I O N

 

FERNAN, J.:

The undisputed facts of the case are as follows:

Respondent Universal Rubber Products, Inc. filed an application with the Philippine Patent office for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" used on rubber shoes and rubber slippers.

Petitioner Converse Rubber Corporation filed its opposition to the application for registration on grounds that:

a] The trademark sought to be registered is confusingly similar to the word "CONVERSE" which is part of petitioner's corporate name "CONVERSE RUBBER CORPORATION" as to likely deceive purchasers of products on which it is to be used to an extent that said products may be mistaken by the unwary public to be manufactured by the petitioner; and,

b] The registration of respondent's trademark will cause great and irreparable injury to the business reputation and goodwill of petitioner in the Philippines and would cause damage to said petitioner within the, meaning of Section 8, R.A. No. 166, as amended.

Thereafter, respondent filed its answer and at the pre-trial, the parties submitted the following partial stipulation of facts:

1] The petitioner's corporate name is "CONVERSE RUBBER CORPORATION" and has been in existence since July 31, 1946; it is duly organized under the laws of Massachusetts, USA and doing business at 392 Pearl St., Malden, County of Middle sex, Massachusetts;

2] Petitioner is not licensed to do business in the Philippines and it is not doing business on its own in the Philippines; and,

3] Petitioner manufacturers rubber shoes and uses thereon the trademarks "CHUCK TAYLOR "and "ALL STAR AND DEVICE". 1

At the trial, petitioner's lone witness, Mrs. Carmen B. Pacquing, a duly licensed private merchant with stores at the Sta. Mesa Market and in Davao City, testified that she had been selling CONVERSE rubber shoes in the local market since 1956 and that sales of petitioner's rubber shoes in her stores averaged twelve to twenty pairs a month purchased mostly by basketball players of local private educational institutions like Ateneo, La Salle and San Beda.

Mrs. Pacquing, further stated that she knew petitioner's rubber shoes came from the United States "because it says there in the trademark Converse Chuck Taylor with star red or blue and is a round figure and made in U.S.A. " 2 In the invoices issued by her store, the rubber shoes were described as "Converse Chuck Taylor", 3 "Converse All Star," 4 "All Star Converse Chuck Taylor," 5 or "Converse Shoes Chuck Taylor." 6 She also affirmed that she had no business connection with the petitioner.

Respondent, on the other hand, presented as its lone witness the secretary of said corporation who testified that respondent has been selling on wholesale basis "Universal Converse" sandals since 1962 and "Universal Converse" rubber shoes since 1963. Invoices were submitted as evidence of such sales. The witness also testified that she had no Idea why respondent chose "Universal Converse" as a trademark and that she was unaware of the name "Converse" prior to her corporation's sale of "Universal Converse" rubber shoes and rubber sandals.

Eventually, the Director of Patents dismissed the opposition of the petitioner and gave due course to respondent's application. His decision reads in part:

... the only question for determination is whether or not the applicant's partial appropriation of the Opposer's [petitioner'] corporate name is of such character that in this particular case, it is calculated to deceive or confuse the public to the injury of the corporation to which the name belongs ...

I cannot find anything that will prevent registration of the word 'UNIVERSAL CONVERSE' in favor of the respondent. In arriving at this conclusion, I am guided by the fact that the opposer failed to present proof that the single word "CONVERSE' in its corporate name has become so Identified with the corporation that whenever used, it designates to the mind of the public that particular corporation.

The proofs herein are sales made by a single witness who had never dealt with the petitioner . . . the entry of Opposer's [petitioner's] goods in the Philippines were not only effected in a very insignificant quantity but without the opposer [petitioner] having a direct or indirect hand in the transaction so as to be made the basis for trademark pre- exemption.

Opposer's proof of its corporate personality cannot establish the use of the word "CONVERSE" in any sense, as it is already stipulated that it is not licensed to do business in the Philippines, and is not doing business of its own in the Philippines. If so, it will be futile for it to establish that "CONVERSE" as part of its corporate name Identifies its rubber shoes. Besides, it was also stipulated that opposer [petitioner], in manufacturing rubber shoes uses thereon the trademark "CHUCK TAYLOR" and "ALL STAR and DEVICE" and none other.

Furthermore, inasmuch as the Opposer never presented any label herein, or specimen of its shoes, whereon the label may be seen, notwithstanding its witness' testimony touching upon her Identification of the rubber shoes sold in her stores, no determination can be made as to whether the word 'CONVERSE' appears thereon.

. . .the record is wanting in proof to establish likelihood of confusion so as to cause probable damage to the Opposer. 7

Its motion for reconsideration having been denied by the respondent Director of Patents, petitioner instituted the instant petition for review.

As correctly phrased by public respondent Director of Patents, the basic issue presented for our consideration is whether or not the respondent's partial appropriation of petitioner's corporate name is of such character that it is calculated to deceive or confuse the public to the injury of the petitioner to which the name belongs.

A trade name is any individual name or surname, firm name, device or word used by manufacturers, industrialists, merchants and others to Identify their businesses, vocations or occupations. 8 As the trade name refers to the business and its goodwill ... the trademark refers to the goods." 9 The ownership of a trademark or tradename is a property right which the owner is entitled to protect "since there is damage to him from confusion or reputation or goodwill in the mind of the public as well as from confusion of goods. The modern trend is to give emphasis to the unfairness of the acts and to classify and treat the issue as fraud. 10

From a cursory appreciation of the petitioner's corporate name "CONVERSE RUBBER CORPORATION,' it is evident that the word "CONVERSE" is the dominant word which Identifies petitioner from other corporations engaged in similar business. Respondent, in the stipulation of facts, admitted petitioner's existence since 1946 as a duly organized foreign corporation engaged in the manufacture of rubber shoes. This admission necessarily betrays its knowledge of the reputation and business of petitioner even before it applied for registration of the trademark in question. Knowing, therefore, that the word "CONVERSE" belongs to and is being used by petitioner, and is in fact the dominant word in petitioner's corporate name, respondent has no right to appropriate the same for use on its products which are similar to those being produced by petitioner.

A corporation is entitled to the cancellation of a mark that is confusingly similar to its corporate name."11"Appropriation by another of the dominant part of a corporate name is an infringement."12

Respondent's witness had no Idea why respondent chose "UNIVERSAL CONVERSE" as trademark and the record discloses no reasonable explanation for respondent's use of the word "CONVERSE" in its trademark. Such unexplained use by respondent of the dominant word of petitioner's corporate name lends itself open to the suspicion of fraudulent motive to trade upon petitioner's reputation, thus:

A boundless choice of words, phrases and symbols is available to one who wishes a trademark sufficient unto itself to distinguish his product from those of others. When, however, there is no reasonable explanation for the defendant's choice of such a mark though the field for his selection was so broad, the inference is inevitable that it was chosen deliberately to deceive. 13

The testimony of petitioner's witness, who is a legitimate trader as well as the invoices evidencing sales of petitioner's products in the Philippines, give credence to petitioner's claim that it has earned a business reputation and goodwill in this country. The sales invoices submitted by petitioner's lone witness show that it is the word "CONVERSE" that mainly Identifies petitioner's products, i.e. "CONVERSE CHUCK TAYLOR, 14 "CONVERSE ALL STAR," 15 ALL STAR CONVERSE CHUCK TAYLOR," 16 or "CONVERSE SHOES CHUCK and TAYLOR." 17 Thus, contrary to the determination of the respondent Director of Patents, the word "CONVERSE" has grown to be Identified with petitioner's products, and in this sense, has acquired a second meaning within the context of trademark and tradename laws.

Furthermore, said sales invoices provide the best proof that there were actual sales of petitioner's products in the country and that there was actual use for a protracted period of petitioner's trademark or part thereof through these sales. "The most convincing proof of use of a mark in commerce is testimony of such witnesses as customers, or the orders of buyers during a certain period. 18 Petitioner's witness, having affirmed her lack of business connections with petitioner, has testified as such customer, supporting strongly petitioner's move for trademark pre-emption.

The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered insignificant, considering that they appear to be of high expensive quality, which not too many basketball players can afford to buy. Any sale made by a legitimate trader from his store is a commercial act establishing trademark rights since such sales are made in due course of business to the general public, not only to limited individuals. It is a matter of public knowledge that all brands of goods filter into the market, indiscriminately sold by jobbers dealers and merchants not necessarily with the knowledge or consent of the manufacturer. Such actual sale of goods in the local market establishes trademark use which serves as the basis for any action aimed at trademark pre- exemption. It is a corollary logical deduction that while Converse Rubber Corporation is not licensed to do business in the country and is not actually doing business here, it does not mean that its goods are not being sold here or that it has not earned a reputation or goodwill as regards its products. The Director of Patents was, therefore, remiss in ruling that the proofs of sales presented "was made by a single witness who had never dealt with nor had never known opposer [petitioner] x x x without Opposer having a direct or indirect hand in the transaction to be the basis of trademark pre- exemption."

Another factor why respondent's applications should be denied is the confusing similarity between its trademark "UNIVERSAL CONVERSE AND DEVICE" and petitioner's corporate name and/or its trademarks "CHUCK TAYLOR" and "ALL STAR DEVICE" which could confuse the purchasing public to the prejudice of petitioner,

The trademark of respondent "UNIVERSAL CONVERSE and DEVICE" is imprinted in a circular manner on the side of its rubber shoes. In the same manner, the trademark of petitioner which reads "CONVERSE CHUCK TAYLOR" is imprinted on a circular base attached to the side of its rubber shoes. The deteminative factor in ascertaining whether or not marks are confusingly similar to each other "is not whether the challenged mark would actually cause confusion or deception of the purchasers but whether the use of such mark would likely cause confusion or mistake on the part of the buying public. It would be sufficient, for purposes of the law, that the similarity between the two labels is such that there is a possibility or likelihood of the purchaser of the older brand mistaking the new brand for it." 19 Even if not an the details just mentioned were identical, with the general appearance alone of the two products, any ordinary, or even perhaps even [sic] a not too perceptive and discriminating customer could be deceived ... " 20

When the law speaks co-purchaser," the reference is to ordinary average purchaser. 21 It is not necessary in either case that the resemblance be sufficient to deceive experts, dealers, or other persons specially familiar with the trademark or goods involve." 22

The similarity y in the general appearance of respondent's trademark and that of petitioner would evidently create a likelihood of confusion among the purchasing public. But even assuming, arguendo, that the trademark sought to be registered by respondent is distinctively dissimilar from those of the petitioner, the likelihood of confusion would still subsists, not on the purchaser's perception of the goods but on the origins thereof. By appropriating the word "CONVERSE," respondent's products are likely to be mistaken as having been produced by petitioner. "The risk of damage is not limited to a possible confusion of goods but also includes confusion of reputation if the public could reasonably assume that the goods of the parties originated from the same source. 23

It is unfortunate that respondent Director of Patents has concluded that since the petitioner is not licensed to do business in the country and is actually not doing business on its own in the Philippines, it has no name to protect iN the forum and thus, it is futile for it to establish that "CONVERSE" as part of its corporate name identifies its rubber shoes. That a foreign corporation has a right to maintain an action in the forum even if it is not licensed to do business and is not actually doing business on its own therein has been enunciated many times by this Court. In La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA 373, this Court, reiterating Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115, stated that:

... a foreign corporation which has never done any business in the Philippines and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Philippines through the use therein of its products bearing its corporate and tradename, has a legal right to maintain an action in the Philippines to restrain the residents and inhabitants thereof from organizing a corporation therein bearing the same name as the foreign corporation, when it appears that they have personal knowledge of the existence of such a foreign corporation, and it is apparent that the purpose of the proposed domestic corporation is to deal and trade in the same goods as those of the foreign corporation.

We further held:

xxx xxx xxx

That company is not here seeking to enforce any legal or control rights arising from or growing out of, any business which it has transacted in the Philippine Islands. The sole purpose of the action:

Is to protect its reputation, its corporate name, its goodwill whenever that reputation, corporate name or goodwill have, through the natural development of its trade, established themselves.' And it contends that its rights to the use of its corporate and trade name:

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

Since it is the trade and not the mark that is to be protected, a trademark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the trader's goods have become known and Identified by the use of the mark.

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

The object of the Convention is to accord a national of a member nation extensive protection "against infringement and other types of unfair competition" [Vanitary Fair Mills, Inc. vs. T. Eaton Co., 234 F. 2d 6331.

The mandate of the aforementioned Convention finds implementation in Sec. 37 of RA No. 166, otherwise known as the Trademark Law:

Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled or have a bona fide or effective business or commercial establishment in any foreign country, which is a party to an international convention or treaty relating to marks or tradenames on the repression of unfair competition to which the Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act . . . ...

Tradenames of persons described in the first paragraph of this section shall be protected without the obligation of filing or registration whether or not they form parts of marks. [emphasis supplied]

WHEREFORE, the decision of the Director of Patents is hereby set aside and a new one entered denying Respondent Universal Rubber Products, Inc.'s application for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" on its rubber shoes and slippers.

SO ORDERED.

Feria (Chairman), Alampay, Gutierrez, Jr. and Paras, JJ., concur