G.R. No. L-10612. May 30, 1958

This is an appeal, taken by the prosecution, from an order of the Court of
First Instance of Manila granting defendant’s motion to quash the information
and dismissing the case, with costs de oficio.

Defendant Lim Hoa alias Lim Hoa Ting is accused of unfair competition in
violation of Article 189 of the Revised Penal Code. It is alleged in the
information:

“That on or about the 12th day of May, 1954, and for sometime prior and
subsequent thereto, in the City of Manila, Philippines, the said accused, being
then the owner and manager of a business establishment named Ting Lian Hong
located at 339-341 Ylang-ylang Street, in said City, did then and there
willfully, unlawfully and feloniously engage in unfair competition for the
purpose of deceiving or defrauding A Tung Chiongco Trading, an authorized
representative of Barrelson Inc., of its legitimate trade and/or the public in
general and sell his goods, the Lantern Brand Food Seasoning by then and there
giving it the general appearance of a product named Oak Barrel Brand Food
Seasoning being sold and distributed by said A. Tung Chingco Trading, as
follows: the same sizes of the bottle containers, the yellow background color of
the labels, the grouping or letterings in English and Chinese characters, the
identical wording and listing of ingredients and instructions for the use of the
product, the use of a lantern symbol closely resembling an oak barrel, the red
seal on the neck of the bottle, the white top cover, the same color scheme of
the letterings, all of which induced the public to believe that the said Lantern
Brand Food Seasoning is that of an Oak Barrel Brand Food Seasoning, which fact
would be likely to induce the public to believe that the said products made in
the Philippines is that of an Oak Barrel Brand Food Seasoning made it the United
States, and thereby giving other persons a chance to do the same with a like
purpose, and likewise caused to be affixed or used in his labels a false
designation of origin or any false description or representation, such as, “VESO
LANTERN BRAND SEASONING AGENCY L. H. TING’S IMPORTER – PACKED BY CHAMS PRODUCTS
CO., SAN FRANCISCO, CALIF., ‘and offered such goods to the public, to the damage
and prejudice of said Oak Barrel Brand Food Seasoning’s distributor, A. Tung
Chingco Trading, and the public interest as a whole.”

Upon arraignment, defendant entered a plea of not guilty, but, subsequently,
he secured permission to withdraw his plea and moved to quash the information
upon the ground “that the facts charged” therein” do not constitute any offense
upon which a valid judgment or conviction may be based.” The prosecution opposed
this motion, but, to no avail. Hence, this appeal.

The order appealed from appears to have been influenced by the following
factors, namely:

1. The allegation, in the motion to quash, that on May 12, 1953, the accused
   Lim Hoa had secured the registration, in the Patent Office of his trade mark
   “Lantern”;

2. The opinion of His Honor, the trial Judge, to the effect that “the accused
   Lim Hoa x x x had applied in good faith for the registration of his trade mark
   with the Patent Office”; that the registration of his trade mark with the Patent
   Office”; that

“x x x the accused had applied for a patent and such patent having been
issued or granting to him, shows conclusively the lack of criminal intent on his
part to violate the law. The sanction obtained by him from the government which
approved his patent gives his act the halo of legality and he cannot therefore
be prosecuted in a criminal action for the acts committed by him under and by
virtue of the authority and sanction given by the government;”

that as “the owner and patentee of the trade-mark ‘Lantern’ x x” he had,
under the provisions of section 20, Republic Act No. 166, “the exclusive right
to use the same in connection with goods, business or services specified in his
certificate”, and that the same “is prima facie evidence of the validity of the
registration in his favor and of the legality of the acts he had committed by
virtue of said authority”; and

3. The finding of His Honor, the trial Judge, to the effect that said
   trade-mark “to the naked eye appears to be very much distinct and different from
   the trade-mark of Kuster Laboratories Incorporated and/or Barelson Incorporated,
   represented in the Philippines by A. Tung Chingco Trading,” the complaint or
   offended party in the case at bar.

We have examined the trade-marks or labels in question – complaint’s “Oak
Barrel” and defendant’s “Lantern” (reproductions of which were attached to the
motion to quash) – and the majority of the members of this Court can not agree
with the view of His Honor, the trial Judge, that the two (2) appear to be “very
much distinct and different” from each other. Although there are some points of
difference between said labels, it cannot be, and it is not, denied that the
points of analogy specified in the information exist.

After reproducing the competing labels, in Brooks Bros. vs. Froelich &
Kuttner (8 Phil., 580), this Court said:

“From an examination of these respective labels it will be noted that they
really of the same color, the corresponding parts of each of the labels being
practically the same, both in form and color, and are so nearly alike that
unless they were compared together the common observer would fail to note any
difference whatsoever. The similarity between the general appearance of the
packages with the labels imported and offered for sale by the defendant and those
sold by the plaintiff is so great as to require the closest scrutiny to detect
the difference, even to one wholly familiar with the packages and wholly aware
of the difference between them. The similarity is such as to influence the
purchaser of the goods offered by the defendants, to believe that the same are
the goods of the plaintiff’s manufacture. So faithfully and closely has the
appearance and arrangement of plaintiff’s packages of thread been followed by
the defendant, that the mind refuses to credit the possibility of attributing
the many points of identity to mere accidental coincidence on the part of the
defendant.

x x x x

“From an examination of the evidence adduced in this caused in the court
below, we are satisfied beyond a reasonable doubt that the defendant and
appellant, in selling the thread in the boxes labeled in the manner described,
intended to give his goods the general appearance of the thread manufactured and
sold by the plaintiff, in the devices, labels, and words used by them, in a way
which would be likely to influence purchasers to believe that the goods offered
by them were those of the plaintiff, and that the similarity in the appearance
of the goods offered for sale by the defendant to those of the conclusion that
the defendant actually intended to deceive the public and defraud the plaintiff.
(U.S. v. Manuel, 7 Phil. Rep., 221; Nellee vs. Baer, Senior & Co., 5 Phil., Phil. Rep., 608.)”

To the same effect is the view adopted in Nelle vs. Baer, Senior & Co. (5
Phil., 608), U.S. vs. Manuel (7 Phil., 221). U.S. vs. Gow Chiong (23 Phil.,
138) and Flaming & Co. vs. Ong Ten Co. (26 Phil., 579).

For obvious reasons, it is not proper for us to say, as yet, that the
similarity in the general appearance of the two (2) labels involved in the case
at bar is such as to warrant the conclusion that the defendant intended to
engage in unfair competition. However, the similarity between both is sufficient
to require that the determination of such question be deferred until after the
trial and the submission of the case for decision on the merits.

Moreover, it is explicitly alleged, in the information, that the defendant
has “willfully, unlawfully and feloniously” engaged in unfair competition “for
the purpose of deceiving or defrauding” the complaint herein “of its legitimate
trade and/or of the public, in general, and sell his goods x x x by then and
there giving it the general appearance of a product named Oak Barrel Brand Food
Seasoning being sold and distributed” by said complaint, and that the
similarities specified in the information “would be likely to induce the public
to believe” that defendant’s product “made in the Philippines is that of an Oak
Barrel Brand Food Seasoning made in the United States, x x x.” Thus, pursuant to
the information, the acts therein set forth were performed by the accused in bad
faith and with a fraudulent intent, and tend to mislead the public into
believing that his products and those distributed by the complaint of is
predicated upon the opposite premise, namely, that the accused acted in good
faith, and that the public could not be misled into confusing or mistaking one
product for the other.

This was a clear error on the part of the lower court. A motion to quash
assumes the facts alleged in the information to be true. In some cases,
additional facts, not alleged in the information, but admitted, or not denied,
by the prosecution may be invoked in support of the motion to quash. In passing
upon the same, the court, however, may not consider a situation contrary to that
set forth in the information. In any event, in the case at bar, the prosecution
does not admit that the defendant had acted in good faith. On the contrary, it
asserts and maintains that he acted with malice and fraudulent intent. Neither
does it admit that the labels or trade-marks in question are “very much distinct
and different” from one another. What is more, it alleges and maintains that the
points of analogy between the two are likely to induce the public to believe
that defendant’s products are the very products being distributed by the
complainant.

Again, although the certificate of registration of defendant’s trade-mark is
– in the language of the order appealed from – “prima facie evidence of the
validity” of such registration, such evidence is rebuttable, not conclusive. In
the case at bar, there is a factor that weakens defendant’s alleged “exclusive
right” by virtue of said registration: the fact that the “Oak Barrel” trade-mark
was registered – according to said order – on March 4, 1952, or more than a year
before the “Lantern” trade-mark. It is well settled, that “one may be declared
unfair competitor even if his competing trade-mark is registered” (Alexander
& Co. vs. Ang, L-6707, May 31, 1955; Parke Davies & Co. v. Kin Foo, 60
Phil. 928; Ed. A. Keller & Co. vs. Kinwa Meriyasu Co., 57 Phil., 262; Yebana
Co. vs. Hua Seco & Co., 14 Phil. 534).

Lastly, the information herein alleges that defendant, likewise, “caused to
be affixed or used in his labels a false designation of origin or false
description or representation,” such as, that his products are “packed by Chams
Products Co., San Francisco, California,” – although in fact they are packed by
defendant in the Philippines. Such false representation falls under the second
paragraph of Article 189 of out Revised Penal Code, pursuant to which the
penalty prescribed in Article 188 thereof shall be imposed upon:

“Any person who shall affix, apply, annex, or use in connection with any
goods or service, or any container or containers for goods, a false designation
of origin, or any false description or representation, and shall sell such goods
or services.”

Said allegation of false representation by the defendant has not been
contested in the motion to quash. Neither does defendant deny that said false
representation is a crime punishable under said paragraph 2 Article 189. In
fact, he now maintains – though not in his motion to quash – that, by reason of
said avernment, the information charges two offenses. Obviously, this pretense
is inconsistent with his motion to quash, insofar as it maintains that the first
part of the information does not charge any offense – particularly the crime of
unfair competition under the first paragraph of Article 189. Under such theory,
only the last part of the information charges an offense, namely a violation of
said paragraph (2) of Article 189. In other words, under the view taken in the
motion to quash and the order appealed from, the information alleges only one
(1) offense – a violation of the second paragraph of said Article. At any rate,
defendant has not objected to the information in the lower court, upon the
ground that it charges more than one offense.

In short, considering that the crime of unfair competition under the first
paragraph of said Article 189 depends, to a large measure, upon the intent of
the accused and the effect of his acts upon the public in general, both of which
are questions of fact, the determination of which depends upon the evidence
thereon, it is our considered opinion that the prosecution is entitled, at
least, to an opportunity to prove the pertinent allegations of the information,
that, at this stage of the proceedings, it is not fair to assume or conclude
that said allegations are false, and that the lower court erred, therefore, in
sustaining defendant’s motion to quash.

WHEREFORE, the order appealed from must be, as it is, hereby reversed, and
the record of this case is, accordingly, remanded to the court of origin for
further proceedings, not inconsistent with this decision, with the costs of this
instance against the appellee.

IT IS SO ORDERED.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J.B.L., Endencia, and Felix, JJ.,
concur.