G.R. No. L-52178 - Ernesto vs. Court of Appeals

Respondent Ling Na Lau, conducting business as Worldwide Pharmacy, owns the registered trademark TOP GEL T.G. & DEVICE OF A LEAF for papaya whitening soap, with a Certificate of Registration issued by the Intellectual Property Office (IPO) valid for ten years from August 24, 2003.
Petitioners, several Chinese drugstores including Century Chinese Medicine Co., Min Seng Chinese Drugstore, and others, were selling whitening soaps allegedly bearing counterfeit versions of respondent’s trademarks.

On November 7, 2005, a letter from Ping Na Lau (respondent’s representative) requested the National Bureau of Investigation (NBI) to investigate drugstores allegedly selling counterfeit soaps bearing the registered trademark TOP GEL T.G. & DEVICE OF A LEAF.
NBI Agent Joseph G. Furing conducted test buys on November 9 and 10, 2005, purchasing soaps from petitioners’ drugstores that purportedly bore the said trademarks. Receipts and samples were obtained.
Ping Na Lau personally examined the soaps and certified them as counterfeit on November 18, 2005. Junayd Esmael also corroborated via affidavit.
On November 21, 2005, the NBI applied for search warrants for violations of Sections 155 and 168, in relation to Section 170 of Republic Act (RA) No. 8293 (Intellectual Property Code), concerning trademark infringement and unfair competition.
On November 23, 2005, the Regional Trial Court (RTC), Branch 143, Makati City, issued multiple search warrants against the petitioners’ establishments.

Petitioners moved to quash the search warrants on grounds of forum shopping, questioning respondent’s ownership of the trademark, and citing the pendency of a related civil case (Civil Case No. 05-54747) between respondent and Benjamin Yu—who claimed ownership and distribution rights over a similar trademark TOP GEL MCA & DEVICE MCA.
Respondent opposed, denying forum shopping and asserting her status as the owner of the trademark.
During pendency, respondent attached an IPO Order dated March 21, 2006, approving a compromise agreement with Yu and others, where:

Respondents (Yu and others) acknowledged respondent’s exclusive rights over TOP GEL T.G. & DEVICE OF A LEAF.
They undertook to cease using similar marks and to pull affected products from the market.
The IPO dismissed the trademark infringement case as moot and academic due to compromise.

On September 25, 2006, the RTC granted petitioners’ motion, quashing all search warrants for lack of probable cause, relying on the existence of a prejudicial question regarding rightful ownership and recognizing Yu’s claims.
RTC denied respondent’s motion for reconsideration on March 7, 2007.

Respondent appealed to the CA, which on March 31, 2009 reversed the RTC’s decision, reinstated the search warrants, and ruled that:

The search warrants were issued pursuant to Rule 126 of the Rules of Criminal Procedure, applicable to anticipated criminal actions (trademark infringement and unfair competition).
Respondent was the registered owner of the trademark and had the right to enforce intellectual property rights.
The civil case cited by petitioners had been dismissed before the search warrants were issued, and the IPO case was not a valid basis to quash the warrants.

Petitioners’ motion for reconsideration of the CA decision was denied on July 2, 2009.

The CA erred in reversing the RTC by applying rules for criminal search warrants instead of rules on search and seizure in civil infringement actions.
The CA relied on an argument raised for the first time in respondent’s appellate brief.
The TOP GEL products seized were genuine under Yu’s ownership and should not have been confiscated in bulk.
The RTC’s finding of prejudicial question and ownership issues was proper.

Whether the CA erred in reversing the RTC’s order quashing the search warrants on the ground that the rules on search and seizure for criminal actions (Rule 126, Rules of Criminal Procedure) apply instead of rules for civil actions (A.M. No. 02-1-06-SC).

Whether the alleged prejudicial question regarding trademark ownership justified the RTC’s quashal of the search warrants.

Whether the seizure of all the subject products was excessive when a few samples would suffice for evidence.

Whether the CA improperly relied on an argument raised for the first time on appeal.