Title
Forietrans Manufacturing Corp. vs. Davidoff Et. Cie Sa and Japan Tobacco, Inc.
Case
G.R. No. 197482
Decision Date
Mar 6, 2017
Domestic corp. FMC accused of manufacturing counterfeit cigarettes resembling Davidoff and Mild Seven trademarks; Supreme Court upheld probable cause for trademark infringement and false designation of origin, reversing Secretary of Justice's dismissal.
trademark infringement
false designation of origin
probable cause
A

Case Digest (G.R. No. 197482)

Facts:

  • Background and Parties
    • Petitioners:
      • Forietrans Manufacturing Corporation (FMC), a domestic corporation based in Pampanga, with its principal address at Angeles Industrial Park in a Special Economic Zone.
      • Agerico Calaquian, president of FMC, and Alvin Montero as representatives of FMC.
    • Respondents:
      • Davidoff Et. Cie SA, a non-resident foreign corporation organized under Swiss law.
      • Japan Tobacco, Inc. (JTI), a non-resident foreign corporation organized under Japanese law.
      • Represented by SyCip Salazar Hernandez & Gatmaitan Law Office through Attorney Ronald Mark Lleno.
  • Initiation of Investigation and Issuance of Search Warrants
    • A report by Business Profiles, Inc. (BPI) alerted respondents that FMC’s warehouses allegedly stored counterfeit cigarettes bearing:
      • The “Dageta” label or the “Dageta International” name, which were alleged to be imitations or confusingly similar to Davidoff and JTI products.
    • In response, SyCip Law Firm secured the assistance of the Philippine National Police’s Criminal Investigation and Detection Group (CIDG).
    • On August 4, 2004:
      • PSI Joel L. De Mesa filed four separate applications for search warrants before the Regional Trial Court (RTC) of San Fernando, Pampanga (SW Case Nos. 044, 045, 046, and 047).
      • The applications alleged that counterfeit cigarette products were being manufactured and stored at FMC.
    • Implementation of Search Warrants:
      • PSI Nathaniel Villegas and PSI Eric Maniego executed two of the search warrants, while PSI De Mesa implemented the others.
      • During the raids, several boxes containing raw tobacco, cigarettes, cigarette packs, reams, machineries, receptacles, sales invoices, and official receipts were seized.
      • Petitioner Agerico Calaquian was allegedly apprehended along with four Chinese nationals.
  • Additional Actions and Subsequent Raids
    • On August 5, 2004, another search warrant (SW No. 048) was issued in relation to FMC’s alleged production, packing, and distribution of counterfeit cigarettes bearing JTI’s Mild Seven trademark and designs.
    • The subsequent raid resulted in the seizure of additional items including cigarette packs, reams, manufacturing machines, sales invoices, and official receipts.
    • Complaint-Affidavits were filed charging FMC and its employees with:
      • Trademark infringement (in relation to Davidoff and JTI trademarks) under Section 155 in connection with Section 170 of the Intellectual Property (IP) Code.
      • False Designation of Origin under Section 169 in relation to Section 170 of the IP Code.
  • Prosecution and Dismissal of Complaints
    • A Joint Resolution dated September 12, 2005, by Second Assistant Provincial Prosecutor Otto B. Macabulos dismissed the criminal complaints on the basis that:
      • The affidavit of the informant/witness (Jimmy Trocio) was insufficient to establish probable cause.
      • The alleged seized evidence, particularly concerning fake JTI or Davidoff products, was either not found or not satisfactorily proven.
      • No overthrowing of the prima facie evidence was presented to indicate FMC’s participation in trademark infringement or false designation of origin.
    • Secretary of Justice Raul M. Gonzalez, in his Resolution dated February 10, 2006, affirmed the dismissal:
      • He ruled that the seizure of Dageta and Dageta International cigarettes was insufficient to prove trademark infringement.
      • He dismissed the allegation of false designation of origin on the basis that no evidence could conclusively demonstrate that the products falsely claimed a German origin.
      • He also denied the seizure of Mild Seven and Mild Seven Lights cigarettes based on the Joint Affidavit of Arrest/Seizure.
    • Respondents filed a Petition for Review challenging the dismissal.
  • Review by the Court of Appeals (CA) and Elevation to the Supreme Court
    • The CA reversed Secretary Gonzalez’s resolutions, finding that:
      • The Secretary acted with grave abuse of discretion by essentially undertaking the function of a trial judge.
      • The evidentiary matters, particularly the issue of whether or not certain items were seized, should be resolved during trial proper rather than at the preliminary investigation stage.
    • Petitioners argued that:
      • FMC, being a PEZA-registered eco-zone export enterprise, could not possibly be involved in trademark infringement as alleged.
      • The evidence seized were genuine imported products for re-export, and no arrests were made during the raid.
    • Respondents countered that the CA correctly reversed the dismissal since:
      • The dismissal by Prosecutor Macabulos and Secretary Gonzalez ignored compelling evidentiary indications of infringement and false designation of origin.
      • There existed prima facie evidence of the similarities between the packaging of authentic Davidoff/Mild Seven cigarettes and the allegedly counterfeit Dageta-branded products.
    • Ultimately, the issue presented for review to the Supreme Court was whether the CA erred in ruling that Secretary Gonzalez committed grave abuse of discretion in finding no probable cause against petitioners.

Issues:

  • Whether the Court of Appeals erred in concluding that Secretary Gonzalez committed grave abuse of discretion in dismissing the criminal complaints for trademark infringement and false designation of origin.
    • Does the evidence, particularly the seized items and comparative samples of cigarette packs, establish a prima facie case for infringement despite the differences noted in the names?
    • Was the determination of probable cause, as made by the prosecutor and affirmed by Secretary Gonzalez, correct and within the bounds of executive discretion?
  • Whether the exercise of the executive power to determine probable cause should be subject to judicial review in this case.
  • Whether the evidentiary matters which include the seizure details and packaging similarities should have been left for a full-blown trial rather than precluded at the preliminary investigation stage.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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