Case Summary (G.R. No. 78413)
Procedural and Factual Background
La Tondena registered, beginning in 1953 with renewal in 1974, the 350 c.c. white flint bottles bearing the names/marks "La Tondena, Inc." and "Ginebra San Miguel" with the Philippine Patent Office under R.A. No. 623 (as amended). In November 1981 LTI sued Cagayan Valley Enterprises, Inc. for injunction and damages for using those bottles to package and sell its liquor labeled "Sonny Boy" without LTI’s written consent, and sought a preliminary injunction. The trial court initially issued a temporary restraining order and later a preliminary injunction upon LTI’s posting of bond. After trial, the trial court ruled for Cagayan (dismissing the complaint for failure to state a cause of action), found Cagayan not guilty of contempt, and awarded damages to Cagayan. LTI appealed; the Court of Appeals reversed, permanently enjoined Cagayan from using the specified bottles, awarded damages and attorneys’ fees, and denied reconsideration. Cagayan filed the present petition for review on certiorari to the Supreme Court.
Issues Raised on Appeal
Cagayan’s assignments of error, paraphrased, challenged the Court of Appeals’ conclusions on: (1) whether LTI needed to display “Reg. Phil. Pat. Off.” on the bottles to sustain its suit under R.A. No. 623 and related trademark law; (2) whether omission of the words “property of” in certain bottles removed them from statutory protection or created a distinction; (3) whether the marks “La Tondena, Inc.” and “Ginebra San Miguel” alone gave sufficient notice such that Cagayan should have inquired; (4) whether Cagayan could claim good faith use given differences from the sworn registration description; (5) the Court of Appeals’ treatment of contempt dismissals; and (6) the propriety of the damages awarded without proof of bad faith.
Statutory Framework Quoted by the Court
- R.A. No. 623, as amended by R.A. No. 5700 (Sections 1–3 quoted): authorizes registration of names/marks stamped or marked on containers used in manufacture/bottling/sale of beverages and other items; prohibits use of registered containers without written consent (creates criminal penalties); and creates a prima facie presumption of unlawful use/possession under Sec. 3.
- R.A. No. 166 (Trademark Law) Sec. 21 (notice of registration requirement) and Sec. 23 (civil remedies) quoted and discussed.
- Article 20, Civil Code (duty to indemnify one who wilfully or negligently causes damage).
- Trademark Office procedural rules requiring photographs showing marks on containers (Rules 128, 129; Rule 33).
Interpretation of Registration Requirements and “Property of” Omission
The Court held that R.A. No. 623 requires only that containers be stamped or marked with the names of the manufacturer, the name of the principal or product, or other marks of ownership; the registration process requires photographs showing the mark but does not mandate particular words or drawings. Consequently, bottles bearing "La Tondena, Inc." and "Ginebra San Miguel" substantially complied with R.A. No. 623 even if they lacked the literal phrase "property of." The omission of "property of" was deemed a minor modification that did not amount to abandonment of the mark or destroy its identifiability. The Court concluded that such omission does not remove the bottles from statutory protection because the ownership remained readily ascertainable from the stamped names.
Scope of “Other Lawful Beverages” — Inclusion of Hard Liquor
Cagayan argued that R.A. No. 623 covered only certain enumerated soft drinks and similar beverages, excluding hard liquor. The Court rejected this narrow construction. It reasoned that the statute’s title and language demonstrate legislative intent to protect all duly marked containers of lawful beverages, defined generally as liquids for drinking. Because hard liquor is lawful (though regulated) and not prohibited, gin and similar products fall within the scope of "other lawful beverages." The Court also relied on the Philippine Patent Office’s registration of LTI’s marks for gin ("Ginebra San Miguel") as persuasive executive construction entitled to weight.
Requirement to Display “Reg. Phil. Pat. Off.” and Effect on Remedies
While acknowledging Sec. 21 of R.A. No. 166 requires registrants to give notice of registration by displaying "Registered in the Philippines Patent Office" or analogous words, the Court held that failure to display such notice does not bar the filing of a civil action for violation of container registration under R.A. No. 623. The Court explained that the notice requirement under Sec. 21 may limit recovery of damages specifically under R.A. No. 166 unless the defendant had actual notice, but it is not a condition precedent to seeking other civil reliefs (injunction, civil damages) under the Civil Code and Sec. 23 of R.A. No. 166. Article 20 of the Civil Code supplements statutory remedies by providing indemnity for wilful or negligent damage; the registrant is not left without civil remedies merely for failing to mark "Reg. Phil. Pat. Off."
Prima Facie Presumption of Unlawful Use; Burden on Alleged User
Section 3 of R.A. No. 623 creates a prima facie presumption that possession or use of registered marked containers by a person other than the registrant is unlawful. In this case, Cagayan’s purchase and use of bottles bearing LTI’s marks invoked that presumption. The Court held that Cagayan could not simply disregard a valid injunction predicated on that presumption without adducing sufficient evidence to overcome it.
Prior Admissions and Corporate Continuity / Alter Ego Doctrine
The Court considered a prior judgment in Civil Case No. 102859 (La Tondena vs. Diego Lim doing business as Cagayan Valley Distillery), in which admissions by Diego Lim acknowledged that bottles marked "La Tondena, Inc." and "Ginebra San Miguel" were registered bottles of LTI. The Supreme Court held those admissions binding on the present petitioner on the basis that the present corporate petitioner was essentially a continuation/successor of the prior business. The Court found indicia of unity: family management (Rogelio Lim, son of Diego Lim), common business and factory location, prior single proprietorship transformed into the corporation, and operation in the same line of business. Because the corporation was effectively a continuation of the prior entity and served as the alter ego/successor, the earlier admissions by Diego Lim were imputed to the corporate petitioner. The Court cited precedents that the corporate form may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud, or otherwise subvert justice.
Contempt Proceedings — Civil vs. Criminal; Double Jeopardy
LTI had filed several contempt motions against Cagayan for violating injunctive orders. The Court characterized the contempts as civil in nature because they involved failure to obey orders for the benefit of a party (i.e., compliance with the injunction). As civil contempt, the proceedings were remedial rather than punitive, and the rule against double jeopardy did not apply. The Court also noted that injunctions must be obeyed until modified or set aside, even if the order is arguably erroneous. The Court further observed that Philippine procedural rules permit the Supreme Court, in appropriate cases, to impose sanctions on contemnors of lower courts to preserve respect for judicial processes.
Damages and Good Faith
Although R.A. No. 166’s Sec. 21 may affect recovery of statutory damages under that Act where registrant failed to display notice, the Court determined that an award of damages in favor of LTI was warranted under the Civil Code and Sec. 23 of R.A. No. 166 because petitioner had actual knowledge of the registration. The
Case Syllabus (G.R. No. 78413)
Procedural History
- Petition for review on certiorari filed in the Supreme Court seeking nullification of the Court of Appeals decision of December 5, 1986 in CA-G.R. CV No. 06685 and denial of petitioner’s motion for reconsideration by resolution dated May 5, 1987.
- Original registration by La Tondena, Inc. (LTI) of the 350 c.c. white flint bottles for its gin “Ginebra San Miguel” with the Philippine Patent Office occurred sometime in 1953; registration was renewed on December 4, 1974.
- On November 10, 1981, LTI filed Civil Case No. 2668 for injunction and damages in Branch I, Court of First Instance of Isabela, against Cagayan Valley Enterprises, Inc. (Cagayan) for using 350 c.c. white flint bottles bearing marks “La Tondena, Inc.” and “Ginebra San Miguel” without written consent and in violation of Section 2 of Republic Act No. 623 as amended by Republic Act No. 5700; an ex parte petition for preliminary injunction was filed the same date.
- Temporary restraining order issued November 16, 1981.
- Writ of preliminary injunction issued December 18, 1981 upon filing by LTI of a bond in the sum of P50,000.00, enjoining Cagayan, its officers and agents from using the registered bottles.
- After a protracted trial (including five contempt motions by LTI), the trial court rendered judgment in favor of Cagayan, ruling the complaint did not state a cause of action, holding Cagayan not guilty of contempt, and awarding damages in favor of Cagayan.
- LTI appealed to the Court of Appeals which, on December 5, 1986, reversed the trial court, set aside the judgment, made the preliminary injunction permanent, and ordered specified damages and attorney’s fees against the defendant.
- Cagayan filed a motion for reconsideration on December 23, 1986, which the Court of Appeals denied by resolution dated May 5, 1987.
- The Supreme Court, in the present decision, denied the petition and affirmed the Court of Appeals’ decision, declaring petitioner in contempt and imposing a fine.
Antecedent Facts (Undisputed)
- LTI registered with the Philippine Patent Office the 350 c.c. white flint bottles used for its gin “Ginebra San Miguel.”
- Cagayan buys from junk dealers and retailers bottles bearing the marks or names “La Tondena, Inc.” and “Ginebra San Miguel” and uses them as containers for its own liquor products.
- Cagayan contended that bottles without the words “property of” do not conform to the description in LTI’s sworn statement attached to registration and renewal.
- Prior litigation: In Civil Case No. 102859 (Court of First Instance of Manila) entitled “La Tondena, Inc. versus Diego Lim, doing business under the name and style ‘Cagayan Valley Distillery,’” a decision was rendered for plaintiff based on admission/acknowledgment by the defendant that bottles marked only with “La Tondena, Inc.” and “Ginebra San Miguel” are registered bottles of LTI.
Parties’ Principal Contentions and Defenses (as presented by Cagayan)
- LTI has no cause of action because it failed to comply with Section 21 of Republic Act No. 166 which requires notice of registration by displaying or printing “Registered in the Phil. Patent Office” or “Reg. Phil. Pat. Off.”; thus no civil or criminal suit can be filed.
- LTI’s products are hard liquors and therefore are not among those contemplated by RA 623; RA 623 protects beverages like Coca-Cola, Royal Tru-Orange, Lem-O-Lime and similar beverages only.
- LTI made no reservation of ownership on its bottles in sales invoices and did not require deposits for retention of bottles.
- No infringement occurred because Cagayan uses its own labels and trademark on its product.
- The bottles used by Cagayan, lacking the words “property of,” are not the registered bottles described in LTI’s sworn statement supporting registration.
Assignments of Error (Petitioner’s Enumeration)
- I. Alleged error by Court of Appeals in holding that plaintiff need not display “Reg. Phil. Pat. Off.” to succeed in injunction under RA 623, as amended.
- II. Alleged error in not distinguishing between bottles bearing “Property of La Tondena, Inc., Ginebra San Miguel” and those simply marked “La Tondena, Inc., Ginebra San Miguel”; omission of “property of” allegedly opens LTI to invalidity.
- III. Alleged error in holding that the words “La Tondena, Inc. and Ginebra San Miguel” alone suffice as notice to defendant, who should have inquired whether reuse of empty bottles was lawful.
- IV. Alleged error in deciding that defendant cannot claim good faith from using bottles marked only with “La Tondena, Inc.” and not the description in LTI’s sworn statement attached to registration.
- V. Alleged error in Court of Appeals’ accommodation of appeal on the dismissals of the five contempt charges.
- VI. Alleged error in deciding that award of damages to defendant by trial court was not in order, while Court of Appeals nevertheless awarded nominal/exemplary damages and attorney’s fees without proof of bad faith.
Relevant Statutory Provisions Quoted (RA No. 623, as amended by RA No. 5700)
- Section 1: Persons engaged in manufacture, bottling or selling of soda, mineral or aerated waters, cider, milk, cream or other lawful beverages, and similar containers, with names or marks of ownership stamped or marked thereon, may register with the Philippine Patent Office description of names or marks and purpose for which containers are used; registration under same conditions, rules, and regulations made applicable to issuance of trademarks.
- Section 2: Unlawful for any person, without written consent of registered manufacturer/bottler/seller, to fill such marked containers for sale, sell, dispose of, buy or traffic in, or wantonly destroy the same, whether filled or not, or to use them for other purposes than registered; violation punishable by fine or imprisonment or both.
- Section 3: Use or possession by any person other than registered manufacturer, without written permission, of such duly marked and registered containers gives rise to a prima facie presumption that such use or possession is unlawful.
- Section 6 (cited): Exceptions for use as containers for “sisi,” “bagoong,” “patis,” and similar native products.
Administrative and Procedural Rules Referenced
- Rules 128 and 129, Revised Rules of Practice Before the Philippine Patent Office in Trademark Cases: registration requires submission of two photographs of the container, duly signed by the applicant, showing clearly the names or marks sought to be registered, and a bottle showing the name or mark irremovably stamped or marked.
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