Case Summary (G.R. No. L-7712)
Background and Legal Proceedings
The conflict involves Caterpillar, Inc.’s assertion that Samson engaged in unfair competition by selling products that mimicked Caterpillar’s internationally known trademarks. Samson, however, had secured local registration for the "CATERPILLAR" mark in 1997 and had been marketing products prior to Caterpillar’s registration of similar marks in the Philippines.
Multiple search warrants authorized by Regional Trial Courts resulted in the seizure of products allegedly infringing Caterpillar’s trademarks. Criminal complaints based on unfair competition were filed by Caterpillar before the Department of Justice (DOJ), while parallel civil cases for unfair competition, damages, and cancellation of trademark registration were filed with the RTC in Quezon City.
The DOJ issued joint resolutions recommending charges against Samson, but also subsequently dismissed some complaints due to questions on probable cause and procedural issues such as quashed search warrants. Samson filed petitions for review to challenge the DOJ’s resolutions and motions to suspend criminal proceedings based on the disposition of related civil cases.
Issue on Suspension of Criminal Proceedings Due to Prejudicial Question (G.R. No. 164352)
Caterpillar contended that the suspension of criminal proceedings against Samson was unlawful, arguing that the criminal cases for unfair competition should proceed independently of the civil case concerning trademark cancellation. They maintained that under Rule 111 of the Rules of Court, Article 33 of the Civil Code, and Section 170 of the IP Code, civil and criminal cases for unfair competition are distinct and may proceed simultaneously.
Conversely, Samson argued that the resolution of the civil case concerning the lawful ownership of the "CATERPILLAR" trademark was intimately related to the determination of guilt in the criminal cases, thereby constituting a prejudicial question that warranted suspension of criminal proceedings.
Supreme Court’s Ruling on Prejudicial Question
The Court held that the civil case for unfair competition, damages, and trademark cancellation is an independent action that may proceed without affecting the criminal prosecution for unfair competition. It emphasized that pursuant to Article 33 of the Civil Code, civil actions involving fraud may be brought independently of criminal prosecutions.
The Court clarified that a prejudicial question must involve an issue whose resolution in a civil case is essential and determinative of the criminal case. Here, the civil case’s issues—such as trademark registration—are not conclusive in determining guilt for unfair competition, which does not require proof of registration but focuses on fraudulent intent to deceive the public.
The Court thus reversed the Court of Appeals’ affirmation of the suspension of criminal proceedings and directed the trial court to reinstate and promptly try the criminal cases without undue delay.
Issue on Probable Cause for Charging Unfair Competition (G.R. No. 205972)
Caterpillar challenged the Secretary of Justice’s resolution dismissing the criminal complaints for unfair competition due to lack of probable cause. It argued that the Court of Appeals erred in dismissing Caterpillar’s petition for review solely based on procedural grounds and should have considered the existence of grave abuse of discretion by the DOJ.
Supreme Court’s Ruling on Probable Cause Determination
The Court reiterated the exclusive authority of the Executive Branch, specifically the investigating prosecutor and the Secretary of Justice, to determine probable cause in criminal cases. The courts’ review of such determination is limited to cases where there is grave abuse of discretion amounting to lack or excess of jurisdiction.
Caterpillar's resort to a petition for review under Rule 43 was ruled improper since the Secretary of Justice’s function in reviewing the finding of probable cause is executive, not quasi-judicial. The proper judicial remedy is a special civil action for certiorari under Rule 65.
Substantively, the Court found no grave abuse of discretion in the Secretary of Justice’s conclusion that no probable cause existed. The resolution noted that Samson’s prior registration and long usage of the "CATERPILLAR" trademark in the Philippines afforded him a presumption of regularity and lawful ownership, which could not be easily contradicted by Caterpillar.
The Court emphasized that unfair competition may be found even against registered trademarks; however, prior use and registration confer significant protection and the evidence presented was insufficient to establish probable cause for criminal charges.
Final Disposition
The Court granted the petition in G.R. No. 164352 and set aside the Court of Appeals’ decision, directing the trial court to reinstate and proceed with the criminal cases without undue delay.
The petition in G.R. No. 205972 was denied due to lack of merit, affirming the Secretary of Justice’s dismissal of criminal charges for unfair competition based on absence of probab
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Case Syllabus (G.R. No. L-7712)
Case Background and Nature of Proceedings
- The case involves consolidated petitions before the Supreme Court of the Philippines: G.R. No. 164352 and G.R. No. 205972, both filed by Caterpillar, Inc. against Manolo P. Samson.
- Caterpillar, Inc., a foreign corporation specializing in footwear, clothing, and related products, owns several internationally known core trademarks including "CATERPILLAR", "CAT", and others.
- Manolo P. Samson operates retail businesses under different corporate names and trades using the trademark "CATERPILLAR", which he registered domestically in 1997 (Trademark Registration No. 64705).
- The cases center on accusations of unfair competition, where Caterpillar alleges that Samson unlawfully used the "CATERPILLAR" trademark and related marks in violation of Philippine law.
Legal Issues Presented
- Whether the Court of Appeals (CA) erred in dismissing Caterpillar’s petition for certiorari (G.R. No. 164352) challenging the suspension of criminal proceedings against Samson on grounds of a prejudicial question.
- Whether the CA erred in affirming the Department of Justice (DOJ) Secretary's resolution finding no probable cause to indict Samson for unfair competition (G.R. No. 205972).
- The proper procedural course for challenging DOJ decisions regarding probable cause.
- The nature and application of the doctrine of prejudicial question in the context of parallel civil and criminal cases.
- Whether criminal complaints for unfair competition can proceed independently and simultaneously with a civil action involving ownership and cancellation of a trademark.
Facts and Procedural History
- Multiple search warrants were issued by the RTC based on NBI applications, resulting in the seizure of products bearing the "CATERPILLAR" trademarks from Samson’s establishments.
- Caterpillar filed several criminal complaints against Samson for unfair competition before the DOJ and concurrently commenced a civil action for unfair competition, damages, and cancellation of Samson’s trademark registration.
- The RTC initially denied Caterpillar’s application for a Temporary Restraining Order in the civil case.
- The DOJ, through its prosecutors, issued joint resolutions recommending charges against Samson under specific provisions of the Intellectual Property Code (IP Code), particularly Section 168.3(a) on unfair competition.
- Samson filed petitions for review to the Secretary of Justice against these joint resolutions.
- The RTC in Muntinlupa suspended the arraignment and proceedings in the criminal cases citing the existence of a prejudicial question posed by the unresolved civil case on trademark ownership.
- The CA dismissed Caterpillar’s challenge to the RTC’s suspension of the criminal proceedings in G.R. No. 164352.
- Separately, upon quashing of search warrants, the DOJ dismissed some of the criminal complaints due to lack of probable cause; the Secretary of Justice affirmed this dismissal.
- Caterpillar appealed the DOJ’s resolution to the CA through a petition for review under Rule 43, which wa