Title
Caterpillar, Inc. vs. Samson
Case
G.R. No. 205972
Decision Date
Nov 9, 2016
Caterpillar challenged Samson's use of its trademarks, alleging unfair competition. DOJ initially found no probable cause, upheld by CA. SC reinstated criminal cases in one petition but affirmed DOJ's decision in another, citing insufficient evidence of unfair competition.
unfair competition
trademark
civil case
A

Case Summary (G.R. No. 222974)

Key Dates and Applicable Law (Constitutional Basis)

Decision date falls in 2016; the 1987 Philippine Constitution governs the constitutional framework and separation-of-powers considerations invoked by the Court. Relevant procedural and substantive law: Rule 111 and Rule 65 of the Rules of Court, Rule 43 on petitions for review (procedural questions), Sections 123.1(e), 131.1, 168.3(a) and 170 of Republic Act No. 8293 (Intellectual Property Code), Article 33 of the Civil Code (independence of civil action in cases of fraud), and jurisprudential standards on probable cause and grave abuse of discretion.

Factual Background — Initial Searches, Seizures and Civil Action

On application of the NBI, multiple search warrants in July 2000 resulted in seizures of products bearing Caterpillar’s Core Marks from establishments operated by Samson. Caterpillar filed criminal complaints for unfair competition with the DOJ (I.S. Nos. 2000-1354 to 2000-1364) and, on July 31, 2000, filed a civil suit in the RTC, Quezon City (Civil Case No. Q-00-41446) for unfair competition, damages, and cancellation of trademark, seeking injunctive relief (TRO application denied August 17, 2000).

DOJ Preliminary Resolutions and Subsequent Searches/Complaints

The DOJ, via Senior State Prosecutor Jude R. Romano, issued a joint resolution (November 15, 2001) recommending criminal charges for unfair competition under the IP Code. Subsequent search warrants (Valenzuela RTC) and further seizures led Caterpillar to file an additional set of criminal complaints (I.S. Nos. 2001-042 to 2001-067), and the DOJ (State Prosecutor Zenaida M. Lim) issued a joint resolution (September 28, 2001) again recommending charges. Six criminal informations were filed in the RTC, Muntinlupa (Criminal Cases Nos. 02-238 to 02-243).

Procedural Motions and RTC Suspension of Arraignment

Samson filed petitions for review with the DOJ in January 2002 and, on May 30, 2002, moved in the RTC to suspend arraignment on grounds that Civil Case No. Q-00-41446 presented a prejudicial question whose resolution would determine the criminal proceedings. On September 23, 2002, Presiding Judge Lerma of the RTC granted the motion and suspended arraignment and related proceedings, reasoning that cancellation of Samson’s registered trademark in the civil case could be dispositive of the criminal cases.

Conflicting DOJ Action and CA Intervention (First Track)

Acting Justice Secretary Gutierrez (January 13, 2003) reversed and set aside State Prosecutor Lim’s resolution (I.S. No. 2001-042 to 2001-067) and directed withdrawal of the informations, reasoning that an RTC in Valenzuela had quashed the search warrants whose fruits were seized (rendering evidence inadmissible). Judge Lerma ordered withdrawal of the affected criminal cases (February 4, 2003). Caterpillar sought relief in the CA (CA-G.R. SP No. 79937), which granted certiorari, set aside the Acting Secretary’s resolution, and directed re-filing of the withdrawn informations; that CA ruling was later affirmed by this Court in a related matter (G.R. No. 169199).

Additional Investigations, DOJ Dismissal and Second CA Proceeding

Separate investigations (RIID-NCRPO) and search warrants served on August 27, 2002 produced further seizures and led to more DOJ complaints (I.S. Nos. 2002-995 to 2002-1036). After preliminary investigation, State Prosecutor Melvin J. Abad issued a joint resolution (August 21, 2003) dismissing the complaints for lack of probable cause; reconsideration was denied (June 18, 2004). The Secretary of Justice affirmed the dismissal (September 19, 2005) and denied reconsideration (December 20, 2007). Caterpillar filed a petition for review with the CA (C.A.-G.R. SP No. 102316), which denied due course (May 8, 2012) on the ground that the correct judicial remedy was not Rule 43; the CA alternatively treated the matter as certiorari but found no sufficient showing of grave abuse. Reconsideration was denied (February 12, 2013), prompting Caterpillar’s G.R. No. 205972.

Issues Presented to the Supreme Court

Two consolidated appeals presented distinct but related questions: (a) in G.R. No. 164352, whether the CA erred in denying due course to Caterpillar’s certiorari petition challenging the RTC’s suspension of the criminal proceedings and whether suspension was contrary to law because the civil cancellation action did not constitute a prejudicial question; (b) in G.R. No. 205972, whether the CA erred in dismissing Caterpillar’s petition for review under Rule 43 (rather than treating it properly as certiorari) and whether the Secretary of Justice committed grave abuse of discretion in affirming the dismissal for lack of probable cause.

Supreme Court’s Analysis — Prejudicial Question and Independence of Civil Action (G.R. No. 164352)

The Court held that the civil action for cancellation of trademark and damages (Civil Case No. Q-00-41446) was an independent civil action under Article 33 of the Civil Code (fraud is the common element), and thus could proceed independently of the criminal prosecution. Under Rule 111 and related jurisprudence, a prejudicial question exists only when resolution of a previously instituted civil action necessarily determines the guilt or innocence in the criminal case. A trademark cancellation action requires determination of lawful registration, but registration is not an element of unfair competition; unfair competition may be established irrespective of registration and may be committed even if the competing mark is registered. Consequently the civil cancellation action was not a prejudicial question that justified suspension of the criminal proceedings. The Court therefore found merit in Caterpillar’s challenge and granted relief.

Supreme Court’s Analysis — Probable Cause, Prosecutorial Discretion and Proper Remedy (G.R. No. 205972)

The Court reiterated that the determination of probable cause to file an information is an executive function lodged in the investigating public prosecutor in the first instance and the Secretary of Justice on review; courts will not intervene except upon clear showing of grave abuse of discretion amounting to lack or excess of jurisdiction. The Court held that Caterpillar’s invocation of Rule 43 was procedurally improper because the Secretary of Justice is not performing a quasi‑judicial function in

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