G.R. No. 180677 - Diaz vs. People

Case Summary (G.R. No. 180677)

Procedural Posture and Consolidation

Two criminal informations (Criminal Case Nos. 00-0318 and 00-0319) were filed against Diaz for alleged trademark infringement under Section 155 in relation to Section 170 of RA No. 8293. The cases were consolidated for joint trial. Diaz pleaded not guilty. The RTC convicted Diaz on both informations. On appeal, the CA dismissed Diaz’s appeal for late filing of the appellant’s brief; a motion for reconsideration was denied. The Supreme Court reviewed both the procedural dismissal and the substantive merits.

Prosecution’s Core Allegations and Evidence

Levi Strauss & Co. (a foreign corporation) and Levi Strauss (Phils.), Inc. (licensee) asserted ownership of registered trademarks and designs associated with LEVI’S 501 jeans (including leather patch with two horses, the arcuate stitching, the tab, and composite marks), registered in the Philippine Patent Office during the 1970s–1990s. Levi’s Philippines conducted an investigation after learning Diaz was selling counterfeit LEVI’S 501 jeans at his tailoring shops; purchases from those shops and surveillance allegedly established the seized jeans were counterfeit imitations bearing those registered trademarks. NBI agents, acting on search warrants sought with Levi’s Philippines’ assistance, executed searches and seized numerous jeans claimed to be counterfeit. Levi’s Philippines maintained it never authorized those goods and that placement of arcuate, tab, and two-horse leather patch on the seized jeans could cause confusion with genuine LEVI’S 501.

Defense’s Core Assertions and Evidence

Diaz admitted ownership of the tailoring shops but denied manufacturing Levi’s jeans or infringing Levi’s marks. He asserted he used the mark “LS Jeans Tailoring,” which was registered with the Intellectual Property Office, and used an “LSJT” red tab and a leather patch bearing two buffaloes (not two horses). Diaz described his business as providing made-to-order or repair services, with styles made per customer instruction; he placed his label and customers’ names inside pockets. He stressed differences in channels of trade and clientele (tailoring shop customers vs. mall/boutique purchasers of genuine Levi’s), and testified he had not received any prior warning or notice regarding his operations.

RTC Ruling and Sentencing

The Regional Trial Court found Diaz guilty beyond reasonable doubt of two counts of trademark infringement under Section 155 in relation to Section 170 of RA No. 8293. The RTC imposed indeterminate sentences of prision correccional (two to five years) for each conviction, fines of P50,000 per case, exemplary damages of P50,000 in favor of Levi’s Philippines, and attorney’s fees of P222,000. The RTC’s conviction indicates it found the prosecution’s evidence sufficient to establish the elements of infringement and likelihood of confusion.

CA Dismissal for Late Filing of Appellant’s Brief

The CA dismissed Diaz’s appeal under Section 1(e), Rule 50, Rules of Court, because his counsel failed to timely serve and file the required number of copies of the appellant’s brief despite multiple extensions. The CA exercised its discretion to dismiss for procedural default after counsel filed the brief 18 days beyond the last extension granted. Diaz’s motion for reconsideration was denied, prompting Supreme Court review.

Supreme Court’s Analysis of CA’s Discretion and Role of Counsel’s Negligence

The Supreme Court acknowledged that dismissal for failure to file the required briefs under Section 1(e), Rule 50 is discretionary, not mandatory, and that appellate courts must exercise sound discretion considering all pertinent circumstances. The Court recognized the CA had granted three extensions, yet counsel still filed late. Although the CA’s dismissal for such neglect was supportable, the Supreme Court emphasized the special gravity of criminal appeals where liberty and property are at stake and the possibility that appellant may have been unaware of counsel’s repeated extension requests. The Court stressed that the inadvertence or incompetence of counsel should not automatically result in the deprivation of an appellant’s right to life, liberty, or property.

Decision to Review Merits Despite Procedural Default

Given the severe consequences for Diaz and his likely unawareness of counsel’s failures, the Supreme Court exercised supervisory power to set aside the CA’s dismissal and, to avoid further delay, proceeded to review the merits itself rather than remand to the CA. The Court took up the record for plenary review of the evidence supporting the convictions.

Statutory Elements of Trademark Infringement and Emphasis on Likelihood of Confusion

The Court restated the statutory elements of infringement under Section 155 of RA No. 8293 as set out in the record: (1) trademark is registered in the IP Office; (2) the trademark is reproduced, counterfeited, copied, or colorably imitated; (3) the infringing mark is used in connection with sale/offering/distribution/advertising of goods or applied to labels/packaging intended for such commerce; (4) the use is likely to cause confusion, mistake, or deception as to goods’ source or identity; and (5) the use is without the consent of the trademark owner. The Court reiterated that likelihood of confusion is the gravamen of the offense.

Tests for Likelihood of Confusion and Their Application

The decision described two tests for confusion: the dominancy test (focus on essential or dominant features) and the holistic test (consideration of the entire mark, labels, and packaging). The Supreme Court explained that trademark cases turn on their facts and that the holistic test was appropriate here due to the nature of the goods (jeans). Ap

Case Syllabus (G.R. No. 180677)

Procedural Posture and Parties

Petition for review by Victorio P. Diaz (petitioner/accused) from resolutions of the Court of Appeals (CA) dated July 17, 2007 and November 22, 2007, which (respectively) dismissed his appeal for belated filing of appellant’s brief and denied his motion for reconsideration.
Underlying convictions were rendered by the Regional Trial Court (RTC), Branch 255, Las Piñas City, on February 13, 2006, in Criminal Case Nos. 00-0318 and 00-0319, for two counts of trademark infringement under Section 155, in relation to Section 170, of Republic Act No. 8293 (Intellectual Property Code).
Respondents include the People of the Philippines and Levi Strauss (Phils.), Inc. (Levi’s Philippines); Levi Strauss and Company (Levi’s), a foreign corporation, is the registered owner and private complainant whose trademarks were allegedly infringed.

Antecedent Facts (Consolidation, Pleas, Dates)

Two informations were filed by the Department of Justice on February 10, 2000, in the RTC of Las Piñas City charging Diaz with trademark infringement, allegedly committed on or about August 28, 1998 and on dates prior thereto.
Criminal Case Nos. 00-0318 and 00-0319 contained substantially identical allegations that Diaz reproduced, counterfeited, copied and colorably imitated Levi’s registered trademarks/dominant features and sold, offered for sale, manufactured and distributed counterfeit patches and jeans.
The two cases were consolidated for joint trial. Diaz pleaded not guilty to each Information on June 21, 2000.

Text and Substance of the Informations (Allegations)

The Informations alleged that Diaz, with criminal intent to defraud Levi’s, engaged in commerce by reproducing, counterfeiting, copying and colorably imitating Levi’s registered trademarks or dominant features, specifically citing: the arcuate design, two-horse brand, two-horse patch, two-horse label with patterned arcuate design, tab, and composite arcuate/tab/two-horse patch.
The alleged acts included sale, offer for sale, manufacture and distribution of counterfeit patches and jeans and other preparatory steps likely to cause confusion, mistake or deception, all without consent of the registered owner, to the damage and prejudice of Levi’s. The Informations charged violations of Section 155 in relation to Section 170 of RA No. 8293.

Prosecution Evidence and Contentions

Levi Strauss and Company (Levi’s) is a foreign apparel corporation and the owner of trademarks and designs for Levi’s jeans including LEVI’S 501, the arcuate design, the two-horse brand/patch, the two-horse patch with patterned arcuate, and the composite tab arcuate.
Levi’s 501 trademarks included: (1) the leather patch showing two horses pulling a pair of pants; (2) the arcuate pattern with the inscription “LEVI STRAUSS & CO”; (3) the arcuate design defined as two parallel stitches curving downward sewn on both back pockets; and (4) the tab on the structural seam of the right back pocket, upper left side. These trademarks were registered in the Philippine Patent Office in the 1970s, 1980s and early 1990s.
After receiving information that Diaz was selling counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza and Talon, Las Piñas City, Levi’s Philippines hired a private investigation group for surveillance and purchases. Purchases and surveillance allegedly established that jeans bought from Diaz’s tailoring shops were counterfeit or imitations of LEVI’S 501.
Levi’s Philippines sought and obtained the assistance of the National Bureau of Investigation (NBI) to procure search warrants for Diaz’s shops. NBI agents executed the warrants and seized several jeans alleged to be fake LEVI’S 501 from Diaz’s shops.
Levi’s Philippines claimed it did not authorize the making or selling of the seized jeans, that each seized jean bore imitations of registered features (arcuate, tab, leather patch), and that the placement of these features could cause consumers to mistake the seized jeans for original LEVI’S 501 jeans.

Defense Evidence and Contentions

Diaz admitted ownership of the tailoring shops searched but denied criminal liability and denied manufacturing Levi’s jeans.
Diaz stated he used the label “LS Jeans Tailoring” on the jeans he made and sold; that “LS Jeans Tailoring” was registered with the Intellectual Property Office.
Diaz’s shops accepted clothes for sewing or repair and offered made-to-order jeans whose styles or designs followed customer instructions; his shops had operated since 1992, and he had received no prior notice or warning regarding his operations.
Diaz asserted distinguishing features: the label “LS Jeans Tailoring” and customer names placed inside pockets; each jean bore a red tab “LSJT” (standing for “LS Jeans Tailoring”) and the leather patch on his jeans displayed two buffaloes rather than two horses.
Diaz’s defense emphasized differences in appearance and trade channels and claimed his clientele and price points (made-to-order, cheaper) differed from the market for authentic LEVI’S 501 jeans.

RTC Decision (Findings and Sentence)

On February 13, 2006, the RTC found Diaz guilty beyond reasonable doubt of twice violating Section 155 in relation to Section 170, RA No. 8293 (Criminal Case Nos. 00-0318 & 00-0319).
Sentences: in each case, imprisonment of two (2) years and up to five (5) years of prisión correccional, and a fine of P50,000.00 per case (with subsidiary imprisonment in case of insolvency), plus accessory penalties provided by law.
Monetary awards: ordered to pay Levi’s Philippines P50,000.00 in exemplary damages and P222,000.00 as attorney’s fees. Costs de officio.

Court of Appeals Ruling and Rationale

Diaz appealed to the CA but the CA dismissed the appeal (resolution dated July 17, 2007) on the ground that Diaz did not file the appellant’s brief on time despite being granted multiple extensions.
The CA denied Diaz’s