Case Summary (G.R. No. 197482)
Petitioners
FMC is a domestic corporation with principal address in Angeles Industrial Park, Special Economic Zone, Bacolor, Pampanga, and is registered as an eco-zone export enterprise with PEZA. Agerico Calaquian, FMC’s president, denied illegal manufacture and asserted that seized cigarettes were genuine imports intended for re-export and that PEZA registration and National Tobacco Administration authorizations precluded trademark infringement.
Respondents
Davidoff and JTI are non-resident foreign corporations alleging trademark infringement and false designation of origin. They authorized local counsel to prosecute infringers and engaged BPI to investigate alleged counterfeit manufacture, storage and distribution in FMC’s warehouses.
Key Dates and Procedural Posture
Investigations and raids took place on August 4–5, 2004. Prosecutor Macabulos issued a Joint Resolution dismissing complaints on September 12, 2005. Secretary of Justice Gonzalez affirmed dismissal on February 10, 2006 and denied reconsideration on March 27, 2006. The Court of Appeals reversed on March 31, 2011 (resolution July 5, 2011). The Supreme Court rendered the decision affirmed by the CA on March 6, 2017. Applicable constitution for adjudication: the 1987 Philippine Constitution.
Applicable Law
Primary statutory law applied: Republic Act No. 8293 (Intellectual Property Code of the Philippines) — notably Section 155 (infringement), Section 169 (false designation of origin; false description or representation), and Section 170 (relating to remedies and procedural aspects). Doctrines applied include the standard for probable cause in criminal prosecutions, the separation of powers between executive and judiciary regarding preliminary investigations, and the standard for grave abuse of discretion permitting judicial review of executive determinations.
Factual Background
BPI reported that FMC’s warehouses stored counterfeit Davidoff and JTI products or colorable imitations. CIDG filed and obtained several search warrants (SW Nos. 044–048) from the RTC of San Fernando, Pampanga. Raids resulted in seizure of boxes containing raw tobacco, cigarettes, cigarette packs and reams labeled “DAGETA” and “DAGETA International,” manufacturing machinery, receptacles, paraphernalia, sales invoices and official receipts; respondents also alleged seizure of items bearing the “MILD SEVEN” and “MILD SEVEN LIGHTS” trademarks. Petitioners claimed goods were genuine Dageta imports from Germany for re-export and denied on-site manufacture or arrests.
Criminal Complaints Filed
Respondents filed three complaint-affidavits charging FMC and personnel under the IP Code: OCPSF-04-H-2047 (Davidoff infringement under Sec. 155 in relation to Sec. 170), OCPSF-04-H-2048 (false designation of origin under Sec. 169 in relation to Sec. 170 for “Made in Germany” labeling), and OCPSF-04-H-2226 (JTI infringement under Sec. 155 in relation to Sec. 170 for alleged imitation of “MILD SEVEN” marks).
Preliminary Investigation and Prosecutor’s Dismissal
On September 12, 2005, Prosecutor Macabulos dismissed the complaints. He found the informant’s affidavit (Jimmy Trocio) insufficient to show probable cause for issuance of search warrants or to support that FMC manufactured fake JTI or Davidoff products. He observed alleged inconsistencies and the absence of clear evidence of seizure of MILD SEVEN products, concluding no confusing similarity between Dageta and Davidoff, and therefore dismissed the infringement and false designation complaints.
Secretary of Justice Resolutions
Secretary Gonzalez affirmed Prosecutor Macabulos’s dismissal (February 10, 2006) and denied reconsideration (March 27, 2006). The Secretary agreed there was no confusing similarity in the names “Davidoff” and “Dageta,” found respondents failed to prove falsity of “Made in Germany” labels, and concurred that there was no proof Mild Seven products had been seized or that on-site manufacture of Mild Seven products occurred during the raids.
Court of Appeals Reversal
The CA reversed the Secretary’s resolutions, holding that Secretary Gonzalez gravely abused his discretion by resolving evidentiary matters reserved for trial and by usurping the role of the trial judge. The CA treated disputed factual questions—such as whether Mild Seven items were seized and whether packaging created a likelihood of confusion—as issues properly decided after a full trial, and therefore concluded that probable cause existed to charge petitioners.
Issues Presented to the Supreme Court
The Supreme Court was asked to determine whether the Court of Appeals erred in finding that Secretary Gonzalez committed grave abuse of discretion in finding no probable cause and whether a prima facie case existed to justify filing Informations for trademark infringement and false designation of origin under the IP Code.
Legal Standards and Separation of Powers
The SC reiterated the legal definition of probable cause for criminal filing: facts sufficient to engender a well-founded belief that a crime was committed and that the respondent is probably guilty. Only prima facie evidence is required at the preliminary stage; it does not require proof sufficient for conviction. The prosecutor and the Secretary of Justice are entrusted with determining probable cause; courts generally refrain from interfering with executive determinations except in clear cases of grave abuse of discretion—an arbitrary, capricious, or despotic exercise akin to lack of jurisdiction.
Supreme Court’s Finding of Grave Abuse by the Secretary
The SC concluded that Secretary Gonzalez committed grave abuse of discretion by failing to evaluate the evidence submitted during the preliminary investigation and by unduly focusing on the sufficiency of the search-warrant affidavits considered by the trial judge. The prosecutor likewise improperly reviewed the judicial determination that supported issuance of the search warrants. The SC emphasized that the prosecutor’s role is distinct from the judge’s and that the Secretary should evaluate the evidence presented in preliminary investigation rather than reweighing matters decided during the warrant issuance process.
Prima Facie Case on Trademark Infringement (Davidoff/Dageta)
The SC found that respondents submitted sample exhibits of authentic Davidoff packs and the Dageta packs seized, noting multiple similarities in pack design (octagonal pack design, black and red covering, silver coloring on tear tape and printing, manufacturing code on base, and similar textual formulations on the back of the pack). The Court observed that infringers frequently use colorable imitations—sufficient points of similarity to confuse consumers
...continue readingCase Syllabus (G.R. No. 197482)
Nature of the Case and Relief Sought
- Petition for Review on Certiorari to the Supreme Court assailing the March 31, 2011 Decision and July 5, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 94587.
- Petitioners (Forietrans Manufacturing Corp. (FMC), Agerico Calaquian, Alvin Montero) seek reversal of the Court of Appeals' decision that set aside the Secretary of Justice’s Resolutions of February 10, 2006 and March 27, 2006 which found no probable cause to charge petitioners with infringement and false designation of origin under the Intellectual Property Code (RA No. 8293).
- Respondents (Davidoff et Cie SA and Japan Tobacco, Inc. (JTI)) urged affirmance of the Court of Appeals, arguing grave abuse of discretion by the Secretary of Justice in evaluating evidence and dismissing complaints.
Parties and Representation
- Petitioners:
- Forietrans Manufacturing Corporation (FMC), a domestic corporation with principal address at Lots 5 and 7, Angeles Industrial Park, Special Economic Zone, Barangay Calibutbut, Bacolor, Pampanga.
- Agerico Calaquian (president of FMC) and Alvin Montero (co-petitioner).
- Respondents:
- Davidoff Et. Cie SA (Swiss corporation) and Japan Tobacco, Inc. (Japanese corporation), collectively referred to as respondents.
- Both respondents represented in the Philippines by SyCip Salazar Hernandez & Gatmaitan (SyCip Law Firm) authorized by special power of attorney to maintain and prosecute actions against manufacturers, importers, distributors, dealers or retailers of counterfeit products bearing respondents’ trademarks.
- Respondents retained Business Profiles, Inc. (BPI) as private investigator in the Philippines.
- Investigating and prosecutorial actors:
- Criminal Investigation and Detection Group (CIDG) personnel: PSI Joel L. De Mesa, PSI Nathaniel Villegas, PSI Eric Maniego, PSI Renato Bangayan.
- Regional Trial Court, Branch 42 presided by Judge Pedro M. Sunga, Jr.
- Second Assistant Provincial Prosecutor Otto B. Macabulos (Prosecutor Macabulos).
- Secretary of Justice Raul M. Gonzalez (Secretary Gonzalez).
- Supreme Court panel and disposition:
- Decision by Justice J. Jardeleza; concurred in by Justices Velasco, Jr. (Chairperson), Bersamin, and Caguioa. Justice Reyes on official leave. Fifth Member designation: Wilfredo V. Lapitan (Division Clerk of Court) noted in Notice of Judgment.
Factual Background Leading to Investigations
- BPI reported to respondents that counterfeit Davidoff and JTI products, or products bearing colorable imitations confusingly similar to Davidoff and JTI trademarks, were being manufactured and stored in FMC’s warehouses.
- SyCip Law Firm sought CIDG assistance to secure warrants to search FMC warehouses based on BPI’s report.
- PSI Joel L. De Mesa filed four applications for search warrants before the RTC of San Fernando, Pampanga on August 4, 2004; docketed as SW Case Nos. 044, 045, 046 and 047 and raffled to Branch 42 (Judge Sunga).
- Allegation in the applications: upon investigation and belief that FMC and/or its proprietors, directors, officers, employees, and/or occupants stored counterfeit cigarettes bearing (a) the name “DAGETA International” purportedly made in Germany; and (b) the name “DAGETA” confusingly similar to the DAVIDOFF trademark — thus requesting warrants to seize subject articles.
- RTC granted the applications; implementation occurred the same afternoon with separate CIDG teams executing SW Nos. 044–047 (PSI Villegas, PSI Maniego, PSI De Mesa).
- During the August 4, 2004 raids, CIDG teams seized boxes containing raw tobacco, cigarettes, cigarette packs and reams bearing “DAGETA” and “DAGETA International,” as well as machineries, receptacles, paraphernalia, sales invoices and official receipts; petitioner Calaquian was allegedly apprehended at the premises along with four Chinese nationals.
- On August 5, 2004, PSI Renato Bangayan filed a search warrant application relating to alleged illegal manufacture, packing and distribution of counterfeit cigarettes bearing reproductions of JTI’s MILD SEVEN trademark; SW No. 048 was issued and served resulting in seizure of cigarettes, packs and reams with MILD SEVEN trademark and designs, machines used in manufacturing, and sales invoices and official receipts.
Criminal Complaints Filed and Their Nature
- Three separate Complaint-Affidavits were filed before the Office of the Provincial Prosecutor of San Fernando, Pampanga charging FMC and its employees under the Intellectual Property Code (RA No. 8293).
- Case identifiers and charges:
- I.S. No. OCPSF-04-H-2047 (also referenced in parts as OCPSF-04-H-202): Davidoff infringement case — Infringement under Section 155 in relation to Section 170 for alleged illegal manufacture of cigarettes bearing DAGETA label with packaging very similar to Davidoff, and script “DAGETA” allegedly deceivingly or confusingly similar to registered mark “DAVIDOFF.”
- I.S. No. OCPSF-04-H-2048: False Designation of Origin — under Section 169 in relation to Section 170 for alleged illegal manufacture/storage of cigarettes labeled “DAGETA” indicating “MADE IN GERMANY” although actually processed, manufactured and packaged at FMC’s premises in Bacolor, Pampanga.
- I.S. No. OCPSF-04-H-2226: JTI infringement case — Infringement under Section 155 in relation to Section 170 for allegedly manufacturing cigarettes deceivingly or confusingly similar to JTI’s “MILD SEVEN” and “MILD SEVEN LIGHTS” trademarks.
- Respondents submitted seized samples and documents (including receipts/inventory) as evidence during preliminary investigation, and presented comparisons between authentic and seized cigarette packs.
Petitioners’ Denials and Defenses
- Petitioner Calaquian denied charges and countered that during the August 4, 2004 raid, CIDG did not find counterfeit cigarettes; asserted nobody was present and the CIDG found boxes of genuine Dageta and Dageta International cigarettes imported from Germany for re-export to Taiwan and China.
- Calaquian asserted FMC’s status as a Philippine Economic Zone Authority (PEZA) eco-zone export enterprise authorized by the National Tobacco Administration to purchase, import and export tobacco; argued FMC would not have passed PEZA scrutiny if engaged in trademark infringement.
- Calaquian denied arrests during the raid and maintained the authenticity of seized Dageta products.
Preliminary Investigation and Joint Resolution of Prosecutor Macabulos
- Joint Resolution dated September 12, 2005 by Second Assistant Provincial Prosecutor Otto B. Macabulos dismissed the criminal complaints.
- Key findings and rationale in the Joint Resolution:
- The affidavit of Jimmy Trocio (informant/witness used by PSI De Mesa in search warrant application) was insufficient to show probable cause to search FMC’s premises for fake JTI or Davidoff products; Trocio did not testify that FMC was manufacturing fake Dageta cigarettes.
- The CIDG did not find Dageta cigarettes during the raid, and did not find fake JTI or Davidoff products, warranting quashal of the warrants.
- There is no confusing similarity between Dageta and Davidoff brands; complaints for Davidoff infringement and False Designation of Origin were found without merit.
- Expressed disbelief that Mild Seven and Mild Seven Lights were seized at FMC’s premises; Joint Affidavit of Arrest/Seizure dated August 6, 2004 did not mention those cigarettes among seized items.
- Concluded there was no proof that FMC manufactured fake Mild Seven cigarettes.
Secretary of Justice Resolutions and Reconsideration
- Secretary of Justice Raul M. Gonzalez issued a Resolution dated Feb