TANDUAY DISTILLERS, INC. vs. GINEBRA SAN MIGUEL, INC.

G.R. No. 164324 August 14, 2009

FACTS: Tanduay has been engaged in the liquor business since 1984. In 2002, they developed a new gin product labeled “Ginebra Kapitan”. Tanduay points out that the label and features of such were precisely chosen to distinguish it from the leading gin brand in the Philippine Market which is “Ginebra San Miguel”. After Tanduay had started selling their merchandise, Ginebra filed a complaint for trademark infringement and unfair competition with damages against Tanduay. With this, a cease and desist order was issued in which both the Regional Trial Court and Court of Appeals sided with Ginebra’s contentions.

CONTENTION OF THE PETITIONER: Tanduay contends that the label design of “Ginebra Kapitan” in terms of color, size and arrangement of text and other label features were precisely selected to distinguish it from Ginebra’s merchandise. “Ginebra Kapitan” bottle uses a resealable twist cap to distinguish it from the other products which uses crown caps or “tansans”.

CONTENTION OF RESPONDENT: There was Infringement and Unfair Competition because the close similarity between the two aforementioned products may give rise to confusion of goods since Tanduay and Ginebra San Miguel are competitors in the business of manufacturing and selling liquors and Ginebra which is a well known trademark was adopted by Tanduay to benefit from the established reputation.

ISSUE: Whether or Not there was proper issuance of the preliminary injunctive order against Tanduay by the lower Courts.

RULING: THERE IS NO PROPER ISSUANCE OF THE INJUNCTIVE WRIT. San Miguel’s right to the injunctive writ has not been clearly demonstrated. The right to the exclusive use of the word “Ginebra” has yet to be determined in the main case and the lower court’s action constitutes grave abuse of discretion amounting to lack of jurisdiction. In the case at bar, a cloud of doubt exists over San Miguel’s exclusive right relating to the word “Ginebra” is still clearly in dispute because of Tanduay’s claim that it has, as others have, also registered the word “Ginebra” for its gin products.

ELIDAD KHO and VIOLETA KHO vs. ENRICO LANZANAS and

SUMMERVILLE GENERAL MERCHANDISINGG.R. No. 150877 May 4, 2006

FACTS: Shun Yih Chemistry Factory (SYCF), a business existing and operating in Taiwan and engaged in the manufacture and sale of Chin Chun Su Creams/Cosmetics, appointed Quintin Cheng as its distributor of Chin Chun Su products in the Philippines for a term of two years. Quintin Cheng registered with the Bureau of Food and Drugs (BFAD) as distributor of Chin Chun Su products. Quintin Cheng subsequently secured a supplemental registration for Chin Chun Su and device. This supplemental registration was ordered cancelled by the Bureau of Patents, Trademarks and Technology Transfer on the ground of failure of the registrant to file the required affidavit of non-use as required by Section 12 of Republic Act No. 166, as amended.

Notwithstanding this cancellation, Quintin Cheng executed an Assignment of a Registered Trademark and a Supplementary Deed of Assignment wherein he sold all his right, title, interest and goodwill in the trademark Chin Chun Su and device to

Elidad Kho. In the meantime, animosity arose between SYCF and Quintin Cheng resulting in the termination of their distributorship agreement. Consequently, on 30 November 1990, SYCF appointed Summerville General Merchandising, represented by Ang Tiam Chay and Victor Chua, as its exclusive importer, re-packer and distributor of Chin Chun Su products in the Philippines for a period of five years. A Complaint for Injunction and Damages was filed by Elidad Kho against Summerville. Kho filed the complaint to enjoin Summerville General Merchandising from using the name Chin Chun Su in their cream products.

ISSUE: Who between Elidad Kho and Summerville has a better right to use the trademark "Chin Chun Su" on their facial cream product?

RULING: Summerville has better right.

The SC held that Summerville General Merchandising and Company has the better right to use the trademark "Chin Chun Su" on its facial cream product by virtue of the exclusive importation and distribution rights given to it by Shun Yih Chemistry Factory of Taiwan on after the latter cancelled and terminated its Sole Distributorship Agreement with Quintin Cheng, who assigned and transferred his rights under said agreement to Elidad C. Kho.

Kho is not the author of the trademark "Chin Chun Su" and his only claim to the use of the trademark is based on the Deed of Agreement executed in his favor by Quintin Cheng. By virtue thereof, he registered the trademark in his name. The registration was a patent nullity because petitioner is not the creator of the trademark "Chin Chun Su" and, therefore, has no right to register the same in his name. Furthermore, the authority of Quintin Cheng to be the sole distributor of Chin Chun Su in the Philippines had already been terminated by Shun Yih Chemistry of Taiwan. Withal, he had no right to assign or to transfer the same to Kho.

ABS-CBN BROADCASTING CORPORATION vs. PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE

MESA, AND ALOYSIUS M. COLAYCOG.R. Nos. 175769-70 January 19, 2009

FACTS: ABS-CBN is engaged in television and radio broadcasting through wireless and satellite means while Philippine Multi-Media Systems Inc. (“PMSI” for brevity), the operator of Dream Broadcasting System provides direct-to-home (DTH) television via satellite to its subscribers all over the Philippines. 

PMSI was granted legislative franchise under RA 8630 to install, operate and maintain a nationwide DTH satellite service and is obligated under by NTC Memorandum Circular No. 4-08-88, Section 6.2 of which requires all cable television system operators operating in a community within Grade “A” or “B” contours to carry the television signals of the authorized television broadcast stations (“must-carry rule”). 

ABS-CBN filed a complaint with Intellectual Property Office (IPO) for violation of laws involving property rights. It alleged that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and copyright and that the NTC circular only covers cable television system operators and not DTH satellite television operators. Moreover, NTC Circular 4-08-88 violates Sec. 9 of Art. III of the Constitution because it allows the taking of property for public use without payment of just compensation. 

PMSI argued that its rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the Memorandum Circular is a valid exercise of police power.  IPO and Court of Appeals ruled in favor of PMSI. 

ISSUES: 1. Whether or not PMSI infringed on ABS-CBN’s

broadcasting rights and copyright. 2. Whether or not PMSI is covered by the

NTC Circular (“must-carry rule”). 3. Whether NTC Circular 4-08-88 violates Sec. 9 of

Art. III of theConstitution because it allows the taking of property for public use without payment of just compensation or it is a valid exercise of police power. 

RULING: 

1. NO. PMSI does not infringe on ABS-CBN’s broadcasting rights under the IP Code as PMSI is not engaged in rebroadcasting of Channels 2 and 23. Rebroadcasting, which is prohibited by the IP Code, is “the simultaneous broadcasting by one broadcasting organization of the broadcast of another broadcasting organization.” ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers receive in its unaltered form. PMSI does not produce, select, or determine the programs to be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in accordance with NTC Memorandum Circular 04-08-88. 

2. YES. “DTH satellite tv operators” is covered under the NTCCircular which “requires all cable television system operators… to carry the television signals of the authorized television broadcast stations”. The Director-General of the IPO and the Court of Appeals correctly found that PMSI’s services are similar to a cable television system because the services it renders fall under cable “retransmission”. Thus, PMSI, being a DTH Satellite TV operator is covered by the NTC Circular. 

3. The carriage of ABS-CBN’s signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is under the direction and control of the government though the NTC which is vested with exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast services/facilities in the Philippines. The imposition of the must-carry rule is within the NTC’s power to promulgate rules and regulations, as public safety and interest may require, to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities.

FILIPINO SOCIETY OF COMPOSERS V. TAN148 SCRA 461 (1987)

FACTS:Filipino Society of Composers, Authors and Publishers

Inc. is the owner of certain musical compositions including songs such as "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao Lamang" and "The Nearness Of You." Benjamin Tan. on the other hand, is the operator of a restaurant known as "Alex Soda Foundation and Restaurant" where a combo with professional singers, hired to play and sing musical compositions to entertain and amuse customers therein, were playing and singing the above-mentioned compositions without any license or permission from the

appellant to play or sing the same. Accordingly, appellant demanded from the appellee payment of the necessary license fee for the playing and singing of aforesaid compositions but the demand was ignored. Tan argued that the mere singing and playing of songs and popular tunes even if they are copyrighted do not constitute an infringement.

ISSUES:

1. Whether or not the playing and singing of musical compositions which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the establishment of Benjamin Tan constitute a public performance for profit within the meaning and contemplation of the Copyright Law of the Philippines; and

2. Assuming that there were indeed public performances for profit, whether or not Benjamin Tan can be held liable therefore.

RULING:(1) Yes. The playing of music in dine and dance

establishment which was paid for by the public in purchases of food and drink constituted "performance for profit" within a Copyright Law .

(2) The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No. 3 provides among other things that an intellectual creation should be copyrighted thirty (30) days after its publication, if made in Manila, or within the (60) days if made elsewhere, failure of which renders such creation public property." Indeed, if the general public has made use of the object sought to be copyrighted for thirty (30) days prior to the copyright application the law deems the object to have been donated to the public domain and the same can no longer be copyrighted. A careful study of the records reveals that the song "Dahil Sa Iyo" which was registered on April 20, 1956 became popular in radios, juke boxes, etc. long before registration while the song "The Nearness Of You" registered on January 14, 1955 had become popular twenty five (25) years prior to 1968, (the year of the hearing) or from 1943 and the songs "Sapagkat Ikaw Ay Akin" and "Sapagkat Kami Ay Tao Lamang" both registered on July 10, 1966, appear to have been known and sang by the witnesses as early as 1965 or three years before the hearing in 1968. The testimonies of the witnesses at the hearing of this case on this subject were unrebutted by the appellant.

ABS-CBN V. PHILIPPINE MULTIMEDIA SYSTEM INC.

G.R. NO. 175769-70 (2009)

FACTS: PMSI is the operator of Dream Broadcasting System.

ABS-CBN contends that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an infringement of its broadcasting rights and copyright under the Intellectual Property Code. The Court of Appeals’ interpretation of the “must-carry rule” violates Section 9 of Article III of the 1987 Philippine Constitution because it allows the taking of property for public use without payment of just compensation.

Respondents, on the other hand, argue that PMSI’s rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular No. 04-08-88. Hence, the “must-carry rule” under the Memorandum Circular is a valid exercise of police power.

ISSUES:

1. Whether PMSI rebroadcasts Channels 2 and 23 of ABS-CBN or not thus, infringing the broadcasting rights and copyrights of the latter.

2. Whether the must-carry rule violates the rights of ABS-CBN under the IPL or not.

RULING: (1) The Director-General of the IPO correctly found

that PMSI is not engaged in rebroadcasting and thus cannot be considered to have infringed ABS-CBN’s broadcasting rights and copyright. ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers receive in its unaltered form.  PMSI does not produce, select, or determine the programs to be shown in Channels 2 and 23.  Likewise, it does not pass itself off as the origin or author of such programs.  Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in accordance with Memorandum Circular 04-08-88.  With regard to its

premium channels, it buys the channels from content providers and transmits on an as-is basis to its viewers.  Clearly, PMSI does not perform the functions of a broadcasting organization hence, it cannot be said that it is engaged in rebroadcasting Channels 2 and 23.

Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission.  The retransmission of ABS-CBN’s signals by PMSI – which functions essentially as a cable television – does not therefore constitute rebroadcasting in violation of the former’s intellectual property rights under the IP Code. 

(2) The “must-carry rule” under the Memorandum Circular 04-08-88 requires all cable television system operators operating in a community within Grade “A” or “B” contours to carry the television signals of the authorized television broadcast stations (Ex: broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13)

The carriage of ABS-CBN’s signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is under the direction and control of the government though the NTC which is vested with exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast services/facilities in the Philippines. The imposition of the must-carry rule is within the NTC’s power to promulgate rules and regulations, as public safety and interest may require, to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it reasonably feasible. As correctly observed by the Director-General of the IPO: Accordingly, the “Must-Carry Rule” under NTC Circular No. 4-08-88 falls under the foregoing category of limitations on copyright.  

NOTE: While the Rome Convention gives broadcasting organizations the right to authorize or prohibit the rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission.

LEVIS STRAUSS & CO. and LEVI STRAUSS PHILIPPINE INC.v.CLINTON APPARELLE, INC. GR. No. 138900, 20 September 2005, Second Division (Tinga, J.)

The petitioners anchor their legal right to the trademark on the Certificate of Registration as well as under RA No. 8293 Section 147.1. This grants the owner of the registered mark the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered if such use results in a likelihood of confusion. This case arose from the Complaint for Trademark Infringement, Injunction and Damages filed by petitioners LEVIS STRAUSS & CO. and LEVI STRAUSS PHILIPPINE INC. (LSPI) against respondent Clinton Apparelle, Inc. together with an alternative defendant, Olympian Garments, Inc., before the RTC of Quezon City. The Complaint alleged that LS

& Co., a foreign corporation duly organized and existing under the laws of the State of Delaware, USA, and engaged in the apparel business, is the owner by prior adoption and use since 1986 of the internationally famous “Dockers and Design” trademark. The “Dockers and Design” trademark was first used in the Philippines in or about May 1988, by LSPI, a domestic corporation engaged in the manufacture, sale and distribution of various products bearing trademarks owned by LS & Co. LS & Co. and LSPI further alleged that they discovered the presence in the local market of jeans under the brand name “Paddocks” using a device which is substantially, if not exactly, similar to the “Dockers and Design” trademark without LS & Co.’s consent. The petitioners prayed for a TRO and writ of preliminary injunctions which the court granted after the respondent failed to appear despite notice. Clinton Apparelle filed a Motion to Dismiss and Motion for Reconsideration in an Omnibus Order but this was denied for lack of merit. Thus, Clinton Apparelle filed with the Court of Appeals a Petition for certiorari, prohibition and mandamus with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, assailing the orders of the trial court. The Court of Appeals ruled in favor of the respondent and held that the trial court did not follow the procedure required by law for the issuance of a temporary restraining order, as Clinton Apparelle was not duly notified of the date of the summary hearing for its issuance. Thus, the Court of Appeals ruled that the TRO had been improperly issued. The appellate court also held that such issuance is questionable for the petitioners failed to sufficiently establish their material and substantial right to have the writ issued. In addition, the Court of Appeals strongly believed that the implementation of the questioned writ would effectively shut down the respondent’s business, which in its opinion should not be sanctioned. Hence, this petition.

ISSUES: 1. Whether or not the issuance of the writ of preliminary injunction by the trial court was proper 2. Whether or not the CA erred in setting aside the orders of the trial court

HELD: Petition is denied. Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of an action prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a particular act or acts. Injunction is accepted as the strong arm of equity or a transcendent remedy to be used cautiously as it affects the respective rights of the parties, and only upon full conviction on the part of the court of its extreme necessity. An extraordinary remedy, injunction is designed to preserve or maintain the status quo of things and is generally availed of to prevent actual or threatened acts until the merits of the case can be heard. It may be resorted to only by a litigant for the preservation or protection of his rights or interests and for no other purpose during the pendency of the principal action. It is resorted to only when there is a pressing necessity to avoid injurious consequences, which cannot be remedied under any standard compensation. The resolution of an application for a writ of preliminary injunction rests upon the existence of an emergency or of a special recourse before the main case can be heard in due course of proceedings. The grounds for the issuance of preliminary injunction under Section 3, Rule 58, of the Rules of Court provide that a clear and positive right especially calling for judicial protection must be shown. Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action.

There must exist an actual right. There must be a patent showing by the complaint that there exists a right to be protected and that the acts against which the writ is to be directed are violative of said right. In this case, the court finds scant justification for the issuance of the writ of preliminary

injunction. The petitioners anchor their legal right to the “Dockers and Design” trademark on the Certificate of Registration issued in their favor by the Bureau of Patents, Trademarks and Technology Transfer, as well as under Republic Act No. 8293 Section 147.1. This grants the owner of the registered mark the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered if such use results in a likelihood of confusion. However, attention should be given to the fact that the petitioners’ registered trademark consists of two elements: (1) the word mark “Dockers” and (2) the wing-shaped design or logo. Notably, there is only one registration for both features of the trademark giving the impression that the two shouldbe considered as a single unit. Clinton Apparelle’s trademark, on the other hand, uses the “Paddocks” word mark on top of a logo which according to the petitioners is a slavish imitation of the “Dockers” design. The two trademarks apparently differ in their word marks (“Dockers” and “Paddocks”), but again according to the petitioners, they employ similar or identical logos. It could thus be said that the respondent only “appropriates” the petitioners’ logo and not the word mark “Dockers”; it uses only a portion of the registered trademark and not the whole.

Given the single registration of the trademark “Dockers and Design” and considering that the respondent only uses the assailed device but a different word mark, the right to prevent the latter from using the challenged “Paddocks” device is far from clear. It is also unclear whether the use without the owner’s consent of a portion of a trademark registered in its entirety constitutes material or substantial invasion of the owner’s right. It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central feature of the petitioners’ trademark—the feature that prevails or is retained in the minds of the public—an imitation of which creates the likelihood of deceiving the public and constitutes trademark infringement. In sum, there are vital matters, which have yet and may only be established through a full-blown trial.

The Court finds that the petitioners’ right to injunctive relief has not been clearly and unmistakably demonstrated. The right has yet to be determined. The petitioners also failed to show proof that there is material and substantial invasion of their right to warrant the issuance of an injunctive writ. Neither were they able to show any urgent and permanent necessity for the writ to prevent serious damage.

The fact that the petitioners had suffered or continue to suffer may be compensated in terms of monetary consideration. The issued injunctive writ, if allowed, would dispose of the case on the merits as it would effectively enjoin the use of the “Paddocks” device without proof that there is basis for such action. The prevailing rule is that courts should avoid issuing a writ of preliminary injunction that would in effect dispose of the main case without trial. There would be a prejudgment of the main case and a reversal of the rule on the burden of proof since it would assume the proposition which the petitioners are inceptively bound to prove.

G.R. No. 164324               August 14, 2009

TANDUAY DISTILLERS, INC., Petitioner, vs.GINEBRA SAN MIGUEL, INC., Respondent.

D E C I S I O N

CARPIO, J.:

The Case

Tanduay Distillers, Inc. (Tanduay) filed this Petition for Review on Certiorari1 assailing the Court of Appeals’ Decision dated 9 January 20042 as well as the Resolution dated 2 July 20043 in CA-G.R. SP No. 79655 denying the Motion for Reconsideration. In the assailed decision, the Court of Appeals (CA) affirmed the Regional Trial Court’s Orders4 dated 23 September 2003 and 17 October 2003 which respectively granted Ginebra San Miguel, Inc.’s (San Miguel) prayer for the issuance of a temporary restraining order (TRO) and writ of preliminary injunction. The Regional Trial Court of Mandaluyong City, Branch 214 (trial court), enjoined Tanduay "from committing the acts complained of, and, specifically, to cease and desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using in commerce the mark "Ginebra," and manufacturing, producing, distributing, or otherwise dealing in gin products which have the general appearance of, and which are confusingly similar with," San Miguel’s marks, bottle design, and label for its gin products.5

The Facts

Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor business since 1854. In 2002, Tanduay developed a new gin product distinguished by its sweet smell, smooth taste, and affordable price. Tanduay claims that it engaged the services of an advertising firm to develop a brand name and a label for its new gin product. The brand name eventually chosen was "Ginebra Kapitan" with the representation of a revolutionary Kapitan on horseback as the dominant feature of its label. Tanduay points out that the label design of "Ginebra Kapitan" in terms of color scheme, size and arrangement of text, and other label features were precisely selected to distinguish it from the leading gin brand in the Philippine market, "Ginebra San Miguel." Tanduay also states that the "Ginebra Kapitan" bottle uses a resealable twist cap to distinguish it from "Ginebra San Miguel" and other local gin products with bottles which use the crown cap or tansan.6

After filing the trademark application for "Ginebra Kapitan" with the Intellectual Property Office (IPO) and after securing the approval of the permit to manufacture and sell "Ginebra Kapitan" from the Bureau of Internal Revenue, Tanduay began selling "Ginebra Kapitan" in Northern and Southern Luzon areas in May 2003. In June 2003, "Ginebra Kapitan" was also launched in Metro Manila.7

On 13 August 2003, Tanduay received a letter from San Miguel’s counsel. The letter informed Tanduay to immediately cease and desist from using the mark "Ginebra" and from committing acts that violate San Miguel’s intellectual property rights.8

On 15 August 2003, San Miguel filed a complaint for trademark infringement, unfair competition and damages, with applications for issuance of TRO and Writ of Preliminary Injunction against Tanduay before the Regional Trial Court of Mandaluyong. The case was raffled to Branch 214 and docketed as IP Case No. MC-03-01 and Civil Case No. MC-03-073.9

On 25 and 29 August and 4 September 2003, the trial court conducted hearings on the TRO. San Miguel submitted five affidavits, but only one affiant, Mercedes Abad, was presented for cross-examination because the trial court ruled that such examination would be inconsistent with the summary nature of a TRO hearing.10 San Miguel submitted the following pieces of evidence:11

1. Affidavit of Mercedes Abad, President and Managing Director of the research firm NFO Trends, Inc. (NFO Trends), to present, among others, market survey results which prove that gin drinkers

associate the term "Ginebra" with San Miguel, and that the consuming public is being misled that "Ginebra Kapitan" is a product of San Miguel;

2. Market Survey results conducted by NFO Trends to determine the brand associations of the mark "Ginebra" and to prove that the consuming public is confused as to the manufacturer of "Ginebra Kapitan";

3. Affidavit of Ramon Cruz, San Miguel’s Group Product Manager, to prove, among others, the prior right of San Miguel to the mark "Ginebra" as shown in various applications for, and registrations of, trademarks that contain the mark "Ginebra." His affidavit included documents showing that the mark "Ginebra" has been used on San Miguel’s gin products since 1834;

4. Affidavits of Leopoldo Guanzon, Jr., San Miguel’s Trade and Promo Merchandising Head for North Luzon Area, and Juderick Crescini, San Miguel’s District Sales Supervisor for South Luzon-East Area, to prove, among others, that Tanduay’s salesmen or distributors misrepresent "Ginebra Kapitan" as San Miguel’s product and that numerous retailers of San Miguel’s gin products are confused as to the manufacturer of "Ginebra Kapitan"; and

5. Affidavit of Jose Reginald Pascual, San Miguel’s District Sales Supervisor for the North-Greater Manila Area, to prove, among others, that gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan" due to the use of the dominant feature "Ginebra."

Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which motion was denied by the trial court. Tanduay presented witnesses who affirmed their affidavits in open court, as follows:12

1. Ramoncito Bugia, General Services Manager of Tanduay. Attached to his affidavit were various certificates of registration of trademarks containing the word "Ginebra" obtained by Tanduay and other liquor companies, to prove that the word "Ginebra" is required to be disclaimed by the IPO. The affidavit also attested that there are other liquor companies using the word "Ginebra" as part of their trademarks for gin products aside from San Miguel and Tanduay.

2. Herbert Rosales, Vice President of J. Salcedo and Associates, Inc., the advertising and promotions company hired by Tanduay to design the label of "Ginebra Kapitan." His affidavit attested that the label was designed to make it "look absolutely different from the Ginebra San Miguel label."

On 23 September 2003, the trial court issued a TRO prohibiting Tanduay from manufacturing, selling and advertising "Ginebra Kapitan."13 The dispositive portion reads in part:

WHEREFORE, the application for temporary restraining order is hereby GRANTED and made effective immediately. Plaintiff is directed to post a bond of ONE MILLION PESOS (Php 1,000,000.00) within five (5) days from issuance hereof, otherwise, this restraining order shall lose its efficacy. Accordingly, defendant Tanduay Distillers, Inc., and all persons and agents acting for and in behalf are enjoined to cease and desist from manufacturing, distributing, selling, offering for sale and/or advertising or otherwise using in

commerce the mark "GINEBRA KAPITAN" which employs, thereon, or in the wrappings, sundry items, cartons and packages thereof, the mark "GINEBRA" as well as from using the bottle design and labels for its gin products during the effectivity of this temporary restraining order unless a contrary order is issued by this Court.14

On 3 October 2003, Tanduay filed a petition for certiorari with the CA.15 Despite Tanduay’s Urgent Motion to Defer Injunction Hearing, the trial court continued to conduct hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show cause why no writ of preliminary injunction should be issued.16 On 17 October 2003, the trial court granted San Miguel’s application for the issuance of a writ of preliminary injunction.17 The dispositive portion of the Order reads:

WHEREFORE, the plaintiff’s application for a writ of preliminary injunction is GRANTED. Upon plaintiff’s filing of an injunctive bond executed to the defendant in the amount of P20,000,000.00 (TWENTY MILLION) PESOS, let a Writ of Preliminary Injunction issue enjoining the defendant, its employees, agents, representatives, dealers, retailers or assigns, and any all persons acting on its behalf, from committing the acts complained of, and, specifically, to cease and desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using in commerce the mark "GINEBRA", and manufacturing, producing, distributing or otherwise dealing in gin products which have the general appearance of, and which are confusingly similar with, plaintiff’s marks, bottle design and label for its gin products.

SO ORDERED.18

On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the injunction order. On 10 November 2003, the CA issued a TRO enjoining the trial court from implementing its injunction order and from further proceeding with the case.19 On 23 December 2003, the CA issued a resolution directing the parties to appear for a hearing on 6 January 2004 to determine the need for the issuance of a writ of preliminary injunction.20

On 9 January 2004, the CA rendered a Decision dismissing Tanduay’s petition and supplemental petition. On 28 January 2004, Tanduay moved for reconsideration which was denied in a Resolution dated 2 July 2004.21

Aggrieved by the decision dismissing the petition and supplemental petition and by the resolution denying the Motion for Reconsideration, Tanduay elevated the case before this Court.

The Trial Court’s Orders

In the Order dated 23 September 2003, the trial court stated that during the hearings conducted on 25 and 29 August and on 4 and 11 September 2003, the following facts have been established:

1. San Miguel has registered the trademark "Ginebra San Miguel";

2. There is a close resemblance between "Ginebra San Miguel" and "Ginebra Kapitan";

3. The close similarity between "Ginebra San Miguel" and "Ginebra Kapitan" may give rise to confusion of goods since San Miguel and Tanduay are competitors in the business of manufacturing and selling liquors; and

"Ginebra," which is a well-known trademark, was adopted by Tanduay to benefit from the reputation and advertisement of the originator of the mark "Ginebra San Miguel," and to convey to the public the impression of some supposed connection between the manufacturer of the gin product sold under the name "Ginebra San Miguel" and the new gin product "Ginebra Kapitan."22

Based on these facts, the trial court concluded that San Miguel had demonstrated a clear, positive, and existing right to be protected by a TRO. Otherwise, San Miguel would suffer irreparable injury if infringement would not be enjoined. Hence, the trial court granted the application for a TRO and set the hearing for preliminary injunction.23

In the Order dated 17 October 2003, the trial court granted the application for a writ of preliminary injunction. The trial court ruled that while a corporation acquires a trade name for its product by choice, it should not select a name that is confusingly similar to any other name already protected by law or is patently deceptive, confusing, or contrary to existing law.24

The trial court pointed out that San Miguel and its predecessors have continuously used "Ginebra" as the dominant feature of its gin products since 1834. On the other hand, Tanduay filed its trademark application for "Ginebra Kapitan" only on 7 January 2003. The trial court declared that San Miguel is the prior user and registrant of "Ginebra" which has become closely associated to all of San Miguel’s gin products, thereby gaining popularity and goodwill from such name.25

The trial court noted that while the subject trademarks are not identical, it is obviously clear that the word "Ginebra" is the dominant feature in the trademarks. The trial court stated that there is a strong indication that confusion is likely to occur since one would inevitably be led to conclude that both products are affiliated with San Miguel due to the distinctive mark "Ginebra" which is readily identified with San Miguel. The trial court concluded that ordinary purchasers would not examine the letterings or features printed on the label but would simply be guided by the presence of the dominant mark "Ginebra." Any difference would pale in significance in the face of evident similarities in the dominant features and overall appearance of the products. The trial court emphasized that the determinative factor was whether the use of such mark would likely cause confusion on the part of the buying public, and not whether it would actually cause confusion on the part of the purchasers. Thus, Tanduay’s choice of "Ginebra" as part of the trademark of "Ginebra Kapitan" tended to show Tanduay’s intention to ride on the popularity and established goodwill of "Ginebra San Miguel."26

The trial court held that to constitute trademark infringement, it was not necessary that every word should be appropriated; it was sufficient that enough be taken to deceive the public in the purchase of a protected article.27

The trial court conceded to Tanduay’s assertion that the term "Ginebra" is a generic word; hence, it is non-registrable because generic words are by law free for all to use. However, the trial court relied on the principle that even if a word is incapable of appropriation as a trademark, the word may still acquire a proprietary connotation through long and exclusive use by a business entity with reference to its products. The purchasing public would associate the word to the products of a business entity. The word thus associated would be entitled to protection against infringement and unfair competition. The trial court held that this principle could be made to apply to this case because San Miguel has shown that it has established goodwill of considerable value, such that its gin products have acquired a well-known reputation as just "Ginebra." In essence, the word "Ginebra" has become a

popular by-word among the consumers and they had closely associated it with San Miguel.28

On the other hand, the trial court held that Tanduay failed to substantiate its claim against the issuance of the injunctive relief.29

The Ruling of the Court of Appeals

In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the determination of whether the TRO and the writ of preliminary injunction were

issued by the trial court with grave abuse of discretion amounting to lack of jurisdiction.30

To warrant the issuance of a TRO, the CA ruled that the affidavits of San Miguel’s witnesses and the fact that the registered trademark "Ginebra San Miguel" exists are enough to make a finding that San Miguel has a clear and unmistakable right to prevent irreparable injury because gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan."31

The CA enumerated the requisites for an injunction: (1) there must be a right in esse or the existence of a right to be protected and (2) the act against which the injunction is to be directed is a violation of such right. The CA stated that the trademarks "Ginebra San Miguel" and "Ginebra Kapitan" are not identical, but it is clear that the word "Ginebra" is the dominant feature in both trademarks. There was a strong indication that confusion was likely to occur. One would be led to conclude that both products are affiliated with San Miguel because the distinctive mark "Ginebra" is identified with San Miguel. It is the mark which draws the attention of the buyer and leads him to conclude that the goods originated from the same manufacturer.32

The CA observed that the gin products of "Ginebra San Miguel" and "Ginebra Kapitan" possess the same physical attributes with reference to their form, composition, texture, or quality. The CA upheld the trial court’s ruling that San Miguel has sufficiently established its right to prior use and registration of the mark "Ginebra" as a dominant feature of its trademark. "Ginebra" has been identified with San Miguel’s goods, thereby, it acquired a right in such mark, and if another infringed the trademark, San Miguel could invoke its property right.33

The Issue

The central question for resolution is whether San Miguel is entitled to the writ of preliminary injunction granted by the trial court as affirmed by the CA. For this reason, we shall deal only with the questioned writ and not with the merits of the case pending before the trial court.

The Ruling of the Court

Clear and Unmistakable Right

Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of a proceeding prior to the judgment or final order, requiring a party or a court, agency, or a person to refrain from a particular act or acts.

A preliminary injunction is a provisional remedy for the protection of substantive rights and interests. It is not a cause of action in itself but merely an adjunct to the main case. Its objective is to prevent a threatened or continuous irreparable injury to some of the parties before their claims can be

thoroughly investigated and advisedly adjudicated. It is resorted to only when there is a pressing need to avoid injurious consequences which cannot be remedied under any standard compensation.34

Section 3, Rule 58 of the Rules of Court provides:

SECTION 3. Grounds for issuance of a writ of preliminary injunction.—A preliminary injunction may be granted when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.

Before an injunctive writ is issued, it is essential that the following requisites are present: (1) the existence of a right to be protected and (2) the acts against which the injunction is directed are violative of the right. The onus probandi is on the movant to show that the invasion of the right sought to be protected is material and substantial, that the right of the movant is clear and unmistakable, and that there is an urgent and paramount necessity for the writ to prevent serious damage.35

San Miguel claims that the requisites for the valid issuance of a writ of preliminary injunction were clearly established. The clear and unmistakable right to the exclusive use of the mark "Ginebra" was proven through the continuous use of "Ginebra" in the manufacture, distribution, marketing and sale of gin products throughout the Philippines since 1834. To the gin-drinking public, the word "Ginebra" does not simply indicate a kind of beverage; it is now synonymous with San Miguel’s gin products.36

San Miguel contends that "Ginebra" can be appropriated as a trademark, and there was no error in the trial court’s provisional ruling based on the evidence on record. Assuming that "Ginebra" is a generic word which is proscribed to be registered as a trademark under Section 123.1(h)37 of Republic Act No. 8293 or the Intellectual Property Code (IP Code),38 it can still be appropriated and registered as a trademark under Section 123.1(j)39 in relation to Section 123.240 of the IP Code, considering that "Ginebra" is also a mark which designates the kind of goods produced by San Miguel.41 San Miguel alleges that although "Ginebra," the Spanish word for "gin," may be a term originally incapable of exclusive appropriation, jurisprudence dictates that the mark has become distinctive of San Miguel’s products due to its substantially exclusive and continuous use as the dominant feature of San Miguel’s trademarks since 1834. Hence, San Miguel is entitled to a finding that the mark is deemed to have acquired a secondary meaning.42 San Miguel states that Tanduay failed to present any evidence to disprove its claims; thus, there is no basis to set aside the grant of the TRO and writ of preliminary injunction.43

San Miguel states that its disclaimer of the word "Ginebra" in some of its registered marks is without prejudice to, and did not affect, its existing or future rights over "Ginebra," especially since "Ginebra" has demonstrably become distinctive of San Miguel’s products.44 San Miguel adds that it did not disclaim "Ginebra" in all of its trademark registrations and applications like its registration for "Ginebra Cruz de Oro," "Ginebra Ka Miguel," "Ginebra San Miguel" bottle, "Ginebra San Miguel," and "Barangay Ginebra."45

Tanduay asserts that not one of the requisites for the valid issuance of a preliminary injunction is present in this case. Tanduay argues that San Miguel cannot claim the exclusive right to use the generic word "Ginebra" for its gin products based on its registration of the composite marks "Ginebra San Miguel," "Ginebra S. Miguel 65," and "La Tondeña Cliq! Ginebra Mix," because in all of these registrations, San Miguel disclaimed any exclusive right to use the non-registrable word "Ginebra" for gin products.46 Tanduay explains that the word "Ginebra," which is disclaimed by San Miguel in all of its registered trademarks, is an unregistrable component of the composite mark "Ginebra San Miguel." Tanduay argues that this disclaimer further means that San Miguel does not have an exclusive right to the generic word "Ginebra."47 Tanduay states that the word "Ginebra" does not indicate the source of the product, but it is merely descriptive of the name of the product itself and not the manufacturer thereof.48

Tanduay submits that it has been producing gin products under the brand names Ginebra 65, Ginebra Matador, and Ginebra Toro without any complaint from San Miguel. Tanduay alleges that San Miguel has not filed any complaint against other liquor companies which use "Ginebra" as part of their brand names such as Ginebra Pinoy, a registered trademark of Webengton Distillery; Ginebra Presidente and Ginebra Luzon as registered trademarks of Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra Santiago as registered trademarks of Distileria Limtuaco & Co., Inc.49 Tanduay claims that the existence of these products, the use and registration of the word "Ginebra" by other companies as part of their trademarks belie San Miguel’s claim that it has been the exclusive user of the trademark containing the word "Ginebra" since 1834.

Tanduay argues that before a court can issue a writ of preliminary injunction, it is imperative that San Miguel must establish a clear and unmistakable right that is entitled to protection. San Miguel’s alleged exclusive right to use the generic word "Ginebra" is far from clear and unmistakable. Tanduay claims that the injunction issued by the trial court was based on its premature conclusion that "Ginebra Kapitan" infringes "Ginebra San Miguel."50

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,51 we held:

While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, this discretion must be exercised based upon the grounds and in the manner provided by law. The exercise of discretion by the trial court in injunctive matters is generally not interfered with save in cases of manifest abuse. And to determine whether there was grave abuse of discretion, a scrutiny must be made of the bases, if any, considered by the trial court in granting injunctive relief. Be it stressed that injunction is the strong arm of equity which must be issued with great caution and deliberation, and only in cases of great injury where there is no commensurate remedy in damages.52

The CA upheld the trial court’s ruling that San Miguel has sufficiently established its right to prior use and registration of the word "Ginebra" as a dominant feature of its trademark. The CA ruled that based on San Miguel’s extensive, continuous, and substantially exclusive use of the word

"Ginebra," it has become distinctive of San Miguel’s gin products; thus, a clear and unmistakable right was shown.

We hold that the CA committed a reversible error. The issue in the main case is San Miguel’s right to the exclusive use of the mark "Ginebra." The two trademarks "Ginebra San Miguel" and "Ginebra Kapitan" apparently differ when taken as a whole, but according to San Miguel, Tanduay appropriates the word "Ginebra" which is a dominant feature of San Miguel’s mark.

It is not evident whether San Miguel has the right to prevent other business entities from using the word "Ginebra." It is not settled (1) whether "Ginebra" is indeed the dominant feature of the trademarks, (2) whether it is a generic word that as a matter of law cannot be appropriated, or (3) whether it is merely a descriptive word that may be appropriated based on the fact that it has acquired a secondary meaning.

The issue that must be resolved by the trial court is whether a word like "Ginebra" can acquire a secondary meaning for gin products so as to prohibit the use of the word "Ginebra" by other gin manufacturers or sellers. This boils down to whether the word "Ginebra" is a generic mark that is incapable of appropriation by gin manufacturers.

In Asia Brewery, Inc. v. Court of Appeals,53 the Court ruled that "pale pilsen" are generic words, "pale" being the actual name of the color and "pilsen" being the type of beer, a light bohemian beer with a strong hops flavor that originated in Pilsen City in Czechoslovakia and became famous in the Middle Ages, and hence incapable of appropriation by any beer manufacturer.54 Moreover, Section 123.1(h) of the IP Code states that a mark cannot be registered if it "consists exclusively of signs that are generic for the goods or services that they seek to identify."1avvphi1

In this case, a cloud of doubt exists over San Miguel’s exclusive right relating to the word "Ginebra." San Miguel’s claim to the exclusive use of the word "Ginebra" is clearly still in dispute because of Tanduay’s claim that it has, as others have, also registered the word "Ginebra" for its gin products. This issue can be resolved only after a full-blown trial.

In Ong Ching Kian Chuan v. Court of Appeals,55 we held that in the absence of proof of a legal right and the injury sustained by the movant, the trial court’s order granting the issuance of an injunctive writ will be set aside, for having been issued with grave abuse of discretion.

We find that San Miguel’s right to injunctive relief has not been clearly and unmistakably demonstrated. The right to the exclusive use of the word "Ginebra" has yet to be determined in the main case. The trial court’s grant of the writ of preliminary injunction in favor of San Miguel, despite the lack of a clear and unmistakable right on its part, constitutes grave abuse of discretion amounting to lack of jurisdiction.

Prejudging the Merits of the Case

Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary injunction, has prejudged the merits of the case since nothing is left to be decided by the trial court except the amount of damages to be awarded to San Miguel.56

San Miguel claims that neither the CA nor the trial court prejudged the merits of the case. San Miguel states that the CA did not rule on the ultimate correctness of the trial court’s evaluation and appreciation of the evidence before it, but merely found that the assailed Orders of the trial court are supported by the evidence on record and that Tanduay was not denied due process.57 San Miguel argues that the CA only

upheld the trial court’s issuance of the TRO and writ of preliminary injunction upon a finding that there was sufficient evidence on record, as well as legal authorities, to warrant the trial court’s preliminary findings of fact.58

The instructive ruling in Manila International Airport Authority v. Court of Appeals59 states:

Considering the far-reaching effects of a writ of preliminary injunction, the trial court should have exercised more prudence and judiciousness in its issuance of the injunction order. We remind trial courts that while generally the grant of a writ of preliminary injunction rests on the sound discretion of the court taking cognizance of the case, extreme caution must be observed in the exercise of such discretion. The discretion of the court a quo to grant an injunctive writ must be exercised based on the grounds and in the manner provided by law. Thus, the Court declared in Garcia v. Burgos:

"It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages.

Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it." (Emphasis in the original)

We believe that the issued writ of preliminary injunction, if allowed, disposes of the case on the merits as it effectively enjoins the use of the word "Ginebra" without the benefit of a full-blown trial. In Rivas v. Securities and Exchange Commission,60 we ruled that courts should avoid issuing a writ of preliminary injunction which would in effect dispose of the main case without trial. The issuance of the writ of preliminary injunction had the effect of granting the main prayer of the complaint such that there is practically nothing left for the trial court to try except the plaintiff’s claim for damages.

Irreparable Injury

Tanduay points out that the supposed damages that San Miguel will suffer as a result of Tanduay’s infringement or unfair competition cannot be considered irreparable because the damages are susceptible of mathematical computation. Tanduay invokes Section 156.1 of the IP Code61 as the basis for the computation of damages.62

San Miguel avers that it stands to suffer irreparable injury if the manufacture and sale of Tanduay’s "Ginebra Kapitan" are not enjoined. San Miguel claims that the rough estimate of the damages63 it would incur is simply a guide for the trial court in computing the appropriate docket fees. San Miguel asserts that the full extent of the damage it would suffer is difficult to measure with any reasonable accuracy because it has invested hundreds of millions over a period of 170 years to establish goodwill and reputation now being enjoyed by the "Ginebra San Miguel" mark.64 San Miguel refutes Tanduay’s claim that the injury which San Miguel stands to suffer can be measured with reasonable accuracy as the legal formula to determine such injury is provided in Section 156.1 of the IP Code. San Miguel reasons that if Tanduay’s claim is upheld, then there would never be a proper occasion to issue a writ of

preliminary injunction in relation to complaints for infringement and unfair competition, as the injury which the owner of the mark suffers, or stands to suffer, will always be susceptible of mathematical computation.65

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,66 this Court upheld the appellate court’s ruling that the damages Levi Strauss & Co. had suffered or continues to suffer may be compensated in terms of monetary consideration. This Court, quoting Government Service Insurance System v. Florendo,67 held:

x x x a writ of injunction should never issue when an action for damages would adequately compensate the injuries caused. The very foundation of the jurisdiction to issue the writ of injunction rests in the probability of irreparable injury, inadequacy of pecuniary compensation and the prevention of the multiplicity of suits, and where facts are not shown to bring the case within these conditions, the relief of injunction should be refused.

Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has failed to prove the probability of irreparable injury which it will stand to suffer if the sale of "Ginebra Kapitan" is not enjoined. San Miguel has not presented proof of damages incapable of pecuniary estimation. At most, San Miguel only claims that it has invested hundreds of millions over a period of 170 years to establish goodwill and reputation now being enjoyed by the "Ginebra San Miguel" mark such that the full extent of the damage cannot be measured with reasonable accuracy. Without the submission of proof that the damage is irreparable and incapable of pecuniary estimation, San Miguel’s claim cannot be the basis for a valid writ of preliminary injunction.

Wherefore, we GRANT the petition. We SET ASIDE the Decision of the Court of Appeals dated 9 January 2004 and the Resolution dated 2 July 2004 in CA-G.R. SP No. 79655. We declare VOID the Order dated 17 October 2003 and the corresponding writ of preliminary injunction issued by Branch 214 of the Regional Trial Court of Mandaluyong City in IP Case No. MC-03-01 and Civil Case No. MC-03-073.

G.R. No. 150877             May 4, 2006

ELIDAD KHO and VIOLETA KHO, Petitioners, vs.HON. ENRICO LANZANAS, Presiding Judge of the Regional Trial Court of Manila – Branch 7 and SUMMERVILLE GENERAL MERCHANDISING, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Culled from the records are the following antecedent facts:

Shun Yih Chemistry Factory (SYCF), a business existing and operating in Taiwan and engaged in the manufacture and sale of Chin Chun Su Creams/Cosmetics, appointed Young Factor Enterprises in the Philippines, owned and operated by Quintin Cheng also known as Kho Seng Hiok, as its distributor of Chin Chun Su products in the Philippines for a term of two years beginning 1978.1 Quintin Cheng registered with the Bureau of Food and Drugs (BFAD) as distributor of Chin Chun Su products. Quintin Cheng subsequently secured a

supplemental registration for Chin Chun Su and device.2 This supplemental registration was ordered cancelled by the Bureau of Patents, Trademarks and Technology Transfer3 on the ground of failure of the registrant to file the required affidavit of non-use as required by Section 12 of Republic Act No. 166, as amended.4

Notwithstanding this cancellation, Quintin Cheng executed on 30 January 1990 an Assignment of a Registered Trademark5 and a Supplementary Deed of Assignment6 dated 25 November 1991 wherein he sold all his right, title, interest and goodwill in the trademark Chin Chun Su and device to petitioner Elidad Kho.

In the meantime, animosity arose between SYCF and Quintin Cheng resulting in the termination of their distributorship agreement on 30 October 1990.7

Consequently, on 30 November 1990, SYCF appointed respondent Summerville General Merchandising, represented by Ang Tiam Chay and Victor Chua, as its exclusive importer, re-packer and distributor of Chin Chun Su products in the Philippines8 for a period of five years or until May 2005.

SYCF further executed a Special Power of Attorney dated 11 September 1991 in favor of Summerville General Merchandising granting it the authority to file complaints against usurpers of Chin Chun Su trademarks/tradename.9

From the foregoing incidents arose several judicial and quasi-judicial proceedings.

1) Civil Case No. Q-91-10926 before the Regional Trial Court (RTC) of Quezon City, Branch 90

On 20 December 1991, Elidad Kho/KEC Laboratory filed a Complaint for Injunction and Damages against Ang Tiam Chay and Summerville General Merchandising before the RTC of Quezon City, Branch 90, docketed as Civil Case No. Q-91-10926. Plaintiff therein Elidad Kho/KEC Laboratory sought to enjoin defendants Ang Tiam Chay and Summerville General Merchandising from using the name Chin Chun Su in their cream products.

On 22 January 1993, a decision in Civil Case No. Q-91-10926 was rendered, the dispositive portion of which provides:

ACCORDINGLY, judgment is hereby rendered:

1. Declaring that plaintiff is not legally authorized to use the trademark "CHIN CHUN SU" and upholding the right of defendant Summerville General Merchandising & Co. to use said trademark as authorized by Shun Yih Chemistry Factory of Taiwan;

2. Declaring plaintiff to have the right to use the copyright claim on "OVAL FACIAL CREAM CONTAINER/CASE" by virtue of Certificate of Copyright Registration No. 3687 issued by the National Library on May 23, 1991;

3. No award of damages;

4. Counsels for plaintiff and defendants are awarded P75,000.00 each as attorney’s fees; and

5. Both parties to pay proportionate fees.10

Both parties appealed the RTC decision to the Court of Appeals, docketed as CA-G.R. CV NO. 48043 entitled, "Elidad C. Kho, doing business under the style of KEC Cosmetic Laboratory v. Summerville General Merchandising and Co., et al." In a decision11 dated 22 November 1999, the appellate court affirmed in toto the decision of the trial court.12 Elidad Kho elevated the case to this Court, docketed as G.R. No. 144100. In a resolution dated 28 August 2000, we denied the petition. We held that:

The issue is who, between petitioner Elidad C. Kho and respondent Summerville General Merchandising and Company has the better right to use the trademark "Chin Chun Su" on their facial cream product?

We agree with both the Court of Appeals and the trial court that Summerville General Merchandising and Company has the better right to use the trademark "Chin Chun Su" on its facial cream product by virtue of the exclusive importation and distribution rights given to it by Shun Yih Chemistry Factory of Taiwan on November 20, 1990 after the latter cancelled and terminated on October 30, 1990 its Sole Distributorship Agreement with one Quintin Cheng, who assigned and transferred his rights under said agreement to petitioner Elidad C. Kho on January 31, 1990.

As correctly held by the Court of Appeals, petitioner Kho is not the author of the trademark "Chin Chun Su" and his only claim to the use of the trademark is based on the Deed of Agreement executed in his favor by Quintin Cheng. By virtue thereof, he registered the trademark in his name. The registration was a patent nullity because petitioner is not the creator of the trademark "Chin Chun Su" and, therefore, has no right to register the same in his name. Furthermore, the authority of Quintin Cheng to be the sole distributor of Chin Chun Su in the Philippines had already been terminated by Shun Yih Chemistry of Taiwan. Withal, he had no right to assign or to transfer the same to petitioner Kho.

WHEREFORE, the instant petition is hereby denied due course.13

2) BFAD Cosmetic Case No. CM-040-91

At the other end of the spectrum, due to the proliferation of fake Chin Chun Su products, Summerville General Merchandising filed a Complaint14 before the BFAD against KEC Cosmetic Laboratory owned by Elidad Kho.

In a resolution of the BFAD dated 4 February 1992, it ruled that:

WHEREFORE, the brand name clearance of CCS in favor of KEC is recalled and cosmetic registration number DR-X6113-78 dtd 11/17/78 is TEMPORARILY CANCELLED until KEC applies to change or amend the brand name CCS it is now using. For this purpose, KEC is hereby ordered to retrieve all locally produced Chin Chun Su Pearl Cream for relabelling as soon as the amendment of its brand name has been approved by this Bureau with the corresponding amended Certificate of Registration.

Summerville’s application to register (renew or reinstate) CCS Medicated Cream under DR-X6113-78 in the name of Shun Yih Chemistry Factory is herewith approved for processing at BFAD-Product Services Division.15

3) Criminal Case No. 00-183261 before the RTC of Manila, Branch 1

This is the case filed before the RTC of Manila, Branch 1, entitled, "People of the Philippines v. Elidad and Violeta Kho and Roger Kho," pursuant to the DOJ Resolution in I.S. No. 00A-02396 and I.S. No. 00B-10973, ordering the filing of a criminal complaint against Elidad, Roger and Violeta Kho.16

Prior to the filing of Criminal Case No. 00-183261 before the RTC of Manila, Branch 1, on 18 January 2000, Victor Chua, representing Summerville General Merchandising, filed a Complaint for Unfair Competition, docketed as I.S. No. 00A-02396 entitled, "Summerville General Merchandising, represented by Victor Chua v. Elidad and Violeta Kho," before the Office of the City Prosecutor of Manila.

Elidad and Violeta Kho filed their counter-affidavit in the Complaint for Unfair Competition which served as their countercharge against Ang Tiam Chay and Victor Chua, likewise for Unfair Competition, docketed as I.S. No. OOB-10973.

On 29 March 2000, the Office of the City Prosecutor granted the consolidation of both I.S. No. 00A-02396 and I.S. No. 00B-10973. On 25 April 2000, Assistant City Prosecutor Rector Macapagal rendered a joint resolution dismissing both the Complaint and countercharge. This resolution of dismissal was reversed by the review resolution17 dated 31 May 2000 issued by Assistant City Prosecutor Elmer Calledo who directed the filing of an information against Elidad Kho, Roger Kho and Violeta Kho for violation of Section 168.3(a) in relation to Sections 168 and 170, Republic Act No. 8293 (The Intellectual Property Code).18 On 17 August 2000, Department of Justice (DOJ) Undersecretary Regis Puno issued a resolution19 dismissing the petition for review filed by Elidad and Violeta Kho and upholding the ruling of Assistant City Prosecutor Calledo, directing the filing of charges against the Khos. Elidad and Violeta Kho filed a motion for reconsideration, and in a complete turnabout, on 28 September 2001, a resolution20 was issued by then DOJ Secretary Hernando Perez again dismissing the Complaint and countercharge in I.S. No. 00A-02396 and I.S. No. 00B-10973 for lack of merit. Summerville General Merchandising accordingly filed a motion for reconsideration of this DOJ resolution dated 20 September 2001.

In view of the latest DOJ resolution ordering the dismissal of the complaint of Summerville General Merchandising against the Khos, the RTC of Manila, Branch 1, issued an Order dated 24 October 2001 directing the dismissal of the Complaint in Criminal Case No. 00-183261.21 Summerville General Merchandising filed with the RTC of Manila, Branch 1, a motion for reconsideration of its Order of dismissal of Criminal Case No. 00-183261. For their part, Elidad and Violeta Kho also filed with the same court a supplemental motion insisting that the Order dismissing Criminal Case No. 00-183261 cannot be set aside because to do so would, in effect, reinstate the said criminal case and would already constitute double jeopardy. Acting on these motions, the RTC of Manila, Branch 1, issued an Order dated 21 August 2002 resolving the motions in the following manner:

The foregoing duly established facts indubitably supports accused’s contention that a re-filing [o]f the Information would put them in double jeopardy. As ruled by the Supreme Court in Marcelo v. Court of Appeals, 235 SCRA 39, upon withdrawal of the Information, which is the logical consequence of the grant of the Motion to Withdraw, there no longer remained any case to dismiss.

Accordingly, finding merit in the Motion for Reconsideration, the same is hereby granted.

The information against accused is hereby dismissed.

The Clerk of Court is hereby directed to return to the accused the cash bonds posted by the latter for their provisional liberty upon presentation of the requisite receipts.

The ruling renders the remaining incidents moot and academic.22

Thereafter, on 17 September 2002, the DOJ Secretary, Hernando B. Perez, granted the pending motion of Summerville General Merchandising for reconsideration of the DOJ resolution23 dated 28 September 2001, which dismissed the Complaint of movant Summerville General Merchandising in I.S. No. 00A-02396, and accordingly issued another resolution vacating the questioned 28 September 2001 resolution and directing the City Prosecutor of Manila to continue with the criminal prosecution of the Khos for Unfair Competition.

Elidad and Violeta Kho filed a motion for reconsideration of the resolution dated 17 September 2002 before the DOJ. The DOJ,24 thru the new Secretary Simeon A. Datumanong denied that double jeopardy lies, in a resolution dated 17 July 2003, declared that:

After an evaluation of the record, we resolve to deny the motion for reconsideration. For double jeopardy to attach, the following requirements must be present: (1) upon a valid indictment; (2) before a competent court; (3) after arraignment; (4) when a valid plea has been entered; and (5) when the defendant was convicted, acquitted, or the case was dismissed or otherwise terminated without the express consent of the accused. (People v. Court of Appeals, 308 SCRA 687). In the instant case, it appears that the case was terminated with the express consent of the respondent, as the criminal case was dismissed upon the express application of the accused. Her action in having the case dismissed constitutes a waiver of her constitutional prerogative against double jeopardy as she thereby prevented the court from proceeding to trial on the merits and rendering a judgment of conviction against her.25

At odds with the final DOJ resolution, the RTC of Manila, Branch 1, handling Criminal Case No. 00-183261, held in its Order dated 2 April 2003 that:

Considering the tenors of the orders of dismissal, whatever maybe the merits of the Motion for Reconsideration, revival of the case is now barred by the impregnable wall of double jeopardy.

ACCORDINGLY, the Motion for Reconsideration dated September 10, 2002 filed by the private prosecutor and subject of the Motion to Resolve is hereby denied with finality.

The Clerk of Court is hereby directed to return to the accused the cash bond posted by them for their provisional liberty upon presentation of the required receipts.26

Thus, Summerville General Merchandising raised its case to the Court of Appeals, docketed as CA-G.R. SP No. 77180, assailing the Order dated 24 October 2001 of the RTC of Manila, Branch 1, dismissing Criminal Case No. 00-183261, as well as the Orders dated 21 August 2002 and 2 April 2003 of the same court affirming its previous order of dismissal.

In a decision of the Court of Appeals dated 26 May 2004 in CA-G.R. SP No. 77180,27 the Court denied due course to the petition of Summerville General Merchandising and affirmed the ruling of the trial court that, indeed, double jeopardy has set in.

The decision of the Court of Appeals in CA-G.R. SP No. 77180 is now the subject of a Petition for Review before this Court, docketed as G.R. No. 163741 entitled, Summerville General Merchandising and Co., Inc. v. Elidad Kho."28

4) Search Warrant No. 99-1520 before the RTC of Manila, Branch 7

Shortly before instituting Criminal Case No. 00-183261 against the Khos, or on 7 January 2000, Summerville General Merchandising applied for the issuance of a search warrant against the Spouses Elidad and Violeta Kho and Roger Kho, since they persisted in manufacturing and selling Chin Chun Su products despite the BFAD order directing them to refrain from doing so. The application was docketed as Search Warrant No. 99-1520 before the RTC of Manila, Branch 7, which was presided over by respondent herein, Judge Enrico A. Lanzanas. A hearing on the application was held on 10 January 200029 and the search warrant was issued against Elidad, Violeta and Roger Kho on the same day.30 Its enforcement led to the seizure of several Chin Chun Su products.311avvphil.net

On 17 January 2000, Elidad, Violeta and Roger Kho filed before the RTC of Manila, Branch 7, a motion to quash the search warrant and for the return of the items unlawfully seized. The motion was opposed by Summerville General Merchandising.

In an Order32 dated 3 April 2000, the RTC of Manila, Branch 7, denied Elidad and Violeta Kho’s motion to quash and to return the seized articles for lack of merit.33 Elidad and Violeta Kho filed a motion for reconsideration and motion to transfer the proceedings in RTC of Manila, Branch 7, to RTC of Manila, Branch 1, citing Supreme Court Administrative Order 113-9534 designating the RTC of Manila, Branch 1, as an Intellectual Property Court. The RTC of Manila, Branch 7, denied these motions in an Order dated 5 June 2000,35 explaining that:

Anent the Motion to Compel this Branch to transfer the case to Branch 1 of this Court, suffice it to say that the cases for violation of Arts. 188 and 189 of the Revised Penal Code (now under the Intellectual Property Law) are those that are already filed in court after the proper preliminary investigation and not cases for application for search warrant involving probable violation of said law. Supreme Court Administrative Circular No. 113-95 itself designates the alluded court or branch thereof to try and decide which clearly excludes cases/applications for search warrant which obviously does not involve trying and deciding case for violation of the Intellectual Property law.

On respondent’s Motion for Reconsideration, the Court finds their arguments therein a rehash of the issues and arguments raised in their Motion to Quash.

WHEREFORE, for lack of merit, respondents’ Motion for Reconsideration and Motion to Transfer, are hereby DENIED.36

Elidad and Violeta Kho filed a Petition for Certiorari and Preliminary Mandatory Injunction,37 docketed as CA-G.R. SP No. 60084, before the Court of Appeals questioning the aforementioned Orders of the RTC of Manila, Branch 7. A decision dated 6 August 200138 was rendered by the Court of Appeals denying the petition. It upheld Search Warrant No. 99-1520 as having been validly issued and properly executed and, thus, there is no basis for the return of the goods seized. A motion for reconsideration filed by the Khos was denied by the Court of Appeals in an Order dated 16 November 2001.39

Elidad and Violeta Kho filed a supplement to their Motion for Reconsideration dated 20 November 200140 before the Court

of Appeals in CA-G.R. SP No. 60084, reiterating their prayer for the quashal of Search Warrant No. 99-1520 and the return of the seized items. The Court of Appeals, in a resolution dated 4 December 2001,41 merely noted the motion in view of its earlier resolution rendered on 16 November 2001 already denying Elidad and Violeta Kho’s Motion for Reconsideration.

Pained by the decisions and orders of the trial court and appellate court, petitioners Elidad and Violeta Kho filed the present petition praying that the decision of the Court of Appeals in CA-G.R. SP No. 60084 dated 6 August 2001 be reversed and set aside, and a new decision be issued granting the quashal of Search Warrant No. 99-1520 and ordering the return of the items unlawfully seized.42

In their Memorandum, petitioners raise the following issues for resolution:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISREGARDING THE WITHDRAWAL OF THE INFORMATION FOR UNFAIR COMPETITION AGAINST THE PETITIONERS IN BRANCH 1 OF RTC-MANILA AS A RESULT OF THE RESOLUTION OF THE DEPARTMENT OF JUSTICE FINDING NO PROBABLE CAUSE.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT NO GRAVE ABUSE OF DISCRETION WAS COMMITTED BY HONORABLE JUDGE ENRICO LANZANAS IN FINDING THAT PROBABLE CAUSE EXISTED AGAINST THE PETITIONERS FOR THE ISSUANCE OF SEARCH WARRANT NO. 99-1520.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT BRANCH 7 OF THE REGIONAL TRIAL COURT OF MANILA HAD JURISDICTION TO ISSUE SEARCH WARRANT NO. 99-1520.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT NO GRAVE ABUSE OF DISCRETION WAS COMMITTED BY HONORABLE JUDGE ENRICO LANZANAS IN RULING THAT SEARCH WARRANT NO. 99-1520 WAS LAWFULLY EXECUTED.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT NO GRAVE ABUSE OF DISCRETION WAS COMMITTED BY HONORABLE JUDGE ENRICO LANZANAS IN NOT ORDERING THE RETURN OF THE ITEMS SEIZED UNDER SEARCH WARRANT NO. 99-1520.43

The petition is devoid of merit.

As to the first issue, it must be noted that the dismissal of Criminal Case No. 00-183261 by the RTC of Manila, Branch 1, was initially by virtue of the resolution of the DOJ dated 28 September 200144 ordering the dismissal of the criminal case for unfair competition.

This order of dismissal, however, was again set aside by the DOJ in its resolution dated 17 September 200245 directing that appropriate information for Unfair Competition be filed against the Khos. The motion for reconsideration of Elidad and Violeta Kho was denied by the DOJ in its resolution dated 17 July 2003.46 This is the latest existing resolution of the DOJ on the matter, dated 17 July 2003, which affirmed the resolution of the then DOJ Secretary Hernando B. Perez directing the City Prosecutor of Manila to file the appropriate information against Elidad and Violeta Kho for Unfair Competition as defined and penalized under Section 168.3(a), in relation to Sections 168 and 170 of Rep. Act No. 8293 or The Intellectual Property Code of the Philippines. Therefore, at the time of the dismissal of Criminal Case No. 00-183261 by the RTC of Manila, Branch 1, on 24 October 2001, the DOJ resolution on

I.S. No. 00A-02396 on which Criminal Case No. 00-183261 is based has not been written finis as yet.

Taking into consideration these circumstances, the Court of Appeals did not err in affirming the Order of the RTC of Manila, Branch 7, denying the motion to quash filed by the herein petitioners because, subsequently, the DOJ still ordered the filing of charges against Elidad and Violeta Kho.

As to whether the RTC of Manila, Branch 1, properly dismissed the criminal case against the Khos despite the resolution of the DOJ ordering their criminal prosecution, we cannot dwell more on the issue because it is already the subject of G.R. No. 163741 before another division of this Court.

Issues two, three and four, on the other hand, boil down to the central issue of whether or not the Court of Appeals erred in upholding the RTC of Manila, Branch 7, in its findings of probable cause to issue a search warrant. Also resting on how we shall resolve the foregoing issue is the fifth and last issue in the Petition at bar which questions the refusal by both the Court of Appeals and the RTC of Manila, Branch 7, to return the seized items.

The issuance of Search Warrants is governed by Rule 126 of the Revised Rules of Court reproduced below:

SECTION 1. Search warrant defined. – A search warrant is an order in writing issued in the name of the People of the Philippines, signed by a judge and directed to a peace officer, commanding him to search for personal property described therein and bring it before the court.

SEC. 2. Court where application for search warrant shall be filed. - An application for search warrant shall be filed with the following:

a) Any court within whose territorial jurisdiction a crime was committed.

b) For compelling reasons stated in the application, any court within the judicial region where the crime was committed if the place of the commission of the crime is known, or any court within the judicial region where the warrant shall be enforced.

However, if the criminal action has already been filed, the application shall only be made in the court where the criminal action is pending.

SEC. 3. Personal property to be seized. – A search warrant may be issued for the search and seizure of personal property:

(a) Subject of the offense;

(b) Stolen or embezzled and other proceeds or fruits of the offense; or

(c) Used or intended to be used as the means of committing an offense.

SEC. 4. Requisites for issuing search warrant. – A search warrant shall not issue except upon probable cause in connection with one specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the things to be seized which may be anywhere in the Philippines.

SEC.5. Examination of complainant; record. – The judge must, before issuing the warrant, personally examine in the form of searching questions and answers, in writing and under oath, the complainant and the witnesses he may produce on facts personally known to them and attach to the record their sworn statements together with the affidavits submitted.

SEC. 6. Issuance and form of search warrant. – If the judge is satisfied of the existence of facts upon which the application is based or that there is probable cause to believe that they exist, he shall issue the warrant, which must be substantially in the form prescribed by these Rules.

What constitutes "probable cause" is well settled. In Microsoft Corporation v. Maxicorp, Inc.,47 we defined probable cause as follows:

Probable cause means "such reasons, supported by facts and circumstances as will warrant a cautious man in the belief that his action and the means taken in prosecuting it are legally just and proper." Thus, probable cause for a search warrant requires such facts and circumstances that would lead a reasonably prudent man to believe that an offense has been committed and the objects sought in connection with that offense are in the place to be searched.

x x x x

The determination of probable cause does not call for the application of rules and standards of proof that a judgment of conviction requires after trial on the merits. As implied by the words themselves, "probable cause" is concerned with probability, not absolute or even moral certainty. The prosecution need not present at this stage proof beyond reasonable doubt. The standards of judgment are those of a reasonably prudent man, not the exacting calibrations of a judge after a full-blown trial.

No law or rule states that probable cause requires a specific kind of evidence. No formula or fixed rule for its determination exists. Probable cause is determined in the light of conditions obtaining in a given situation. xxx

In Columbia Pictures, Inc. v. Court of Appeals,48 we explained further that:

Although the term "probable cause" has been said to have a well-defined meaning in the law, the term is exceedingly difficult to define, in this case, with any degree of precision; indeed, no definition of it which would justify the issuance of a search warrant can be formulated which would cover every state of facts which might arise, and no formula or standard, or hard and fast rule, may be laid down which may be applied to the facts of every situation. As to what acts constitute probable cause seem incapable of definition. There is, of necessity, no exact test.

At best, the term "probable cause" has been understood to mean a reasonable ground of suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the person accused is guilty of the offense with which he is charged; or the existence of such facts and circumstances as would excite an honest belief in a reasonable mind acting on all the facts and circumstances within the knowledge of the magistrate that the charge made by the applicant for the warrant is true.

Probable cause does not mean actual and positive cause, nor does it import absolute certainty. The determination of the existence of probable cause is not concerned with the question of whether the offense charged has been or is being committed in fact, or whether the accused is guilty or

innocent, but only whether the affiant has reasonable grounds for his belief. The requirement is less than certainty or proof, but more than suspicion or possibility.

In Philippine jurisprudence, probable cause has been uniformly defined as such facts and circumstances which would lead a reasonable, discreet and prudent man to believe that an offense has been committed, and that the objects sought in connection with the offense are in the place sought to be searched. It being the duty of the issuing officer to issue, or refuse to issue, the warrant as soon as practicable after the application therefor is filed, the facts warranting the conclusion of probable cause must be assessed at the time of such judicial determination by necessarily using legal standards then set forth in law and jurisprudence, and not those that have yet to be crafted thereafter.

We also declared in People v. Chiu,49 citing Malaloan v. Court of Appeals,50 that a search warrant is merely a judicial process designed by the Rules to respond only to an incident in the main case, if one has already been instituted, or in anticipation thereof.

It bears repeating that the proceedings before the RTC of Manila, Branch 7, was solely for the issuance of Search Warrant No. 99-1520, while the main case against Elidad and Violeta Kho for violation of The Intellectual Property Code was instituted only later on as Criminal Case No. 00-183261 before the RTC of Manila, Branch 1. What is before us in the Petition at bar is the validity of the search warrant issued in the proceedings in Search Warrant No. 99-1520.

A perspicacious examination of the records reveal that the RTC of Manila, Branch 7, followed the prescribed procedure for the issuance of Search Warrant No. 99-1520, namely, (1) the examination under oath or affirmation of the Complainant and his witnesses and, in this case, Judge Enrico A. Lanzanas personally examined complainant-policewoman SPO4 Nedita Alvario Balagbis, and Mr. Victor Chua, the representative/officer of Summerville General Merchandising, at the hearing on the application for Search Warrant No. 99-1520 held on 10 January 2000; (2) an examination personally conducted by then Presiding Judge Lanzanas, in the form of searching questions and answers, in writing and under oath, of the complainant and witnesses on facts personally known to them; and (3) the taking of sworn statements, together with the affidavits submitted, which were duly attached to the records.51

In determining probable cause in the issuance of a search warrant, the oath required must refer to the truth of the facts within the personal knowledge of the applicant or his witnesses, because the purpose thereof is to convince the committing magistrate, not the individual making the affidavit and seeking the issuance of the warrant, of the existence of probable cause.52

From the affidavit dated 7 January 2000 of SPO4 Nedita Balagbis, in support of the application for search warrant, she stated that Summerville General Merchandising represented by Mr. Victor Chua sought the assistance of their police station in connection with the proliferation of fake Chin Chun Su products. With Victor Chua, they made a surveillance of two places, namely 2407 Topacio Street and 2412 Raymundo Street both in San Andres, Manila. Through this, they were able to verify that plastic containers were being labeled with Chin Chun Su stickers filled with cream at 2407 Topacio Street. On the other hand, in the affidavit dated 7 January 2000 of Victor Chua, he stated that Summerville General Merchandising, being the exclusive importer, distributor and dealer of Chin Chun Su products received reliable information that persons going by the name of Elidad, Violeta and Roger Kho were engaged in the illegal manufacture and sale of these products. From the surveillance conducted with the help

of SPO4 Balagbis, they saw a tricycle full of containers taken to a house at 2412 Raymundo Street, San Andres, Manila. It was at this address that Chin Chun Su stickers were being affixed. The containers were thereafter taken to 2407 Topacio Street to be filled with the cream product.

Clearly, probable cause existed for the issuance of the warrant as shown by the affidavits of the above affiants who had personal knowledge of facts indicating that an offense involving violation of intellectual property rights was being committed and that the objects sought in connection with the offense are in the place sought to be searched. The surveillance conducted by SPO4 Nedita Balagbis on the basis of reliable information that Elidad, Violeta and Roger Kho were engaged in the illegal manufacture and sale of fake Chin Chun Su products enabled her to gain personal knowledge of the illegal activities of the Khos.53 This fact was sufficient justification for the examining judge, in this case Judge Lanzanas, to conclude that there was probable cause for the issuance of the search warrant.

At the hearing conducted by Judge Lanzanas, SPO4 Nedita Balagbis and Victor Chua testified on the affidavits they separately executed, and essentially stated therein upon inquiry by Judge Lanzanas that indeed several fake Chin Chun Su products were loaded to a tricycle and brought to a warehouse in Topacio Street.

In People v. Tee,54 this Court held that:

It is presumed that a judicial function has been regularly performed, absent a showing to the contrary. A magistrate’s determination of probable cause for the issuance of a search warrant is paid great deference by a reviewing court, as long as there was substantial basis for that determination. Substantial basis means that the questions of the examining judge brought out such facts and circumstances as would lead a reasonably discreet and prudent man to believe that an offense has been committed, and the objects in connection with the offense sought to be seized are in the place sought to be searched.

We cannot find any irregularity or abuse of discretion on the part of Judge Lanzanas for issuing the assailed search warrant. On the contrary, we find that he had complied with the procedural and substantive requirements for issuing a search warrant. We are, therefore, bound to respect his finding of probable cause for issuing Search Warrant No. 99-1520.

After declaring that Search Warrant No. 99-1520 was validly issued by the RTC of Manila, Branch 7, then there is no reason for us to order the return of the articles seized by virtue thereof.

WHEREFORE, the Decision of the Court of Appeals dated 6 August 2001 and Resolution dated 16 November 2001, denying the quashal of Search Warrant No. 99-1520 and the return of the seized items, are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.