FACTS:
ADA ABELLERA
ARTICLE 28. UNFAIR COMPETITION
G.R. No. L-1999. December 27, 1906.
THE UNITED STATES, Plaintiff-Appellee, v.
VICENTE MANUEL, Defendant-Appellant.
1. TRADE-MARKS AND TRADE NAMES; UNFAIR
COMPETITION. The true test of unfair
competition is whether certain goods have
been intentionally clothed with an appearance
which is likely to deceive the ordinary purchases
exercising ordinary care, and not whether a
certain limited class of purchasers with special
knowledge not possessed by the ordinary
purchases could avoid mistake by the exercise
of this special knowledge.
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2. ID.; ID. In order to maintain an action for
unfair competition under section 7 of Act No.
666, it is necessary that the intent on the part of
the competitor to deceive the public shall be
proven beyond any doubt.
3. ID.; ID. It being proven that the accused
had acquired bottles, with the mark incrusted in
the glass, a long time before Watson & Co. had
registered the said mark in accordance with the
said act, and taking into consideration the fact
that the registration provided for the use of the
mark for carbonated waters (aguas gaseosas),
and not for the use of marked bottles, and the
fact that the accused was accustomed to put his
own labels on the bottles containing the various
classes of waters sold by him, it can not be said
that he has violated the law and committed the
alleged offense.
Vicente manuel is charged with "unfair
competition," as defined and penalized in
Act No. 666 of the Philippine Commission.
For many years, A. S. Watson, and Co.,
limited, a corporation duly organized under
the laws of Great Britain and registered in
the Mercantile Register of the Philippine
Islands, was extensively engaged in the city
of Manila and the Philippine Islands in the
business of manufacturing and selling soda
water, lemonade, ginger ale, and other
aerated waters.
sometime in 1903, it was registered with
the then Bureau of Patents, Copyrights,
and Trade marks of the Philippine Islands a
trade mark consisting of the words "A. S.
Watson and Company, Limited," together
with the figure of a unicorn and dragon on
either side of a Chinese pagoda, which had
been adopted and appropriated by said A.
S. Watson and Co., Limited. as their trade
mark for many years prior to its registry.
The soda water, lemonade, and other
aerated waters manufactured by A. S.
Watson and Co., Limited were sold in
bottles, specially made for the purpose,
with their trade mark blown on the side in
large raised letters and figures, these letters
and figures being so strikingly and
prominently displayed that they forcibly
attract the attention of the eye and arouse
the sense of touch on the most superficial
examination. On these bottles labels were
pasted also bearing the said trade mark,
and in addition the name of the particular
variety of aerated water contained therein.
It was the custom of the said A. S. Watson
and Co., Limited, to give the purchaser of its
aerated waters what was called a deposit
slip with each case of such goods sold,
obligating themselves to refund a stipulated
amount on the return of the empty bottles
together with this deposit slip.
On and about the 30th of September, 1903,
the, Vicente Manuel, manufactured and
sold a number of bottles of aerated waters
in bottles identical in form and appearance
with those used by A. S. Watson and Co.,
Limited, with the trade mark of that firm
blown on the side in the same manner in
which it is blown on their bottles, there
being no reasonable doubt that the bottles
used by the defendant were bottles which
had been formerly used by A. S. Watson and
Co., Limited in their business as
manufacturers and vendors of aerated
waters.
On the bottles sold by the Manuel there
were pasted labels with his name and the
kind of aerated water contained therein,
the printed matter contained in these labels
being different from that contained in the
bottles sold by A. S. Watson and Co.,
Limited, and the general appearance of the
respective labels not being strikingly similar
or dissimilar, though a comparative
examination develops a number of points of
difference in size, shape, and color.
It does not expressly appear on either label
whether the name printed thereon is that
of the manufacturer of the aerated water
contained therein or that of a dealer
engaged in the business of buying and
selling such waters.
The evidence tended to prove that the
aerated waters sold by S. Watson and Co.,
Limited, have a wide reputation for
excellence of the Philippine Islands, and
that great care and attention to detail are
exercised in their manufacture, with a view
to the production of a wholesome and
pleasant beverage, and that to this end
distilled water is used exclusively in their
preparation; and there is evidence in the
record which tends to prove that the
aerated waters sold by the defendant were
unwholesome and of inferior quality, and
that distilled water had been used in their
manufacture.
TC: It convicted the accused of "unfair
competition," and sentenced him to pay a
fine of $50, gold, and the costs of the trial,
and to subsidiary imprisonment in case of
insolvency and nonpayment of the fine.
ISSUE: WON Manuel is guilty of unfair
competition.
HELD:YES
Section 7 of Act No. 666, which defines
unfair competition, provides that
"Any person who in selling his goods shall
give them the general appearance of goods
of another manufacturer or dealer, either in
the wrapping of the packages in which they
are contained or the devices or words
thereon, or in any other feature of their
appearance, which would be likely to
influence purchasers to believe that the
goods offered are those of a manufacturer
or dealer other than the actual
manufacturer or dealer, and who clothes
the goods with such appearance for the
purpose of deceiving the public and
defrauding another of his legitimate trade,
or any subsequent vendor of such goods or
any agent of any vendor engaged in selling
such goods with a like purpose, shall be
guilty of unfair competition . . ., and in
order that the action shall lie under this
section, actual intent to deceive the public
and defraud a competitor shall affirmatively
appear on the part of the person sought to
be made liable, but such intent may be
inferred from similarity in the appearance
of the goods as packed or offered for sale to
those of complaining party."cralaw
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We are satisfied beyond a reasonable
doubt that the defendant, in selling his
aerated waters in bottle with the design
blown on the side as described above,
gave his goods the general appearance of
aerated waters manufactured by A. S.
Watson and Co., Limited, in the devices
and words used on the bottles in which
they were contained, in a way that the
goods offered were those of A. S. Watson
and Co., Limited; and that the similarity in
appearance of the goods offered for sale by
the defendant to those of A. S. Watson and
Co., Limited, was such as to justify the
inference that the defendant actually
intended to deceive the public and defraud
the said A. S. Watson and Co., Limited.
Counsel for defendant insist that the use of
different labels pasted on the bottles
forbids the inference of an intent to device
the public or defraud A. S. Watson and Co.,
Limited, but an ocular examination of the
labels and the device blown on the bottles
does not sustain his contention; for while it
is true that a cautious purchaser who was
acquainted with the English language need
not have been deceived if he took the pains
to read the printed matter on the label,
nevertheless the difference in the general
appearance of the labels is not sufficient to
protect from mistake the ordinary
purchaser who is unacquainted with the
English language, unless he took the
extraordinary precaution of having with him
a sample of the label of A. S. Watson and
Co., Limited, with which to make a direct
comparison, on each occasion when he
bought a bottle of aerated water; by far the
most striking and noticeable characteristics
of the bottles of aerated waters sold by A.
S. Watson and Co., Limited, is the evidence
blown on the side, upon seeing which the
ordinary purchaser might well be excused
from a too careful scrutiny of the wording
of the much less noticeable and less easily
remembered label, printed in a language
known to but a small percentage of the
residents in Manila and the Philippine
Islands, (Glen Cove Mfg. Co. v. Ludeling, 22
Fed. Rep., 823; Cook v. Ross, 73 Fed. Rep.,
203.)
The true test of unfair competition is
whether certain goods have been clothed
with an appearance which is likely to
deceive the ordinary purchaser exercising
ordinary care, and not whether a certain
limited class of purchasers with special
knowledge not possess by the ordinary
purchaser could avoid mistake by the
exercise of this special knowledge.
It is also contended that since A. S. Watson
and Co., Limited, sold the bottles containing
their aerated waters, these bottles became
the property of the purchaser, who could
not be deprived of the privilege of doing
what he pleased with his own property. A.
S. Watson and Co., Limited, deny that they
ever sold bottles of the kind used by the
defendant, and insist that the transaction
whereby they received from each purchaser
of their bottled goods a certain sum of
money which they obligated themselves to
return in exchange for the empty bottles
was not intended as a sale. We are satisfied,
however, that since the purchaser at his
discretion could either retain or return
these bottles, the transaction must be
regarded as a sale of the bottles when the
purchaser actually exercised that discretion,
and decided not to return them to the
vendor.
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We have no doubt that the purchasers of
aerated waters from A. S. Watson and Co.,
Limited, who paid the so-called "deposit"
but never demanded or received the refund
guaranteed in the deposit slip, because the
absolute, unconditional owners of such
bottles, but the right of ownership does not
carry it the right to use the thing owned for
the purpose of deceiving the public and
defrauding third parties. The defendant
might have manufactured these bottles
himself, in which case there could have
been no doubt as to his right of ownership,
and nevertheless, he would have had no
moral or lawful right to use them as he did.
It is said that if the provisions of Act No. 666
deprive the defendant of the right to use
these bottles for the sale of his goods, that
act is unconstitutional in that it takes from
the defendant rights of property without
due process of law.
It is not true, however, that the right of
ownership carries with it the right to use
ones property as we hold this defendant
used these bottles that is, for the purpose
of deceiving the public and defrauding
ones neighbors and Act No. 666, by
expressly prohibiting unfair competition,
does not deprive anyone of a right of
property which justly belonged to him prior
to its enactment, its only effect being to
define and penalized a wrong which already
existed but which no adequate punishment
had been provided by law. (Evans v. Van
Laer, 32 Fed. Rep., 153; Sawyer Crystal Blue
Co. v. Hubbard, 32 Fed. Rep. 388.)
The evidence or record sustains the findings
of the trial court and we find no error in the
proceedings prejudicial to the rights of the
accused, except that the sentence includes
subsidiary imprisonment in the event of
insolvency and nonpayment of the fine
imposed, for which there is no authority in
the act of the Commission defining and
penalizing "unfair competition." The
sentence imposed by the trial court is
therefore subsidiary imprisonment, and
thus modified and sentenced is affirmed,
with the costs of this instance against
the Appellant.
ARTICLE 29
G.R. No. 128927 September 14, 1999
REMEDIOS NOTA SAPIERA, petitioner,
vs.
COURT OF APPEALS and RAMON
SUA, respondents.
FACTS:
REMEDIOS NOTA (hahaha) SAPIERA has
been acquitted of the crime estafa but was
held liable nonetheless for the value of the
checks she indorsed in favor of private
respondent Ramon Sua.
On several occasions Sapiera, a sari-sari
store owner, purchased from Monrico Mart
certain grocery items, mostly cigarettes,
and paid for them with checks issued by
one Arturo de Guzman
(in case mag-ask si maam, there were four
checks)
These checks were signed at the back by
petitioner. When presented for payment
the checks were dishonored because the
drawer's account was already closed.
Ramon Sua informed Arturo de Guzman
and Sapiera about the dishonor but both
failed to pay the value of the checks.
Hence, four (4) charges of estafa were filed
against Sapiera. Arturo de Guzman was
charged with two (2) counts of violation of
B.P. Blg. 22, These cases against Sapiera and
de Guzman were consolidated and tried
jointly.
The court a quo 2 acquitted petitioner of all
the charges of estafa but did not rule on
whether she could be held civilly liable for
the checks she indorsed to Sua. The trial
court found Arturo de Guzman guilty of
Violation of B.P. Blg. 22 on two (2) counts
and sentenced him to suffer imprisonment
of six (6) months and one (1) day in each of
the cases, and to pay private respondent
P167,150.00 as civil indemnity.
ISSUE: WON the acquittal for the crime of
estafa precludes a separate civil action for
damages for the same act or omission. NO
(Simply put, WON Sapiera should pay civil
indemnity to Sua after the TC had
acquitted her of her criminal charges. YES)
HELD:
Section 2, par. (b), of Rule 111 of the Rules
of Court, as amended, specifically provides:
"Extinction of the penal action does not
carry with it extinction of the civil, unless
the extinction proceed from a declaration
in a final judgment that the fact from
which the civil might arise did not exist."
The judgment of acquittal extinguishes the
liability of the accused for damages only
when it includes a declaration that the fact
from which the civil liability might arise did
not exist. Thus, the civil liability is not
extinguished by acquittal where:
(a) the acquittal is based on reasonable
doubt;
(b) where the court expressly declares that
the liability of the accused is not criminal
but only civil in nature; and,
(c) where the civil liability is not derived
from or based on the criminal act of which
the accused is acquitted.
Thus, under Art. 29 of the Civil Code
When the accused in a
criminal prosecution is
acquitted on the ground that
his guilt has not been proved
beyond reasonable doubt, a
civil action for damages for
the same act or omission
may be instituted. Such
action requires only a
preponderance of evidence.
Upon motion of the
defendant, the court may
require the plaintiff to file a
bond to answer for damages
 in case the complaint should
be found to be malicious.
In a criminal case where the
judgment of acquittal is
based upon reasonable
doubt, the court shall so
declare. In the absence of
any declaration to that
effect, it may be inferred
from the text of the decision
whether or not acquittal is
due to that ground.
Based on the above findings of the trial
court, the exoneration of petitioner of the
charges of estafa was based on the failure
of the prosecution to present sufficient
evidence showing conspiracy between her
and the other accused Arturo de Guzman
in defrauding Sua.
However, by her own testimony, Sapiera
admitted having signed the four (4) checks
in question on the reverse side. The
evidence of the prosecution shows that she
purchased goods from the grocery store of
Sua as shown by the sales invoices issued by
private respondent; that these purchases
were paid with the four (4) subject checks
issued by de Guzman; that petitioner signed
the same checks on the reverse side; and
when presented for payment, the checks
were dishonored by the drawee bank due
to the closure of the drawer's account; and,
petitioner was informed of the dishonor.
Despite the conflicting versions of the
parties, it is undisputed that the four (4)
checks issued by de Guzman were signed
by petitioner at the back without any
indication as to how she should be bound
thereby and, therefore, she is deemed to
be an indorser thereof.
(Just in case mag-ask si maam)
The Negotiable Instruments Law clearly
provides
Sec. 17. Construction where
instrument is ambiguous.
Where the language of the
instrument is ambiguous, or
there are admissions therein,
the following rules of
construction apply: . . . . (f)
Where a signature is so
placed upon the instrument
that it is not clear in what
capacity the person making
the same intended to sign,
he is deemed an indorser. . . .
Sec. 63. When person
deemed indorser. A
person placing his signature
upon all instrument
otherwise than as maker,
drawer or acceptor, is
deemed to be an indorser
unless he clearly indicates by
appropriate words his
intention to be bound in
some other capacity.
Sec. 66. Liability of general
indorser. Every indorser
who indorses without
qualification, warrants to all
subsequent holders in due
course: (a) The matters and
things mentioned in
subdivisions (a), (b) and (c) of
the next preceding section;
and (b) That the instrument
is, at the time of the
indorsement, valid and
subsisting;
 And, in addition, he engages
that, on due presentment, it
shall be accepted or paid or
both, as the case may be,
according to its tenor, and
that if it be dishonored and
the necessary proceedings
on dishonor be duly taken,
he will pay the amount
thereof to the holder or to
any subsequent indorser
who may be compelled to
pay it.
The dismissal of the criminal cases against
petitioner did not erase her civil liability
since the dismissal was due to insufficiency
of evidence and not from a declaration
from the court that the fact from which the
civil action might arise did not exist.
An accused acquitted of estafa may be
nevertheless be held civilly liable where the
facts established by the evidence so
warrant. The accused should be adjudged
liable for the unpaid value of the checks
signed by her in favor of the complainant.
The rationale behind the award of civil
indemnity despite a judgment of acquittal
when evidence is sufficient to sustain the
award was explained by the Code
Commission in connection with Art. 29 of
the Civil Code, to wit:
The old rule that the
acquittal of the accused in a
criminal case also releases
him from civil liability is one
of the most serious flaws in
the Philippine legal system. It
has given rise to numberless
instances of miscarriage of
justice, where the acquittal
was due to a reasonable
doubt in the mind of the
court as to the guilt of the
accused. The reasoning
followed is that inasmuch as
the civil responsibility is
derived from the criminal
offense, when the latter is
not proved, civil liability
cannot be demanded.
This is one of those cases
where confused thinking
leads to unfortunate and
deplorable consequences.
Such reasoning fails to draw
a clear line of demarcation
between criminal liability
and civil responsibility, and
to determine the logical
result of the distinction. The
two liabilities are separate
and distinct from each other.
One affects the social order
and the other private rights.
One is for punishment or
correction of the offender
while the other is for
reparation of damages
suffered by file aggrieved
party . . . . It is just and
proper that for the purposes
of imprisonment of or fine
upon the accused, the
offense should be proved
beyond reasonable doubt.
But the purpose of
indemnifying the
complaining party, why
should the offense also be
proved beyond reasonable
doubt? Is not the invasion or
violation of every private
right to be proved only by
preponderance of evidence?
Is the right of the aggrieved
person any less private
because the wrongful acts is
also punishable by the
criminal law?