186. Coca Cola v.
Gomez hearsay as they had no personal knowledge of the alleged crime; there is no
G.R. No. 154491/November 14, 2008
By: Marie Titular
TOPIC: Unfair Competition
PETITIONERS: Coca Cola Bottlers Phils. Naga Plant
RESPONDENTS: Quintin Gomez and Danilo Galicia
PONENTE: Chico-Nazario
DOCTRINE: The essential elements of an action for unfair competition are (1) confusing
similarity in the general appearance of the goods and (2) intent to deceive the public
and defraud a competitor. The confusing similarity may or may not result from similarity
in the marks, but may result from other external factors in the packaging or
presentation of the goods. The intent to deceive and defraud may be inferred from the
similarity of the appearance of the goods as offered for sale to the public. Actual
fraudulent intent need not be shown.
FACTS:
 Coca-Cola applied for a search warrant against Pepsi for hoarding Coke empty
bottles in Pepsi's yard in Concepcion Grande, Naga City, an act allegedly
penalized as unfair competition under the IP Code. Coca-Cola claimed that the
bottles must be confiscated to preclude their illegal use, destruction or
concealment by the respondents.
 In support of the application, Coca Cola submitted the sworn statements of
three witnesses detailing how they saw empty Coca Cola bottles inside Pepsi
shells or cases.
 MTC issued a search warrant to seize 2,500 Litro and 3,000 eight and 12
ounces empty Coke bottles at Pepsi’s Naga yard for violation of Sec. 168.3(c)
of the IP Code. The local police seized and brought to the MTC’s custody
2,464 Litro and 4,036 eight and 12 ounces empty Coke bottles, 205 Pepsi shells
for Litro, and 168 Pepsi shells for smaller (eight and 12 ounces) empty Coke
bottles, and later filed with the Office of the City Prosecutor of Naga a
complaint against two Pepsi officers for violation of Section 168.3 (c) in
relation to Section 170 of the IP Code. The named respondents, also the
respondents in this petition, were Pepsi regional sales manager Danilo E.
Galicia (Galicia) and its Naga general manager Quintin J. Gomez, Jr. (Gomez)
 In their counter-affidavits, Galicia and Gomez claimed that the bottles came
from various Pepsi retailers and wholesalers who included them in their return
to make up for shortages of empty Pepsi bottles; they had no way of
ascertaining beforehand the return of empty Coke bottles as they simply
received what had been delivered; the presence of the bottles in their yard
was not intentional nor deliberate; Ponce and Regaspi's statements are
mention in the IP Code of the crime of possession of empty bottles.
 MTC Ruling: denied the twin motions and explained that there was an
exhaustive examination of the applicant and its witnesses through searching
questions and the Pepsi shells are prima facie evidence that the bottles were
placed there by the respondents. MR was also denied
 RTC Ruling: voided the warrant for lack of probable cause and the non-
commission of the crime of unfair competition. MR was also denied.
ISSUE:
Whether or not respondent’s hoarding of Coke bottles constitute unfair
competition.
HELD:
NO. From jurisprudence, unfair competition has been defined as the passing
off (or palming off) or attempting to pass off upon the public the goods or
business of one person as the goods or business of another with the end and
probable effect of deceiving the public. One of the essential requisites in an
action to restrain unfair competition is proof of fraud; the intent to deceive
must be shown before the right to recover can exist. The advent of the IP Code
has not significantly changed these rulings as they are fully in accord with
what Section 168 of the Code in its entirety provides. Deception, passing
off  and fraud upon the public are still the key elements that must be present
for unfair competition to exist.
As basis for this interpretative analysis, the court noted that Section
168.1 speaks of a person who has earned goodwill with respect to his goods
and services and who is entitled to protection under the Code, with or without
a registered mark. Section 168.2, as previously discussed, refers to the general
definition of unfair competition. Section 168.3, on the other hand, refers to
the specific instances of unfair competition, with Section 168.3(a) referring to
the sale of goods given the appearance of the goods of another; Section
168.3(b), to the inducement of belief that his or her goods or services are that
of another who has earned goodwill; while the disputed Section 168.3(c) being
a “catch all” clause whose coverage the parties now dispute.
Under all the above approaches, the court concludes that the “hoarding” – as
defined and charged by the petitioner – does not fall within the coverage of
the IP Code and of Section 168 in particular. It does not relate to any patent,
trademark, trade name or service mark that the respondents have invaded,
intruded into or used without proper authority from the petitioner. Nor are
the respondents alleged to be fraudulently “passing off” their products or
services as those of the petitioner. The respondents are not also alleged to be
undertaking any representation or misrepresentation that would confuse or
tend to confuse the goods of the petitioner with those of the respondents,
or vice versa. What in fact the petitioner alleges is an act foreign to the Code,
to the concepts it embodies and to the acts it regulates; as alleged, hoarding
inflicts unfairness by seeking to limit the opposition’s sales by depriving it of
the bottles it can use for these sales. In this light, hoarding for purposes of
destruction is closer to what another law, R.A. No. 623 covers.
SECTION 1. Persons engaged or licensed to engage in the manufacture,
bottling or selling of soda water, mineral or aerated waters, cider, milk, cream,
or other lawful beverages in bottles, boxes, casks, kegs, or barrels, and other
similar containers, with their names or the names of their principals or
products, or other marks of ownership stamped or marked thereon, may
register with the Philippine Patent Office a description of the names or are
used by them, under the same conditions, rules, and regulations, made
applicable by law or regulation to the issuance of trademarks.
similar containers - who are given special protection with respect to the
containers they use. In this sense, it is in fact a law of specific coverage and
application, compared with the general terms and application of the IP Code.
Thus, under its Section 2, it speaks specifically of unlawful use of containers
and even of the unlawfulness of their wanton destruction - a matter that
escapes the IP Code's generalities unless linked with the concepts of
"deception" and "passing off" as discussed above.
Unfortunately, the Act is not the law in issue in the present case and one that
the parties did not consider at all in the search warrant application. The
petitioner in fact could not have cited it in its search warrant application since
the "one specific offense" that the law allows and which the petitioner used
was Section 168.3 (c). If it serves any purpose at all in our discussions, it is to
show that the underlying factual situation of the present case is in fact
covered by another law, not by the IP Code that the petitioner cites. Thus, the
lack of probable cause to support the disputed search warrant at once
becomes apparent.

SECTION 2. It shall be unlawful for any person, without the written consent of
the manufacturer, bottler or seller who has successfully registered the marks
of ownership in accordance with the provisions of the next preceding
section, to fill such bottles, boxes, kegs, barrels, or other similar containers so
marked or stamped, for the purpose of sale, or to sell, dispose of, buy, or
traffic in, or wantonly destroy the same, whether filled or not, or to use the
same for drinking vessels or glasses or for any other purpose than that
registered by the manufacturer, bottler or seller. Any violation of this section
shall be punished by a fine or not more than one hundred pesos or
imprisonment of not more than thirty days or both.

As its coverage is defined under Section 1, the Act appears to be a measure

that may overlap or be affected by the provisions of Part II of the IP Code on
"The Law on Trademarks, Service Marks and Trade Names." What is certain is
that the IP Code has not expressly repealed this Act. The Act appears, too, to
have specific reference to a special type of registrants - the manufacturers,
bottlers or sellers of soda water, mineral or aerated waters, cider, milk, cream,
or other lawful beverages in bottles, boxes, casks, kegs, or barrels, and other