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to take judicial notice of the news article on the supposed turn-

over of PJI to its stockholders thus fails.
Finally, petitioner’s arguments that the Republic’s failure to
pray for the reconveyance to it of the Mabini lots reflects its
not being a real party in interest, and that since PJI is already
represented by the PCGG, it is superfluous for the Republic to
be a co-plaintiff fail. At most, like its misplaced reliance on
rulings of this Court in G.R. Nos. 108552 and 138598, these
are feeble attempts to invoke technicalities to further delay the
proceedings in the case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Azcuna, ** Tinga, Velasco, Jr., and Brion, JJ., concur.

SECOND DIVISION

[G.R. No. 154491. November 14, 2008]

COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga

Plant, petitioner, vs. QUINTIN J. GOMEZ, a.k.a. “KIT”
GOMEZ and DANILO E. GALICIA, a.k.a. “DANNY
GALICIA,” respondents.

SYLLABUS

1. REMEDIAL LAW; CRIMINAL PROCEDURE; SEARCH AND

SEIZURE; SEARCH WARRANT; SUBSTANTIVE AND
PROCEDURAL REQUIREMENTS. — The issuance of a

**
Additional member per Raffle dated January 30, 2008 and pursuant to
Administrative Circular No. 84-2007, in lieu of Justice Leonardo A. Quisumbing.
who took no part.
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search warrant against a personal property is governed by Rule

126 of the Revised Rules of Court whose relevant sections
state: “Section 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. Section 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. Section 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.”
To paraphrase this rule, a search warrant may be issued only
if there is probable cause in connection with a specific offense
alleged in an application based on the personal knowledge
of the applicant and his or her witnesses. This is the substantive
requirement in the issuance of a search warrant. Procedurally,
the determination of probable cause is a personal task of the
judge before whom the application for search warrant is filed,
as he has to examine under oath or affirmation the applicant
and his or her witnesses in the form of “searching questions
and answers” in writing and under oath. The warrant, if issued,
must particularly describe the place to be searched and the
things to be seized. We paraphrase these requirements to stress
that they have substantive and procedural aspects.
2. ID.; ID.; ID.; ID.; PROBABLE CAUSE; EXPLAINED. —
[P]robable cause, as a condition for the issuance of a search
warrant, is 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.
Probable cause requires 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. Implicit in this statement
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is the recognition that an underlying offense must, in the first

place, exist. In other words, the acts alleged, taken together,
must constitute an offense and that these acts are imputable
to an offender in relation with whom a search warrant is applied
for.
3. MERCANTILE LAW; INTELLECTUAL PROPERTY CODE;
UNFAIR COMPETITION; ELUCIDATED. — “Unfair
competition,” previously defined in Philippine jurisprudence
in relation with R.A. No. 166 and Articles 188 and 189 of the
Revised Penal Code, is now covered by Section 168 of the IP
Code as this Code has expressly repealed R.A. No. 165 and
R.A. No. 166, and Articles 188 and 189 of the Revised Penal
Code. Articles 168.1 and 168.2 x x x provide the concept
and general rule on the definition of unfair competition. The
law does not thereby cover every unfair act committed in the
course of business; it covers only acts characterized by
“deception or any other means contrary to good faith” in the
passing off of goods and services as those of another who has
established goodwill in relation with these goods or services,
or any other act calculated to produce the same result. What
unfair competition is, is further particularized under Section
168.3 when it provides specifics of what unfair competition
is “without in any way limiting the scope of protection against
unfair competition.” Part of these particulars is provided under
Section 168.3 (c) which provides the general “catch-all” phrase
x x x. Under this phrase, a person shall be guilty of unfair
competition “who shall commit any other act contrary to good
faith of a nature calculated to discredit the goods, business or
services of another.” 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. It formulated the “true test” of
unfair competition: whether the acts of defendant are such as
are calculated to deceive the ordinary buyer making his purchases
under the ordinary conditions which prevail in the particular
trade to which the controversy relates. 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.
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Deception, passing off and fraud upon the public are still
the key elements that must be present for unfair competition
to exist.
4. ID.; ID.; COVERAGE. — [T]he IP Code x x x [is] a set of rules
that refer to a very specific subject — intellectual property.
Aside from the IP Code’s actual substantive contents (which
relate specifically to patents, licensing, trademarks, trade names,
service marks, copyrights, and the protection and infringement
of the intellectual properties that these protective measures
embody), the coverage and intent of the Code is expressly
reflected in its “Declaration of State Policy” x x x. “Intellectual
property rights” have furthermore been defined under
Section 4 of the Code to consist of: a) Copyright and Related
Rights; b) Trademarks and Service Marks; c) Geographic
Indications; d) Industrial Designs; e) Patents; f) Layout-Designs
(Topographies) of Integrated Circuits; and g) Protection of
Undisclosed Information. Given the IP Code’s specific focus,
a first test that should be made when a question arises on whether
a matter is covered by the Code is to ask if it refers to an
intellectual property as defined in the Code. If it does not,
then coverage by the Code may be negated. A second test, if
a disputed matter does not expressly refer to an intellectual
property right as defined above, is whether it falls under the
general “unfair competition” concept and definition under
Sections 168.1 and 168.2 of the Code. The question then is
whether there is “deception” or any other similar act in “passing
off” of goods or services to be those of another who enjoys
established goodwill. Separately from these tests is the
application of the principles of statutory construction giving
particular attention, not so much to the focus of the IP Code
generally, but to the terms of Section 168 in particular. Under
the principle of “noscitur a sociis,” when a particular word or
phrase is ambiguous in itself or is equally susceptible of various
meanings, its correct construction may be made clear and
specific by considering the company of words in which it is
found or with which it is associated.
5. ID.; ID.; HOARDING MORE SPECIFICALLY COVERED
BY RA 623. — The act alleged to violate the petitioner’s rights
under Section 168.3 (c ) is hoarding which we gather to be the
collection of the petitioner’s empty bottles so that they can
be withdrawn from circulation and thus impede the circulation
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of the petitioner’s bottled products. This, according to the

petitioner, is an act contrary to good faith — a conclusion
that, if true, is indeed an unfair act on the part of the respondents.
The critical question, however, is not the intrinsic unfairness
of the act of hoarding; what is critical for purposes of Section
168.3 (c ) is to determine if the hoarding, as charged, “is of
a nature calculated to discredit the goods, business or services”
of the petitioner. We hold that it is not. Hoarding as defined
by the petitioner is not even an act within the contemplation
of the IP Code.
6. REMEDIAL LAW; CRIMINAL PROCEDURE; SEARCH AND
SEIZURE; SEARCH WARRANT; CONSIDERED
DEFECTIVE ON ITS FACE WHEN THE IMPUTED ACTS
DO NOT VIOLATE THE CITED OFFENSE. — Where, as
in this case, the imputed acts do not violate the cited offense,
the ruling of this Court penned by Mr. Justice Bellosillo is
particularly instructive: “In the issuance of search warrants,
the Rules of Court requires a finding of probable cause in
connection with one specific offense to be determined
personally by the judge after examination of the complainant
and the witnesses he may produce, and particularly describing
the place to be searched and the things to be seized. Hence,
since there is no crime to speak of, the search warrant
does not even begin to fulfill these stringent requirements
and is therefore defective on its face. The nullity of the warrant
renders moot and academic the other issues raised in petitioners’
Motion to Quash and Motion for Reconsideration. Since the
assailed search warrant is null and void, all property seized by
virtue thereof should be returned to petitioners in accordance
with established jurisprudence.”

APPEARANCES OF COUNSEL

Senior Legal Counsel (SMC) for petitioner.

Rosales & Associates Law Office for respondents.
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DECISION

BRION, J.:

Is the hoarding of a competitor’s product containers punishable

as unfair competition under the Intellectual Property Code (IP
Code, Republic Act No. 8293) that would entitle the aggrieved
party to a search warrant against the hoarder? This is the issue
we grapple with in this petition for review on certiorari involving
two rival multinational softdrink giants; petitioner Coca-Cola
Bottlers, Phils., Inc. (Coca-Cola) accuses Pepsi Cola Products
Phils., Inc. (Pepsi), represented by the respondents, of hoarding
empty Coke bottles in bad faith to discredit its business and to
sabotage its operation in Bicolandia.
BACKGROUND
The facts, as culled from the records, are summarized below.
On July 2, 2001, 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.1 In support of
the application, Coca-Cola submitted the sworn statements of
three witnesses: Naga plant representative Arnel John Ponce
said he was informed that one of their plant security guards
had gained access into the Pepsi compound and had seen empty
Coke bottles; acting plant security officer Ylano A. Regaspi
said he investigated reports that Pepsi was hoarding large quantities
of Coke bottles by requesting their security guard to enter the
Pepsi plant and he was informed by the security guard that
Pepsi hoarded several Coke bottles; security guard Edwin Lirio
stated that he entered Pepsi’s yard on July 2, 2001 at 4 p.m.
and saw empty Coke bottles inside Pepsi shells or cases.2

1
See Paragraph 3 of the Application; records, p. 96.
2
Id., pp. 98-101.
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Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo

of Naga City, after taking the joint deposition of the witnesses,
issued Search Warrant No. 2001-013 to seize 2,500 Litro and
3,000 eight and 12 ounces empty Coke bottles at Pepsi’s Naga
yard for violation of Section 168.3 (c) of the IP Code.4 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.5 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

3
Id., pp. 108-109.
4
Sec. 168. Unfair Competition, Rights, Regulations and Remedies. —
xxx xxx xxx
Sec. 168.3: In particular, and without in any way limiting the scope of
protection against unfair competition, the following shall be deemed guilty of
unfair competition:
xxx xxx xxx
(c) Any person who shall make any false statement in the course of trade
or who shall commit any other act contrary to good faith of a nature calculated
to discredit the goods, business or service of another.
5
Sec. 170. Penalties. — Independent of the civil and administrative sanctions
imposed by law, a criminal penalty of imprisonment from two years to five
years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred
thousand pesos (P200,000), shall be imposed on any person who is found
guilty of committing any of the acts mentioned in Section 155, Section 168
and Subsection 169.1.
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are hearsay as they had no personal knowledge of the alleged

crime; there is no mention in the IP Code of the crime of
possession of empty bottles; and that the ambiguity of the law,
which has a penal nature, must be construed strictly against the
State and liberally in their favor. Pepsi security guards Eduardo
E. Miral and Rene Acebuche executed a joint affidavit stating
that per their logbook, Lirio did not visit or enter the plant
premises in the afternoon of July 2, 2001.
The respondents also filed motions for the return of their
shells and to quash the search warrant. They contended that no
probable cause existed to justify the issuance of the search
warrant; the facts charged do not constitute an offense; and
their Naga plant was in urgent need of the shells.
Coca-Cola opposed the motions as the shells were part of
the evidence of the crime, arguing that Pepsi used the shells in
hoarding the bottles. It insisted that the issuance of warrant
was based on probable cause for unfair competition under the
IP Code, and that the respondents violated R.A. 623, the law
regulating the use of stamped or marked bottles, boxes, and
other similar containers.
THE MTC RULINGS
On September 19, 2001, the MTC issued the first assailed
order 6 denying the twin motions. It explained there was an
exhaustive examination of the applicant and its witnesses through
searching questions and that the Pepsi shells are prima facie
evidence that the bottles were placed there by the respondents.
In their motion for reconsideration, the respondents argued
for the quashal of the warrant as the MTC did not conduct a
probing and exhaustive examination; the applicant and its witnesses
had no personal knowledge of facts surrounding the hoarding;
the court failed to order the return of the “borrowed” shells;
there was no crime involved; the warrant was issued based on
hearsay evidence; and the seizure of the shells was illegal because
they were not included in the warrant.
6
Penned by Pairing Judge Irma Isidora M. Boncodin, MTC, Branch 1,
Naga; records, p. 23.
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On November 14, 2001, the MTC denied the motion for

reconsideration in the second assailed order, 7 explaining that
the issue of whether there was unfair competition can only be
resolved during trial.
The respondents responded by filing a petition for certiorari
under Rule 65 of the Revised Rules of Court before the Regional
Trial Court (RTC) of Naga City on the ground that the subject
search warrant was issued without probable cause and that the
empty shells were neither mentioned in the warrant nor the
objects of the perceived crime.
THE RTC RULINGS
On May 8, 2002, the RTC voided the warrant for lack of
probable cause and the non-commission of the crime of unfair
competition, even as it implied that other laws may have been
violated by the respondents. The RTC, though, found no grave
abuse of discretion on the part of the issuing MTC judge. 8
Thus,
Accordingly, as prayed for, Search Warrant No. 2001-02 issued
by the Honorable Judge Julian C. Ocampo III on July 2, 2001 is
ANNULLED and SET ASIDE. The Orders issued by the Pairing Judge
of Br. 1, MTCC of Naga City dated September 19, 2001 and November
14, 2001 are also declared VOID and SET ASIDE. The City Prosecutor
of Naga City and SPO1 Ernesto Paredes are directed to return to
the Petitioner the properties seized by virtue of Search Warrant
No. 2001-02. No costs.
SO ORDERED.9
In a motion for reconsideration, which the RTC denied on
July 12, 2002, the petitioner stressed that the decision of the
RTC was contradictory because it absolved Judge Ocampo of
grave abuse of discretion in issuing the search warrant, but at

7
Penned by Acting Presiding Judge Jose P. Nacional, MTC, Branch 1,
Naga; id., p. 22.
8
Decision penned by Judge Ramon A. Cruz, RTC, Branch 21; id., pp. 202-211.
9
Id., p. 210.
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the same time nullified the issued warrant. The MTC should
have dismissed the petition when it found out that Judge Ocampo
did not commit any grave abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us through
this petition for review on certiorari under Rule 45 of the Rules
of Court to reverse the decision of the RTC. Essentially, the
petition raises questions against the RTC’s nullification of the
warrant when it found no grave abuse of discretion committed
by the issuing judge.
THE PETITION and
THE PARTIES’ POSITIONS
In its petition, the petitioner insists the RTC should have
dismissed the respondents’ petition for certiorari because it
found no grave abuse of discretion by the MTC in issuing the
search warrant. The petitioner further argues that the IP Code
was enacted into law to remedy various forms of unfair
competition accompanying globalization as well as to replace
the inutile provision of unfair competition under Article 189 of
the Revised Penal Code. Section 168.3(c) of the IP Code does
not limit the scope of protection on the particular acts enumerated
as it expands the meaning of unfair competition to include “other
acts contrary to good faith of a nature calculated to discredit
the goods, business or services of another.” The inherent element
of unfair competition is fraud or deceit, and that hoarding of
large quantities of a competitor’s empty bottles is necessarily
characterized by bad faith. It claims that its Bicol bottling operation
was prejudiced by the respondents’ hoarding and destruction
of its empty bottles.
The petitioner also argues that the quashal of the search warrant
was improper because it complied with all the essential requisites
of a valid warrant. The empty bottles were concealed in Pepsi
shells to prevent discovery while they were systematically being
destroyed to hamper the petitioner’s bottling operation and to
undermine the capability of its bottling operations in Bicol.
The respondents counter-argue that although Judge Ocampo
conducted his own examination, he gravely erred and abused
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his discretion when he ignored the rule on the need of sufficient

evidence to establish probable cause; satisfactory and convincing
evidence is essential to hold them guilty of unfair competition;
the hoarding of empty Coke bottles did not cause actual or
probable deception and confusion on the part of the general
public; the alleged criminal acts do not show conduct aimed at
deceiving the public; there was no attempt to use the empty
bottles or pass them off as the respondents’ goods.
The respondents also argue that the IP Code does not
criminalize bottle hoarding, as the acts penalized must always
involve fraud and deceit. The hoarding does not make them
liable for unfair competition as there was no deception or fraud
on the end-users.
THE ISSUE
Based on the parties’ positions, the basic issue submitted to
us for resolution is whether the Naga MTC was correct in issuing
Search Warrant No. 2001-01 for the seizure of the empty Coke
bottles from Pepsi’s yard for probable violation of Section 168.3
(c) of the IP Code. This basic issue involves two sub-issues,
namely, the substantive issue of whether the application for
search warrant effectively charged an offense, i.e., a violation
of Section 168.3 (c) of the IP Code; and the procedural issue
of whether the MTC observed the procedures required by the
Rules of Court in the issuance of search warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the RTC
decision, our agreement is more in the result than in the reasons
that supported it. The decision is correct in nullifying the search
warrant because it was issued on an invalid substantive basis
— the acts imputed on the respondents do not violate Section
168.3 (c) of the IP Code. For this reason, we deny the present
petition.
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The issuance of a search warrant10 against a personal property11

is governed by Rule 126 of the Revised Rules of Court whose
relevant sections state:
Section 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.
Section 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.
Section 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. [Emphasis supplied]
To paraphrase this rule, a search warrant may be issued only
if there is probable cause in connection with a specific offense
alleged in an application based on the personal knowledge of
the applicant and his or her witnesses. This is the substantive
requirement in the issuance of a search warrant. Procedurally,
the determination of probable cause is a personal task of the
judge before whom the application for search warrant is filed,

10
Rule 126, 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.
11
Rule 126, Section 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.
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as he has to examine under oath or affirmation the applicant

and his or her witnesses in the form of “searching questions
and answers” in writing and under oath. The warrant, if issued,
must particularly describe the place to be searched and the things
to be seized.
We paraphrase these requirements to stress that they have
substantive and procedural aspects. Apparently, the RTC
recognized this dual nature of the requirements and, hence,
treated them separately; it approved of the way the MTC handled
the procedural aspects of the issuance of the search warrant
but found its action on the substantive aspect wanting. It therefore
resolved to nullify the warrant, without however expressly
declaring that the MTC gravely abused its discretion when it
issued the warrant applied for. The RTC’s error, however, is
in the form rather than the substance of the decision as the
nullification of the issued warrant for the reason the RTC gave
was equivalent to the declaration that grave abuse of discretion
was committed. In fact, we so rule as the discussions below
will show.
Jurisprudence teaches us that probable cause, as a condition
for the issuance of a search warrant, is 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. Probable cause requires 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.12 Implicit in this statement is the recognition that an
underlying offense must, in the first place, exist. In other words,
the acts alleged, taken together, must constitute an offense and
that these acts are imputable to an offender in relation with
whom a search warrant is applied for.
In the context of the present case, the question is whether
the act charged — alleged to be hoarding of empty Coke bottles

12
La Chemise Lacoste, S. A. v. Judge Fernandez, G.R. Nos. 63796-97,
May 21, 1984, 129 SCRA 373.
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— constitutes an offense under Section 168.3 (c) of the IP

Code. Section 168 in its entirety states:
SECTION 168. Unfair Competition, Rights, Regulation and
Remedies. —
168.1. A person who has identified in the mind of the public the
goods he manufactures or deals in, his business or services from
those of others, whether or not a registered mark is employed, has
a property right in the goodwill of the said goods, business or services
so identified, which will be protected in the same manner as other
property rights.
168.2. Any person who shall employ deception or any other means
contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, or his business, or services
for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of
unfair competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope
of protection against unfair competition, the following shall be
deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or 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,
or who otherwise clothes the goods with such appearance as shall
deceive the public and defraud 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;
(b) Any person who by any artifice, or device, or who employs
any other means calculated to induce the false belief that such person
is offering the services of another who has identified such services
in the mind of the public; or
(c) Any person who shall make any false statement in the course
of trade or who shall commit any other act contrary to good faith
of a nature calculated to discredit the goods, business or services
of another.
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168.4. The remedies provided by Sections 156, 157 and 161

shall apply mutatis mutandis. (Sec. 29, R.A. No. 166a)

The petitioner theorizes that the above section does not limit
the scope of protection on the particular acts enumerated as it
expands the meaning of unfair competition to include “other
acts contrary to good faith of a nature calculated to discredit
the goods, business or services of another.” Allegedly, the
respondents’ hoarding of Coca Cola empty bottles is one such
act.
We do not agree with the petitioner’s expansive interpretation
of Section 168.3 (c).
“Unfair competition,” previously defined in Philippine
jurisprudence in relation with R.A. No. 166 and Articles 188
and 189 of the Revised Penal Code, is now covered by Section
168 of the IP Code as this Code has expressly repealed R.A.
No. 165 and R.A. No. 166, and Articles 188 and 189 of the
Revised Penal Code.
Articles 168.1 and 168.2, as quoted above, provide the concept
and general rule on the definition of unfair competition. The
law does not thereby cover every unfair act committed in the
course of business; it covers only acts characterized by “deception
or any other means contrary to good faith” in the passing off
of goods and services as those of another who has established
goodwill in relation with these goods or services, or any other
act calculated to produce the same result.
What unfair competition is, is further particularized under
Section 168.3 when it provides specifics of what unfair competition
is “without in any way limiting the scope of protection against
unfair competition.” Part of these particulars is provided under
Section 168.3(c) which provides the general “catch-all” phrase
that the petitioner cites. Under this phrase, a person shall be
guilty of unfair competition “who shall commit any other act
contrary to good faith of a nature calculated to discredit the
goods, business or services of another.”
From jurisprudence, unfair competition has been defined as
the passing off (or palming off) or attempting to pass off upon
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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. It formulated the “true test” of unfair competition:
whether the acts of defendant are such as are calculated to
deceive the ordinary buyer making his purchases under the ordinary
conditions which prevail in the particular trade to which the
controversy relates.13 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.14
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.
The act alleged to violate the petitioner’s rights under Section
168.3 (c) is hoarding which we gather to be the collection of
the petitioner’s empty bottles so that they can be withdrawn
from circulation and thus impede the circulation of the petitioner’s
bottled products. This, according to the petitioner, is an act
contrary to good faith — a conclusion that, if true, is indeed an
unfair act on the part of the respondents. The critical question,
however, is not the intrinsic unfairness of the act of hoarding;
what is critical for purposes of Section 168.3 (c) is to determine
if the hoarding, as charged, “is of a nature calculated to discredit
the goods, business or services” of the petitioner.
We hold that it is not. Hoarding as defined by the petitioner
is not even an act within the contemplation of the IP Code.
The petitioner’s cited basis is a provision of the IP Code, a
set of rules that refer to a very specific subject — intellectual
property. Aside from the IP Code’s actual substantive contents
(which relate specifically to patents, licensing, trademarks, trade
names, service marks, copyrights, and the protection and

13
Alhambra Cigar & Cigarette Manufacturing Co. v. Mojica, 27 Phil.
266 (1914).
14
Compania General de Tabacos de Filipinas v. Alhambra Cigar &
Cigarette Manufacturing Co., 33 Phil. 485 (1916).
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infringement of the intellectual properties that these protective

measures embody), the coverage and intent of the Code is
expressly reflected in its “Declaration of State Policy” which
states:
Section 2. Declaration of State Policy. — The State recognizes
that an effective intellectual and industrial property system is vital
to the development of domestic and creative activity, facilitates
transfer of technology, attracts foreign investments, and ensures
market access for our products. It shall protect and secure the
exclusive rights of scientists, inventors, artists and other gifted
citizens to their intellectual property and creations, particularly
when beneficial to the people, for such periods as provided in this
Act.
The use of intellectual property bears a social function. To this
end, the State shall promote the diffusion of knowledge and
information for the promotion of national development and progress
and the common good.
It is also the policy of the State to streamline administrative
procedures of registering patents, trademarks and copyright, to
liberalize the registration on the transfer of technology, and to enhance
the enforcement of intellectual property rights in the Philippines. (n)

“Intellectual property rights” have furthermore been defined

under Section 4 of the Code to consist of: a) Copyright and
Related Rights; b) Trademarks and Service Marks; c) Geographic
Indications; d) IndustrialDesigns; e) Patents; f) Layout-Designs
(Topographies) of Integrated Circuits; and g)Protection of
Undisclosed Information.
Given the IP Code’s specific focus, a first test that should
be made when a question arises on whether a matter is covered
by the Code is to ask if it refers to an intellectual property as
defined in the Code. If it does not, then coverage by the Code
may be negated.
A second test, if a disputed matter does not expressly refer
to an intellectual property right as defined above, is whether it
falls under the general “unfair competition” concept and definition
under Sections 168.1 and 168.2 of the Code. The question
then is whether there is “deception” or any other similar act in
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“passing off” of goods or services to be those of another who

enjoys established goodwill.
Separately from these tests is the application of the principles
of statutory construction giving particular attention, not so much
to the focus of the IP Code generally, but to the terms of Section
168 in particular. Under the principle of “noscitur a sociis,”
when a particular word or phrase is ambiguous in itself or is
equally susceptible of various meanings, its correct construction
may be made clear and specific by considering the company of
words in which it is found or with which it is associated.15
As basis for this interpretative analysis, we note 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 168.1
referring to the sale of goods given the appearance of the goods
of another; Section 168.2, 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 being a “catch all”
clause whose coverage the parties now dispute.
Under all the above approaches, we conclude 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

15
Agpalo, Statutory Construction, 3 rd (1995) Ed., at p. 159, citing Co
Kim Chan v. Valdez Tan Keh, 75 Phil. 371, and Soriano v. Sandiganbayan,
G.R. No. 65952, July 1, 1984, among others.
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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, to wit:
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.
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 similar containers —
who are given special protection with respect to the containers
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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. Viewed in this light, the lack of probable
cause to support the disputed search warrant at once becomes
apparent.
Where, as in this case, the imputed acts do not violate the
cited offense, the ruling of this Court penned by Mr. Justice
Bellosillo is particularly instructive:
In the issuance of search warrants, the Rules of Court requires
a finding of probable cause in connection with one specific offense
to be determined personally by the judge after examination of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized. Hence,
since there is no crime to speak of, the search warrant does
not even begin to fulfill these stringent requirements and is
therefore defective on its face. The nullity of the warrant renders
moot and academic the other issues raised in petitioners’ Motion
to Quash and Motion for Reconsideration. Since the assailed search
warrant is null and void, all property seized by virtue thereof should
be returned to petitioners in accordance with established
jurisprudence. 16

Based on the foregoing, we conclude that the RTC correctly

ruled that the petitioner’s search warrant should properly be
16
Supra note 12, pp. 705-706.
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Datuman vs. First Cosmopolitan Manpower and Promotion
Services, Inc.

quashed for the petitioner’s failure to show that the acts imputed
to the respondents do not violate the cited offense. There could
not have been any probable cause to support the issuance of a
search warrant because no crime in the first place was effectively
charged. This conclusion renders unnecessary any further
discussion on whether the search warrant application properly
alleged that the imputed act of holding Coke empties was in
fact a “hoarding” in bad faith aimed to prejudice the petitioner’s
operations, or whether the MTC duly complied with the procedural
requirements for the issuance of a search warrant under Rule
126 of the Rules of Court.
WHEREFORE, we hereby DENY the petition for lack of
merit. Accordingly, we confirm that Search Warrant No. 2001-01,
issued by the Municipal Trial Court, Branch 1, Naga City, is
NULL and VOID. Costs against the petitioner.
SO ORDERED.
Quisumbing, Acting C.J. (Chairperson), Carpio Morales,
Tinga, and Velasco, Jr., JJ., concur.

FIRST DIVISION

[G.R. No. 156029. November 14, 2008]

SANTOSA B. DATUMAN, petitioner, vs. FIRST

COSMOPOLITAN MANPOWER AND PROMOTION
SERVICES, INC., respondent.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR STANDARDS;

RECRUITMENT AND PLACEMENT OF WORKERS;
PRIVATE EMPLOYMENT AGENCIES ARE HELD
JOINTLY AND SEVERALLY LIABLE WITH THE